Commonwealth v. Reliance Safe Deposit & Trust Co.

Opinion by Mr. Justice Potter, On the ground that the body of the act contains subject matter which is not clearly expressed in the title, counsel for appellant in this case question the constitutionality of the Act of April 23, 1909, P. L. 143, which [186] provides for proceedings against certain corporations to have their charter rights declared null and void. It is provided in the act “That all corporations in this Commonwealth, having the right to receive deposits of money, and to do a banking business, which have not paid in the capital required by law, and have not in any manner exercised the powers conferred upon them by their letters patent, or which have failed to exercise their corporate privileges for two years after having been liquidated,” shall be proceeded against by quo warranto. Counsel suggest that the subject matter.comprised in the words “which have not paid in the capital required by law, and have not in any manner exercised the powers conferred upon them by their letters patent” is not fairly indicated by anything in the title. Notice is however given in the title that corporations, which have not commenced business within two years from the date, of their letters patent, shall be proceeded against. This language is, we think, sufficiently comprehensive to cover that portion of the enacting clause to which reference is made. A corporation which has not paid in its capital,- as required by law, and which has not in any manner exercised the powers conferred upon it by its letters patent, cannot in any proper sense of the word be said to have commenced business. We agree with the statement in the opinion of the court below that “The payment of the capital or the providing of capital with which to do business is a necessary prerequisite to the commencing of business or the exercise of corporate privileges.” And we also' agree with the view of the trial court that the title in this particular is sufficient. It is unduly long for so short an act, but it points with sufficient clearness to the subject of the statute which is, proceedings to declare null and void the charters of certain corporations that have failed to exercise their privileges. In the original suggestion filed by the at- , tornéy general, it was charged that the appellant had not paid, in the capital required by law, and had not [187] exercised the powers conferred upon it by its letters patent. To these specifications were added at the trial a third, that “the defendant has failed to exercise its corporate powers for two years after having been liquidated.” Under the facts as found by the trial judge, the defendant was delinquent as charged in the original suggestion, and the amendment was not therefore necessary. It however did no harm. The information was subject to amendment either on or at any time before the trial: Com. v. Swank, 79 Pa. 154. It appears from the record that in 1904 the assignee of the Penn Bank, which after a change of name had been operated under a special charter granted April 5, 1872, “to the Safe Deposit and Trust Company of Wheatland,” sold the charter to Samuel B. Hartwell for the sum of $10.00. He with his associates undertook to reorganize the company, and without the payment of any cash capital into the treasury, they issued to themselves paid up capital stock to the amount of $200,000.00. This was in violation of a sound and fundamental rule that in banking corporations the capital stock must be paid in cash. There is no room for watered stock in such a corporation. If the reorganizers of this institution desired to continue the banking business, they were bound to pay in the designated amount of capital in cash. That the old corporation, the Penn Bank, was liquidated, cannot be denied. Admittedly it made a voluntary assignment for the benefit of its creditors, and its assets were distributed, and its charter was sold. Its affairs were wound up and settled. The attempt of the reorganizers to capitalize the franchise, or the right to do business granted by the State, at the sum of $200,000, was the merest farce. The action was a nullity. Nor does it appear that the reorganizers have in any proper manner exercised the powers conferred upon them by the letters patent. The mere hold-; ing of annual meetings and the election of officers, without anything else, is not a compliance with the law. [188] The opinion filed by the learned judge of the court below, amply vindicates the conclusion reached, that the defendant company has failed to exercise in any manner contemplated by law, its corporate privileges. Under the facts as found, the Commonwealth was entitled to judgment of ouster and to a decree declaring the charter rights and corporate privileges of the defendant company to be null and void. The assignments of error are overruled, and the judgment and the decree made in pursuance thereof are affirmed.