and that the Directors had refused to take | tions of equitable cognizance into the courts of measures to prevent its collection, on his requisithe United States, in which corporate rights are tion and prays for an injunction on the officer involved, or evils are threatened or inflicted on to restrain his further proceedings. The Cir corporate property, making the Corporation and cuit Court affirmed the bill so as to restrain the its managers parties, then a very compendious collection of all taxes assessed upon the Bank, method of bringing into the courts of the Unitexcept such as were laid under the Act of 1845. ed States all questions in which these artificial The first inquiry that arises is, has this court beings are concerned has been invented, and the a jurisdiction of the parties to the suit? The most morbid appetite for jurisdiction among all case is one of a stockholder of a Corporation, their various members will be gratified, and upbringing the Corporation before the courts of on a class of cases where grave doubts exist United States to redress a corporate wrong in whether those who made the Constitution ever which both are similarly interested. The early intended to confer any jurisdiction whatever. decisions of this court on this question would Nor can this jurisdiction be supported by afbe conclusive against the bill. They require firming that the Corporation is not a necessary that the plaintiff should be from a state differ- party to the bill. The subject of the bill is the ent from all the individual members of the cor- title of the Corporation to an exemption under poration. The Chief Justice said, that invisible, the Act of Incorporation, and its object is the intangible, and artificial being, that mere legal protection of corporate franchises and property. entity-a corporation aggregate-is certainly The being of the Corporation is charged to be not a citizen; and consequently cannot sue or an issue involved in the prayer for relief, and be sued in the courts of the United States, un- the inaction of the directors affords the motive less the rights of the members in this respect can for the suit. be exercised in their corporate name.

60.

5 Cranch, 57, 61, 78; 6 Wheat., 450; 14 Pet.,

The conduct of the Directors was determined in the course of their duty as the governing body of the Corporation, under the law of their These cases required that the citizenship of all organization. Their measures and judgments the corporators should appear on the record, so were the acts of the Corporation. Whether that the court might be sure that the controversy these were conclusive upon the corporators, or had arisen between citizens of different states, whether they might be impeached at the suit of or citizens of a state and foreign states, citizens a single dissenting shareholder; whether the reor subjects. In Marshall v. Baltimore & Ohio lations between the State and the Corporation Railroad Co., 16 How., 314, the court relaxed were to be settled in a suit between them or in its strictness in reference to this averment, and this suit, are the matters in issue, and the Corwas satisfied by an allegation of the habitat of poration was an essential party to their adjudicathe corporation, but still intimated that the na- tion. The principle of the bill is, that in detional character of the corporators was an essen-clining to take effective measures of prevention tial subject of inquiry in a question of jurisdic--that is, refusing to apply for an injunctiontion. The court says: "The persons who act the Directors abdicated their controlling powers, under these faculties and use the corporate and any stockholder became entitled to intername, may be justly presumed to be resident vene for the interests of himself and his assoin the State which is the necessary habitat of ciates. The decree in this cause is not a decree the corporation, and where alone they can be for the relief of this corporator, but is a decree made subject to suit, and should be estopped in for the Corporation, and does not differ from a equity from averring a different domicil as decree proper to a case of the Corporation against against those who are compelled to seek them the Treasurer. It is clear, therefore, that the Corthere, and nowhere else." And again: "The poration was a necessary party to the bill, and presumption arising from the habitat of a cor- so on the adjudged cases. poration being conclusive of those who use the corporate name and exercise the faculties of it."

This case is one of a corporator suing the Corporation of which he is a member, and is the first instance of such a case in the court. He cannot aver against the manifest truth, that all the corporators, himself included, are of a different state from himself, to give the court juisdiction upon the principle of the earlier cases. And if the doctrine of an equitable estoppel can be applied to a subject where facts, and not arbitrary presumptions, were the only objects of consideration; and if, indeed, the character of of the corporator, as a matter of law, is to be assumed to be that of the situs of the Corporation, then all the corporators, plaintiffs as well as defendants, stand upon this record as citizens of the same state, and this suit cannot be main tained. But if no inquiry into the citizenship of stockholders may be made; if a foreign stockholder, upon the real or affected indifference of a Board of Directors, or on some imaginary or actual obstacle to relief, arising in the state of opinion in the courts of the State, can draw ques

Bagshaw v. East Union R. R. Co., 7 Hare, 114; Cunningham v. Pell, 5 Paige, 607; Rumney v. Mead, Finch, 303; 1 Danl. Ch. Pr., 251; Charles Ins. & T. Co. v. Sebring, 5 Rich. Eq., 342.

The case is one between a corporator and the Corporation and the jurisdiction cannot be affirmed unless the court is prepared to answer the question whether a mere legal entity, an artificial person, invisible, intangible, can be a citizen of the United States in the sense in which that word is used in the Constitution; and relying on the case of Marshall v. The Bal timore & Ohio Railroad Co., 16 How., $14, with a long list of antecessors, I am forced to conclude that it cannot be.

The court has assumed this jurisdiction, and I am therefore called to inquire whether a court of chancery can take cognizance of the bill. The Act of Incorporation of the Bank charges the Board of Directors with the care of the corpor ate affiairs, subject to an annual responsibility to the stockholders. The principle of a court of chancery is, to decline any interference with the discretion of such directors, or to regulate their

SUPREME COURT OF THE UNITED STATES.

DEC. TERM,

conduct or management in respect to the duties | in law, in whom the whole stock and property
committed to them.
debtors, officers and servants, are responsible
of the bank are vested, and to whom all agents
for all contracts, express or implied, made in
reference to such capital; and for all torts and
injuries, diminishing or impairing it." The
Corporation, therefore, must vindicate its own
wrongs, and assert its own rights, in the modes
pointed out by law.

never permit an individual stockholder to come I do not say that a court of chancery will before it to assert a right of the corporation in which he is a shareholder, where there is an obstacle of such a nature that the name of the corporation cannot be employed before legiti mate tribunals in their regular modes of proceeding, but the burden is thrown upon the plaintiff to establish the existence of an urgent necessity for such a suit.

The consideration of analogous cases will

The business of that court is to redress grievances illegally inflicted or threatened, not to supply the prudence, knowledge or forecast requisite to successful corporate management. The facts of this case involve, in my opinion, merely a question of discretion in the perform ance of an official duty. In 1852 the taxes were withdrawn from the Treasurer of Cuyahoga County, by an assignee of the Bank, and were never passed into the State Treasury. The Supreme Court of Ohio, subsequently to this, pronounced the taxes to be legally assessed upon these banks, and that there was no contract between the State and the banks, and there was no exemption from the tax by anything apparent in the Act of 1845. Some of these judgments were pending in this court upon writs of error then nndecided, no judgment having been given contrary to that of the author-strengthen this conclusion; cases where courts ities, legislative, executive and judicial, as well as by the people of Ohio. It was under these conditions that this stockholder, who purchased stock after the controversy had arisen in Ohio, some five days before the taxes were payable, addressed the Directors of the Commmercial Bank to take preventive measures-that is, I suppose, to file a bill for an injunction instantly --and upon their suggestion of difficulties. proceeds to take charge of the corporate rights of the Bank by this suit, in the Circuit Court of the United States. The Directors were elected annually; they were, collectively, owners of one tenth of the stock of the Bank, and no evidence is shown that any other stockholder supposed that "preventive measures," under the circumstances, could be sustained. There is no charge of fraud, collusion, neglect of duty, or of indifference by the directors, save this omission to take some undefined "preventive measures," which the plaintiff affected to suppose might be proper.

I understand the rule of chancery, in refer ence to such a case, to be that no suit can be maintained by an individual stockholder for a wrong done, or threatened, to such a corporation, unless it appears that the plaintiff has no means of procuring a suit to be instituted in the name of the corporation; and that the rule is universal, applicable, as well to the cases where the acts which afford the ground for complaint were either such as a majority might sanction, or whether it belonged to the category of those acts by which no stockholder could be bound except by his own consent. This principle has the highest sanction in the decisions of that court.

Foss v. Harbottle, 2 Hare, 461; affirmed 1 Phil., 790; 2 Phil., 740; 7 Hare, 130.

The principle is an obvious consequence from the relations between the officers and members of a chartered corporation, and the corporation itself. These are explained in Smith v. Hurd, 12 Met., 371. The court says: "There is no legal privity, relation, or immediate connection, between the holders of shares in a bank in their individual capacity, on the one side, and the directors of the bank on the other. The directors are not the bailers, the factors, agents, or trustees of such individual stockholders. The bank is a corporation and body politic, having a separate existence, as a distinct person 416

of chancery are more free to intervene, from the fiduciary relations between the parties and the extent of its general jurisdiction over them. Such are cases of danger to the interests of a creditor of an estate from the collusion of an executor with the debtor of the estate, or the insolvency of the executor; or where an executor wrongfully fails to make a settlement with a surviving partner, and a residuary legatee seeks one entire settlement of the estate against the executor and partner; or where a decedent in his life has fraudulently conveyed assets, and his executor is estopped to impute fraud, and there are creditors; or where the managers of a joint stock company have been guilty of fraud, illegality, waste, and their stockholders desire relief. In all these cases the Court of Chancery will suffer a party remotely interested to institute the suit which his trustee, or other representative, should have brought, and will grant relief on that suit which would have been commenced it. Sir John Romilly, in a late appropriate to the case of him who should have case belonging to one of these categories, says:

ficient to prove that it may be an unpleasant "To support such a bill as this it is not suf duty to the executors and trustees to take the necessary steps for protecting the property intrusted to them. It is not sufficient to show that it will be for their interests not to take such steps. It is necessary to show that they prefer their own interests to their duty, and that they intend to neglect the performance of the obligation incidental to the office imposed upon them, and which they assumed to perform; or, as said in Travis v. Milne, that a subrights of the parties interested in the estate stantial impediment to the prosecution by the against the surviving partner exists."

Travis v. Milne, 9 Hare, 141; Hersey v. Veazie, Staunton v. Carron Co., 23 L. & Eq., 315; 11 Shep., 1; Colquitt v. Howard, 11 Ga., 556.

The Cleveland Bank has betrayed no purpose These cases afford no support to this suit. to abandon its corporate duty. The interests and obligations of the Directors coincide to support its pretensions. There is no supineness in their past conduct, nor indifference to the existing peril. The evidence, at the most, convicts them only cf a present disinclination to commence suits, which were likely to be unproductive, at the request of the shareholder.

The answer shows that the taxes for 1852 had not been recovered by the State, but had been retaken by an assignee of the Bank. Nor does the correspondence show that the Directors had decided to abandon the contest. The case here does not at all fulfill the conditions on which the interposition of a shareholder is allowable. Elmslie v. McAulay, 3 Bro. C. C.. 624, 1 Phil., 790; Law v. Law, 1 Coll., 41; Walker v. Trott, 4 Ed. Ch., 38.

But the evidence does not allow me to conclude that any impediment whatever existed to a suit in the name of the Corporation, from any disposition of the Directors to resist the claims of the State. Their protest appears at every successive stage of the action of the fiscal officers. This suit is evidently maintained with their consent; there has been no appearance either by the Directors or the Corporation, but they abide the case of the stockholder. The decree is for the benefit of the Corporation. The question then is, can a corporation belonging to a state, and whose officers are citizens, upon some hope or assurance that the opinions of the courts of the United States are more fa vorable to their pretensions, by any combination, contrivance, or agreement with a non-resident shareholder, devolve upon him the right to seek for the redress of corporate grievances, which are the subjects of equitable cognizance in the courts of the United States by a suit in his own name. In my opinion, there should be but one answer to the question.

I come now to the merits of the case made by the bill.

In the suit of the Piqua Bank v. Knoop, 16 How., 369, I gave the opinion that the Act of February, 1845, did not contain a contract obligatory between the State of Ohio and the banking corporations which might be originated by it, in reference to the rule of taxation to be applied to their capital or business. That the Act imposed no limit upon the power of the General Assembly of the State, but that the rate of taxation established in that Act was al terable at their pleasure. To that opinion I now adhere.

limitation of time imposed upon the corporate exisence of the banks. It would not affect the proposition if the charters were for a century, or in perpetuity. Nor does the proposition derive strength from the fact that the Statute applies only to banking corporations, or corporations confined to a single form of commercial dealing. The proposition would have had the same degree of accuracy if the Act had been universal, applicable to all private corporations, whether for manufactures, trades, intercourse, mining, morals, or religion. It is said by a competent authority, that in the State of Mas sachusetts there are near twenty-five hundred trading corporations, and that more than seven tenths of the real and personal property of that State is held by corporations. The proportion between the property of corporations and individuals is greater there than in other states, but the property held by corporations in other states is large enough to awaken the most earnest attention. A concession of the kind contained in this Act, by a careless or a corrupt Legislaiure, for a term or in perpetuity, would impair in many states their resources to an alarming extent.

Writers upon the condition of the Turkish Empire say, that three fourths of the landed property of the Empire is held in mortmain, as vakuf by mosques or charitable institutions, for their own use, or in trust for their owners. This property ceases to coniribute to the public revenues, except in a specific form of certain objectionable taxes of produce, and is inaliena ble If held in trust, it is exempt from forced sales and confiscations, and, on the death of the owner without children, passes to the mosque or other charitable trustee. In that Empire, the ecclesiastical and judicial is the dominant interest, for the Ulemas are both priests and lawyers, just as the corporate moneyed interest is dominant in Ohio, and in either country that interest claims exemption from the usual burdens and ordinary legislation of the State. The judgment of this court would establish the permanent existence of such an incubus upon the resources and growth of that country, if that interest should have taken their privileges in the form of a contract, and had such a constitution as ours. Yet the first step for the regeneration of Turkey, according to the wisest statesmanship, is to abolish the vakuf.

But assuming a contract to be collected from the indeterminate expressions of the 60th sec tion of the Act, as interpreted by its general objects and the supposed policy of the State, the question is presented, what consequence did the reconstitution of the political system of the Bentham, treating upon constitutional proState by the people in 1851, and their direction visions in favor of contracts, says: "If all to the Legislature to adopt equality as the rule contracts were to be observed, all misdeeds of assessment of taxes upon corporate property, would be to be committed, for there is no misaccomplish to the claims of these corporations? deed the committal of which may not be made Certainly no greater question-none involv- the subject of a contract; and to establish in fa ing a more elemental or important principle-vor of themselves, or of any other person or perhas ever been submitted to a judicial tribunal. It involves the operation and efficiency of the fundamental principles on which the American constitutions have been supposed to rest. The proposition of this confederacy of some fifty banking corporations, having one fortieth of the property of the State, is, that by the law of their organization for the whole term of their corporate being, there exists no power in the government nor people of Ohio to impair the concessions contained in the Act of 1845, particularly that determining the amount of their contribution to the public revenue. This proposition does not depend for its truth upon the

sons, an absolute despotism, a set of legislators would have no more to do than to enter into any engagement-say with a foreign despot, say with a member of their own community-for this purpose." And were this to happen, should it be that a state of this Union had become the victim of vicious legislation, its property alienated, its powers of taxation renounced in favor of chartered associations, and the resources of the body politic cut off, what remedy have the people against the misgovernment? Under the doctrines of this court none is to be found in the government, and none exists in the inher. ent powers of the people, if the wrong has

taken the form of a contract. The most de- | dispute, that the property possessed by ecclesiliberate and solemn acts of the people would astical or religious foundations belongs to the not serve to redress the injustice, and the over- general category of property of the Church, and reaching speculator upon the facility or corrup- constitutes a true and proper portion of its pattion of their Legislature would be protected by rimony. In consequence whereof, as the propthe powers of this court in the profits of his erty of the Church is inviolable, so are the posbargain. Where would the people find a rem sessions of such foundations." Nor was the docedy? Let the case before us form an illustra trine of inviolableness of the contracts foreign tion. Congress cannot limit the term nor abol to these controversies. The sagacious and farish the privileges of these corporations; they sighted members of the ecclesiastical interests are corporations of Ohio, and beyond her limits fortified themselves with concordats, and these they have no legal existence; they live in the concordats were affirmed to be contracts," contemplation of her laws and dwell in the and, like these, entail obligations;" and "if place of their creation. 13 Pet., 512; 16 How., the bond of a bargain is to be respected in pri314. Nor can Congress enlarge the subjects vate life," so they declared "it is sacred and for state taxation, nor interfere in the support inviolable in the life of states." A slight change of the state government. They could not em- of expression will demonstrate that the principower the State to collect taxes from these cor- ple of corporate policy, the dictate of corporate porations. Were the resources of the State op ambition, which has predominated in the conwith pressed the burden of a Turkish vakuf, tests in Europe, leading to desolating wars, is the Congress could not afford relief. same which this court is required to sanction in favor of corporations in the United States. The allocution of the Ohio banks to this court may be thus stated: "That the charters of incorporation granted by the state governments are in their essence and nature contracts,' which entail obligations;' that consequently, they are finally under the guardianship and protection of the judiciary establishment of the United States; and no Acts of the State Legislature which conferred them, in whatever touches their existence, methods of proceeding, or corporate privilege, are binding on them; that, as the state Legislatures are agents of the people, whatever they have done in these respects is obligatory upon them, and irrevocable by them, in any form of their action, or in the exercise of any of their sovereign authority; and as the judiciary establishment of the Union is charged with the duty of holding the States and people to their limited orbits, and to afford redress for violated contracts, and to prevent serious resulting damage; and as these corporations cannot sue in the courts of the United States, it is the duty of the court to suffer the corporate wrongs to be redressed in the suit and at the solicitation of any of their stockholders who can appear there-for the state of opinion in the state courts will not allow the hope of redress from them.

The faculties of the Judicial Department are even more fatal to the State than the impotence of Congress. The courts cannot look to the corruption, the blindness, nor mischiev ous effects of state legislation, to determine its binding operation. Fletcher v. Peck, 6 Cranch, 87. The court, therefore, becomes the patron of such legislation, by furnishing motives of incalculable power to the corporations to stimulate it, and affording stability and security to the successful effort. Where, then, is the rem edy for the people? They have none in their state government nor in themselves, and the federal government is enlisted by their adversary. It may be that an amendment of the Constitution of the United States, by the pro posal of two thirds of Congress and the ratifi cation of the Legislatures of three fourths of the States, might enable the people of Ohio to assess taxes for the support of their government, upon terms of equality among her citi

zens.

The first observation to be made upon this is, that these extraordinary pretensions of corporations are not unfamiliar to an inquirer into their nature and history. The steady aim of the most thoroughly organized and powerful of the corporate establishments of Europe has ever been to place themselves under the protection of an external authority, superior to the gov ernment and people where they dwell-an au thority sufficiently powerful to shield them from responsibility and to secure their privileges from question. I do not refer to the claim of kings to passive obedience under a divine title. Ecclesiastical corporations, acknowledging the supremacy of the Pope, afford a case parallel to that before us. I find their principles com pendiously declared in an allocution of a min ister of Rome to the Court of Sardinia, in ref erence to taxes on church property there. I find that religious corporations, forming a portion of the ecclesiastical family at large, are, by their very nature, under the guardianship and au thority of the Church; and consequently, no measure or laws can be adopted with respect to them, except by the spiritual power, or through its agency, especially in what touches their existence or their conduct in the institutions to which they respectively belong, nor can any other rule be recognized, even in matters that concern their property. It is, in truth, beyond

The allowance of this plea interposes this court between these corporations and the gov ernment and people of Ohio, to which they owe their existence, and by whose laws they derive all their faculties. It will establish on the soil of every State a caste made up of combinations of men for the most part under the most favorable conditions in society, who will habitually look beyond the institutions and the authorities of the State to the central government for the strength and support necessary to maintain them in the enjoyment of their special privileges and exemptions. The consequence will be a new element of alienation and discord between the different classes of society, and the introduction of a fresh cause of disturbance in our distracted political and social system. In the end, the doctrine of this decision may lead to a violent overturn of the whole system of corporate combinations.

Having thus examined the proportions of the doctrine contained in the judgment of the court. I oppose to it a deliberate and earnest dissent.