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CORPORATIONS
86. Nature of a Corporation. A corporation has been defined to be "a collection of many individuals into one body, under a specific denomination having perpetual succession, under an artificial form and vested by the policy of the law, with the capacity of acting in several respects as an individual." In other words corporation is the name applied to an association of persons authorized by law to create, by mutual contribution, a common fund for the purpose of transacting business without rendering the individual members personally liable for the debts of the association, beyond a certain amount. The object is to permit persons to obtain the advantage of large combinations of capital without involving, beyond certain limits, the private property of the individuals composing it. A corporation is an artificial person having an existence in many respects separate and apart from the members composing it. While it can only transact business by means of agents, the obligations created are the obligations of the artificial person, the corporation. The common fund or capital of the corporation, is the only property that can be subjected in payment of the debts. The individual property of the members is not the property of the corporation.
UNITED STATES PATENT OFFICE, WASHINGTON. D. C.
87. Corporations Distinguished from Partnerships. A partnership may be created by mutual consent of the parties desiring to engage in that joint enterprise. The only limitation is that the enterprise must be for a lawful purpose. A person may form a partnership for the transaction of any kind of business which he may transact as an individual. A corporation, on the other hand, must have permission from the government to transact business. This permission is called its franchise. Corporations cannot be formed for every purpose. That is, individuals are permitted to engage in lines of business denied to corporations. A corporation is an artificial person, regarded in law as distinct from the individuals composing it. A partnership is not distinct from the individuals composing it, and the individual members are personally liable for the debts of the partnership. A corporation has a continuous existence; it continues to live regardless of death of some of its members, or regardless of a change of membership. A partnership ceases to exist upon the death of a member, or by a change of membership. A corporation's members do not have the right, as such, to act as agents of the corporation for the purpose of transacting business. The agents of the corporation are appointed in a manner prescribed by law, and by the rules of the corporation. In a partnership, each member is the recognized and authorized agent of the partnership. Each member may bind the partnership by any contract made within the scope of the partnership business. For example, if A and B form a partnership for the purpose of selling real estate, either A or B by reason of the partnership agreement, is authorized to sell real estate in the name of the firm. If A, B, C, D, and E are stockholders in the X Co. neither A, B, C, D or E is entitled, by reason of his being a stockholder, to make contracts for the corporation. A board of directors must be elected by the stockholders, who in turn elect officers, and appoint agents authorized to transact the business of the corporation.
88. Powers of a Corporation. Corporations are not permitted, as such, to transact business of every kind. A corporation is an artificial being created by law. It can exist only for those purposes enumerated by law. Corporations, as such, have well recognized, or distinguished, powers or characteristics. The ordinary powers of a corporation are as follows: