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IV. The Corporation Sole in Statutory Form
Seventeen states explicitly {68} recognize the corporation sole under statutory law, often in a special section for nonprofit corporations or in a section on religious societies. {69} At least eight other jurisdictions have at least one corporation sole created under special or private charter, sometimes dating to a time before the passage of a general incorporation statute. {70}
To understand the corporation sole under both of these categories, a method of analysis will be useful. For states that recognize the corporation sole under general law, California's statutes can serve as a comparative model. For the states with special or private acts of incorporation, Maryland's private charter for the Archbishop of Baltimore is a useful example.
The California legislation dates to 1877, {71} and comprises part 6 of the title division on nonprofit corporations. Some sections are technical, and relate to filing provisions, applicability to corporations organized prior to the implementation of the law, and procedures for voluntary dissolution. {72} The key sections are those dealing with who may incorporate, the corporate powers, and the questions of vacancy and succession.
The California statutory system indicates that a corporation sole may be formed by a "bishop, chief priest, presiding elder, or other presiding officer of any religious denomination, society, or church." {73} The corporate powers specified in the California law are comprehensive. In California, a corporation sole may:
(a) Sue and be sued, and defend, in all courts, and places, in all matters and proceedings whatever.
(b) Contract in the same manner and to the same extent as a natural person, for the purposes of the trust.
(c) Borrow money, and give promissory notes thereof, and secure the payment thereof by mortgage or other lien upon property, real or personal.
(d) Buy, see, lease, mortgage, and in every way deal in real and personal property in the same manner that a natural person may, without the order of any court.
(e) Receive bequests and devises for its own use or upon trusts to the same extent as natural persons may, subject, however, to the laws regulating the transfer of property by will.
(f) Appoint attorneys in fact. {74}
The most complex issue regarding the old corporation sole was that of continuing operation during a vacancy in the office. California deals with this issue in two ways: 1) at the time of incorporation, the manner of filling a vacancy is to be specified, {75} and 2) the law makes clear that the corporation has perpetual existence even during a vacancy. {76}
In contrast with the common law corporation sole, the California statute, like almost all its modern counterparts, is far more precise. A comparison will be useful. The common law or "old" corporation sole applied to some unspecified officers, and not to others of similar origin. The statutory or "new" corporation sole, in contrast, applies to those who are designated at the time of their incorporation. The old corporation sole was "in abeyance" at the time of a vacancy, whereas the new corporation sole could hold title to real estate only
The most complex issue regarding the old corporation sole was that of continuing operation during a vacancy in the office. California deals with this issue in two ways: 1) at the time of incorporation, the manner of filling a vacancy is to be specified, and 2) the law makes clear that the corporation has perpetual existence even during a vacancy.
In contrast with the common law corporation sole, the California statute, like almost all its modern counterparts, is far more precise. A comparison will be useful. The common law or "old" corporation sole applied to some unspecified officers, and not to others of similar origin. The statutory or "new" corporation sole, in contrast, applies to those who are designated at the time of their incorporation. The old corporation sole was "in abeyance" at the time of a vacancy, whereas the new corporation sole could hold title to real estate only, and alienation of the property was difficult and legally questionable. The new corporation sole has the same power over its property as any other corporation, and is not limited in the type of property it can own. In short, the new statutory corporation sole removes the vagaries of the old.
Private charters have a parallel history and similar content. The Maryland legislation incorporating the Archbishop of Baltimore dates to 1832. The law permits church property held by trustees to be deeded to the Archbishop and his successors. However, such property is limited to two acres, must be real property, and can only be used for a church, parsonage, or burial ground. {77}
In 1868, the Maryland legislature amended the act. The acreage designation was enlarged to five acres, and "school house" was added to the list of uses. {78} Up to this point, the Maryland law did not mention the alienation of property. A later amendment, in 1874, granted the power "to dispose of, lease, sell and convey from time to time... To the same extent, [as] any private person or other corporate body." {79}
Two subsequent amendments completed the law. In 1894, the restriction to real property was removed. The Archbishop, as a corporation sole, was given the power to exercise rights over property "real, person or mixed." {80} Finally, in 1927, the acreage restriction was completely removed. {81}
This original 1832 legislation, with its four amendments, remains the charter of the Archbishop of Baltimore as corporation sole. No further change can now be made, because the Maryland code prohibits the General Assembly from amending the charter of a religious corporation even if it was previously incorporated by special act. {82} Furthermore, the code now contains modern provisions for subsidiary or separate Roman Catholic Corporations. {83}
The contrast between the California and Maryland laws is very apparent. The California legislation consists of more formal and highly structured general statutes, whereas the Maryland private charter is rather informal, the product of patchwork amendment. The California code carefully establishes a process for creating or dissolving a corporation sole, whereas the Maryland law barely goes beyond the simple statement that a corporation is deemed to exist. Clearly, the general statutes represent a later stage in the evolutionary process.
Although differences exist, the corporations sole created under general corporation laws and those established by special acts or private charters have several common features. They both deserve to be classified under the heading of "new" or "modern" corporations sole, because both are more than merely modes of holding title property. Both are meant to provide a framework for the operation of continuing concern. They are also both meant to provide a structure for the planning, financing, direction and management necessary for an organization existing and working in a sophisticated business environment.
The Achilles heel of the "old" corporation sole was that the corporation itself was a person holding an office. When the incumbent died, the common law could only hold the corporate life and activity in suspension, or "abeyance", until the office was filled again. In regard to the "old" corporation sole, Maitland said, "Our corporation sole is a man who dies." {84} Carr added, "That is the difficulty. The artificial personality of the corporation is not strong enough to compel us to ignore the natural personality of the sole incorporator. The office has not been completely personified if the death of the office holder can cause such a deadlock." {85}
The modern corporation sole, created under legislative auspices, solves the succession problem quite satisfactorily in one of two ways. Either a specified structure of continuing operation is created statutes, as in California, {86} or the statutes specify some external set of canons, practices or rules to deal with an interregnum, as in Maryland. {87}
The fact that the modern American corporation sole works satisfactorily is, perhaps, best illustrated by the relative absence of recent cases carried to the appeal level. {88} Corporate structure is seldom at issue, but the cases tend to run the gamut: torts, {89} contract, {90} civil procedure, {91} piercing the corporate veil, {92} workman's compensation, {93} taxation, {94} eminent domain, {95}estates {96} and simple fraud. {97} Property disputes are relatively rare, perhaps because there would be first amendment implications for most corporations sole. {98}
The corporation sole seems to have a settled existence. There has been no rash of new legislation, nor have there been any repeals of earlier laws.
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