1. A corporation created by statute can exercise no powers and
has no rights, except such as are expressly given or necessarily
implied.
2. The Act of Congress approved May 24, 1870, 16 Stat. 137,
incorporating the National Savings Bank of the District of Columbia
does not authorize the creation of any corporate stock or capital.
The profits of the institution, after deducting the necessary
expenses of conducting it, inure wholly to the benefit of the
depositors in dividends or in a reserved surplus for their greater
security.
3. The bond filed pursuant to the eleventh section of that act
is in no sense capital owned by the bank or the corporators. It was
required solely to secure depositors and creditors.
This bill for an account and a distribution of profits was filed
by Fanny A. Huntington, administratrix, and Frank H. Gassaway,
administrator, of William S. Huntington, deceased, against the
National Savings Bank of the District of Columbia, a corporation
chartered by an Act of Congress approved May 24, 1870, 16 Stat.
137, the provisions of which are stated in the opinion of the
Court.
Shortly after the passage of the act, Huntington and fifteen
Page 96 U. S. 389
other persons named therein as corporators met, organized, and
elected the officers provided for. A bond in the penal sum of
$200,000, conditioned to pay and to satisfy to every depositor or
person entitled such sum as the party may be entitled to within
thirty days after such deposit shall be demanded was filed with the
clerk of the Supreme Court of the District of Columbia and approved
by one of the judges thereof. No capital was ever paid into the
bank by any of the corporators, nor has it ever issued any stock,
or divided shares.
The bill alleges that the bank has done a large business, and
sustained no considerable losses, and that therefore all its
profits, and the present large value of its capital stock and
franchises, belong to said sixteen corporators; that neither
Huntington in his lifetime nor the complainants since his death
ever received more than about $3,000 of dividends or profits of
said bank; that while other corporators have received larger
dividends, the rights of the complainants have not been recognized,
but that, on the contrary, the defendant pretends that upon the
death of Huntington all the rights in said business and the
franchises survived to the other corporators, and that, as
expressive of that view and to injure the complainants, the
defendant has long since the death of Huntington adopted a bylaw to
that effect; that the sureties on the bond are sureties of the
corporation and not of each other, and that the liability of each
and all of them continues until a new bond is demanded and given,
as required by law; and that the right of the surviving members to
choose the successor of a deceased member is an assumption wholly
unsupported by law. The bill then prays for an account of receipts,
expenditures, and profits since the organization of the bank,
together with the dividends paid to each corporator, and that the
franchises, property, and privileges be valued, and the defendant
decreed to pay to the complainants one-sixteenth part thereof.
The answer of the defendant alleges that the profits realized
were the property of the individuals who organized under the
charter, and that they accrued from the personal credit of the
several corporators and their attention to the use of the funds
deposited with the bank, and not from the employment of any
capital, but denies that said alleged profits, capital stock,
and
Page 96 U. S. 390
franchises are of great value. It then avers that no division of
profits was made among the corporators until after July, 1873, and
the death of Huntington, and that the amount so divided was
subsequently, in order to meet large losses incurred by reason of
the financial panic, refunded by the surviving corporators, but
that in the meantime the share of the profits due Huntington up to
the time of his death, in March, 1872, had been paid to the
complainants. It then denies any continuing interest of the
complainants in said profits after his death, and alleges that the
bylaw complained of was not adopted with a view of precluding any
rights which had accrued, but for the purpose of defining in the
future the relation of the members of the corporation.
The answer further admits that the corporators signing the bond
were sureties of the corporation and not of each other, and avers
that they did not execute it as corporators, and that it was not
capital, nor was its execution by the corporators required by the
charter or bylaws, nor was it the consideration of the relations of
the parties
inter sese, and that if it were, so far as
Huntington's estate is concerned, such consideration would have
failed in consequence of the insolvent condition of his estate and
its inability to respond in aid of the other corporators against
liabilities and claims.
A general replication was filed, but no proofs were taken. The
case was heard on the pleadings, and the bill dismissed. The
complainants then appealed to this court.
Page 96 U. S. 391
MR. JUSTICE STRONG delivered the opinion of the Court.
The bill of the complainants assumes that, as personal
representatives of William S. Huntington, deceased, they have an
equitable ownership of one-sixteenth part of the franchises,
property, and privileges of the defendant corporation, and that, as
such representatives, they are entitled to call for an account of
the profits made, and to demand payment to them of one-sixteenth
part of the value of the franchises and property as well as
profits. Whether this assumption is well founded or not -- whether
the estate of their intestate has any pecuniary interest in the
corporate franchise and property -- can be determined only after a
careful examination of the defendant's charter. The corporation was
created by an Act of Congress, approved May 24, 1870, entitled "An
Act to incorporate the National Union Savings Bank of the District
of Columbia." By that act, George H. Plant, William S. Huntington,
and twenty-one other persons named, and their successors, were
declared to be a body politic and corporate, under the corporate
name mentioned, having succession, capable of suing and being sued,
of having a common seal, and generally of doing and performing all
things relative to the object of the institution lawful for any
individual or body politic or corporate to do.
The object of the institution was declared in the fourth
section.
Page 96 U. S. 392
By that it was enacted that "the corporation may receive on
deposit, for the use and benefit of the depositors, all sums of
money offered for that purpose," and invest the same in the manner
therein described. The section then added:
"The income or interest of all deposits shall be divided among
the depositors, or their legal representatives, according to the
terms of interest stipulated."
The eighth section required an annual report to be made to
Congress, specifying the number of depositors, total number of
deposits, amount invested in bank stock and deposited in bank on
interest, amount secured by bank stock, amount invested in public
funds, loans on mortgage of real estate, loans on personal
securities, amount of cash on hand, total dividends of the year,
and annual expenses of the institution, all of which to be
certified and sworn to by the treasurer and five managers, or
more.
The ninth section required the books of the corporation, at all
times during their hours of business, to be kept open for the
inspection and examination of the Comptroller of the Currency or
depositors.
The eleventh section enacted that the corporation should file
with the clerk of the Supreme Court of the District a bond with
security, in the penal sum of $200,000, approved by one of the
judges of the court, conditioned to pay to every depositor or
person entitled such sum as the party may be entitled to, within
thirty days after such deposit shall be demanded; which bond might
be sued by any depositor or person entitled, after such demand and
refusal to pay.
Other provisions of the act require the officers of the
corporation to give security and take an oath for the faithful
discharge of their duties, and forbid any officer, director, or
committee charged with the duty of investing the deposits to borrow
any portion thereof or use the same except in paying the expenses
of the corporation.
These are all the provisions that have any relation to the
question we are considering. It is to be noticed that the charter
does not authorize the creation of any corporate stock or capital,
nor does it contemplate the existence of any other than the
deposits which may be made. The corporators are not
Page 96 U. S. 393
required to contribute anything. There are, of consequence, no
shareholders. Not a word is said in the instrument respecting any
dividends of capital, or even of profits, to others than the
depositors. Certainly no express authority is given to make
dividends to the corporators, and we discover nothing from which
such authority can be inferred. The dividends of which a return is
required by the eighth section to be made to Congress are evidently
those spoken of in the fourth, as made to the depositors. The rules
to be applied to the construction of corporate grants are well
known. A corporation created by statute can exercise no powers and
has no rights except such as are expressly given or necessarily
implied. In this case, so far from there being an implication of
any pecuniary interest in the corporators or any duty due to them
from the corporation, the contrary is expressly declared. The
institution having no capital stock, whatever liability, if any,
there may be to the corporators must be satisfied out of the
profits made from the deposits. But the charter, when conferring
the power to receive money on deposit, limits it to receiving for
"the use and benefit of the depositors" and directs how it may be
invested. It further declares that "the income or interest of all
deposits shall be divided among the depositors or their legal
representatives," not among the depositors and the corporators. It
is true the income or interest is to be divided among the
depositors "according to the terms of interest stipulated,"
implying perhaps that the dividend may be less than the interest
received by the corporation, but there is nothing in the charter
that indicates the excess is for the benefit of the corporators. It
is to provide for the necessary expenses of the institution
authorized to be paid, and perhaps to raise a contingent fund to
meet possible losses.
During the argument, our attention was called to the eleventh
section of the charter, which requires the corporation to file a
bond with security in the penal sum of $200,000, conditioned to pay
and satisfy depositors, and it is argued that this bond may be
considered as capital contributed by the corporators named in the
charter, and hence we are asked to infer that they have a pecuniary
interest which entitles them to a division of the profits, as also
to a share of the capital, and to a beneficial
Page 96 U. S. 394
interest in the franchise. If this were so, the complainants'
bill does not aver that William S. Huntington was one of the
obligors in the bond or that he was even in that mode one of the
contributors to capital stock. But if it be assumed that he was, it
would still be true that the bond was in no sense capital owned by
the corporation or by the corporators. It was required by the
charter solely for the security of the depositors or creditors of
the institution. The corporation was required to give the bond with
security, but what the security should be was left to the approval
of a judge of the Supreme Court of the District. There was no
requirement that the corporators should sign the bond, much less
that all of them should. The security might have been given by
strangers exclusively, or by one or more of the corporators. If
given by the latter, the obligors would have been bound not as
corporators, but as any other persons having no connection with the
institution.
We think the complainants have mistaken the nature of the
corporation. It is not a commercial partnership, nor is it an
artificial being the members of which have property interests in
it, nor is it strictly eleemosynary. Its purpose is rather to
furnish a safe depositary for the money of those members of the
community disposed to entrust their property to its keeping. It is
somewhat of the nature of such corporations as church wardens for
the conservation of the goods of a parish, the college of surgeons
for the promotion of medical science, or the society of antiquaries
for the advancement of the study of antiquities. Its purpose is a
public advantage, without any interest in its members. The title of
the act incorporating it indicates its purpose -- namely an act to
incorporate a national savings bank, and the only powers given to
it were those we have mentioned -- powers necessary to carry out
the only avowed purpose, which was to enable it to receive deposits
for the use and benefit of depositors, dividing the income or
interest of all deposits among its depositors or their legal
representatives. It is, like many other savings institutions
incorporated in England and in this country during the last sixty
years, intended only for provident investment, in which the
management and supervision are entirely out of the hands of the
parties whose money is at stake, and which are
quasi-benevolent and most useful, because they hold out
no
Page 96 U. S. 395
encouragement to speculative dealing or commercial trading. This
was the original idea of savings banks. Scratchley's Treatise on
Savings Banks,
passim; Grant's Law of Bankers 571, where,
in defining savings banks, it is said the bank derives no benefit
whatever from any deposit or the produce thereof. Such are savings
banks in England, under the statutes of 9 Geo. IV, c. 92, sec. 2,
and 26 & 27 Vict., c. 87. Very many such exist in this country.
Among the earliest are some in Massachusetts, organized under a
general law passed in 1834, which contained a provision like the
one in the act of Congress, that the income or profit of all
deposits shall be divided among the depositors, with just deduction
of reasonable expenses. They exist also in New York, Pennsylvania,
Maine, Connecticut, and other states. Indeed, until recently the
primary idea of a savings bank has been that it is an institution
in the hands of disinterested persons, the profits of which, after
deducting the necessary expenses of conducting the business, inure
wholly to the benefit of the depositors in dividends or in a
reserved surplus for their greater security. Such, very plainly, is
the defendant corporation in this case. The complainants have
therefore no pecuniary interest in it, and no right to the relief
they ask.
Decree affirmed.
