CORPORATION (from Lat. corporare, to form into a body, corpus, corporis), in English law, an association of persons which is treated in many respects as if it were itself a person. It has rights and duties of its own which are not the rights and duties of the individual members thereof. Thus a corporation may own land, but the individual members of the corporation have no rights therein. A corporation may owe money, but the corporators as individuals are under no obligation to pay the debt. The rights and duties descend to the successive members of the corporation. This capacity of perpetual succession is regarded as the distinguishing feature of corporations as compared with other societies. One of the phrases most commonly met with in law-books describes a corporation as a society with perpetual succession and a common seal. The latter point, however, is not conclusive of the corporate character.
The legal attributes of a corporation have been worked out with great fulness and ingenuity in English law, but the conception has been taken full-grown from the law of Rome. The term in Roman law corresponding to the modern corporation is collegium; a more general term is universitas. A collegium or corpus must have consisted of at least three persons, who were said to be corporati—habere corpus. They could hold property in common and had a common chest. They might sue and be sued by their agent (syndicus or actor). There was a complete separation in law between the rights of the collegium as a body and those of its individual members. The collegium remained in existence although all its original members were changed. It was governed by its own by-laws, provided these were not contrary to the common law. The power of forming collegia was restrained, and societies pretending to act as corporations were often suppressed. In all these points the collegia of Roman closely resemble the corporations of English law. There is a similar parallel between the purposes for which the formation of such societies is authorized in English and in Roman law. Thus among the Roman collegia the following classes are distinguished:—(1) Public governing bodies, or municipalities, civitates; (2) religious societies, such as the collegia of priests and Vestal Virgins; (3) official societies, e.g. the scribae, employed in the administration of the state; (4) trade societies, e.g. fabri, pictores, navicularii, &c. This class shades down into the societates not incorporated, just as our own trading corporations partake largely of the character of ordinary partnerships. In the later Roman law the distinction of corporations into civil and ecclesiastical, into lay and eleemosynary, is recognized. The latter could not alienate without just cause, nor take land without a licence—a restriction which may be compared with modern statutes of mortmain. All these privileged societies are what we should call corporations aggregate. The corporation sole (i.e. consisting of only a single person) is a later refinement, for although Roman law held that the corporation subsisted in full force, notwithstanding that only one member survived, it did not impute to the successive holders of a public office the character of a corporation. When a public officer in English law is said to be a corporation sole, the meaning is that the rights acquired by him in that capacity descend to his successor in office, and not (as the case is where a public officer is not a corporation) to his ordinary legal representative. The best known instances of corporation sole are the king and the parson of a parish. The conception of the king as a corporation is the key to many of his paradoxical attributes in constitutional theory—his invisibility, immortality, &c.
The term quasi-corporation is applied to holders for the time being of certain official positions, though not incorporated, as the churchwardens of a parish, guardians of the poor, &c.
The Roman conception of a corporation was kept alive by ecclesiastical and municipal bodies. When English lawyers came to deal with such societies, the corporation law of Rome admitted of easy application. Accordingly, in no department has English law borrowed so copiously and so directly from the civil law. The corporations known to the earlier English law were mainly the municipal, the ecclesiastical, and the educational and eleemosynary. To all of these the same principles, borrowed from Roman jurisprudence, were applied. The different purposes of these institutions brought about in course of time differences in the rules of the law applicable to each. In particular, the great development of trading companies under special statutes has produced a new class of corporations, differing widely from those formerly known to the law. The reform of municipal corporations has also restricted the operation of the principles of the older corporation law. These principles, however, still apply when special statutes have not intervened.
The legal origin of corporation is ascribed by J. Grant (Treatise on the Law of Corporations, 1850) to five sources, viz. common law, prescription, act of parliament, charter and implication. Prescription in legal theory implies a grant, so that corporations by prescription would be reducible to the class of chartered or statutory corporations. A corporation is said to exist by implication when the purposes of a legally constituted society cannot be carried out without corporate powers. Corporations are thus ultimately traceable to the authority of charters and acts of parliament. The power of creating corporations by charter is an important prerogative of the crown, but in the present state of the constitution, when all the powers of the crown are practically exercised by parliament, there is no room for any jealousy as to the manner in which it may be exercised. The power of chartering corporations belonged also to subjects who had jura regalia, e.g. the bishops of Durham granted a charter of incorporation to the city of Durham in 1565, 1602 and 1780. The charter of a corporation is regarded as being of the nature of a contract between the king and the corporation. It will be construed more favourably for the crown, and more strictly as against the grantee. It cannot alter the law of the land, and it may be surrendered, so that, if the surrender is accepted by the crown and enrolled in chancery, the corporation is thereby dissolved. Great use was made of this power of the crown in the reigns of Charles II. and James II.
Every corporation, it is said, must have a name, and it may have more names than one, but two corporations cannot have the same name. And corporations cannot change their name save by charter or some equivalent authority.
The possession of a common seal, though, as already stated, not conclusive of the corporate character, is an incident of every corporation aggregate. The inns of courts have common seals, but they are only voluntary societies, not corporations. Generally speaking, all corporate acts affecting strangers must be performed under the common seal; acts of internal administration affecting only the corporators, need not be under seal. The rule has been defended as following necessarily from the impersonal character of a corporation; either a seal or something equivalent must be fixed upon so that the act of the corporation may be recognized by all.
A corporation may be abolished by statute, but not by the mere authority of the crown. It may also become extinct by the disappearance of all its members or of any integral part, by surrender of charter if it is a chartered society, by process of law, or by forfeiture of privileges.
The power of the majority to bind the society is one of the first principles of corporation law, even in cases where the corporation has a head. It is even said that only by an act of parliament can this rule be avoided. The binding majority is that of the number present at a corporate meeting duly summoned.