
    WILLIAM A. MELOY, Assignee, vs. THE CENTRAL NATIONAL BANK et al.
    The president of a corporation organized under Section 554 of the Revised Statutes relating to the District of Columbia executed without the authority or direction of the stockholders an assignment of all its assets for the benefit of creditors. Held, That the assignment was void not only because not made by authority of the stockholders, but it would seem also because a corporation has no power to make an assignment for the benefit of creditors.
    In Equity.
    No. 10,296.
    Decided November 26, 1888.
    The Chief Justice and Justices James and Merrick sitting.
    Appeal from a decree in equity dismissing a bill to obtain a discovery and account.
    The Facts are stated in the opinion.
    Mr. William A. Meloy for plaintiff:
    The plea rests the defendants’ case upon this single ground, viz: '
    That the deed of general assignment, though regularly executed and in due and sufficient legal form, “ was not [previously] authorized by the said company by any vote of its stockholders or of its trustees or board of directors.”
    Than this one point the bank sets up no defense.
    The bank, by its plea, admits that it was the agent, trustee, and depositary of the company.
    That a balance of “from $1,200 to $1,500 moneys of said company were remaining on deposit” with it, besides commercial paper in its possession for collection.
    That the deed of conveyance to the cqmplainant was actually made, as set forth in the bill, in the name of the company, executed by its genuine corporate seal, duly delivered and the transfer accepted.
    We need go no further in the record.
    Equity Rule 28 says: If upon issue the facts pleaded be determined for the defendent, they shall avail him as far as in law and equity they ought to avail him, i. e., only so far.
    Under this rule our point is in the nature of a demurrer •to the plea, as if it were formally set down for hearing under this rule and we only say this plea states no valid defense of which the bank can in law and equity avail itself.
    
    1. It is not valid. The defense rests on Section 544, R. SD. C. This declares the persons named in a certificate of incorporation and their successors “by their corporate name capable of purchasing and conveying any real or personal estate whatever,” “but [they] shall not mortgage such estate or give any lien thereon, except in pursuance of a vote of the stockholders of the company.”
    To this we reply, first, the conveyance in question is not a mortgage.
    Second. It is an objection which the defendant bank cannot make. The provision of the statute is exclusively for the benefit of the stockholders of the company.
    A mortgage is the conveyance of property by way of pledge for the security of a debt, which conveyance is to become void on payment of the debt. 4 Kent Com., 136; 2 Washburn on Real Estate, 36.
    
      a. Here was no pledge. That is the bailment or transfer of the mere possession of property to be held until a debt is discharged or condition performed.
    
      b. Nor retention of any title or interest whatever in rem to the grantor.
    c. No defeasance or performance of any condition of pledge-holding.
    In respect to all these, the essentials of a mortgage, this conveyance fails to meet the requirements of the definition.
    The instrument in question is a full transfer of .all title both legal and equitable in trust with contingent remainder to the grantor.
    The grantee was by it vested with all title and interest with power to sell and convey all and everything, and it is only in the net proceeds and the disposition thereof that the remainder corporation or its privies in estate or interest have any claim, direct or indirect.
    The statute is not to be extended by construction to comprehend cases beyond the literal significance of its terms. Sedg. on Stat. and Cons. Law., 260.
    2. The depositary bank is not competent to raise this provision of the statute to avoid discovery and payment over of the property in its hands.
    3. But if all this were false reasoning, still the admitedly genuine seal of the corporation furnishes the evidence that it was lawfully impressed, and the deed the lawful act of the corporation.
    “The contrary must be shown by the objecting party.” Angelí & Ames on Corp., Sec. 224, 11th ed.
    The long continued, still unbroken, subsequent acquiescence of the stockholders, which may be inferred from silence as well as from overt acts, is proof of full authorization to execute the deed. Howe vs. Wheeler, 27 Conn., 538; Angell & Ames on Corp., Sec. 223, 11th ed.
    4. Finally: Apart from statutory provisions there is no difference between corporations and individuals. It may, therefore, make an assignment.
    “It has unlimited power over its property to pay its debts.” 2 Kent Com., 10th ed., 398 and note. See, also, Angell & Ames on Corp., Sec. 691; State vs. Bank of Maryland, 6th G. & J., 205; Reynolds vs. Starke County, 5 Ohio, 205.
    “By weight of authority which is irresistible (says Chancellor Walworth in 3 Barb., Ch. 119-124; affirmed in 3 N. Y., 238), a corporation has a right to make an assignment in trust for its creditors, and may exercise that right to the same extent and in the same manner as a natural person, unless restricted by its charter,” &c. See, also, Burrill on Assign., 5th ed., Sec. 64, and many citations.
    And it is now settled law that such general assignment of assets does not transfer the franchise or operate as any extinguishment of the corporation. See Burrill on Assign., 5th ed., Sec. 299, 64; Story’s Op. in 12 Peters, 138.
    Messrs. Edwards & Barnard for defendant:.
    Section 554, R. S. D. C., provides that a corporation organized under our law shall “be capable in law of purchasing, holding, and conveying any real or personal estate whatever, which may be necessary to enable the company to carry on its operations,” &c., “but shall not mortgage such estate, or give any lien thereon, except in pursuance of a vote of the stockholders of the company.” Gashwiler vs. Willis, 33 Cal., 12; Curtis vs. Leavitt, 15 N. Y., 9.
    “A corporation has no other powers than such as are specifically granted, or such as are necessary for the purpose of carrying into effect the powers expressly granted.” Weckler vs. 1st Nat. Bank, 42 Md., 581; Bank of Augusta vs. Earle, 13 Peters, 519.
    It is doubtful whether this corporation could lawfully make the assignment in question by any method. Burrill on Assign., Sec. 299.
    A president of a corporation has no authority by virtue of his office to make an assignment of the assets of the company for the benefit of creditors. Walworth Co. Bank vs. Trust Co., 14 Wis., 325; Crump vs. U. S. Mining Co., 7 Gratt., 352; Hoyt vs. Thompson, 5 N. Y., 320; Gibson vs. Goldthwaite, 7 Ala., 281-292.
    The deed in this case is not even signed by the company, but the president signs only his own name, and acknowledges it as his own act.
    The presumptions, which in some cases are raised by such a deed, do not arise where the charter requires a previous vote, as in this case. Johnson vs. Bush, 3 Barb. Ch., 207.
   Mr. Justice Bingham

delivered the opinion of the court:

The complainant states in his bill that from the 15th of September, 1885, to the 3d .of June, 1886,-his assignor, the Anglo-American Insurance Company, transacted business with the defendant as its depositary bank, delivering to it from time to time divers sum of money, as also bills, notes, checks, drafts, and so forth, for collection, in respect to all of which the bank engaged to act as a collecting agent of the insurance company, and to pay over and to account for all such collections to the company and to its assignees on demand; that on the 24th of June, 1886, the insurance company duly executed and delivered to the complainant its deed of assignment of all its assets, and the complainant accepted the same and entered upon the discharge of the trust thereby created, for the benefit of all the creditors of the company; that the complainant notified the defendant of these facts, and made the proper demand on.its officers for an account and discovery of the assets in its hands; that the defendant neglected and refused to make such discovery or to account, and the complainant prays that the defendant be compelled to make discovery and to account, and asks for a decree for payment of whatever amount may be found in its hands.

To this bill the defendant filed his plea, denying that the complainant was legally the assignee of the Anglo-American Insurance Company, and asserting that the assignment was not the act of the corporation, nor authorized by a vote of its stockholders, trustees, or directors. A replication was filed and the case heard in the Court in Special Term, and a decree of dismissal of the bill rendered, from which the complainant appeals.

The issue presented is whether it was in the power of the insurance company, a corporation, to make this assignment. It is contended by the defendant that it could not; first, because by the provisions of Section 554 of the Revised Statutes of the District of Columbia, it is provided that a corporation organized under this statute shall be capable in law of purchasing, holding, and conveying any real or personal estate whatever, which may be necessary to enable the company to carry on its operations — but “shall not mortgage such estate or give any lien thereon except in pursuance of a vote of the stockholders of the company.”

It is argued by counsel for the complainant that the term mortgage or lien used in this statute cannot embrace a deed of assignment; that a deed of assignment is not the creation of a lien on property of the corporation within the meaning of this statute, and is not a mortgage.

We are inclined to believe otherwise. We think it is the creation of a lien upon the property of the corporation. The legal title is conveyed- by this deed of assignment in trust for the specific purpose that the property may be converted into money for the benefit of creditors. We think, therefore, the assignment must be held to be void, because from the evidence it is clear there was not a compliance with the provisions of this statute. There never was any vote of the stockholders nor any meeting of the stockholders in relation to the making of an assignment. Indeed it appears from the evidence that the assignment was simply the act of the president. It does not appear that the trustees or directors of the corporation were consulted, or that they had any meeting whatever on the subject. The contrary is shown by the fact that the directors were scattered — all of them were absent in foreign parts at the time of and for quite a period anterior to the assignment. It is very clear outside of this statute, on general principles, that the president has no power to make an assignment unless he is ordered to do so by the directors of the company.

It is claimed, however, that two years have elasped since this assignment was made, and that no complaint has been made by the stockholders or trustees, and hence their acquiescence in this act must be presumed and that this is sufficient. However that may be, at common law this deed of assignment without compliance with the terms of the statute cannot be validated by such acquiescence. But we are also inclined to think that this could not be so for another reason, namely, the corporation'itself has no power to make an assignment of its assets for the benefit of creditors. It so hampers itself in thus making a disposition of its property and its means for carrying out the purposes of its organization, that it amounts to a practical dissolution of the corporation. That is not one of the known methods by which a corporation may be dissolved and cease to do business. The way we apprehend for a corporation to surrender its charter is by a proper proceeding in a court of chancery, that surrender being made of course to the sovereign power which created it. Chancery has power to appoint a receiver to take charge of the assets and to do complete justice to the stockholders and the creditors of the concern.

We think there was no error in the decree of the court below in dismissing this bill, and it is therefore affirmed.  