Fietsam v. Hay

• Decision Date: 28 September 1887
• Citation: Fietsam v. Hay , 122 Ill. 293, 13 N.E. 501 (Ill. 1887)
• Parties: FIETSAM, Assignee, etc., v. HAY and another.
• Court: Illinois Supreme Court

122 Ill. 293

13 N.E. 501

FIETSAM, Assignee, etc.,

v.HAY and another.

Supreme Court of Illinois.

September 28, 1887.

Appeal from circuit court, St. Clair county; B. H. CANBY, Judge.

F. A. McConaughy, for appellant.

James M. Hay, for appellees.

MULKEY, J.

The People's Bank of Belleville, incorporated under a special act of the legislature approved and in force March 27, 1869, having become insolvent on the seventeenth of April, 1878, made a general assignment of all its property and effects for the benefit of creditors. The assignees presented a petition to the county court of St. Clair county, at its March term, 1887, for leave to sell ‘all the rights, privileges, powers, and immunities which were granted by the said act incorporating said bank.’ The judge of the county court being interested in the result of the proceeding, the venue was changed to the circuit court of St. Clair county, where, upon due consideration of the petition, that court entered an order dismissing the same. The present appeal is from the order of dismissal. The correctness of the decision of the circuit court depends entirely upon whether the title to the franchise created and conferred by the bank charter passed, as an asset of the bank, to the assignee under the assignment. That its language is sufficiently comprehensive and adequate to pass the franchise to the assignee, if, as matter of law, the bank could transfer it at all, we have no doubt. This is not questioned. The question, therefore, is whether a corporate franchise, in the absence of statutory authority, is in law capable of being assigned or transferred. Differently put, the question as formulated by the parties themselves is: ‘Did the franchise of the said bank pass with the deed of assignment to the assignee as a salable asset of the said bank?’

The word ‘franchise’ is often used in the sense of privileges generally, but in its more appropriate and legal sense the term is confined to such rights and privileges and are conferred upon corporate bodies by legislative grant. It is in the latter sense alone the word is now to be considered. The franchise proposed to be sold is a corporate franchise, and the artificial body or political entity to which it pertains is what is known to the law as an aggregate corporation. Such a corporation has been well defined to be ‘an artificial being, created by law, and composed of individuals, who subsist as a body politic under a special denomination, with the capacity of perpetual succession, and of acting within the scope of its charter’ as a natural person. Now, a franchise is nothing more than the right or privilege of being a corporation, and of doing such things, and such things only, as are authorized by the corporation's charter. This right of a body of men to be and act as an artificial person, without, as a general rule, incurring individual responsibility, is declared by Blackstone to be ‘a royal privilege or branch of the king's prerogative, subsisting in the hands of a subject.’ 2 Bl. Comm. 37. Such right or franchise is defined by Bouvier to be ‘a certain privilege conferred by grant from government, and vested in individuals.’ 1 Bouv. Law Dict. 545. Now, it is clear from these definitions, and from the very nature of a corporation, that a franchise, or the right to be and act as an artificial body, vests in the individuals who cpmpose the corporation, and not in the corporation itself. This fact, we think, is not without significance in reaching a conclusion upon the main question to be determined, outside of the numerous authorities bearing directly on the subject. It will be kept in mind that the corporation body, for purposes of ownership, and, indeed, for most purposes, has a distinct...