Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/44

§ 34.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. III. which is nonsense. On the other hand, using the term corpo- ration in the second sense before referred to, 1 as meaning a body of men, to assert that the corporation owns the corporate funds is to make not a meaningless, but an incorrect assertion. The term ownership connotes an indefinite multitude of rights in respect of the thing owned, including the right to destroy it. This multitude of rights is not possessed by the corporators either singly or as a body corporate; 2 and, accordingly, with no propriety can they be said to own the corporate funds. § 34. The discussion of the legal relations respecting the cor- L j rela _ porate funds, i. e., the funds standing in the name of tions in re- the corporation, will constitute a large part of this spectofthe ' . ° l corporate volume. Ihe general outline is this : The state has f 1 the power or right to enforce the application of these funds to the objects of incorporation, at least so far as the pub- lic is interested in their attainment ; the shareholders have the right that these funds shall be applied to these objects ; and the creditors of the corporation have the right to prevent the diversion of these funds from the objects of incorporation to the injury of creditors. The result of the respective rights of these different classes of persons is that corporate property be- comes a fund set apart for the attainment of certain purposes from which it cannot be diverted without the consent of all whose legally protected interests would be injured by such di- version. It becomes a " Zweckvermogen," — fund devoted to an object — as a German writer, Brinz, has aptly termed it. 3 i See § 23. 2 Compare §§ 48-50. 3 It is not intended to assert that a corporation, in whatever sense the term be used, is technically, or in all respects substantially, a "trus- tee;" nor are corporate funds " trust funds" in the sense that there is a "direct and express trust attached to the property." See Graham v. Railroad Co., 102 U. S. 148, 160. In- deed, it is said by the highest au- thority that "a corporation" holds its property as absolutely as an in- dividual, lb., cited in Hollins v. Brierfield Coal Co., 150 U. S. 371, 24 382 et seq. The phrase " trust f und " undoubtedly is vague, and perhaps the courts might have chosen a bet- ter one. The object of the above analysis is to indicate how the term '• ownership " does not substantially and fully describe the legal situation of funds " belonging to a corpora- tion." In one case, with reference to certain circumstances, a court may speak of corporate property as a "trust fund;" in another, it may say that a corporation owns its prop- erty as absolutely as an individual. One should be careful in applying such general phrases under circum-