History of the Corporation Sole
|MARQUIS Financial Management Systems|
What Were the Original Corporations Recognized by Secular Authorities?
The earliest corporations were civil or ecclesiastical, rather than business or profit. See generally Laski, The Early History of the Corporations in England, 30 Harvard Law Review 561 (1917); Williston, History of the Law of Business Corporations Before 1800 (pts. I and II, 2 Harvard Law Review 109, 149 (1888).
Please Describe Some of the Main Characteristics of a Corporation Sole, and Distinctions Between a Corporation Sole and a Corporation Aggregate.
"Legal nomenclature is for once its own interpreter. A member of a corporation sole is one of a series of persons succeeding one another in some official position." C. Carr, The Law of Corporations 14 (1905 & photo reprint 1984). For example Queen Elizabeth II, as a corporation sole, is identical to Victoria; the present Archbishop of Canterbury in his corporate form is one with his predecessors, Laud, Benson and Lang. The corporation sole, unlike its business counterpart, is only vertical in time.
"There are a few points of corporation law applicable to a corporation sole," according to Kent. [2J. KENT, COMMENTARIES 273.] There are however, four legal characteristics unique to it: All corporations sole are " either public officers or dignitaries of the established church." In short the corporation sole is the incorporation of an office. At common law, the corporation sole can claim title to real property only. Property and powers of a corporation sole are transferred on the death of an incumbent to successors in office, not to heirs or through executors.
The corporation sole lacks the usual trappings of a corporation. It does not have a board of directors, officers, stock, by-laws, official minutes, or standard corporate name. The older corporations sole are also devoid of a royal charter or other formal authorization, characteristics that may be required of later corporations. [Since state acknowledgment later became an alleged requirement, or at least a state policy, a theory had to be developed to justify the corporation sole existence of the ancient churches. One such theory [not law] was based on the fiction that some earlier king had issued a charter which was subsequently lost, or at least the crown had no objection to continuing a corporate existence. [See Williston, History of the Law of Business Corporations Before 1800 (pts. I & II), 2 Harvard Law Review 105 at 113-114.]
In the Massachusetts case of The Overseers of the Poor of the City of Boston v. David Sears 39 Mass (2Pick) 122 at 128 (1839) the Massachusetts Supreme Court there described some of the distinguishing aspects between a corporation sole and corporation aggregate as follows:
". . .In all these aspects, the distinction between an aggregate and sole corporation, growing out of the different modes of constitution and forms of action, is striking and obvious. A bishop or parsons acting in a corporate capacity and holding property to him and his successor in right of office, has no need of a corporate name, he requires no particular, he performs all legal acts under his own seal, In his own name and name of office; his own will alone regulates his acts and he has no occasion for a secretary, for he need not keep a record of his acts, need no treasurer, for he has no personal property except the rents and proceeds of the corporate estate, and these he takes to his own use when received. By-laws are unnecessary, for he regulates his own action, by his own will and judgment, like any other individual acting in his own right. But it is not necessary to pursue the comparison into all its details; the points suggested are sufficient to show the legal distinctions between the two classes of corporations."
The Overseers case was decided in 1839. In a more recent decision in 1983, the California Second Appellate District decided County of San Luis Obispo v. Delmar Ashurst 146 Cal.. App.3d 380, 194 Cal. Rptr. 5 (1983) wherein it insightfully stated:
". . .The issue as defined by the trial court, "is whether the assets of its corporation sole are the personal assets of its titular head, and thus subject to execution for his or her debts." The answer on the basis of legal authorities defining the corporation sole and its attributes must be, as the trial court concluded, an unequivocal "no". The corporation sole is a venerable creation of the common law of England, and is well established under common law in California. (Santillan v. Moses (1850) 1 Cal. 92; Archbishop v. Shipman (1889) 79 Cal. 283. California by statute has legitimized this tradition and regulates the formalities attendant upon the creation and continued existence of the corporation sole (Corp. Code Section 10000 et seq.) One principal purpose of the corporation sole is to insure the continuation of ownership (sic) [quiet possession given by GOD under Abrahamic Covenant] dedicated to the benefit of a religious organization which may be held in the name of the titular head (sic) [The Office]. Title [quiet possession by inheritance from GOD] will not then be divested or passed to that person's heirs upon the death but will be retained for the benefit of the religious group and passed to the successors to his office.
The topic was covered by Blackstone who described the corporation sole as follows: "Corporation 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. In this sense the king is a corporation sole; so is a bishop; some are deans, prebendaries, distinct from their several chapters; and so is every parson and vicar. And the necessity of at least use, of this institution will be very apparent, if we consider the case of a parson of a church. At the original endowment of parish churches, the freehold of the church, the churchyard, the parsonage house, the globe, and the tithes of the parish, were vested in the then parson by the bounty of the donor, as a temporal recompense to him for the spiritual care of the inhabitants, and with the intent that the same emoluments should afterwards continue as a recompense for the care. But how was this to be effected ? The freehold was vested in the parson; and, if we suppose it vested in his natural capacity, on his death it might descend to his heir, and would be liable to his debts and encumbrances; or at best, the heir might be compellable, at some trouble and expense, to convey these rights to the succeeding incumbent. The law therefore has wisely ordained, that the parson, quatenus (as) parson, shall never die, any more than the king; by making him and his successors a corporation. By which means all the original rights of the parsonage are preserved entire to the successor; for the present incumbent, and his predecessor who lived seven centuries ago, are in law one and the same person; and what was given to the one was given to the other also." (1 Blackstone's Commentaries, ch. 18, pp. 469-470).
The Vatican gave formal approval to the corporation sole as one of the approved methods of holding title to church property in a private letter sent to the American bishops in 1911. For the text, see 2 T. BOUSCAREN, CANON LAW DIGEST 443 (1966) A. MAIDA & N. CAFARDL, CHURCH FINANCES AND CHURCH RELATED CORPORATIONS 129 (1986)
Can You Provide More Examples of the Modern Use of a Corporation Sole, and Recognition by Legislatures and Courts of the United States of America?
The office of bishop in most dioceses in the U.S. is a corporation sole. 4 New Catholic Encyclopedia, Corporation 337 (1967). A current review as of 1988 reveals approximately one-third of the diocesan bishops are corporations sole. The remainder of the dioceses have small boards, usually appointed by the bishop. See Maitland, The Corporation Sole, 16 Law Quarterly Review 335 (1900), reprinted in F. Maitland, Selected Essays 73 (1936). There is however a biography entitled Corporation Sole, a life of Cardinal Mundelein, See E. Kantowicz, The Corporation Sole (1983).
The Office of the President of the Church of Jesus Christ of Latter Day Saints is a corporation sole.
The Governor of Tennessee is regarded as a corporation sole. Polk v. Plummer, 21 Tenn. (2 Hum.) 500 (1841); Governor v. Allen, 27 Tenn. (8 Hum.) 176 (1847).
Probate judges have been accorded the status of a corporation sole [Overseers of the Poor v. Sears, 39 Mass. (22 Pick.) 122, 126 (1839)., and in some cases town supervisors [Jansen v. Ostrander 1 Cow. 670, 683 (N.Y. Sup. Ct. 1824)].
Under the Governor General & rsquos Act of Canada at Chapter G-9, Part 1, para. 2 it reads: "The Governor General of Canada or other chief executive officer or administrator carrying on the Government of Canada on behalf and in the name of the Sovereign, by whatever title designated, is a corporation sole."
The Office of the Pope of the Roman Catholic Church is a corporation sole.
Most English speaking countries with a form of government based on common or cannon law (including the United States, Canada, Latin America, and Caribbean Islands) recognize corporation sole in two significant ways. In the first instance, states acknowledge the office as prior existing, provided the articles of incorporation are drafted so as to provide the pre-article history of the office. In the second instance, states recognize a newly created corporation sole by the simple filing of articles of incorporation. In this latter instance, the articles do not reference any pre-incorporation history of the office, as indeed none exists.
In statutory form encompassing both types of corporations sole seventeen states in the United States of America recognize the corporation sole. They are:
Alabama Code Section 10-4-1 to 9 (1975)
Alaska Stat. Section 10.40.060 (1985)
Arizona Revised Stat. Ann. Section 10-421 to 428 (1977)
California Corp. Code Sections 10000 to 10015 (West 1977)
Colorado Rev. Stat. 7-52-101 to 104
Hawaii Rev. Stat. Section 419-1to9
Idaho Code Section 30-304
Michigan Comp. Laws Ann. Section 458. 1-2, 458.271-273 (West 1983)
Montana Code Ann. 35-3-101 to 209 (1985)
Nevada Rev. Stat. Section 84.010-080 (1985)
New Hampshire Rev. Stat. Ann. Section 306.6-8 (1984)
North Carolina Gen. Stat. Section 615 (1982)
Oregon Rev. Stat. Section 61.055 (1)-(3) (1983)
South Carolina Code Ann. Section 33-31-140 (Law Co-op 1978)
Utah Code Ann. Section 16-7-1 to 12 (1973)
Washington Rev. Code ann. Section 24.12.010-040 (1969)
Wyoming Stat. Section 17-8-109 to 113 (1977)
At least nine other states or jurisdictions have at least one corporation sole created under special or private charter, sometimes dating to before the time of the passage of a general incorporation statute. They are the District of Columbia, Illinois, Kentucky, Maine, Maryland, Massachusetts, Nebraska, Rhode Island, and Texas. No authoritative listing has been found listing the states which have corporations sole under private law or special incorporation. The foregoing nine jurisdictions were drawn from cases citing a corporation sole in a judicial opinion, from the examination of sessions law, and from a listing of corporate names of dioceses in the 1987 Official Catholic Directory.
In Terret v. Taylor 13 U.S. (9Cranch) 43, 46 (1815), Town of Pawlett v. Clark 13 U.S. (9 Cranch) 292 (1815), W. Trinidad v. Sagrade Orden de Predicadores 263 U.S. 458 (1924) where the Court states at page 460:
". . .The plaintiff being a corporation sole, has no stockholders. It is the legal representative of an ancient religious order the members of which have among other vows, that of poverty."
The existence of a corporation sole is also analyzed by the Supreme Court in deciding the exempt tax status in Northwestern University v. People 99 U.S. 387 (1878).
Finally, in determining the question of federal and state tax excepted [distinguished from exempt] status of a hospital and infirmary operated by the office of the corporation sole called: "Sisters of Charity of the Incarnate Word", the Texas appellate court discussed the exception status under federal internal revenue statutes as follows:
". . .Under a federal internal revenue statute, 4 Fed Stat. Ann (2d ed.) Pp. 245-252; 38 Stat. At Large, chap. 16, pp. 172-180, exempting the income of corporations sole organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual. It has just recently been held by the United States in the case of Trinidad v. Sagrada Orden de Predicadores, 44 Sup. Ct. 204, 68 L. Ed. 223, that a corporation sole, of an ancient religious order of similar character to the one here under consideration, does not forfeit its exemption by reason of incidental earnings and profits arising from its general charitable operations, where none of its members share in the profits." Santa Rosa Infirmary v. City of San Antonio (Tex. Com. App. 1925) 259 S.W. 926 at 934.
Is One Jurisdiction Favored Over Any Other As a State or Country where The Corporation Sole Might be Recorded?
After reviewing all of the corporation sole statutes and case law available on this subject, Washington and Nevada are favored simply because the statutes are simple, the fees are minimal, and the statute prohibits any annual fee or filings.
Do Other Jurisdictions Recognize Corporation Sole?
The doctrine of comity involves the recognition that one sovereignty allows within the territory to the legislative, executive, or judicial act of another sovereignty, having due regard for its own citizens. In general, the principle of comity is that the courts of one state or jurisdiction will give effect to the laws and judicial decisions of another state or jurisdiction, not as a matter of obligation, but out of deference and mutual respect. Brown v. Babbit Ford, Inc. 117 Ariz. 192, 571. P.2d 689, 685. Although the term "comity" is defined in Black?s Law Dictionary 6th ed. (1991) at page 267, the question is by no means clear whether each state, county or other political subdivision thereof will automatically recognize a corporation sole acknowledged by the Nevada Secretary of State.
"When a state departs from a generally accepted rule of private international law, it is not denounced as a law-breaker by judges or diplomats in other countries. English judges sometimes say that their actions are dictated by lsquo; comity & rsquo;. This is an unusual word, and gives the impression of being a technical term; however it is unclear what, if anything, English judges mean when they use it. Its literal meaning is & lsquo; courtesy & rsquo;, and in this sense comity is regarded as something different from law of any sort; rules of comity are customs which are normally followed but which are not legally obligatory. At other times is used as a synonym for private international law; as a synonym for public international law; or as a totally meaningless expression. It is a wonderful word to use when one wants to blur the distinction between public and private international law, or to avoid clarity of thought."
AKEHURST, MODERN INTRODUCTION TO INTERNATIONAL LAW, 7th ed. (1996), p. 73.
If I hire a Lawyer or Accountant, Will He or She Understand the Corporation Sole?
In some instances yes, in most cases no. The corporation sole is not taught in modern law school classes. Unless the lawyer has had extensive experience with ecclesiastical or canon law, or other ecclesiastical bodies using the corporation sole, and well versed and learned in corporation sole, the chances are the lawyer, accountant, or advisor, will be entirely unfamiliar with the corporation sole.
At best, the lawyer, accountant, or advisors unfamiliarity, or limited knowledge, with the corporation sole will probably cause him or her to confuse it with a "non profit" or "not for profit" corporation with or without a 26 U.S.C.S. 501 (c)(3) status.
IT MUST BE EMPHASIZED THE CORPORATION SOLE IS DIFFERENT FROM a "non-profit" or "not-for-profit" corporation with or without at 26 U.S.C.S. 501 (c)(3) status IN ALMOST EVERY CONCEIVABLE WAY.
Under these circumstances with a lawyer, accountant, or advisor, unfamiliar with a corporation sole, it is recommended to seek out competent advice and assistance of a lawyer or knowledgeable advisor extremely familiar with corporation sole, who can assist, rather than fights with or re-characterizes your objectives. Although, asking a lawyer or accountant to educate himself or herself, can become extremely costly.