delivered the opinion of the court;
The pleadings in this case, present first, the question of jurisdiction; secondly, the constitutionality of the Real Estate Bank of the State of Arkansas; and lastly, the construction of the relative powers of the respective boards of direction.
The question involves principles of the highest moment, and of the most vital importance, and such as the whole community as well as the parties upon the record, have a direct and immediate interest in having conclusively and finally settled.
Their novelty, magnitude, and intrinsic difficulty, have induced this court to give to them the most mature examination and- reflection; and have sensibly impressed them with the highly responsible and delicate duty they are called on to perform. ■
At a previous day of the present term of the Supreme Court, the Attorney for the State filed his motion, in writing for a writ of quo war-ranto against the defendant.
The writ was ordered to be issued, and was made out under-the- direction and seal of the court. It is simply a. citation directed to the Sheriff of Pulaski county, commanding him. to. summon. Chester A sliley. to appear before the Supreme Court* and show unto the State, the warrant by which he exercises the franchise of a director of the Principal Bank of the Real Estate Bank of the State of Arkansas, at the City of Little Rock; which it alleges was never lawfully granted to him. The writ was issued on the 12st day of February 1839, was executed the same day, and made returnable the day after; upon the, return of it, the dependent came into court, and moved to have the writ set aside for want of jurisdiction; which motion was overuled. He then appeared, and put in a plea of abatement to the jurisdiction of the court, alleging the office of Director of the Principal Bank of the Real Estate Bank of'thc State of Arkansas was a private right, and not a public franchise. To this plea the Attorney for the State demurred, and the demurrer was sustained, and the plea held to be insufficient; and a judgment of respondeat oustet was entered up in the cause.
The defendent thereupon, put in five several pleas, justifying his title to the franchise inquestio n, and showing the warrant by which he claimed to be elected to exercise the office of director. To these pleas there was also a demurrer, and after argument by counsel on the point, .the demurrer was sustained and'the pleas declared to be defective, in not setting forth a good and sufficient warrant, according to the provisions of the charter. The defendent then asked and obtained leave to amend his pleadings; whereupon he filed an amedment to each of his five several pleas previously put in, to which the Attorney for the State demurred, and there wasjoinder in the demurrer
The case now stands for trial upon the pleadings and issue thus made up by the parties.
The court have met with little or no difficulty in settling the question of jurisdiction. The point was fully discussed and directly decided, during the present term, in the case of The State against Chester Ashley and others, on a motion for an information in the nature of a writ of quo warranto. The Chief Justice, in delivering the opinion in that case, laid down the doctrine, that the Supreme Court had jurisdiction in cases of quo warranto, in which the whole community was directly interested, and that the ancient writ in such cases, (which was adopted by our constitution.) was wholly a civil proceeding, and that it could only be issued and prosecuted in the name and under the authority of the State, by her properly constituted legal officer.
The soundness and correctness of this opinion, it is believed, can neither be questioned nor controverted by any fair mode of reasoning, or upon any just or respectable weight of authority. In reviewing the principles, then, as heretofore established in the case above refer' fed to,the question of jurisdiction, so far. as regards', the power of the. Supreme Court to issue the writ, is conclusively settled. The constitil-express 'grant, confers upon it “powerlo issue .writs of-error and supersedeas, certiorari, habeas corpus, mandamus, add quo war-ranto, and other remedial writs, and to bear and determine the .same.” See Art. VI,- Sem 2, of the Constitution.
It now remains to be seen, whether the office of director of thd Principal Bank of the Real Estate Bank of the State of Arkansas, is a private right or a public franchise. '.This question was decided id Overruling the defendant’s plea in abatement to the jurisdiction of the •court. But as that opinion was not committed to writing, it may not be amiss here to state the grounds upon which it was predicated. That the office of director is a public franchise and not a private right, is per- • fectly manifest; for the legislature in granting the charter, created.the' office and prescribed the manner of filling it. It is equally clear, that the charter is a public law, and not a private-act; for the privilege of banking cannot be exercised without authority of law, and in its very' nature and essence it appertains and essentially belongs to the act of sovereignty. In the case of The People vs. The Utica Insurance Company, 15 John. Rep. 386, the Supreme Court of New York held this emphatic language: “ That every privilege’or immunity of a public nature, which 'cannot legally be exercised without a legislative grants is a public franchise, and that the right of banking is a public franchise,This principle is broadly asserted in the court of the King’s Bench in the case of The King vs. Nicholson, et al. 1 Str. 297. See also the case of The People vs. Miagara Bank, 6 Cow. 296. Besides., by the express terms of the charter, the - State has a-voice'in all the transactions of the.Bank, by the appointment of two members in the board of directors of the Prncipal Bank and- each of the 'Branches, and four directors in the central board. The capital of the Bank is • raised upon her faith and credit, pledged in the form of bonds, regularly executed, and'made payable to the Bank. -If each and all of these facts and circumstances do not show that the State, and conse^ quently the whole community have a direct-and vital interest in the government and management of the corporation, then it is difficult to conccivc-a case in which she can be interested, or imagine a law of a more general'and public nature.
if these positions bo true, and that they are seems almost self-evident, then it necessarily follows, that the Supreme Court has jurisdiction of the case now under consideration; and that the office of director cf the 'Principal Bank of the Neal Estate Bank of Arkansas, is a public .franchise and not a private right, and consequently the writ cf quo warranto will well lie in behalf of the State, provided the defendant has unlawfully usurped or intruded into, and exercised the duties or franchises of the office.
Before we proceed to the examination of the second question, it is necessary to define what is meant by a constitution, and to lay down a few general rules of interpretation applicable to such instruments. An American constitution, according to the theory and practice of our peculiar sj'stem3, is the supreme, original, and written will of the people, acting in their highest sovereign capacity, creating and organizing the form of government, assigning to the different departments, their respective powers and duties, and restraining each and all of them, within their own proper and peculiar spheres. The powers, which are conferred, the restrictions, which are imposed, the authorities, which are exercised, and the organization and distribution of them, are all intended for the common benefit, and they are as essential to the maintenance and security of the entire plan, as they are to the protection and preservation of liberty itself. The principleswhich are thus declared by the sovereign will, must of necessity forever remain inviolate and fundamental, so long as the form of government under which they are established exists; or written constitutions, with all their boasted excellencies, are mere idle ceremonies or useless inventions. To deny their sovereignty and inviolability, is at Once to impeach the right of self-government, and to destroy the only means by which that blessing can be perpetuated. The constitution of the State is, then, the supreme, paramount law of the land, except ' it comes in conflict with the constitution of the United States, or with the laws and treaties of the general government, made in pursuance of its authority; and the courts arc bound soto treat and consider it. -We are not aware that this doctrine has ever been impugned Or denied by any respectable authority, since the decision in the case of Marbury vs. Madison. The Chief Justice of the United States then placed it upon such high and unquestionable ground, that since that time, it never has been attempted to be shaken, and it is now universally acquiesced in, and admitted by every intelligent man in community. There is certainly a wide and striking difference between the constitution of the United States and of a State govern-men^' The one is an enumeration and a delegation of certain speci-powers, granted by the States, or the people of th.e States, for national purposes and objects. Hence, Congress can exercise no power that is not specifically granted by the - constitution, or incidentally included among some of its enumerated powers. ‘ By an inspection and examination of all the State constitutions of our own country, they will be found to be nothing more or less, than so many bills of rights, declaratory of the great and essential principles of civil and political justice, imposed as so many duties, and enjoined as so many restrictions, both upon the departments of the governmen t, and upon the people. The legislature then can exercise all power that is not expressly or impliedly prohibited by the constitution; for whatever powers .are not limited or restricted, they inherently possess as a portion of the sovereignty of the State. • ' ■
The question then recurs, is there any prohibiting or restraining clause in the constitution, interdicting the legislature from incorporating the Real Estate Bank of the State of Arkansas? That this question is put directly in issue by the pleadings, is perfectly manifest; for admitting that the defendant has shown a good warrant, according to the provisions of the charter; yet if the charter itself has no. validity or constitutional existence, it surely cannot be pretended that he is entitled to hold, or can be rightly inducted into an office created' by an act which, in the- nature of things, can have no legal entity or being. Therefore, whenever the attorney for the State applied for, and obtained the writ, the validity of the charter was unavoidably drawn in question, and the court was constrained to meet and decide it.
Before we proceed to consider the clause in the constitution bearing upon this question, we will lay down the following rules of inter-prelation for that instrument.
1st. The constitution, like all other deeds or charters, is to be construed according to the sense of the terms used, and the intention of its authors.
2nd. It is to be construed, says Judge Story, “ as a frame of laws established by the people according to their own free pleasure and sovereign will.” :
3rd; it should receive a fair and liberal interpretation, so that the true objects of the grant may be promoted,.and the government left in the full and free exercise and enjoyment of all its rights, privileges, and immunities, which are not excepted out of its ordinary and general powers, and declared by the sovereign will to be inviolate and •supreme. ' • • •
The constitution declares “that the General- Assembly, may incorporate one State Bank, with such amount of capital as may be deemed' necessary, and such number of branches as may be required for Che ’ public convenience; which shall become the repository of the funds belonging to, or under the control of the State, and shall be required to loan them out throughout the State, and in each county, in proportion to representation. And they shall have further power to ineorpo-rate one other banking institution, calculated to aid and promote the great agricultural interest of the country; and the faith and credit of the State may be pledged to raise the funds necessary to carry into operation, the two Banks herein specified: provided, such security can be given by the individual stockholders as, will guarantee the State against loss of injury.”- See article 8, sec. 1,’ of the Constitution. It is contended that this clause imposes no restrictions upon the legislature, as to the number of Banks; but that they may establish as many as they deem necessary and proper, for the general interest or public convenience. It is said to be merely an affirmative grant of power, which the legislature was fully.-invested with, without any such declaration, and -therefore it imposes no limitation on their authority.
- The argument, although plausible and ingenious, cannot be admitted’ to be sound or logical, without virtually repealing the prohibition intended to bo secured by the Convention. There are two ways' of imposing a constitutional restriction or limitation. The grant may contain negative words, denying in express terms, the exercise of the-power claimed or attempted to be usurped; or it may simply contain •an affirmation, which amounts to as positive a negation of any -other power upon the same subject, as if the grant itself had employed nagative, and not affirmative words in the declaration. The consti-tions of the United States and of the States, furnish satisfactory and conclusive proof of the truth-and importance of the principle here stated. Indeed it will be found from an. examination of those instru- ‘ ments, that the usual and more general mode - of imposing restrictions, is by affirmative words, “ which in their operation imply a negative of other objects, than those affirmed; and in such cases,-a negative or exclusive sense must be given to the words, or they will have no ope'ration at all.”
The general rule upon the subject is, « a specification of particulars k an exclusion of generals; or the expression of one thing is the exclusion of another.” And Lord Bacon remarks, -“that as exception strengthens Ore force of law, in cases not excepted, so enumeration weakens it, cases not enumerated.” Congress has power to regulate commerce with foreign nations, and with the Indian tribes, to declare war, to grant letters of marque and reprisal, to coin money, and regulate the the value thereof. These powers are given affirmatively by the grant, and yet they clearly and conclusively indicate a restrictive sense; for it never was imagined by any one, that the States could exercise any one of the powers here enumerated. They are as clearly prohibited from so doing, as from passing any bill of attainder, ex post facto law, or law impairing the obligation oí contracta,' or making any thing but gold and silver a lawful tender in payment of debts; which latter restrictions are imposed by express negative terms. The constitution of this State divides the powers of government into three separate and distinct departments, and assigns those which are legislative to one, those which are executive to another, and these which are judicial to a third. Can it be contended, that the legislature has power to create another department of government? and yet this is a mere affirmation of power, without any express or positive words, negativing their authority.
But is not the prohibition as full and as explicit as if the constitution had declared that the legislature should have uo power to organise any other department. Again, it declares that the supreme, executive power of the State, shall be vested in a chief magistrate, who shall be styled “the Governor of the State of Arkansas.” Can the supreme executive power of the State, be vested in more than one chief magistrate, or can he be styled by any other name than i-the Governor of the State?” Certainly not. The judicial power of the State is vested in one Supreme Court, in Circuit Courts, in County Courts, in Probate Courts, and Justices of the Peace. The Supreme Court is made to consist of three judges. Have the legislature power to create more than one Supreme. Court, or to compose that tribunal of more than three judges? The simple statement of the question carries with it the answer. The grant, however, contains no express negative terms; but iis affirmation implies as positive a negation, as if it had been expressly so declared. The legislative power of the State is vested in a Senate and'House of Represcnatives. Can there be any.other legislative branches of government? The Senate shall consist of members to be chosen every four years, and the House of Representatives, every two years. Can the Senate be directed to be chosen every two years, and the House of Representatives annually? In these instances, the legislative is only limited by affirmative words, .which carry with them an exclusive or restrictive sense. The clause limiting the number of banks to two, is clear, explicit, and peremptory. The General Assembly has no more power to create two State Banks, than it has to create two executives, two senates, or two houses of representatives. The language in both cases is affirmative; but it is not on that account less restrictive or authoritative. Could they make any other bank than the State Bank contemplated^ the constitution, the repository of the funds belonging to the State. Certain]y not. — ■ Why? Because the clause we are considering gives to that bank the custody or deposite of these iunds. The legislature, then, has power to incorporate only one State Bank, with such a number of Branches as the public convenience-may require. The latter part of the section declares, “that theyshall'further have power to incorporate one other tanking institution, calculated to aid and promote the great agricultural interest of the country, and the faith and credit of the State may be pledged to raise the funds necessary to carry into operation the two hanks herein specified. The term banking institution is somewhat indefinite; but it is nevertheless capable of receiving a proper legal construction. If it was even uncertain what was meant by it, still the sentence taken together, clearly defines its meaning; for it declares, that the faith and credit of the State may be pledged to carry into operation “the two banks herein specified;” — thus showing that the convention contemplated the establishment of two banks, one State Bank with Branches, and one other such Bank as that mentioned in the constitution. They have no more power to create or incorporate two banking institutions, in aid and in promotion of the agricultural interest of the country, than they have to create two Supreme Courts, or to make that tribunal consist of more than three judges, or to establish and organize more than three departments of government. Not to give to the clause we are considering a prohibitory and limited sense, is to render it wholly! inoperative and void, and that too, in express violation of its restricted language, and the object and design of the convention. Whether the restriction sought to be imposed, will he found practical or salutary, or whether it will answer the purposes that its authors had in view, are questions which the court is not called on to decide. The motives and object of the convention in inserting this section, cannot be forgotten or mistaken by any one at all conversant with the transactions or proceedings of that body. The wjjQ]e currenc j 0f the nation was then in a state of disorder and confusion,-threatening serious and calamitous mischief to the community; and the evils apprehended, and which were attempted to be remedied, were an excessive issue and circulation óf depreciated bank paper, created by the means of 'State institutions, which were rapidly springing up.in every quarter of the country. This .state of things, induced the convention to endeavor to limit the number of banks of our own State, hoping to mitigate the contagion of excessive banking that was then likely to fall upon every part of the Union; the existence and continuance of which has since so seriously affected all the great and flourishing interests of society.. Whether they have'done much, or little, to cure the evil, or whether they may have aggravated 'it, time and'future events will-alone détermine.
If the convention, however, has limited the number to two banks, and that they have, seems to our' minds clearly demonstrable, then, this court is bound to see the prohibition and injunction of the constitution strictly followed and obeyed. The legislature, then, unquéstion- ' ably possesses the power to incorporate one banking institution calculated to aid and promote the agricultural interests of the country. The question then-remaining to be determined, is, does the act of the General Assembly incorporating the Real Estate iBank, create such an institution, consisting of four integral parts or offices of discount and deposite, or does it establish four independent and separate banks?.
It is tobe regretted, that the charter is so exceedingly vague and uncertain, that itis almost impossible to apply to it any thing like legal accuracy.. Many of its most important clauses are-contradictory and irreconcilable with each other, and with the general objects and spirit of the act. The court, however, in considering it, must keep in view the nature and design of the grant, its general intention and scope, as they appear from the entire structure of the charter, regarded as a whole, as well as from all its component parts. The charter is a contract between the stockholders and the State, founded upon a valuable consideration, with all the powers and privileges conferred upon it by the act of incorporation, in the first instance the contract is execu-tory, because certain precedent conditions' arc imposed upon the stockholders, but it has been, or may become executed, whenever the , . conditions are complied with and the charter accepted; and the rights and franchises established by the act, become complete and vested in the corporation. , .
In the celebrated case of Dart. Col. vs. Woodward, a corporation is defined to be “an artificial being, invisible, intangible, and existing only in contemplation of law.” As it is the mere creature of law, it can only possess those properties, which the charter of its creation, .expressly or impliedly confer upon it. Among these are its immortality and- individuality 5 properties by which a perpetual succession may be kept up, so that its members may act with the will of a single individual. This investiture of its personality by law, enables a succession of individuals to promote the general objects of the charter*, for it endows them with certain powers and franchises, which, though they might be exercised through the medium of its natural members, are yet considered as subsisting in the corporation itself, as distinctly as if it was a real person, or an immortal being. This artificial personage does not share in the civil government of the country, unless that be the purpose for which it was created; nor is it responsible in its corporate capacity for personal misdemeanors or crimes. “ The objects for which a corporation' is created, are .universally such as the government wishes to promote. They are deemed beneficial, and that usually constitutes the consideration for which it is created.” After a corporation is so formed,.it necessarily and inseparably acquires certain incidental powers, as constituent parts of its corporate existence. Among these are, 1st, the power to have*a perpetual succession, and of course the power of electing members in room of those removed by death or otherwise. 2nd, To sue and be sued, implead and be im-pleaded, to grant and receive by its corporate name. 3rd, To purchase and hold lands and chattels. 4th, To have a common seal.— 5th, The power of amotion or removal of its members. 6th, To make by-laws for the government, of the corporation/ 4 Wheaton Rep. 515, Dartmouth College vs. Woodward; 1 Bl. Com. 469, 470, 471, 482; 1 Kyd. Cor. 25; 1 Bur. 200; Porter’s case, 1 Co. 22, b. 23.
Those who contend, that- the act of incorporation is not warranted by the constitution, must place their objections upon" the ground that the local boards by the third, twenty-first, and twenty-second sections of the charter, possess all the powers and privileges of banking.— That the' central board is by the seventh, eighth, and ninth sections .of the charter, the mere creature of their will, and clothed with certain enumerated and delegated powers, given for the express purpose of preserving a common concert of operation, with a view to the credit and welfare of the several banks. That the enumeration of its par-(.¡cu]ar p0Wers excludes all general powers not enumerated; and from its very nature and-organization, it is shown to be but a delegation of the directors of the Principal Bank and the respective Branches, formed for consultation and advisement. That it is not the mere words or name used in the incorporating act that creates the corporation, blit it is the power, rights, capacities, and privileges conferred; and as all these are given by the charter, to the Principal Bank and Branches, consequently, they are four distinct and independent banking corporations. The charter often uses the term banks, instead of a bank, and it expressly declares the manner in which loans shall be negotiated and made by the Principal Bank and each of the Branches; and the latter clause of tile twenty-first section then adds, K they may severally sue and be sued, plead and be impleaded, answer and be answered, in all courts having competent jurisdiction, and to have a common seal,” thus endowing the Principal Bank and each of the Branches respectively with the properties of personality and immortality, .which are of the very essence of a corporation. That these properties cannot exist at one and the same time in the Real Estate Bank of the State of Arkansas, considered as one institution, and in the Principal Bank and the respective Branches, is clearly manifest; and as the charter has conferred them upon the latter, and withheld them from the former, it thereby constitutes them so many separate and independent banks. That this position is not destroyed by denominating these separate banks, “ the Real Estate Bank of the Slate of Arkansas,” or by pledging the faith of the State, to raise capital stock to hank on, or by dividing the losses and profits after the twenty-second year of the charter, equally among the stockholders, according to their respective shares. This, it may be said, is only intended to facilitate or procure 'the necessary loans for banking by a common fund; and for greater security and profit among the respective banks ih'emseiyes. It may be contended by those opposed to the bank, that this is but a pretext under the shadow of names, to endeavor to evade by indirection, the constitutional prohibition. To give to the charter any other construction, it may be said, would be to clothe the central board with arbitrary and despotic power; and therefore, it certainly ft ever could have been the intention of the legislature to have created any.such corporation; and that too, without any affirmative declaration or expression. '
It should be borne in mind, that the abuse of a power is a wholly different thing from an unwarranted usurpation of it. The one may be, and often is-, agreeable to the letter and spirit of the constitution; the other always is, and of necessity, must be, ift derogation Of its authority. .It must be confessed, that this view of the question is imposing and persuasive; and the court have found no ordinary difficulty in successfully meeting and answering the Objection. They are deemed, however, not to be sound or tenable; and such as must yield - to a fair and just construction of the charter. It surely cahnot. be contended that-the power given in the constitution to incorporate one. banking institution, is restricted or confined to a single point or place. The legislature unquestionably possess all power, not expressly or ■ impliedly prohibited. If they have the power to create a bank, based " upon the agricultural interest -of the country, they certainly possess all the power that is necessary or requisite to put that bank into successful operation; and to make it administer to the wants, wishes, and convenience of the people; To give them power to incorporate a bank, and to confine its operation or management to a single point or place, would, in effect, be to clothe them with a power, and at thé same time, to deny them all the essential and requisite means that ■ would make the exercise of that power beheficial or useful. To suppose such a state of case, involves a manifest inconsistency, and such as rlo legal tribunal will ever countenance or allow.
The legislature, then, has the power to establish one banking-instil -tulion with any number of agencies or offices of discount and deposit • to transact its business; and they may locate these offices or agencies at as many points or places as they may deem advisable or proper.— -The only question, then, is, have they done so? The idea of a bank does not presuppose that it shall be kept at one house or. confined to one place;, but that it shall be one entire corporation, represented by as many integral or constituent parts as may be considered necessary for the transaction of its business. These parts must, however, be inferior or subordinate, and they must bé Under the control and direction of a superior or governing head.. The. legislature may vest the governing power of the corporation in a select body of magistracy, chosen from among the stockholders, or from any other class, provided they make but one corporate body. . In the case now before U6, the first section of the charter declares, ‘5 that there shall be a bank under the name and title "of the Real Estate Bank of the State of Arkansas, whh an original cash capital of two millions of dollars to be raised by ]oans or negotiations on the security of real property at cash valuation, -with the guarantee of the public faith and credit of the State,-and •thatthe institution shall consist of a Principal Bank and three Branches. The second section locates the different offices, and divides the capital stock equally between these offices. The twenty-first section creates the subscribers to the capital stock a corporation and body politic for the term of twenty-five years, under the name of the Real Estate Bank of Arkansas, and makes them capable of receiving and holding all kinds of property, and of granting, selling, and alienating 'the same; and empowers them to loan, negotiate, to take mortgages, and to discount on such terms and securities as they may judge proper. Here, then, is an express legislative declaration that there shall be one bank under the style and name of the Real Estate Bank of the State of Arkansas, and that the institution shall consist of the Principal Bank and three Branches, which are nothing more than so many integral parts or offices or agencies of discount belonging to the corporation. The subscribers to the capital stock compose the corporation; and it is the Real Estate Bank of the State of Arkansas that is endowed with all the essential and important properties of a corporation or a body politic; and it is the institution thus established, and not the Principal Bank and Branches, as they are called, that has the right to exercise all the powers and franchises of banking, and to do and perform every act that is necessary to continue its corporate existence. The faith and credit of the State is pledged to the Real Estate Bank,' by the tenth section of the charter, and not to the Principal Bank or Branches.
This shows that the legislature only contemplated the establishment of one such banking institution. The form of the bonds is prescribed by the charter: they are made payable io the order of the Real Estate Bank, and assigned by the endorsement of the President and Cashier of that institution. The mortgages for the security of the stock, and for the final payment of the State bonds, are directed to be executed to the Real Estate Bank by the thirteenth section of the •charter, and all their notes and liabilities are also directed to be issued and created in the same way. By the thirty-seventh section of the charter, the losses and profits of the institution are equally divided • . among the entire stockholders according to their respective shares, after first paying all the liabilities of the corporation. These enacting ■clauses clearly indicate, that it was the design and object of thelegis-]ature to create and establish but one banking institution. For the act creates and calls it a unity, and preserves that feature through the ■entire charter, by means of the central board of direction.
That part of the twenty-first section of. the charter, which declares that the Principal Bank and Branches, “ may severally sue and be sued, plead and be impleaded, answer and be answered, in all courts having ' a competent jurisdiction, and to have a common seal, and the same to alter and renew at pleasure,” must be considered wholly inoperative " and void, as it is directly and positively opposed to the incorporating clause in the same section, and to the general objects and design of the charter. The powers and rights that are attempted to be confer-red by this clause upon the Principal. Bank and Branches, belong necessarily to the corporation itself, for if there is but one corporation, it alone is capable of exercising theseimporlant franchises, as necessary . incidents of its power. They are possessed in as full a manner, and in as ample a degree, without being expressly granted, as if they had been directly conferred by the charter; for they are of the nature and essence of the corporation itself, and cannot be separated from it.— This view of the subject is strengthened and- confirmed by comparing and analyzing the respective powers of (he local and central boards of direction. The third t section of the charter,-in assigning -to the local boards the business severally belonging to each respective office, so far as relates to signing and emitting of notes, the extent of loans to be made, the purchasing of exchange, and the deposite and direction of funds, contains express limitations on their authority, and declares, “ that the rights and franchises conferred shall not be so-con- ' strued as to extend powers and privileges beyond the control of the central board of directors.”
\ The twenty-second section in conferring upon the several boards the power to make by-laws and regulations for the administration of the institution entrusted to them respectively, expressly, prohibits them from making any ordinance or regulation contrary to the rules or bylaws of the central board. Here, then, are two express declarations of the charter, limiting the power of the several offices to.the action of the central board; and declaring that in no instance shall theic Powers and privileges be extended boy.ond its control. The charter, then, clearly intended to make the local boards subordinate to the central board, and give to the latter the governing power of the inslj-tution, Besides the powers already enumerated, the local boards • ' * * ■ possess the right to elect their own officers, -to constitute the central board, to appoint the commissioners to appraise the property of per? sons who apply for stock or loans, and to judge of the sufficiency of all mortgages offered for such stock or loans. This enumeration of their rights, constitutes by far the greater share of their power, if not the entire sum. The enumeration and specification of the whole mass of powers belonging to the central board, show that they are of the most important character, and that upon their due exercise mainly depends the existence of the corporation. It is unlimited, except so far as it is restrained in _a few particulars by the charter, and by the laws of the land. It. cannot create an additional office of discount and deposite, nor can it abolish any one of' those already established, when after the first year of their organization and operation, they declare a dividend of six per cent, per annum, upon the capital invested. Nor can it deprive a stockholder of the right of voting for the entire directory of thS whole institution, nor a director who shall have received a majority of all the voles so given, of being declared duly elected. These are the principal. restraints imposed by the charter, and of course, they are obligatory and conclusive on those points. ’ The seventh section directs the manner in which the Bank shall be organized:— “ when it shall appear that eleven thousand two hundred and fifty shares of the capital stock have been subscribed, and that all mortgages intended to secure the subscription, have been perfected to the satisfaction of the managers,” then' it makes it the duty of the managers, “to cause a notice of the same to be given in all the newspapers published in the Slate; whereupon the stockholders -are required to proceed, at the place appointed for the location of the Principal Bank and each of its Brancliés, to elect a board of directors to consist of seven members for. each office, and the Governor shalfappoint two members on llic part of the State, to each of those respective boards, ■ from among the stockholders. The boards thus formed, shall continue in office for the term of one year, and lhe directors so elected shall immediately thereafter elect one of said directors to be president of each respective branch, except the directors of the Principal Bank.” The eighth section' declares, “ That upon 'the election and organization of■ the boards of directors of the several branches, as ° . provided for in the seventh section of this act, each of them shall select two of their'members, (one being a State director,) who, with ■ the president of said bank, and three members of the Principal Bank, shall become members of, and' form‘the central board pf directors.” The bank must be organized, agreeably to these provisions of the • charter, and the principles therein contained. The number of the ■ respective boards can neither be diminished .or enlarged, beyond the provisions of the.charter. In the first, organization and formation of the several boards .of direction, and in their subsequent continuance and election, their number can neither be in any manner, altered, varied, or changed from the one fixed and specified in the charter.— .For if they could, the local and central boards of direction would be deranged and disorganized; and made to- consist of a number wholly different from that established by the act of incorporation, which would be clearly, not only irregular, but illegal.
The respective boards must, therefore, by .the election of directors, be made to conform to the number expressed in the charter. The stockholders, in proceeding to organize the corporation, had unques-¿ionably the right- to vote for the whole- directory of the Principal Bank and each of the Branches. This right was, however, a personal ■ privilege, which might be waived at pleasure, according to the.discre-lion of each individual stockholder. - In voting at" the time appointed by the managers, and at the places prescribed- in the charter, the stockholders were not necessarily- compelled to’ vote for the entire directors of the whole corporation; but they might make their election to waive their privilege, and only vote for the directors of -each respective-local board; and such an exercise of the right of suffrage in organizing the bank,'Would not be inconsistent or incompatible with the charter; provided all the other essential arid-indispensable requisites were complied with. The ninth section defines the power, and prescribes the duties of the central board, and makes-it consist of •twelve members, chosen from the Principal Bank and- Branches. It declares “that it shall be the duty of the central board, immediately after their appointment, to meet at the city of Little Rock, and elect from among themselves, a president of said board, who shall be president of the Principal Bank, and hold his office for a term not less than four years. It is made their duty to apply for; and receive from the managers, all the books, the papers, and mortgages, belonging to the bank, and also from the Governor, the bonds of the State, and to appoint two commissioners to negotiate the sale of them, provided the same can be sold for par value. They are required to meet at the banking house of the Principal Bank, on the first Mondays in May and November, in each year; and in case of the absence of the President, they shall elect a President pro tempore, and the cashier of the Principal Bank shall be secretary of the board, and it shall be his duty to .keep a regular account of all its acts and proceedings. This section further declares, “thatthe central board shall possess a revising and controlling power over all the acts and proceedings of the Principal Bank and Branches, so far as may seem necessary and proper, for preserving a common concert of operation, with the view to the credit and web fare of the several banks. It shall assign and transfer any excesses of subscription for stock, made at the Principal Bank or any of its Branches, to the office where there is a deficiency of subscription, and the stock not taken. It shall lessen or withdraw the capital of any of the offices of said bank, where the same cannot be employed to profit and advantage, and where, after the first year, a dividend of six per cent, per annum cannot be divided, and transfer the same to such bank, branch, or branches, as are deficient and in want of capital. — • It shall attend to the, payment of the interest, as it becomes due, on the State bonds, and all loans negotiated. It shall ascertain and strike the dividends of the profits, as well for- the Principal Bank as for the Branches; and attend to the payment of them to the individual stockholders, as hereinafter provided. It shall settle and control all the general accounts of the institution, and, ufinally, it shall exercise such other power for the well governing and ordering ike affairs of the said hanks, as may be deemed necessary and proper to advance the general interest: Provided, That the same be not contrary to the provisions of this charter, or the laws of the State.” By the twenty-fifth section it is declared, that after the first appointment of directors, the central board shall fix upon the time for holding the future elections, as well for the Branches as the Principal Bank, and the directors of said Principal Bank and Branches, shall be elected by the stockholders or fheir attorneys, after public notice shall be given in all the .newspapers published at the city of Little Rock, and such other newspapers as are published at the several places where the Branches of said Bank are located, at least thirty days previous to such elections, “thereby appointing the time and place where the stockholders shall meet for that purpose,” each stockholder being entitled to one vote for each share held by him, not exceeding one hundred ; and no person, co-partnership, or firm, shall be entitled to a greater number than one hundred ' votes. The director who shall receive a majority of the votes so given, shall be declared elected; provided, the stockholder, to be entitled to vote, shall have held his shares three calendar months, previous to -such election.” The duties herein enjoined, and the powers conferred upon the central board, are of the most general and important character; and it is difficult to conceive how the legislature could have conferred a more widely extended authority. Complete and unlimited control is given to the central board, over the acts and proceedings of the respective offices, in order that the credit and welfare of the Bank* may be kept up and preserved. This is done to preserve consistency and uniformity of action throughout the entire operations of the cor- ‘ poration. If the powers here given are not duly and properly exercised by the central hoard, the institution would speedily fall into the utmost confusion, if not into utter ruin. The central board is required to do much that is important and absolutely necessary, to organize the bank, and after it is put into operation, they are then commanded to perform certain other highly responsible duties, by which alone, its corporate existence can be maintained, and the general objects of the charter promoted. The general interest of the bank is committed to its custody and care, by express grant; and it is invested with ■ complete and plenary power, for the well governing and ordering the affairs of the institution. The central board may be said to represent the unity, sovereignty, and indivisibility of the corporation, by means of its legislative powers; and hence the charter has made it their duly, to declare the dividends of the profits among the stockholders, to pay the interest upon the Slate bonds, and all loans negotiated, and to settle and control the general accounts of the institution, That this governing power may be respected and obeyed, the central board has express power given to it, by the twenty-first section, to establish by-laws, rules, and ordinances, for the well governing of the affairs of ■ the corporation. Power is given to it, after the bank is organized, to appoint the time and place of holding the future elections, for the stockholders to vote for the directors of the Principal Bank and Branches. The unity of the corporation is thus clearly indicated, and kept up, by the charter, in giving to each stockholder the right to vote for all the directors of the corporation, one vote for each share, provided, the number docs not exceed one hundred.
re§ard those duties enumerated in tbe charter, and which até imposed upon the central board, they are bound to perform them, and cannot confide their execution to other hands. It is a delegation of power, and of course cannot be transferred to any other body without a vj0]a(_¡0n 0f ^he charter. These duties concern the general-interest of the corporation; therefore, the legislature has thought proper to confide them to the central board '; and has made it imperative upon that board to exercise them. '
The'locál boards are inferior, subordinate tribunals, possessing limited,authority specially delegated to them by the charter; and if they usurp powers conferred upon the central board, or if the central board attempts to delegate to them powers entrusted to itself, such act or acts are void, being repugnant to the charter.
Th.e local boards cannot pass any by-law or ordinánce affecting any other part of. the corporation than that over which they respectively preside, and even then, their authority is subjected to the control of the central board. It is the central board that constitutes the revising and governing power-of the corporation,-and-forms the bond of union which binds its separate and components parts together, making it one common whole, and one banking institution. And’if this be the case? then the legislature possessed the power to incorporate such a bank?' and its charter is established agreeably to the constitution. In relation to the' policy or propriety of the powers and privileges conferred on this corporation,.it is neither the duty or-intontion of the court to express or intimate any opinion. Time and experience can alone solve that problem, and to those unerring and scrutinizing tests, the friends and enemies of the bank, are both equally constrained implicitly to submit.their difference of opinion. It must, however, be admitted that the constitutional question' is one of difficulty and'embarrassment, about which enlightened jurists may differ, and.in regard to which human reason may be' induced to pause, and-human judgment to stand in a state of suspense. And this being the case, according to the doctrine of the Supreme Court of the United' States, in the case of McCulloch vs. The State of Maryland, and of Osbourn vs. The Bank of the United States, this court is bound to' respect the law, and declare the act of the legislature in' incorporating the Real Estate Bank; to be constitutional.
The only remaining.quest'ion to be determined, is, whether the de-fence set up by the defendant, in his five several pleas, is a good answer to the writ, ór shows’a valid warrant for exercising the duties, of director of the Principal Bank of the Real Estate Bank' of the State of'Arkansas.' The Slate is bound to show nothing, for if the office was lawfully granted, the defendant can show-his warrant for .exercising-its duties. He must cither disclaim or. justify, if he disclaims, then the State must have judgment. If he justifies, he is bound to show his-title'specially, and till those particulars upon which it is founded. See Willcock on Mun. Corporations, 486, 487, 488. In this case' the defendant has justified, arid has pleaded five- several-pleas, showing his warra-iit or title to the'office.' All of- the pleas áver,-. that he was elected director agreeably to.the provisions of the charter,- arid according to the ordinances ánd regulations óf the local ánd. central boards,, made in pursuance of its authority. They plead, substantially tile sarria matter in different ways. The defendant relies upon each jilea, as showing a.good and sufficient warrant. In order to determine this riVattef.correctly, the court must look to those provisions of -the charter, and the ordinances and regulations of the central and local boards relating to the subject, the inquiry, then, is, wliat constitutes a good arid sufficient warrant for the election of director of' the Principal Bank of the Real Estate Bank of the State of Arkansas 'i
- The Jaw incorporating the bank, is a public act, ánd therefore the court is bound judicially to take notice of it; consequently, it is not necessary for the defendant, in his pleas, to set out the entire charter Of the bank-. .
. There are certain precedent conditions required by the charter, td he performed by the .subscribers to the capital stock, before they can Become stockhplders, and hence it is necessary to aver, that.-the charter was accepted; for without such an allegation, the court carindt-bc informed of the legal existence of that fact. .The defendant rhust aVer, that he is a stockholder'; for the charter prohibits any other person from being chosen a member of the board, of directors, and, of course, it is indispensably' necessary to make such an allegation; The defendant must allege, and set out the ordinance of the central board,' fixing the lime and place of holding the election for directors, agreeably to the twenty-fifth section of the charter, and he must aver that shch election .was held, at the time and place, appointed by the notice, prescribed by the central' board, and in pursuance of its authority,'and that he received a majority of the votes, of all the stockholders, who voted at such election; •
The whole power in regard to fixing the time and place for holding future election for directors of the Principal Bank and Branches, is conferred expressly by the .charter on the central board; and it is their duty to exercise it: consequently they have no authority to delc-tha.t power to the local boards, or to any part or portion of (he corporation, and if they make any such delegation to the directors of the Principal Bank or Branches, such act or acts are null and void; for they are not only wholly unauthorized, but positively prohibited by the charter. And if the local boards assume or usurp any such power in regard to the election of directors, such a proceeding on their part is equally null and void, being repugnant to the charter, and also to the authority of the central board. This being the case, it necessarily re_ suits that the election of directors for the Principal Bank and Branches, which has been held under the act of the central board, purporting to authorize the respective boards to appoint commissioners to hold such election, is nugatory and void; for the central board have no power to make such an ordinance upon the local boards, neither have those boards any authority to act under such an ordinance, or to prescribe any rule upon the subject. If the central board should fail to act, or to appoint commissioners to hold the election, or should'act not in conformity to, but in disobedience of the charter, then, as there can be no valid election for directors of the Principal Bank and Branches, under such a proceeding, it necessarily follows, that no new central board can be legally appointed or chosen, by those claiming to derive their authority under, or by virtue of such illegal and invalid election. The corporation would not,on that account, be necessarily dissolved; provided, it is otherwise properly organized, according to the provisions of the charter. The former existing central board, if legally constituted, would continue in office, with full power and authority to meet, and to appoint the time and place of holding the future election for directors for the Principal Bank and Branches, and to prescribe the mode and manner of declaring the director, who should receive a majority of the votes of all the stockholders, duly elected. The central board possesses the sole and exclusive power of appointing the time and place of holding the election for directors of the Principal Bank and Branches, and of prescribing the rule of certifying such election, for the charter expressly confers it, by the twenty-fifth section. This power does not belong to the local boards as an incidental power, for ¿hey possess no incidental powers, and it certainly is not conferred by the twenty-second section of the charter, giving authority to the local boards, “ to make by-laws and regulations for the administration of the institution entrusted to them respectively.” What right or authority have they, then, to make any by-law or regulation, respecting the general interest of the corporation? Is not that interest confided to the central board by express grant, and is it not enjoined upon it as an absolute and positive duty; which it can neither delegate nor fail to execute? Then jt is not only the right, but the duty of the central board to appoint the time and place for holding the election for all of the directory, and also to prescribe the mode and manner by which that election shall be legally declared, and duly certified. Without some such rule or regulation, prescribed or ordained by the central board, the right of suffrage in the stockholders, and- the right of being chosen a' director, would be inchoate and incomplete; for these important and necessary franchises could not be exercised and carried into practical operation, unless there was some mode or means devised by the central board for that purpose. In laying down the rule upon the subject, the central board may adopt any regulation, that their discretion may dictate, provided such ordinance or by-law does not impair the right of the director, who receives a majority of the votes of all the stockholders of the corporation offered to be given, to be declared duly elected, or the right of each and every individual stockholder, to vote for all the directory of the Principal Bank, as well as each of the Branches. These rights they can neither touch or impair, in any manner, for they are secured and defined by the charter. It is as much the right of the director, who receives a majority of the votes of all the stockholders, to be declared duly elected, as it is the right of each and every stockholder to vote for all the directors of the Principal Bank and Branches. Whatever rules or regulations the central board may choose to adopt, in relation to this matter, must be in aid and confirmation of those rights, and not in derogation of their-authority. The moment its action interferes in such a manner with these rights, as seriously to lessen and embarrass them, such ordinance or regulation becomes null and void, and the courts of justice, upon a case properly made out, would be bound to afford the injured party proper and adequate remedy and redress. The election for directors must then be held at one and the same time, and at one and the same place, and the time and place must be ordained a&d appointed by an order of the central board, agreeably to the directions of the twenty-fifth section of the charter,. The central board must also prescribe the rule, by which tha director who reccives'a majority of the votes of all the stockholders, shalj be declared duly elected, and his election properly.authenticated.
íf these principles be correct, andthal they áre, the court have no (foen ¡t follows that-each and all of the defendant’s five several pleas, are fatally defective, in not avering and showing such a state of fads, as .constitutes a valid or sufficient warrant,- for'exercising th'e duties of the office of director of the Principal Bank- of the. Real Estate Bank of the State of Arkansas, They fail to show that the defendant is a stockholder, and that the election under which he claims to have been chosen a director, was held under,'-and in pursue ■ anee of an ordinance or direction of the central board of directors, fixing the time when, <j.nd the place where, the same should he held', agreeably to the provisions and requisitions of the charter. Nor do they exhibit any notice of said election, given by, and under thé authority of the central board,, as prescribed by the charter. ■ The pleas, in not showing these important and indispensable requisites-of a good and sufficient \varrant, wholly fail to justify-the defendant's title to the franchise. ■ ■
This being the case, it follows as a necessary consequence, that the defendant must be regarded, as having unlawfully entered into, and exercised the office of director.in question. He justifies his claim to, the franchise, in each and all of his pleas, partly under an ordinance of the central board, purporting to authorize the Principal Bank and ■Branches to appoint commissioners Ip hold said election; and partly under a resolution adopted by the directory of the Principal Bank,, acting Under, and in conformity- to, the authority attemptedto.be given .them by the central' board; and as both the ordinance and resolution have already been shown to be inconsistent with the charter, they afe therefore null and void; consequently, the election of directors of the Principal Bank and Branches, held under such authority and direction, must be equally inoperative, -and of no effect, and therefore the -demurrer to each of the pleas of the defendant must be sustained.-