
    The People ex rel. Thomas C. Platt, President, etc., App’lt, v. Edward Wemple, Comptroller, Resp’t.
    
    
      (Court of Appeals,
    
    
      Filed November 26, 1889.)
    
    1. Taxes—Cokpobations—Joint stock companies—Laws 1880, chap. 542.
    The United States Express Company is composed of individuals who signed an agreement April 22, 1854, to take effect May, 1854, to continue ten years. It was renewed in 1864, and in 1884, for twenty years. It was described therein as a “ joint stock company,” with a capital, shares which were assignable, managed by a board of directors and officers, etc., etc. Meld, that it was not a mere partnership but a corporation, and is subject to and must pay a tax to the state under Laws 1880, chap. 542, § 3.
    2. Same—“ Incobfokated.”
    The word “ incorporated,” as used in said act, is not to be taken in a technical or restricted meaning, * * * but includes any combination of individuals upon terms which embody, or adopt as rules or regulations of business, the enabling provisions of the statutes.
    3. Same—Constitutional law.
    The tax authorized by chapter 542, Laws 1880, is not obnoxious to the federal constitution.
    Appeal from an order of general term, supreme court, third department, denying the application of the relator to vacate an assessment under Laws 1880, chap. 542, and ratifying and confirming the proceedings of the comptroller thereunder.
    
      Wm. W. McFarland and Chas. M. Da Costa, for app’lt; Chas. F. Tabor, Atty. Gen., for resp’t
    
      
       Affirming 24 N. Y. State Rep., 668.
    
   Danforth, J.

This case arises upon an application made by the relator as president of the United States Express Company for a certiorari requiring the comptroller of the state to return to the supreme court his proceedings relating to the imposition of a tax on the franchise or business of that company, to the end that such proceedings.might be set aside, and that in the meantime the collection of the tax be stayed. So far as is material to the question raised upon this appeal, the return of the comptroller showed that prior to the 9th of April, 1888, that officer called upon the Express Company to report as to the amount of its capital stock employed within this state, for the purpose of enabling him to adjust the taxes and penalty due from it to the state under the provisions of the act, chap. 542 of the Laws of. 1880, entitled: “ An act to provide for raising taxes for the use of the state upon certain corporations, joint stock' companies and associations,” as amended by subsequent acts, chap. 361, Laws of 1881; chap. 501, Laws of 1885, that the company refused to comply with his demand and he from such data as he could procure did assess and fix the taxes and penalties recited in the relator’s application. It was thereupon stipulated by the relator and the comptroller that the only question to be argued by either party should be whether the relator was liable for the tax provided for by the third section of the act of 1880, supra, and the acts amendatory thereof, and upon hearing of the matter before the general term of the supreme court in the third department the application of the relator to vacate the assessment was denied and the proceedings of the comptroller were ratified and confirmed.

From the order then made this appeal is taken by the relator. The discussion is necessarily limited to the point presented by the stipulation already referred to.

The express company was composed of individuals who signed an agreement purporting to have been made April 22, 1854, but which by its terms was to take effect on the first of May, 1854, and continue in force for ten years thereafter. On November 24,1859, the articles were amended by the associates so as to continue in force for twenty years from the first of May, 1864, and on January 23, 1884, the directors under power conferred upon them by the associates passed a resolution continuing the existence of the company for twenty years 'from May 1, 1884. The association was formed for the purpose of carrying on a forwarding agency, banking, exchange and insurance business between such cities and towns of the United States and those of other countries as the directora or their successors might specify.

It is described in the articles as a “ joint stock company," its capital declared to be $500,000, divided into shares of $100 each, subject to increase or decrease as the board of directors might think proper but represented by certificates or scrip signed by the president and secretary of the company, and countersigned by the treasurer. These shares are made assignable without restriction from one person to another in the usual form in person or by attorney and may be forfeited by order of the directors for causes set forth in the agreement. The property and business of the company is to be managed by a board of five directors, who from their own number might elect a president, vice-president, and secretary, and, except by their permission, “no shareholder in” the company can use or sign its associate name; in short into their hands the management of the whole business of the company is intrusted. The directors are also empowered to declare dividends from the net earnings of the company as they may from time to time deem expedient.

Deeds and other instruments of conveyance or as security are to run to the president and all suits at law or in equity in favor of the company are to be brought in his name. It is also, provided that the death of no member or any number of members less than a majority of the interest of the whole shall operate as a dissolution of the company but its business shall continue as if no death had occurred.

It seems obvious from these articles that the arrangement consummated by 'them has little in common with a private partnership, for they provide for a permanent investment of capital, the right of succession, the transfer of property by an assignment of the certificate of ownership, .and the prosecution of suits in the name of one person. The company has therefore the characteristics of a corporation, and, so far as it can, it assumes to itself an independent personality, and asserts powers and claims privileges not possessed by individuals or partnerships. It is precisely such an association as, when formed without authority from parliament, was declared in England to be illegal and void, and to be “deemed a public nuisance,” 6 George, I, chap. 18, § 18, the the statute in this respect following, it was said, the common law, and enforcing its rules by the imposition of penalties. Buck v. Buck, 1 Camp., 547; Rex v. Stratton, id., 549, note; Josephs v. Pebrer, 3 Barn. & C., 639. It was held in Duvergier v. Fellows, 5 Bing., 248, that there can be no transferable shares of any stock except the stock of corporations or of joint stock companies created by acts of parliament, affirmed in 10 B. & C., 826, and 1 Clark & Fin., 39, and to the same effect is the decision in Blundell v. Winsor, 8 Simons, 601.

It is not necessary, however, to assert in what cases such a combination of individuals would now be deemed illegal at common law, for the statutes of the state render the arrangement possible, and in our opinion the association in question is within their purview.

By the act of 1849, chap. 258, § 1, a joint stock company or association was authorized “ to sue and be sued in the name of the president and treasurer,” with like effect as if the names of the .associates were stated in the proceedings. It was extended in 1851. Laws of 1851, chap. 455; Laws of 1853, chap. 153. On March 31, 1854, a bill was introduced into the legislature, see Senate Journal of that date, and passed April 15, 1854, Laws of 1854, chap. 245, entitled An act to amend, and in addition to the several acts relative to joint stock associations,” the first section of which declared that, “§ 1, Whenever in pursuance of its articles of association, the property of any joint stock association is represented by shares of stock, it may be lawful for said associations to provide by their articles of association, that the death of any stockholder or the assignment of his stock shall not work a dissolution of the association, but it shall continue as before, nor shall such company be dissolved except by judgment of ■a court for fraud in its management, or other good cause to such court shown, or in pursuance of its articles of association,” and, by § 2, that “said association may also, by said articles of association, provide that the shareholders may devolve upon any three or more of the partners the sole management of their business.”

A further act was passed in 1867, chap. 289, authorizing “joint stock companies and associations to purchase, hold and convey real estate,” and declaring that all conveyances thereof should be made to the president of the company, who might hold and convey the same free from any claim thereon against any of the shareholders, or any person claiming under them.

In view of the capacities and attributes with which, as we have seen, the United States Express Company is endowed, and in view also of the statutes which legalize its assumed capacities, and make valid and effective its asserted right of succession, its distinctive name, and the alienability of its shares, we find nothing to warrant the contention of the appellant that it is a mere partnership, existing only under its articles of agreement and association. It is true these articles contain no reference to any statute of the state as one under or by which the company was organized, yet by the very constitution of the body itself, and the privileges and powers-which it can only exercise by virtue of those statutes, it must betaken to belong to one of those classes of artificial beings described in the act of 1880, supra, as a corporation, joint stock company or association.

The several persons composing it are made into a collective-body and are given capacity in its name, and not them own, to-take, grant, sue and be sued. Thus they are united, or organized, or incorporated. The death of a member causes no-interruption, and the power of continued existence of this one body and its organized or corporate action is derived from no-inherent power of one or all of its members, but from the law which sanctions the union. It is doing business within this-state, and because it was also formed under the laws of the-state it is within the act. Nor does it seem to us that this construction is at all at variance with the literal and precise-language of the act. It declares, § 3 of the act of 1880, as-amended in 1881, chap. 361, “ Every corporation, joint stock company or association whatever, now and hereafter incorporated or organized under any law of this state, or now or hereafter incorporated or organized by or under the laws of any other state or country, and doing business in this state, “ with: certain exceptions not now material,” shall be subject to and pay a tax as a tax upon its corporate franchise or business'into the treasury of this state annually, to be computed,” according to certain specified circumstances, upon the capital stock or its; valuation made in accordance with the provisions of the first section of the act.

The first section thus referred to makes it “the duty of the president or treasurer of every association, corporation or joint stock company, liable to be taxed on its corporate franchise or business as-provided in § 3, to make a report to the comptroller,” of its capital and dividends, and if no dividends, then of circumstances which prevent an appraisal. The phraseology of both sections, the first, “ every association, corporation or joint stock company,” and the-third, the same words differently arranged, embrace the “ United States Express Company,” and its relation to the class is not" changed by the subsequent limitation implied by the words “ incorporated under any law of this state.” The word “ incorporated,” as here used, is not to be taken in a technical or restricted meaning and confined to an association brought into being according to the formality of a statute, but as including any combination, of individuals upon terms which embody or adopt as rules or regulations of business the enabling provisions of the statutes.

In .the case before us the agreement which brought many persons into one artificial body was so framed as to accomplish that end, and in proposing to conduct its affairs by the power-given to it in the mode prescribed by the legislature they must be deemed, for the purposes of the act in question, to be incorporated, that is formed or united, under the law of the state-whether the artificial body be termed a corporation, a joint stock company, or association.

Nor is the principal question altogether new. In Waterbury v. Merchants Union Express Co., 50 Barb., 158, the nature and legal character of the defendant, a joint stock association created in like manner with the one before us, was held to have all the attributes of a corporation, and all its incidents except a common seal. The-statutes from 1849 to 1867, supra, were examined and held to confer the qualities which distinguished a corporation from a partnership and to establish the relations of a member of the association as those of a stockholder in a corporation, and not those-of an individual in a partnership, and that in controversies affecting them the analogies afforded by laws and jurisprudence in the case of corporations should be followed, and not those derived from a simple partnership. In Westcott v. Fargo, president. of the same company, 6 Lansing, 319, a like discussion was had upon circumstances calling for a decision as to the nature and character of the association. A shareholder sued the company for the loss of freight entrusted to it. It was set up as a defense-that the plaintiff as such shareholder was one of the owners of interest in the express company; but the court held otherwise,, that it was no valid objection that the plaintiff was a member of the company, saying, “ the action is against the corporation and so the plaintiff prevailed. Upon appeal the case came in this court, 61 N. Y., 542, and again the issue was distinctly presented. The appellant contended that the plaintiffs could not maintain an action upon a contract between themselves and the association of which they were members; that their remedy was-in equity for an accounting, as in partnership cases; while for the respondent it was argued that “joint stock companies, organized under the statutes of the state, are corporations, not partnerships.”

This court also examined the statutes relating to joint stock companies, supra, and came to the conclusion that they conferred powers and privileges of corporations not possessed by individuals or partnerships.

We do not overlook the contention of' the learned counsel for the appellant that the articles of agreement and association of the express company already contained the provisions embraced in the act of 1854, supra, and were, therefore, part of the fundamental law of the company. No doubt parties are, in general, deemed to contract with reference to the state of the law as it existed at the time of making the contract, but certainly there is nothing to-prevent them from doing so with reference to a state of the law which did not then exist, and more especially is this so if it appears that by the terms of the agreement that changed condition of the law might reasonably be expected. The act of 1854 was proposed to the legislature as early as March. It was passed and became a law on the 15th of April, and although by force of the statute, 1 R. S., title 4, part 1, chap. 7, 157, § 12, it-did not take effect until twenty days thereafter, it was apparently in contemplation, of the parties when on the 22d of April, and, therefore, after its passage, they prepared an agreement •embodying the terms and language of the statutebut however that may be, the period of its new or extended existence began in 1864 when the law was in full force. The agreement which ■effected it might well be deemed equivalent to a new and •original organization. I do not, however, regard this fact as •essential. It is not an answer to the operation of the statute that the agreement constituting the joint stock association was prepared antecedent to the time when it took effect. It is ■enough that the powers which it provided for, and assumed to exercise, were thereby ratified ana made valid. Thenceforth it :acted under and by virtue of the statute.

Second. We are also of opinion that the tax sought to be •enforced is neither in form nor substance obnoxious to any provision of the federal constitution. It interferes in no respect with commerce, with foreign nations, or among the several states. It is confined to capital employed in this state by an entity existing under its laws, and the manner in which its value shall be assessed and the rate of taxation are matters of legislative discretion. In no aspect does it profess “ to regulate •commerce,” nor in any proper sense has the legislation in question that effect

We, therefore, agree with the supreme court, and think its •order should be affirmed.

All concur; Andrews, J., in result  