Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/537

CHAP. VIII.] CORPORATION AND STATE. [§ 505. § 505. Having considered the relations between the state and the corporation, a few words may be said as to Relations the relations more particularly subsisting between between 1 • ° the state the state and (a) the shareholders, (b) the directors and the and other officers and agents of the corporation, and interested 8 (c) the creditors of the corporation. pirate C ° r " The contract with the state, when there is one, is enterprise, between the state and the original corporators, who incorporate themselves by accepting the constitution of the corporation. Their incorporation enables them, within the scope of the cor- porate powers, to act as a body corporate, and places their rights and interests in the hands of a majority of their own number and of the corporate agents. Accordingly, it is the province of the body corporate or corporate management, to protect the interests of all the shareholders against the conse- quences of unconstitutional action on the part of the state. Nevertheless, when the corporation fails to act in defence of corporate interests, a shareholder may. 1 As the corporation, however, cannot sue the state directly to compel it to repeal an unconstitutional law, nor to obtain damages from the state for the effects of such a law, 2 it is usually in the legal relations between the shareholders and other persons in any way inter- ested in the corporate enterprise, that the consequences of un- constitutional legislation show themselves. 3 As, for instance, questions arising under a law imposing increased personal lia- bility upon shareholders would come up between shareholders and creditors endeavoring to enforce this improperly increased valid contracts ; and that upon its dissolution its property vested in its trustees (under the statutory pro- visions for winding up). People v. O'Brien, 111 N. Y. 1. So in the case of forfeiture of franchises for forming an illegal trust, the cor- porate property after payment of debts belongs to the shareholders. Havemeyer v. Superior Court, 84 Cal. 327. See, also, § 437. 1 Where the legislature of a state has repealed the charter of a street railroad company, and transferred its franchises and track to another, and the corporation refuses to seek a remedy in the courts, a stock- holder of the company will have a standing in a court of equity to ob- tain an injunction on the ground that the repealing statute impairs the obligation of a contract. Green- wood v. Freight Company, 105 U. S. 13. See §§ 138 et seq. 2 See § 462. 3 A statute to the effect that all dividends not claimed within five years shall be paid to a university, 517