Corporations Can Be Criminals, Too

WASHINGTON -- A corporation can't be handcuffed and hauled off to jail, but it can be charged with a crime.

A company can even face an execution of sorts, if the charges lead to an overwhelming fine or bad publicity that destroys the business.

Lawyers for Arthur Andersen, the top-drawer accounting firm charged with obstructing justice in the Enron case, have argued that by indicting the company, the Justice Department is imposing the death penalty.

As I understand it, Arthur Anderson is a partnership, and as such is quite different from a corporation.

CORPORATION

CORPORATION - A fictitious legal entity/person which has rights and duties independent of the rights and duties of real persons and which is legally authorized to act in its own name through duly appointed agents. It is owned by shareholders. Usually created under the authority of state law.
An aggregate corporation is an ideal body, created by law, composed of individuals united under a common name, the members of which succeed each other, so that the body continues the same notwithstanding the changes of the individuals who compose it, and which for certain purposes is considered as a natural person.
A corporation, or body politic, or body incorporate, is a collection of many; individuals united in one body, under a special denomination, having perpetual succession under an artificial form, and vested by the policy of the law with a capacity of acting in several respects as an individual, particularly of taking and granting property, contracting obligations and of suing and being sued; of enjoying privileges and immunities in common and of exercising a variety of political rights, more or less extensive, according to the design of its institution or the powers conferred upon it, either at the time of its creation or at any subsequent period of its existence.
In the case of Dartmouth College against Woodward, 4 Wheat. Rep. 626, Chief Justice Marshall describes a corporation to be 'an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law,' continues the judge, 'it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created. Among the most important are immortality, and if the expression may be allowed, individuality properties by which a perpetual succession of many persons are considered, as the same, and may act as the single individual, They enable a corporation to manage its own affairs, and to hold property without the perplexing intricacies, the hazardous and endless necessity of perpetual conveyance for the purpose of transmitting it from hand to hand. It is chiefly for the purpose of clothing bodies of men, in succession, with these qualities and capacities, that corporations were invented, and are in use.'
The words corporation and incorporation are frequently confounded, particularly in the old books. The distinction between them is, however, obvious; the one is the institution itself, the other the act by which the institution is created.
Corporations are divided into public and private.
Public corporations, which are also called political and sometimes municipal corporations, are those which have for their object the government of a portion of the state and although in such case it involves some private interests, yet, as it is endowed with a portion of political power, the term public has been deemed appropriate.
Another class of public corporations are those which are founded for public, not for political or municipal purposes, and the whole interest in which belongs to the government. The Bank of Philadelphia for example, if the whole stock belonged exclusively to the government, would be a public corporation; but inasmuch as there are other owners of the stock, it is a private corporation.
Nations or state are denominated by publicists, bodies politic, and are said to have their affairs and interests and to deliberate and resolve in common. They thus become as moral persons, having an understanding and will peculiar to themselves, and are susceptible of obligations and laws. In this extensive sense the United States may be termed a corporation; and so may each state singly.
Private Corporations. In the popular meaning of the term nearly every corporation is public, inasmuch as they are created for the public benefit; but if the whole interest does not belong to the government, or if the corporation is not created for the administration of political or municipal power, the corporation is private. A bank, for instance, may be created by the government for its own uses; but if the stock is owned by private persons it is a private corporation, although it is created by the government and its operations partake of a private nature. The rule is the same in the case of canal, bridge, turnpike, insurance companies, and the like. Charitable or literary corporations, founded by private benefaction, are in point of law private corporations, though dedicated to public charity, or for the general promotion of learning.
Private corporations are divided into ecclesiastical and lay.
Ecclesiastical corporations in the United States are commonly called religious corporations they are created to enable religious societies to manage with more facility and advantage the temporalities belonging to the church or congregation.
Lay corporations are divided into civil and eleemosynary. Civil corporations are created for an infinite variety of temporal purposes, such as affording facilities for obtaining loans of money; the making of canals, turnpike roads and the like. And also such as are established for the advancement of learning.
Eleemosynary corporations are such as are instituted upon a principle of charity, their object being the perpetual distribution of the bounty of the founder of them to such persons as he has directed. Of this kind are hospitals for the relief of the impotent, indigent and sick or deaf and dumb.
Corporations, considered in another point of view, are either sole or agregate.
A sole corporation, as its name implies, consists of only one person to whom and his successors belongs that legal perpetuity, the enjoyment of which is denied to all natural persons. Those corporations are not common in the United States. In those states, however, where the religious establishment of the church of England was adopted when they were colonies, together with the common law on that subject, the minister of the parish was seised of the freehold, as persona ecclesiae, in the same manner as in England; and the right of his successors to the freehold being thus established was not destroyed by the abolition of the regal government, nor can it be divested even by an act of the state legislature.
A sole corporation cannot take personal property in succession; its corporate capacity of taking property is confined altogether to real estate.
An aggregate corporation consists of several persons who are united in one society, which is continued by a succession of members. Of this kind are the mayor or commonalty of a city; the heads and fellows of a college; the members of trading companies, and the like.

Partnership

PARTNERSHIP - An association of two or more people who agree to share in the profits and losses of a business venture. The members of a partnership are called partners.

Articles Of Partnership

ARTICLES OF PARTNERSHIP - The name given to an instrument of writing by which the parties enter into a partnership, upon the conditions therein mentioned. This instrument generally contains certain provisions which it is the object here to point out.
But before proceeding more particularly to the consideration of the subject, it will be proper to observe that sometimes preliminary agreements to enter into a partnership are formed, and that questions, not unfrequently, arise as to their effects. These are not partnerships, but agreements to enter into partnership at a future time. When such an agreement has been broken, the parties may apply for redress to a court of law, where damages will be given, as a compensation. Application is sometimes made to courts of equity for their more efficient aid to compel a specific performance. In general these courts will not entertain bills for specific performance of such preliminary contracts; but in order to suppress frauds, or manifestly mischievous consequences, they will compel such performance. When, however, the partnership may be immediately dissolved, it seems the contract cannot be specifically enforced.
It is proper to premise that under each particular head, it is intended briefly to examine the decisions which have been made in relation to it.
The principal parts of articles of partnership are here enumerated:
The Names Of The Contracting Parties. These should all be severally set out;
The agreement that the parties actually by the instrument enter into partnership, and care must be taken to distinguish this agreement from a covenant to enter into partnership at a future time;
The Commencement Of The Partnership. This ought always to be expressly provided for. When no other time is fixed by it, the commencement will take place from the date of the instrument;
The Duration Of The Partnership. This may be for life or for a specific period of time; partnerships may be conditional or indefinite in their duration, or for a single adventure or dealing, this period of duration is either express or implied, but it will not be presumed to be beyond life. When a term is fixed, it is presumed to endure until that period has elapsed; and, when no term is fixed, for the life of the parties, unless sooner dissolved by the acts of one of them, by mutual consent, or operation of law.
A stipulation may lawfully be introduced for the continuance of the partnership after the death of one of the parties, either by his executors or administrators, or for the admission of one or more of his children into the concern. Sometimes this clause provides, that the interest of the partner shall go to such persons, as be shall by his last will name and appoint, and for want of appointment to such persons as are there named. In these cases it seems that the executors or administrators have an option to continue the partnership or not.
When the duration of the partnership has been fixed by the articles, and the partnership expires by mere effluxion of time, and, after such determination it is carried on by the partners without any new agreement, in the absence of all circumstances which may lead as to the true intent of the partners, the partnership will not, in general, be deemed one for a definite period; but in other respects, the old articles of the expired partnership are to be deemed adopted, by implication as the basis of the new partnership during its continuance.
The business to be carried on and the place where it is to be conducted. This clause ought to be very particularly written, as courts of equity will grant an injunction when one or more of the partners attempt, against the wishes of one or more of them, to extend such busiress beyond the provision contained in the articles.
The name of the firm, as for example, John Doe and Company, ought to be ascertained. The members of the partnership are required to use the name thus agreed upon, and a departure from it will make them individually liable to third persons or to their partners, in particular cases.
A provision is not unfrequently inserted that the business shall be managed and administered by a particular partner, or that one of its departments shall be under his special care. In this case, courts of equity will protect such partner in his rights.
Sometimes a provision is introduced that a majority of the partners shall have the management of the affairs of the partnership. This is requisite, particularly when the associates are numerous.
A provision should be inserted as to the manner of furnishing the capital or stock of the partnership. When a partner is required to furnish his proportion of the stock at stated periods, or pay by installments, he will, where there are no stipulutions to the contrary, be considered a debtor to the firm. Sometimes a provision is inserted that real estate, and fixtures belonging to the firm shall be considered, as between the partners, not as partnership but as several property. In cases of bankruptcy this property will be treated as the separate property of the partners.
A provision for the apportionment of the profits a and losses among the partners should be introduced. In the absence of all proof, and controlling circumstances, the partners are to share in both equally, although one may have furnished all the capital, and the other only his skill.
Sometimes a stipulation for an annual account of the Property of the partnership whether in possession or in action, and of the debts due by partnership is inserted. These accounts when settled are at least prima facie evidence of the facts they contain.
A provision is frequently introduced forbidding any one partner to carry on any other business. This should be provided for, though there is an implied provision in every partnership that no partner shall carry. on any separate business inconsistent or contrary to the true interest of the partnership.
When the partners are numerous, a provision is often made for the expulsion of a partner for gross misconduct, for insolvency, bankruptcy, or other causes particularly enumerated. This provision will govern when the case occurs.
This instrument should always contain a provision for winding up the business. This is generally provided for in one of three modes: first, by turning all the assets into cash, and, after paying all the liabilities of the partnership, dividing such money in proportion to the several interests of the parties; secondly, by providing that one or more of the partners shall be entitled to purchase the shares of the others at a valuation; thirdly, that all the property of partnership shall be appraised, and that after paying the partnership debts, it shall be divided in the proper proportions. The first of these modes is adopted by courts of equity in the absence of express stipulations.
It is not unusual to insert in these articles, a provision that in case of disputes the matter shall be submitted to arbitration. This clause seems nugatory, for no action will lie for a breach of it, as that would deprive the courts of their jurisdiction, which the parties cannot do.
The articles should be dated, and executed by the parties. It is not requisite that the instrument, should be under seal.

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