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The Modern Corporation Sole
Reprinted from ****inson Law Review, Fall 1988 By: James B. O'Hara
Footnote hyperlinks located within { }
In 1894, Sir Frederick Pollock asked his American friend Oliver Wendell Holmes. "Have you such a thing as a corporation sole still about you?" The future Justice replied, "I don't know of any corporation sole." {1}
I. Introduction
Blackstone begins his treatment of corporations with the following classification:
The first division of corporations is into aggregate and sole... "Corporations sole consist of one person only and his successors, in some particular station, who are incorporated by law, in order to give them some legal capacities and advantages, particularly that of perpetuity, which in their natural persons they could not have had." {2}
He then proposes two conspicuous examples of corporations sole, one civil ("the king is a sole corporation"); the other, ecclesiastical ("so is a bishop... and so is every parson and vicar"). {3}
In the period prior to the rise of the modern business corporation and the legal evolution and development that accompanied it, {4} the corporation sole was a fixture in every tier of English society. The corporation sole was as distant from the ordinary peasant and tradesman as the Crown, but as the parish clergy.
A modern Holmes attempting a reply to a modern Pollock might initially be perplexed, since the usual sources of ready reference suggest two contradictory conclusions. On the one hand, the sources indicate the corporation sole is "not common," "almost obsolete," {5} or "obsolescent." {6} The standard casebooks and hornbooks of corporation and property law do not usually treat the topic. {7} Cases cited in legal literature are often very old, and the only full-length journal article devoted exclusively to the subject is from the turn of the century. {8} At least one author equates it with the modern "one-person" corporation, {9} although the two have completely distinct origins. {10}
On the other hand, further research reveals functioning corporations sole in at least one-half of the states, with explicit statutory provisions for corporations sole in about a third. In many jurisdictions, this is the manner of incorporating Roman Catholic dioceses, or more accurately, the bishops of those dioceses. {11} From this perspective, the corporation sole is a useful, even commonplace, legal reality.
The apparent discrepancy is not real. The old common law corporation sole, which was transported to American shores in colonial days, is indeed almost dead. However, a modern version, which bears the same name, has evolved and is widely used today. {12} The transformation from the old to the new is a fascinating story, well worth the telling.
The present study proposes: 1) to define the classic common law corporation sole; 2) to trace its development in America; and 3) to describe the present status of the corporation sole in the United States with analysis of its modern forms. The emphasis will be fundamentally American, with English sources serving as points of reference and prologue. Moreover, the English side of the story has already been told. {13}
The modern corporation sole page 2
Reprinted from ****inson Law Review, Fall 1988 By: James B. O'Hara
Footnote hyperlinks located within { }
II. The "Old" Common Law Corporation Sole
"Legal nomenclature is for once its own interpreter. A member of a corporation sole is one of a series of single persons succeeding one another in some official position." {14} The crux of this description is not that the corporation sole is composed of a single person. Rather, it is really composed of a number of persons who, one after another, hold the same office. The really crucial element of this definition is the series itself and the seriatim succession.
For example, Queen Elizabeth II, as corporation sole, is identical to Victoria; the present Archbishop of Canterbury in his corporate form is one with his predecessors, Laud, Benson or Lang. {15} The corporation sole, unlike its business counterpart, is only vertical in time.
"There are very few points of corporation law applicable to a corporation sole," according to Kent. {16} There are, however, four legal characteristics unique to it:
1. All corporations sole are "either public officers or dignitaries of the established church." {17} In short, the corporation sole is the incorporation of an office.
2. At common law, the corporation sole can claim title to real property only. {18}
3. Property and powers of a corporation sole are transferred on the death of an incumbent to successors in the office, not to heirs or through executors. {19}
4. The corporation sole lacks the usual trappings of a corporation. It does not have a board of directors, officers, stock, by-laws, official minutes, seal, or corporate name. {20} The older corporations sole are also devoid to royal charter or other formal authorization, characteristics that are required in later corporations. {21}
Historically, both the king and a variety of clergy qualified as corporations in their official capacities. However, the ecclesiastical form is older, dating to the mid-fifteenth century. {22} Initially, the corporation sole grew out of the efforts of judges to solve title problems that arose from the passage of real property to a church. Although the early common law of property was elaborate and intricate, it sometimes lacked the sophistication to deal with these problems. At that time, legal forms did not exist that allowed the devise of real property to a church in fee simple absolute.
The law struggled with this problem in amusing ways. For example, property was sometimes devised to the saint after whom a parish was named, or to the four walls of a church building. Under these circumstances, the local bishop or priest was the agent or administrator. Therefore, it was only a short leap in logic to incorporate the agent. {23}
The hierarchical polity of the English church was well suited to this type of corporate structure. However, it was still another one hundred fifty years before a civil corporation sole appeared when Lord Coke ascribed coporateness to the crown. {24} Blackstone confidently called this development uniquely English. {25} In one sense, he is correct, but modern scholarship also finds a powerful Roman Catholic Canon Law influence on the process. {26}
For all its singularity, the sole corporation had many detractors. In fact, Maitland and Pollock particularly thought it was an anomaly, a "strange conceit," a "juristic abortion," {27} an "unhappy freak of English law," {28} and a "useless figment of shreds and patches." {29}
Some of the criticism came from theorists who objected to the philosophical underpinnings of the fictitious personality of the corporation sole. {30} But practical problems were also evident. The courts accepted some officers as corporations, yet resisted the corporate claims of others similarly situated. {31} This inconsistency may explain why the corporation sole was not widely extended to other civil officers.
Other practical questions were also raised. What claims on corporate property might arise from the heirs of deceased incumbent? What limits on fraudulent transfer by a dishonest incumbent? Is a separate accounting required for the incumbent as corporation and as a private person? Is there a quasi-fiduciary relationship between the corporation sole and his successors?
Added to these questions are several other crucial problems: What happens to the corporation during the illness or absence of the incumbent; and who manages the property, and with what legal force, during an interregnum? These practical considerations were more difficult than the theoretical questions. Yet for all the inconsistency of application and the eccentricity of the concept, the corporation sole has endured in some form for more than five centuries.
The modern corporation sole page 3
Reprinted from ****inson Law Review, Fall 1988 By: James B. O'Hara
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