Report of the Judiciary Committee.

The committee on the judiciary, to whom was referred the House "bill relative to proceedings against persons or incorporations? usurping corporate powers, liberties or franchises, and incorporations guilty of misuser or nonuser," have had the same under consideration, and have instructed me to report:`

That should the above bill become a law, it would essentially, and the committee believe injuriously, change the course of proceedings in the entire class of cases affected thereby. The bestowal upon a court of chancery of jurisdiction over corporations is an infringement of the common law, for by it, the control of corporations was entrusted to courts of law, and chancery had no right to interfere, either to restrain the usurpation of corporate powers by indivíduale, or to prevent corporations from transcending the limits of their chiar-" ters, nor to appoint receivers of their property, or decree a forfeiture of their franchises. Such appears to be the doctrine of the books, 2 John, chan. R, 371 Hopkins' Virg. Rep. 354.

The jurisdiction of chancery is created solely by statute. The first act in this state was passed at the special session, in June 1837.⠀ It is entitled "An act to provide for proceedings in chancery against corporations, and for other purposes." See sess. laws of 1837, page 306. The next act on this subject was passed on the 15th of April, 1839. It is entitled "An act to provide for the voluntary dissolution." of corporations, and to prescribe the duties of receivers in chancery1 in certain cases, and for other purposes." It is found on page 94, of the session laws of 1839.

These two acts together, form a system. The one gives the court jurisdiction-the other principally provides for the mode in which the r jurisdiction shall be carried out. Both are borrowed, nearly, literal ly, from the New York Revised Statutes, articles 2 and 3, of title 4, of chapter 8, of part 3, (2d vol. 377.)

That system has been the subject of frequent adjudications in New York. The practice under it is well settled; and unfortunately in our ~

own state, the necessity for actions under the sa me provisions has been so great that the mode of proceeding has been perfectly well ascertained and also settled.

The nature of the jurisdiction conferred by the act of 1837 was the subject of judicial decision in the chancery of this state in the case of Attorney General vs. Oakland County Bank, 1 Walker's Chan. Rep. 97. In that case the chancellor says:

"The bill is not filed under the first two sections of the act of 1837, but under the third and subsequent sections. Under the first and second sections, this court is authorized to restrain, by injunction, the exercise of a franchise, after proceedings have been instituted at law to test the right of the franchise. 1st. In the case of a corporation assuming any franchise, liberty or privilege, or transacting any business not allowed by its charter; and 2d, Where individuals claim any corporate rights, privileges or franchises not granted to them by law. In these two cases the jurisdiction of the court extends no farther than to restrain the corporation, or individuals, as the case may be, from exercising the franchise claimed by them, until the question of right is settled at law. An injunction therefore would not be granted, unless usurpation was clear, or, it being doubtful, unless there was danger to the public while the question was being tried at law. But under the other sections of the act, the powers of this court are more extensive against corporations having banking powers. It has power not only to restrain such corporations, by injunction, from exercising their corporate powers, but to appoint a receiver to take charge of their property and effects, and to decree their dissolution in the following cases: 1st. When the corporation is involved; 2d. When it refuses to pay its debts, and 3d, When it has violated any of the provisions of its charter or act of incorporation, or any law binding upon it. Under the statute this court has greater power over banking corporations than the supreme court. It may not only enforce a forfeiture of their franchises, by dissolving them, for a violation of their charters, but it may appoint a receiver to take charge of their effects for creditors, and compel the officers and stockholders to discover the same under oath."

At common law proceedings by information or quo warranto must have been in the name of the people, although in some cases they might have been on the relation of an individual. Hence where an

injunction, in aid of and incidental to a suit at law, was asked for, the Attorney General was designated as the person to apply for it. But in regard to banking corporations, the legislature for wise reasons made a different provision. Section 4, of the act of 1837 is as follows:

Sec. 4. "Such injunction may be issued on the application of the Attorney General in behalf of the state, or of any creditor or stockholder of such corporation upon bill or petition filed for that purpose, and upon satisfactory proof of any fact set forth in the preceding section as a prerequisite thereto."*

In 1842, an act was passed entitled "An act to amend the corporate rights of certain banks, and for other purposes." Laws of 1842, page 56. This act applied to the associations organized under the general banking laws, and need not now be the subject of comment. In the same year (see page 61 of laws of 1842) an act was passed, entitled "An act to repeal the charters of certain banks, and for other purposes." The first section repeals certain charters by name, and specifically. The second section makes the repeal conditioned, as to the Banks of Macomb, Pontiac, Oakland County, Calhoun and Constantine. The third section allows the Chancellor to appoint a Receiver for any of the enumerated Banks (where Receivers had not already been appointed,) on the petition of any creditor. This was already allowable under the act of 1837.

This, then, is the primary and the principal act on the subject. The provision which allows, in the case of a banking corporation, any creditor or stockholder to be a complainant is most beneficial. The Attorney General may be absent from the state-he may be a stockholder in the Bank, or connected in interest or feeling, or otherwise, with those who are such. In point of fact, many of the principal cases of bank failures have been brought before judicial tribunals by private creditors. Such is the case at this time with the Bank of Michigan and the Bank of St. Clair.

As the bill referred to your committee proposes to repeal the act of 1837, it became our duty to examine that law and its connexion with other statutes. We think that the present bill is very defective and ought not to become a law for the following reasons:

First. It repeals entirely the act of 1837.