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Thursday, August 25, 2011


May 15, 1934.
It has long been recognized that the Federal Government has constitutional authority to create corporations for the administration of proper Federal Functions. Thus the United States has issued charters of incorporation to national banks (McCulloch v. Maryland, 4 Wheat. 316 1819); interstate bridge companies (Luxton v. North River Bridge Company, 153 U.S. 528); interstate railroads (Pacific Railroad Removal Cases, 115 U.X. 2); and patriotic societies (e.g. American Legion; see U.S. Code Title 36, Chapter 3).
The constitutional authority of the United States to incorporate an Indian tribe, for the more convenient administration of Indian affairs, is beyond question. See Lane v. Pueblo of Santa Rosa, 249 U.S. 110, upholding corporate character of pueblo, under 10 Stat. 575, and Laws of New Mexico 1851-1852, pp. 176, 418; and see 14 C. J. 97: "Quasi-
municipal corporations have been created by Congress within State limits upon Indian reservations, and the power of Congress so to do is understand to stand unquestioned, (Citing authorities)."
In the exercise of the congressional power to charter Federal corporations, there is no constitutional restriction upon the method of incorporation that Congress may select.
A corporation may be created either by a special act, whereby a legislative body charters a corporation directly, or by a general act authorizing some administrative officer to issue a charter of incorporation to a body of "incorporators" under prescribed conditions. Both methods of incorporation are equally valid and constitutional. Falconer v. Campbell, 8 Fed. Cas. No. 4620 (1840); Cranby Min. Co. v. Richards, 95 Mo. 106; Ames v. Port Huron Co., 6 Mich. 266; 1 Blackstone comm. 474. The choice between these two methods of incorporation is a question of legislative policy.
The Wheeler-Howard Bill is, in effect, a general incorporation law for a defined class of Federal corporations, to wit, incorporated Indian tribes or communities. The proposed bill (April Committee Print) specifies the procedure to be followed in the issuance of a charter (Title I, Section 2 and Section 15); enumerates the corporate powers which may be conveyed by charter (Title I, Section 4 and Section 15); specifies those corporate powers which every charter is to contain (Title I, Section 3); and otherwise defines the status and powers of a chartered Indian corporation, in many detailed provisions of the bill. The Wheeler-Howard Bill is, therefore, similar to the general incorporation bills enacted by Congress for certain classes of corporation in the District of Columbia (26 Stat. L. 625) and for national banks generally (U.S. Code, Title 12, chap. 2).
In earlier times, all corporations were created by special legislation. This practice is still commonly followed by Congress. The Federal corporations thus chartered have been few in number and varied in character. In the various States, the difficulties and delays incident to the process of incorporation by special act led to the passage of general laws for the chartering of various types of corporation (e.g. stock corporations, charitable corporations, religious corporations, and other membership corporations). In many cases the States have gone so far as to prohibit, by constitutional provision, all special incorporation acts.
It is noteworthy that Congress likewise prohibited territorial Legislatures from granting special legislative charters (Rev. Stat. Sec. 1889; Comp. Stat. (1913) Section 3478).
It is also worthy of note that when a general law for the Federal incorporation of interstate carriers was recommended by President Taft (in a special message to Congress, dated January 10, 1910), the opponents of that measure, while objecting to many of its features, raised no objection to the general character of the law. Thus Mr. Garret of Tennessee declared on the Floor of the House (February 7, 1910):
"In passing, let me say, Mr. Chairman, that if we are to have any such incorporation, I quite agree that it should be under a general law, and only under a general law. There should be no special acts of Congress granting charters to particular associations for special purposes. * * * I have frequently protested against the passage of special bills granting charters of incorporation to District associations, simply on the ground that we ought not to pass such special acts. I am glad to see that we have fewer of these than formerly. If we are to have this general policy, by all means let it be under a general law, but let us consider well before we have it at all."
The policy of incorporation by special act was followed in various bills introduced in the last few years for the incorporation of particular Indian tribes (e.g. S-3588, 72d Cong.; S. 4165, 71st Cong.; H.R. 17052, 71st Cong.; S. 5753, 70th Cong.). These bills all failed of passage, apparently because Congress could not devote sufficient time to working out the administrative details of the "legislative charters". The present Wheeler-Howard Bill puts the responsibility for working out these details upon the Secretary of the Interior and the Indians seeking the charter.
Acting Solicitor.

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