51. Proceedings to forfeit charters —(a) Jurisdiction. A decree of forfeiture can be rendered only by a court of the State from which the corporation received its charter. Proceedings to that end should be generally instituted in a court of law, since courts of chancery have no power, unless by statute, to forfeit the charters or decree the dissolution of corporations. There are but two kinds of cases in which an 2 clerk's office; that the legality of the incorporation is required to be presumed; that neither the corporators themselves nor those sued by the corporation are allowed to deny it; and that the franchise can only be annulled by direct proceedings, it was held that the failure of a turnpike company to file articles in the office of the Secretary of State within three months after filing them in the county clerk's office, as required, would not invalidate its organization so as to affect the validity of a tax voted for building a turnpike, although section 6 of the act provides that the acts of corporations shall be valid if the required copy of the articles is filed in the office of the Secretary of State within three months. Walton v. Riley, (1887) 85 Ky. 413. So, where a corporation fails to comply with the statutory requirements as to the payment of capital stock, making annual reports, et cetera, that fact will not invalidate a loan made in good faith, in the usual course of business, to such corporation. Lippincott v. Shaw Carriage Co., 25 Fed. Rep. 577. But see Waterman on Corporations, § 430, where the author says: "When a company never had any corporate existence so as to enable it to take and hold property in a corporate name, that fact may be inquired into in a collateral proceeding. And so, if, professing such existence, it acquires for a particular purpose in a corpo rate name the property of another, as it has no power as such to take, neither can it transfer; and the sufficiency of a transfer made by it may be inquired into collaterally." 1 Carey v. Cincinnati &c. R. Co., 5 Iowa, 357. 2 Denike v. New York &c. Lime Co., 80 N. Y. 599; Buffalo &c. R. Co. v. Cary, 26 N. Y. 75; Baker v. Administrator of Backus, 32 Ill. 79; Neall v. Hill, 16 Cal. 145; Gaylord v. Fort Wayne &c. Co., 6 Biss. 286; Attorney-General v. Tudor Ice Co., (1870) 104 Mass. 239, declaring that the Supreme Judicial Court of Massachusetts, "sitting in equity, does not administer punishment or enforce forfeitures for transgressions of law;" Attorney-General v. Clarendon, 17 Ves. 491; President &c. v. City Bridge Co., 2 Beas. 46; State v. Merchants' Ins. Co., 8 Humph. 235: Bayless v. Orne, 1 Freeman, (Miss.) Ch. 161; Strong v. McCagg, 55 Wis. 624; Bangs v. McIntosh, 23 Barb. 591; Howe v. Deuel, 43 Barb. 504; Doyle v. Peerless Petroleum Co., 44 Barb. 239; Belmont v. Erie R. Co., 52 Barb. 637. In Attorney-General v. Tudor Ice Co., 104 Mass. 239, 243, Gray, J., declared that "the single case in which an information has been sustained in an English court of chancery against a corporation for carrying on a business beyond its corporate powers is Attorney-General v. Great Northern Railway Co., 1 Drewry & Smale, 154, in which Vice Chancellor Kinders information in equity in the name of the attorney-general should be sustained. "The one is of public nuisances which affect or endanger the public safety or convenience, and require immediate judicial interposition, like obstructions of highways or navigable waters. The other is of trusts for charitable purposes, where the beneficiaries are so numerous and indefinite that the breach of trust can not be effectively redressed except by suit in behalf of the public. If there are any other cases to which this form of remedy is appropriate, that of a private trading corporation, whose proceedings ley in 1860 restrained a railway company from trading in coal in large quantities upon the ground that there was danger that, if allowed to go on, it might get into its hands the coal trade of the whole district from or through which its railway ran, and thus acquire a monopoly injurious to the public. That case is evidently the foundation of the dictum of Vice Chancellor Wood, two years later, in Hare v. London & Northwestern Railway Co., 2 Johns. & Hem. 80, 111." Under the Pa. Act of June 14, 1836, § 2, allowing writs of quo warranto to be issued by courts of common pleas in case of forfeiture for misuser of the franchises of a corporation within the county, and the act of April 7, 1870, § 1, extending the jurisdiction of the court of Common Pleas of Dauphin county to all suits by the Commonwealth throughout the State, the latter court has jurisdiction of a writ of quo warranto against a water company of Bradford county for furnishing impure and unwholesome water. The act of 1874, giving a remedy to any citizen to whom pure water is not furnished, does not affect the remedies of the Commonwealth. Commonwealth v. Towanda Water-Works, (Pa. 1888) 15 Atlan. Rep. 440; s. c. 22 W. N. Cas. 439. Beach on Railways, § 592. 1 Cf. District Attorney v. Lynn & Boston R. Co., 16 Gray, 242; Attorney-General v. Cambridge, 16 Gray, 247; Attorney-General v. Boston Wharf Co., 12 Gray, 563; Rowe v. Granite Bridge Co., 21 Pick. 344, 347. 2 Cf. County Attorney v. May, 5 Cush. 336; Jackson v. Phillips, 14 Allen, 539, 579; Attorney-General v. Garrison, 101 Mass. 223; Mass. Gen. Stat. ch. 14. § 20; Attorney-General บ. Railroad Cos., 35 Wis. 425; Spooner v. McConnell, 1 McLean, 337; Attorney-General v. Hudson Riv. R. Co., 1 Stockton, 526; Attorney-General v. New Jersey R. Co., 2 Green, (N. J.) Ch. 136; Buck Mountain Coal Co. v. Lehigh Coal & Nav. Co., 50 Pa. St. 91; Sparhawk v. Union &c. R. Co., 54 Pa. St. 401; Biglow v. Hartford Bridge Co., 14 Conn. 578; State v. New Haven &c. Co., 45 Conn. 331. A court of equity has no jurisdiction to restrain a navigation company from collecting tolls on the streams to which its charter refers, on the ground that it had failed to improve the streams as the charter prescribed, or to keep them in order; the only mode of proceeding against a corporation in such a case being by quo warranto at the suit of the State. Pixley v. Roanoke Nav. Co., 75 Va. 320. are not shown to have injured or endangered any public or private rights, and are objected to solely upon the ground that they are not authorized by its act of incorporation and are therefore against public policy, is not one of them."1 § 52. (b) Of the parties. A private person can not, unless authorized by statute,2 institute judicial proceedings against a corporation for the purpose of obtaining a decree of forfeiture. Such suits are to be brought by the State alone. For it is with the State that the contract is made, upon breach of which the charter of a corporation may be forfeited; and it is for the State alone to determine whether the forfeiture shall be enforced, or waived. Suits to enforce the forfeiture are brought on behalf of the State by the attorney-general, who may proceed therein of his own motion without an express act of legislature authorizing him so to do; and in construing 1 Attorney-General v. Tudor Ice Co., (1870) 104 Mass. 239, 244, per Gray, J. 2 Gaylord v. Fort Wayne &c. R. Co., 4 Biss. 286; Commonwealth v. Alleghany Bridge Co., 20 Pa. St. 185; Baker v. Backus, 32 Ill. 79; North v. State, 107 Ind. 356: Wilmersdoerffer v. Lake Mahopac Imp. Co., 18 Hun, 387; Stout v. Zulick, 48 N. J. 399. But a statute giving a remedy to any citizen does not affect the remedies of the commonwealth. Commonwealth v. Towanda Water-Works, (Pa. 1888) 15 Atlan. Rep. 440. Cf. Western Pennsylvania R. Co.'s Appeal, (1885) 104 Pa. St. 399. 3 People v. Rensselar &c. R. Co., 15 Wend. 113; People v. Northern R. Co., 42 N. Y. 217; Strong v. McCagg, 55 Wis. 624, 628; Rice v. National Bank, 126 Mass. 300, 304; Briggs v. Cape Cod &c. Canal Co., 137 Mass. 71, 72; Folger v. Columbian Ins. Co., 99 Mass. 267; s. c. 96 Am. Dec. 747 (annotated); Commonwealth v. Union Ins. Co., 5 Mass. 230; Chesapeake & O. Canal Co. v. Baltimore & O. R. Co., 4 G. & M. (Md.) 1; Regents of University of Maryland v. Williams, 9 Gill & J. 365; s. c. 31 Am. Dec. 72, 111; Lord v. Essex Building Assoc. No. 4, 37 Md. 327; State v. Fourth N. H. Turnpike, 15 N. H. 162; State v. Boston &c. R. Co., 25 Vt. 433; Kruffet v. Great Western R. Co., 25 Ill. 353. Even in Pennsylvania under the act of June 19, 1871, authorizing a private citizen by bill in equity to compel a corporation to show that it has authority to do a certain act, he can not prove the mere non-user of a franchise in order to establish a forfeiture of the charter. Western Pennsylvania R. Co's. Appeal, (1885) 104 Pa. St. 399. In Regents of the University of Maryland v. Williams, 9 Gill & J. 365; s. c. 31 Am. Dec. 72, 111, it was said: "For the government, with which the contract is made, may not wish to enforce the forfeiture, and may, if it choose to do so, waive the breach of any condition of the contract arising out of the charter." See further upon the subject of waiver, § 59, infra. 5 State v. Southern R. Co., 24 Tex. the provision of the New York Code of Civil Procedure which confers upon the attorney-general the power to sue a corporation to vacate its charter, it is held that the words "upon leave granted" do not authorize the court to inquire whether the suit is a wise act, but only whether the attorney-general alleges a prima facie case, or a case of such gravity that it should be judicially determined.' Ordinarily, the corporation itself is a necessary party to a bill to declare a forfeiture of its franchises, or to divest it of any of its property or rights.2 But if the information has for its object to test the fact of legal corporate existence, it should be filed against the individuals assuming to act as a corporation; for, it is said, that to make the pseudo corporation itself the defendant, would be to acknowledge its existence." 80. Thus in People v. Stanford, (1888) 77 Cal. 360, under the California Code of Civil Procedure, § 803, providing that an action may be brought by the attorney-general for the usurpation of a franchise, and Civil Code, § 358, authorizing an inquiry as to the right of a corporation to exercise corporate power at suit of the State, on information of the attorney-general, the people may maintain an action at the relation of that officer, to compel a railroad corporation to forfeit its franchises and restrain the exercise of the same. 1 In re Application of AttorneyGeneral, (1889) 50 Hun, 511, construing N. Y. Code Civ. Proc., $ 1798. 2 Mickles v. Rochester City Bank, 11 Paige, 118; s. c. 42 Am. Dec. 103, 106, 107, the court saying: "Where the corporate property of a manufacturing corporation is all exhausted, and the bill is filed against the stockholders by a creditor of the company, for the mere purpose of enforcing the personal liability of the stockholders for the debts of the company, it may not be necessary to make the corporation itself a party, although its dissolution has not been judicially declared. But where the object of the bill is to divest the corporation itself of any of its property, or of any of its corporate rights or privileges, upon the ground that it has forfeited its charter, or surren dered its franchises, the other defendants in the suit may have a right to insist that the corporation itself shall be made a party, to the end that the decree may be binding upon such corporation, and that the other defendants may not be subjected to future litigation with the corporation itself in relation to the same matters." An information to dissolve a corporation, praying for no citation, showing that in some way not disclosed the corporation was in the hands of a receiver, who, though not alleged to have been served, was the only person who appeared, no service having been made on the person alleged to have been the last president, and no appearance entered for him, was held properly dismissed. State v. Jefferson Iron Co., 60 Tex. 312. 3 People v. Railway Co., 15 Wend. 114; People v. Richardson, 4 Cow. 97; § 53. (c) Of the writs.- Chancellor Kent lays down two modes of proceeding to ascertain and enforce the forfeiture of a charter for default or abuse of power. The one is by scire facias; and that process is proper where there is a legal existing body, capable of acting, but which has abused its power. The other mode is by information in the nature of a quo warranto, which is in form a criminal, and in its nature a civil remedy; and this is the proper mode of proceeding against persons who have assumed to act in a corporate capacity, but who, by reason of some defect in their organization, can not legally exercise their powers, having a mere de facto corporate existence. But an information in the nature of quo warranto is now regarded not only as the appropriate means of testing the right to exercise corporate franchises, but also as the proper remedy for the abuse thereof. The ancient civil writ of quo warranto has long since become obsolete in England, and is now wholly superseded in that country and in most of Commonwealth v. Central Passenger 1 Kent's Commentaries, 313; Regents of University of Maryland v. Williams, 9 Gill & J. 365; Ames v. Kansas, 111 U. S. 449; State v. Merchants' Ins. Co., 8 Humph. 235; People v. Utica Ins. Co., 15 Johns. 378; s. c. 8 Am. Dec. 249; State v. St. Paul &c. R. Co., 35 Minn. 222; Baker v. Backus, 32 Ill. 79, 110; King v. Passmore, 3 Term Rep. 132. 2 Terrett v. Taylor, 9 Cranch, 43. See note to Folger v. Columbian Ins. Co., 96 Am. Dec. 747, 757, and authorities there cited; Parish of Bellport v. Tooker, 29 Barb. 256; s. c. 21 N. Y. 267; People v. Kingston Turnpike Co., 23 Wend. 193; State v. Real Estate Bank, (1854) 5 Ark. 595, which was a proceeding by quo warranto for the purpose of seizing into the |