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it was incorporated, and that whenever it does so it may be sued there without the aid of local statute law 1. If therefore it is a true consequence of the fiction theory that outside the boundaries of the sovereignty which created it the personality of a corporation cannot exist, and therefore the corporation cannot be domiciled, in holding that theory we must be content to be at variance with common opinion and courts of law, which persist in believing that the personality of the corporation can exist in a very real sense outside those boundaries, that it can be domiciled and resident there, and subject in consequence to the jurisdiction of the local courts, just as a natural person can.

But it is questionable whether this geographical manner of considering the problem of the status of a migrating corporation is not a misleading manner. A truer statement of the problem is from the point of view rather of metaphysics than geography. The problem has usually been discussed in connexion with questions of jurisdiction, and for that reason the geographical aspect of the question has been pushed into the foreground. The physical absence of a corporation from the scene of its activities in a foreign state is material in considering the question whether the courts of that state can exercise jurisdiction over the corporation; but it is not material in considering another and a more fundamental question, whether the fictitious personality which is conceded to à corporation by one state can become in another the subject' of any legal rights and duties at all. In the special case of a contract, for instance, the first question is, how can the contract of the foreign corporation be enforced ? the second and the more fundamental is, can the foreign corporation make a valid contract at all? The law of agency, it is said, will help us to answer the first question, in which we are concerned with jurisdiction : but it will not help us to answer the second, in which we are concerned with power and capacity; for if a principal has no power or capacity in law to perform an act himself, he cannot in general perform it by an agent. An agent can cross a physical barrier, but not one which exists in legal theory.

The theories of fiction and concession lead, it is said, to the conclusion that a corporation can have no legal existence outside the boundaries of the state which created it. The matter would be better expressed by saying that they lead to the conclusion that a corporation, which exists only in the contemplation of some law, can have no legal existence when that law is not contemplating it. Of the two expressions the latter contains the more fundamental


1 6 Thomp., Corp., s. 7989.


truth and leads more directly to a clear view of the effect which these theories have upon the problem of the status of a foreign corporation. "The character of a juridical person,' says Savigny, in a classical expression of the theory of concession, 'cannot be asserted by the mere will of several members acting together or of an individual founder. But for this purpose the sanction of the sovereign authority of the state is also necessary?' What is conceded by the sovereign authority of the state is, not leave to the corporation and the public to indulge an instinctive desire to regard the group which is to be incorporated as having a fictitious personality, but that the sovereign authority of the state should exercise itself to maintain a personality in the group. The fictitious personality is a fiction existing in contemplation, not of public opinion, but of law. It is not only created by an act, but it is also upheld by an enduring state of the will of the sovereign authority, and apart from that will it has no objective existence. One whose mind is to be held by the fiction theory must not think of the fictitious personality of the corporation as a sort of ghost of a natural person. 'A corporation has no soul, because it is created by the king and not by God;' and what the king creates, like the emperor's new clothes, has no existence apart from the fact that he, and those who have to think his thoughts, think of it as existing. It is possible to say of the personality of a corporation that, although it does not come into existence until there has been a concession from the sovereign authority, yet once the concession has been made, it has an objective existence of its own, apart from the continued exercise of the will of the sovereign authority; and this is a view which has found favour in France 2. But in that case it is not a personality which is conceded, but recognition of a personality, and concession is thus reduced to a formality akin to registration in the sense in which a motor-car is registered, and the fiction theory is implicitly abandoned in favour of a view which is indistinguishable from the realistic view, that within its own sphere and for its own purposes the artificial identity of a corporation is just as real as any other identity 3.?

When it is said that the personality of a corporation is fictitious and exists only in the contemplation of law, the natural me ing and the purport of the words is that the personality is not only created by an act, but also exists in an enduring state of the will of the sovereign authority of the State in which the corporation came into existence. But what then is to become of that personality when it seeks to become the subject of rights and duties upheld by the authority of another state? For the sake of illustration one may consider the case of a contract made by an English company through its local manager in France, to be performed in France. The incidents of the contract will in general be regulated by the principles of the French law of contracts, but even if owing to special circumstances they are regulated by the principles of the law of contract of England or of some other state, the contract is upheld in existence by the sovereign authority of France. It consists, according to the usual analysis, of an agreement and a resulting obligation. The nature of the obligation is that it is a legal bond whereby constraint is laid on a person. In the particular instance, the legal bond is imposed by the sovereign authority of France. The parties to the contract must therefore be persons upon whom the sovereign authority of France is capable of imposing its bond, or there can be no valid contract. They must, that is, be persons in contemplation of French law. A natural person is under any circumstances capable of serving as the object of the French legal bond. Even if he is an English subject, domiciled and resident in England, and contracting in France by an agent only, yet he has his natural self upon which the obligation can be imposed and which enables the law of France to contemplate him as having capacity to contract. With a corporation it is otherwise. The individual man,' says Savigny, 'clearly

i Savigny, System, s. 89. ? Mestre, Les Personnes morales, p. 170.

3 Pollock, op. cit., p. 114.

• carries with him his claim to jural capacity in his corporeal appearance. . . By this appearance every one else knows that he has to respect the personal rights of such a being, and every judge that he has to preserve those rights for him. But if now the natural jural capacity of the individual man be transferred by a fiction to an ideal subject it completely lacks that natural confirmation 1.' The English corporation in fact lacks just that feature, a natural self, which is essential in order to enable it to play the part of a natural person in France. Its personality is a fiction of English law. Apart from a state of the will of the sovereign authority of England, in which is its only existence, it is nothing; and the sovereign authority of France cannot contemplate a nonentity as exercising a capacity, or constrain it with a legal bond. It has been said that this feature in the nature of the personality of a corporation must absolutely prevent it from becoming the subject' of rights and duties upheld by the law of a state other than that in wbich it was incorporated. At one time the Court of Queen's Bench of Upper Canada was prepared to hold that a corporation could not enter into any contract or transact any business at all in its corporate capacity in a foreign

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state 1. The logic of facts, however, has long made that simple solution of the problem impossible. In the courts of this country the right of a foreign corporation to sue upon its contracts in its corporate name has been beyond question since the case of The Dutch West India Company v. Van Moses?, decided in 1734. Contracts made by English corporations in France, to return to the instance already mentioned, are in fact recognized and enforced as valid contracts under the Anglo-French convention of 1862. The sovereign authority of France does in fact impose its bond upon the English corporation. But then the corporation must be becoming a fictitious person, not only in contemplation of English law, but of French law also ; and just as its original fictitious personality had no existence except as contemplated by English law, so its fictitious personality in contemplation of French law has no existence except as contemplated by French law. There is no real objective element in the fictitious personality which can pass from the contemplation of one law to the contemplation of the other and preserve its identity ; and the personality in contemplation of the French law must therefore have a different identity from that contemplated by English law. In regulating the character of the fresh personality French law applies the principles of the English law of corporations. The fresh personality is therefore an exact reproduction of the original personality. Nevertheless it is not identical with it, any more than one man's idea of a cube is identical with another man's idea of a cube, although both are ideas of the same abstraction.

The principle of law by which a corporation is enabled to discharge its functions in a foreign state is generally said to be that the corporation is recognized by the foreign state, and that the recognition rests upon international comity. In this phrase the word comity tells us only about the motives for the recognition. The phrase is therefore incomplete as it stands, since it tells us that the corporation is recognized, without telling us what it is recognized to be. The recognition intended is no doubt recognition as a legal personality, for certain purposes, in contemplation of the law of the foreign state. But from what has already been said it seems impossible, if that personality is to be regarded as fictitious, to find any meaning for the phrase so construed unless 'recognize'is understood to mean much the same thing as 'reincorporate.' In order to maintain consistently the fiction theory, it seems that we must be prepared to hold that the recognition, no less than an act of formal reincorporation, is really the creation of a new and distinct personality. The foreign


1 Genesee Mutual Insurance Co. v. Westman, 8 U. C. Q. B. 487.

i Strange, 611.



corporation will not, by reason of the species of reincorporation usually called recognition, become similar in character to the domestic corporations of the state to which it migrates, because that state will in general apply to its constitution the principles of the law of corporations of the state in which it was first incorporated. But in a true sense it will be a domestic corporation of that state; and it is pot impossible that its position as a domestic corporation in this qualified sense should have a practical effect on the liabilities of its members, if, for example, the foreign state should seek to impose upon the corporation as a condition precedent to recognition liabilities inconsistent with its original charter .

Mr. Bigelow, in his learned annotations on Story's Conflict of Laws, argues that a foreign state has no more difficulty in recognizing in a literal sense the fictitious personality of a migrating corporation than it has in recognizing a contract, for instance, made by parties beyond its jurisdiction, who subsequently come within it. It might be said that just as in that case there are not two contracts, but the contract is the same whether it is recognized by the law of one state or of another, so in the case of a corporation there are not two fictitious personalities, but one. But the identity which is preserved by a contract under the circumstances is only partial. It contains a real and natural element, that of agreement, and this reality maintains its identity, as the real personality of a natural person does, whatever may be its circumstances. But the obligation which is imposed upon the agreement is created and upheld by some authority. When the parties migrate, the obligation imposed upon them is no longer an obligation of the law of the land in which the contract was made, but of the law of the land to which they migrate. The obligation, and therefore the contract also of which the obligation is an essential part, suffers thereby the same change of identity which the fictitious personality of a corporation suffers. It becomes an obligation created and upheld by the authority of the foreign state instead of the authority of the state in which it was first created ; although as in the case of a corporation, if in the particular case the foreign state applies to the contract the principles of the law of contract of the original state, the new identity may be an exact reproduction of the old. It is only the real element in the contract, that of agreement, that retains its identity, and can therefore be recognized in the literal sense by the foreign state. The

1 e. g. Risdon Iron Works v. Furness (1906] 1 K. B. 49 (noted on p. 122 above), where an attempt was made to impose upon the members of an English limited liability company, by means of a law of the State of California, liabilities inconsistent with the limitation contained in the Company's memorandum of association.

2 8th ed., p. 178.

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