A corporation was formed in the State of New York to carry on a dental business, to hire offices and engage the services of licensed dentists. Thousands of . dollars were invested in equipment and advertising. A law was then passed that none but duly licensed dentists could advertise to practise dentistry. This was construed by the courts to apply to corporations and to prevent corporations from advertising since they could not take the examinations and therefore could not get the prescribed license. But, argued the directors, how about our charter which gives us specifi cally the right to do exactly what we are doing? The court disposed of this argument by saying that if the law did in effect repeal the corporation's charter the law merely exercised a privilege of the state vouch safed to the state by every corporate charter, thru the constitutional provision above mentioned. Thus has been lost much valuable good-will in dental, medi cal and legal corporations.
3. Corporate powers.—The reader will object that to show such leniency toward one party to a contract is both unfair and illogical. The state enters into a contract with certain people, yet it may do as it pleases with the contract, may even repudiate any or all pro visions. But allowances must be made for the fact that one of the parties is the state, without whose power all contracts would be hollow words. The contract of the state is, in effect, that the persons conducting the corporation shall have certain rights and privi leges; that these rights and privileges shall be pro tected against third persons, and that in collateral matters arising between the state and the corpora tions these rights and privileges shall be recognized as a basis for negotiation.
These rights and powers may be divided into three classes : implied, express and incidgatal.
_ 4. Implied powers.—The implied powers of a cor poration are those powers which every corporation has by virtue of its corporate existence. It is not neces sary that they should be expressly stated in the cor porate charter. Among them is the power to sue and be sued in the corporate name. Partnerships, it will be recalled, sue and are sued in the names of the individual partners. A corporation has always the right to have a corporate seal, which follows as a natural incident of the right to use a distinct cor porate name. More important, however, is the so called right of continuous succession. By virtue of this povver the members may exchange their interest in the corporation without dissolving it, nor is the corporation dissolved by the death of a member.
Right here it is well to point out an important dif ference between the partnership and the corporation. In the partnersllip_each member is a o-eneral acrent of The business, and this is the reason why partnerships are dissolved when a partner dies. The survivors. should not be compelled to accept the decedent's heirs as their general agents. In the corporation, how ever, each member is not a general agent. The gen eral agents are the elected directors acting, not separately, but as a unit. Continuous succession, therefore, is possible and not injurious, since the new members of a corporation cannot deal with third per sons on behalf of the corporation but can merely help to elect the directors.
Another implied power is the power to hold such property as is necessary to carry out the express pur poses of the corporation. In England this includes the right to hold stock in other companies. In this country the power is implied in insurance coinpanies and other financial institutions that could not find ade quate means of investing their funds if they were not permitted to hold stock of other companies. For the ordinary corporation the power to hold stocks is an express power that must be claimed in the corporate charter. In a few states special rules prohibit cor porations from holding real estate. Finally the cor poration has general power to make necessary contracts in the exercise of its express powers.
5. Express powers of corporations.—The charter Nvhich the corporation obtains from the state confers the right to conduct a certain kind or kinds of busi ness. Thus the corporation may be given the right to rtm a railroad, to build locomotives, to buy and sell general merchandise and the like. The specific powers thus conferred are termed the express powers of the corporation. In most states corporation's may be formed to early on any number of separate lines of work, but in a few states like Pennsylvania, the ex press powers are restricted to one general line. In many jurisdictions, ordinary business corporations are not permitted to include any and every power that comes into the mind of the projectors. Thus in New York, corporations cannot engage in legal work. Corporations doing a banking business or a so-called public service business, such as electric lighting and railway transportation, are compelled to incorporate under special statutes that provide -special methods of regulation by the state.