1The title of this contribution points to three things. Of them, pink unicorns might strike most legal historians as the less obvious one in a study on the history of company law. Yet thinking of the history of English commercial law in terms of culture judirique would be no less strange, only slightly less eccentric. Culture judirique may be defined as the way legal doctrine interprets the law and its place in the society where that law applies. But this is just one of the many possible definitions. A more honest explanation is that culture juridique refers to any possible combination of the terms “values”, “society” and “jurists” put together in a single sentence (taking into account also all their synonyms). The result is as broad as it is vague. But for a Continental jurist this makes perfect sense because, whatever the definition, it always refers to the concept of doctrine. So in effect explaining what the culture juridique about the subject X is means providing a reasoned summary of the legal doctrine on that subject. The problem is that “doctrine” is not a category familiar to the English jurist. Or rather, an English jurist would use that term (though presumably they would do that only under duress) not as a category, but just to signify “scholarly opinions on the way a set of rules applies or applied”. Which is not what a Continental lawyer would intuitively mean when speaking of “doctrine”: at the very least, the definition above should be enriched of another level, thus becoming “scholarly opinions of the scholarly opinions on the way a set of rules applies or applied”. Hence the colour in the title: everybody knows what a unicorn is, but we always imagine them white. Pink unicorns are something that neither exists nor is usually (thankfully) imagined. The common lawyer would have the same reaction if asked to describe the history of commercial law as culture juridique. To talk about the subject, he or she would give an account of the development of discrete legal subjects pertaining to commerce. Which is what the present contribution shall endeavour to do – going back to the unicorn at the end, to see whether we should paint it white or leave it pink.

2It is frequent among contemporary company law scholars to find elaborate discussions on the basic elements underpinning corporate law. In a recent and highly influential work, a very distinguished group of company lawyers listed five such elements: separate legal personality, limited liability, transferable joint stock, delegated management and investor ownership1. About two and a half centuries ago, Blackstone thought that the five basic elements of corporations were the right to have “perpetual succession”, the faculty “to sue or be sued”, the right “to purchase land and hold them”, “a common seal”, and finally “to make by‑laws or private statutes”2. Apart from the fondness for the number five, the reader might notice several similarities between the modern experts and Blackstone. The ability to transfer joint stock, however, did not make the top list of Blackstone – who, admittedly, was not thinking primarily of profit-maximising business structures when writing about corporations3. This might also explain the absence of “investor ownership” from his list. But the main, structural difference lies elsewhere: much to the contrary of our modern experts, Blackstone did not associate separate legal personality with limited liability. For him, legal personality was a fundamental element of corporations. Limited liability was not. This might appear puzzling to a modern lawyer, all the more since most contemporaries of Blackstone would have agreed with him. Quite unlike Blackstone’s contemporaries, the development of company law in England was very recently described as “the struggle to enable business enterprises to have all five of the core structural characteristics” of the experts above4. This is hardly an isolated position. Most historical overviews on the development of company law unwittingly share the same undertones found in Patristic literature to describe Greek philosophers from Plato to Plotinus: step by step, the gradual discovery of the Truth. With this highly teleological approach to the history of business organisations, every step leads to the next and is a progressive refinement of the shortcomings of the past. In this Darwinian evolutive process the ultimate goal is the acquisition of two things above all others: legal personality and limited liability.

3Historically, the relationship between incorporated and unincorporated companies is a rather ambiguous one5. The modern association between separate personality and limited liability was developed only after that separate legal personality was granted to all companies in the middle of the nineteenth century, and that law courts realised its full implications in the famous Salomon’s case towards the end of that century. To understand the development of English company law, however, we should keep separate the two elements of legal personality and limited liability. Between them, the more multifaceted and complex one is probably legal personality. It is often said that considering the company as a legal person enables it to do what most other (physical) persons can do – namely entering into contracts and owning assets, delegating authority to others (in effect, agency), and suing and being sued in its own name6. If this is the case, as we shall see, then there was little need of bestowing legal personality to business enterprises.

4During the fifteenth and sixteenth centuries, incorporation in England was granted mainly to collective bodies – from boroughs to university colleges and livery companies. While in the fifteenth century this was typically done to settle a somewhat unclear state of affairs and not to innovate7, during the sixteenth century the same privilege was extended also to some merchant trading companies – the first time in 1505, to the Merchant Adventures. Much unlike in the fifteenth century, this time the bestowal of incorporation was perceived as an innovation, a clear rupture with the past. By and large, the – few – companies that received the benefit of incorporation were organised either as joint-stock companies or as regulated companies8. Initially, the difference was mainly based on the company’s radius of operations: the joint-stock model was chosen for long-distance trade, whereas the regulated company was preferred for trade within western Europe9. This neat division, however, did not last long. For some time the regulated company seemed to prevail, and some of the main join-stock companies – the Levant and the Russia – were reorganised as regulated companies between the end of the sixteenth century and the first decades of the seventeenth. The reign of James I saw a considerable growth in the number of companies, if only for the king’s willingness to sell all sorts of monopolies. This largesse with monopolies, however, could not work for ever – at the very least, one monopoly should not infringe the other. The appetite of his successor, Charles I, for an ever-growing number of monopolies to sell led to confusion and uncertainty. The instability of the Civil War, the Interregnum and the Restoration proved even worse for corporations. By and large, the central part of the seventeenth century was a difficult time for the development of corporations in England10. When however the institutional and political climate improved – at least, in the sense of becoming more predictable – with the 1688 Coup (more often referred to as the Glorious Revolution), corporations started to grow again11. By then, however, most overseas territorial monopolies had disappeared. This could be greeted as a conquest of free market against rent-seeking institutional opportunism (as the favour enjoyed by those corporations with the government was largely due to their willingness to pay well for their monopolies) or lamented as the evidence of dysfunctional behaviour both within single companies and in their mutual relationships (given the remarkable inefficiency and opaqueness of many trading corporations)12.

5The claim of new institutional economists that the “credible commitment” theory paved the way to a steady growth of companies in England13 might perhaps strike as a little too optimistic (to say nothing of whether the “commitment” that the new sovereign accepted with the Glorious Revolution was particularly “credible”). It is true that there was a rapid acceleration in the formation of companies in the 1690s. After all, Houghton’s Collection – the newspaper where John Houghton listed the current quotations of the shares of the major companies – started in 1692, and by 1695 had already 137 joint stock companies; the more famous Course of the Exchange started during the same years, and it was not the only one14. But this acceleration did not last long, as many of the companies formed in those years disappeared shortly afterwards15.

6If the “credible commitment” theory might appear somewhat too optimistic, the consolidated narrative as to the early eighteenth-century developments of joint stock companies is definitely too pessimistic. This narrative portrayed the 1720 South Sea Bubble as a calamity that arrested the development of joint stock for a full century by wholly disrupting the market and greatly discouraging investors. Legal historians came to accept this narrative especially with the important work of William Scott16, all the more after its endorsement by William Holdsworth in his monumental – and monumentally influential – History of English Law17. More recent scholarship has however questioned the conclusion18, showing how the financial and legal consequences of this legislation have been somewhat over-emphasised19. The South Sea Act, more commonly referred to as the Bubble Act, passed on the same year as the bursting of the Bubble, prohibited the formation of further joint-stock companies without specific authorisation by Parliament. This measure, often considered a harsh answer by the Parliament meant to prevent further market “bubbles”, was in fact devised for the very opposite purpose: enacted at the apex of the market frenzy, it was meant to curb competition by limiting alternative opportunities of investment in joint-stock companies. Its purpose, therefore, was to encourage the investors in their buying frenzy, making however sure that they would buy only South Sea company shares20. The South Sea Act continued to apply for another 105 years after the South Sea Bubble; while in theory it should have curbed the number of joint stocks, in practice it was remarkably ineffective, for investors soon realised that they did not need the blessing of the law to set up a new joint stock21. If anything, therefore, the Bubble Act encouraged the growth of the number of unincorporated joint stocks22.

7From the late seventeenth century, the joint-stock model began to gain popularity – both over the regulated company and in absolute terms. The great (or, as they came to be known, “moneyed”) three companies – the East India Company, the South Sea Company and the Bank of England – were all formed as joint-stock. But, and more importantly to our purposes, the success of the joint-stock structure was not limited to the “heavy league”: on a smaller financial scale, a large number of business entities were created to deal with domestic trade and manufacture. Many such entities were shaped as joint-stock companies, yet they seldom asked for the privilege of incorporation. The penumbra surrounding the actual functioning of the unincorporated joint-stock companies is partly the result of our expectation to find clear, well-defined rules specifically thought to regulate discrete forms of business organisation. What happened in practice was that a first group of investors would gather together and draft a first agreement, after which a call would be made on other (often, passive) investors. Thereafter, a second and more elaborated contract would be drafted. This new contract would deal with three main points. First, the joint-stock capital: its amount, the way to raise it, and its division into shares as well as their transferability23. Second, the governance of the enterprise: the various organs of the company, their election and specific powers. Third, and perhaps most interestingly, the trust: the contract, in effect a deed of settlement, would also often include the formation of a trust. In its turn, the trust would include all the capital and the assets of the company, nominate the first trustees and provide a mechanism for their replacement. This way, although technically unincorporated, the business organisation would acquire some degree of autonomy from its members.

8“Foreigners”, Maitland famously said, “manage to live without trusts. They must.”²⁴ Over the last few decades we foreigners have happily started to make some progress on that front. At least, we have become moderately used to the idea that trust is not a typical English dish. But perhaps we would not associate it with partnerships. And yet, in hindsight, even a foreigner could see the logic of the operation: legal personality was a scarce commodity, whereas lawyers were used to deal with trusts. It would have been more surprising if they had not thought of applying trusts to partnerships. A first and obvious advantage of using the trust form can be appreciated in litigation: shaping the business structure as a trust allowed suing and being sued in the names of the trustees as opposed to all partners individually25. The advantage of dealing with a few trustees instead of dozens – or hundreds – of partners was no less important in the day-to-day life of the business, as many operations required expressly the signature of all the parties involved26. It might be noted that these two points are both in Blackstone’s top five (the five elements necessary to have corporations), as the second of the two is functionally identical to Blackstone’s “common seal”27. Another and very important advantage of shaping the joint stock as a trust was that the trust allowed for some separation between the estate of the business and that of its members. By the early eighteenth century at the latest there was little doubt that the personal creditors of the trust beneficiaries could not force the liquidation of the trust estate, nor could the personal creditors of the trustee seek execution against the assets held in trust by the same trustee28. This of course does not mean that there was no difference between incorporated joint stocks and unincorporated ones shaped as trusts. So for instance the seller of a share of stock held in trust had to assign the share to the buyer. The assignment was an ingenious solution to bypass the prior approval of the other partners²⁹, but assigning a share remained a little more complicated than simply transferring it30.

9Lack of legal personality did not necessarily mean lack of distinction between assets of the partnership and of the partners. By the late seventeenth century, the Court of Chancery had already established a system of priority between personal creditors and creditors of the partnership. Because of its symmetry (as it applied equally to partners and partnership), this priority system has often been called the “jingle rule”, but a more formal way of calling it could be “weak entity and owner shielding”31. Depending on whether the insolvency started with the partnership or the partner, the rule gave priority, respectively, to the creditors of the partner or of the partnership. Basically, if it was the partnership to be insolvent, the Chancellor would privilege the creditors of the person of the partner, whereas if it was the partner to be insolvent then the creditors of the partnership would come first32. At least in principle, the rule was meant to be rather thorough: no creditor of the partnership could pursue a claim against assets held by the partner until all the creditors of the partner as individual were paid in full, and none of the creditors who contracted with the partner as individual could pursue a claim against assets held by the partnership, even when they belonged to the same partner, until all creditors of the partnership were paid in full. The rule is first clearly attested in Craven v Knight in 168233, and then famously restated by Lord King C in Ex parte Cook in 172834. It is hardly surprising that this “soft” limited liability developed in equity and not at common law35. Since the parties contracted their liabilities relying on the distinction between partnership’s and individual partner’s assets, it might have not been too difficult to argue for the substantial unfairness of the pari passu rule36. Even if the law did not speak of limited liability for partnerships, in other words, the parties behaved as if the partnership’s estate was different from that of the individual partners: not respecting the will of the contracting parties would therefore have been inequitable.

10Some scholars have argued that, by the late seventeenth century, incorporated companies enjoyed full limited liability37. On the subject – as in many others – the work of Holdsworth was of great influence to the development of English legal historiography. Holdsworth stressed how the company’s statute would often allow the company to ask further contributions from its members and how the company’s creditors would resort to this indirect mechanism “by a sort of subrogation”, which ultimately denied the limited liability of the shareholders38. This mechanism however was not implied in the structure of the partnership, nor was it possible to argue for its constructive application: when the statute was silent on the right to ask further contributions to the company’s coffers (and so, ultimately, to the creditors’ pockets), therefore, the partners did enjoy limited liability. If the mere silence of the statute was sufficient to stop this subrogation, Holdsworth argued, then all the more a statutory clause explicitly denying any further liability of the shareholders for the company’s liabilities would work against the company’s creditors39. “Thus – he concluded – by the adoption of the corporate form, a clear line could be drawn between corporate liability and individual liability”40. What is not clear from Holdsworth’s account, however, is whether this limited liability could be analogically applied, in full or in part, also to unincorporated companies.

11The answer seems somewhat nuanced. The more the company was shaped as a trust, the stronger the legal consequences of the separation between partners and business organisation41. As long as this business organisation was explicitly set up as a trust, the jingle rule would provide some form of (mild) liability insulation. One might speculate as to whether the Court of Chancery would extend the same protection to other unincorporated joint stocks where the form of trust was less pronounced, especially those where the trust was wholly absent. It is of course possible to imagine that the Chancery would have argued for an implied trust, or might have even interpreted the jingle rule itself on the basis of trust law. On the point, however, more research is needed. One way or another, it seems safe to argue that it was better to shape the business organisation as an explicit trust, and that, this way, there was some financial insulation separating the unincorporated partnership from its members, and this insulation operated in both directions. Insulation, however, is not the same thing as limited liability. The express exclusion of the partners’ personal liability was, it would seem, one of the main reasons for seeking (i.e. for paying the considerable fees unofficially required to get)42 incorporation43. Despite the great talent of contemporary lawyers in drafting deeds of settlement, having full limited liability was still better than relying on trust law. At the same time, it should be noted, the expenses needed to get incorporation might have been prohibitively high for a small partnership but not for a medium-sized one. Even so, many such partnerships remained unincorporated. This might suggest that not all the business people who could afford the privilege of incorporation were so keen to obtain it44. Few among the legal historians highlighting the gravity of the consequences that unlimited liability entailed in early modern England (or, for that matter, anywhere else) did also notice how such consequences would often remain just theoretical, given the difficulties involved in shareholder debt collection during the same period45. If unincorporated joint stock was common, however, it still remained a “step-child of the law”, with “serious legal difficulties to surmount”46. The limit of attenuated forms of liability insulation lay in the insolvency of the partnership, and this insolvency could well mean financial ruin for its members47. When the partnership was insolvent, the only issue at law was to determine which creditors should be the first in helping themselves to the assets of the individual partner – nor whether the partner could avoid as much. Statutory clauses limiting the liability of the partners had only effect between partners, not towards third parties. Of course, it was possible to negotiate limited liability specifically in each and every contract made with third parties – as it became fairly common in the insurance business48 – but that was hardly a practical solution, not to mention that it would still leave the door open to claims based on negotiable instruments49 or (at least in theory) tortious liability50.

12Trust law and the jingle rule allowed for some financial separation between partners and partnership, yet this separation was due to legal rules elaborated in equity and then applied also to joint-stock companies. With respect to company law, therefore, such rules had an exogenous origin – an origin that lay elsewhere. During the late eighteenth and especially early nineteenth centuries, however, a different set of rules began to emerge from the structure itself of the joint stock companies. As the structure was one and the same for both incorporated and unincorporated joint stocks, the emergence of those rules progressively led to the blurring of the difference between them: the more the business organisation was treated as a separate and autonomous legal entity, the less important the lack of legal personality became. Better stated, the law began to recognise the significance of the autonomy of the company’s structure and so to treat such a structure more and more like a legal person, regardless of whether it was formally incorporated.

13Before looking at how the similarity of the business structure of any joint stock progressively led to the extension of the rules devised for incorporated joint stocks also to unincorporated ones, it is important to stress that such a similarity was not appreciated by the law. For centuries, the term “corporation” was only applied to incorporated associations. In his Institutes of the Lawes of England, for instance, Edward Coke argued that “Persons capable of purchase are of two sorts, persons natural created of God … and persons incorporate or politique created by the policy of man”51. It is now perhaps clearer what Blackstone meant when, writing almost a century and a half after Coke’s Institutes, he said that one of the essential features of legal personality is the capacity “to purchase land and hold them”52. On the subject, the position of lawyers had not changed much from Coke’s time to Blackstone’s. So for instance some decades after Blackstone, in 1793, Stewart Kyd defined a corporation as: “a collection of many individuals united into one body, under a special denomination, having perpetual succession under an artificial form, and vested, by the policy of law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of contracting obligations, and of suing and being sued, of enjoying privileges and immunities in common”53. This was not just the position of legal treatises, but also of law courts. So for instance in the contemporary case of Kirk v Nowill and Butler (1786) Lord Mansfield CJKB defined the corporation as “a creature of the Crown created by letters patent. … Those corporations which are created by Act of Parliament have no other additional powers incident to them than those [sic] have which are created by Charter unless they be expressly given”54. Even if some scholars have made much of the plural form often used by lawyers and law courts alike until the half of the nineteenth century when referring to corporations55, at common law the lack of legal personality continued to make a significant difference.

14We have seen the close relationship between trusts and unincorporated joint stocks. When the joint stock company did not have legal personality, the legal title to the property was vested in its directors qua trustees. In the incorporated companies, by contrast, the legal title to the property was vested in the corporation itself. The difference is of course of great significance, but in both cases the shareholders were the beneficiaries of the equitable claim. Despite the difference, therefore, the “mechanism” was the same. This identity of mechanism is the reason why many rules originally devised only for incorporated joint-stock companies were progressively applied also to unincorporated joint-stock ones56.

15Equitable property is a very flexible concept, and this flexibility may be appreciated also by looking at the legal nature of the shares. Before doing so, however, we should spend a few words on the nature of the proprietary interests of the partners. Qualifying the proprietary interests of the partners (or shareholders) as equitable property meant defining the legal nature of the share on the basis of the company's assets. Doing so was not a straightforward operation, and it led to much litigation. Out of this litigation, however, a body of case law emerged specifically on the legal nature of the share57. The subject was made more complex by two other factors. First was the question of devolution of property belonging to the partnership, because of the dual intestate succession at common law – one for real estate (which went to the legal heir) and another for personal property (which went to the next of kin). By the early eighteenth century it was an established rule in equity to treat partnership land as subject to an implied trust for sale – i.e., forcing the sale of the land, and dividing its value among the partners. As such, in equity partnership land was considered as personalty for the purposes of inheritance. The second factor was the law of mortmain. Seeking to prevent land from falling into ecclesiastical hands, an important statute was passed in 1279, De viris religiosis. More than a century later, in 1391, this statute was extended to lay corporations. Leaving corporations (first of all, ecclesiastical) free to acquire and accumulate land was felt as highly undesirable, for that was perceived as quite incompatible with the feudal structure, if only because it deprived the lord of his feudal incidents and because the civil burdens attaching to the ownership of land were not suited to corporate bodies58. In principle, judging by the tenor of the statute itself, the prohibition was an absolute one. Yet in practice it became customary to grant dispensations from the statute. Normally, such dispensations were granted on an ad hoc basis to religious corporations, and once and for all to trading corporations (enshrined in their instrument of incorporation)59. This licence however was not often an unrestricted one, as it normally allowed to purchase as much land as the operations of the corporation required – but no more than that60. This remained the case up to the middle of the nineteenth century, especially for railroad and canal corporations61. Only with the Joint Stock Companies Act 1856 was mortmain (almost entirely) abolished62.

16We can now turn to the legal nature of the shares. The early forms of joint-stock companies had a fixed number of shares: when the company needed further capital, it did not issue new shares but rather increased the amount already called up on the existing ones63. The obvious limit was the structural impossibility of attracting vast amounts of money from a – potentially unlimited – number of small investors. This limit became very tangible with the exceptional financial needs of the East India Company during the seventeenth century. The solution was found dividing the capital into an indeterminate number of shares of fixed nominal value. This value represented an equitable right (i.e., a right in equity) to an undivided part of the company’s assets. Crucially, this approach to the legal nature of the shares applied to both incorporated and unincorporated companies. This would soon lead to important changes in the law, as we are about to see.

17In Ex parte The Lancaster Canal Co., on appeal, the counsel (Sir Edward Sugden, later on Lord St Leonards) argued that even if the incorporating Act was silent on the matter, the share should in any case be considered personal property (as opposed to real property). The point is important. Being incorporated, it is only the company to have a proprietary right in its assets. As such, what the shareholders can have is simply an interest (and not ownership) to a share of the company’s profits64. Three years later, The Attorney-General v Giles (1835) reached the same conclusion65, and Bligh v Brent (1837) marked a watershed on this – rather disputed – subject66. Bligh v Brent clearly established the interest of the shareholders of an incorporated company as confined just to the profits of the corporation, not also – at least directly – to its assets. But what about an unincorporated company? Would it be possible to extend the same rationale also to them? Bligh’s case referred only to incorporated companies, but even so the concurring opinion of Parke B., based as it was on a business organisation shaped as a trust, was clearly meant for unincorporated companies67. In 1839 Bligh was cited before the King’s Bench in a case (Humble v Mitchell) on an unincorporated joint stock company (a bank). Shares, it was held, were not “goods, wares or merchandises” (for the purposes of the Statute of Frauds)68. Shares, in other words, were no ordinary property, even in the absence of a subject – a legal person – different from the partners. A few years later, in 1846, when dealing with shares and shareholders in Sparling v Parker the Court of Chancery made no distinction between incorporated and unincorporated companies. This was intentional: Lord Langdale (the Master of the Rolls) argued that the right of the shareholder in a company was the same, “whether [the company was] incorporated or not”.69 The application of Bligh’s doctrine to unincorporated companies went even further with another – and rather complex – Chancery case finally settled in 1852, Myers v Perigal. In this case, the problem was to determine the nature of the shares of an unincorporated joint-stock bank for the purposes of inheritance. The Vice-Chancellor (Shadwell) relied on the pre-Bligh, older case law and concluded that, since the company had no legal personality, then its property had to be imputed directly to its partners according to the nature of the property itself. Hence, he concluded, given the large amount of land owned by the joint-stock, the shares were “necessarily chattels real” (i.e. real property)70. On appeal (in 1851), also the Chancellor (Truro) seemed more sympathetic towards the older authorities: the mere fact that the Mortmain Act had been enacted at a time in the past where the main kind of corporations were ecclesiastical ones, and not joint-stocks with a very large number of partners, he reasoned, would not make the same Act unsuited for joint-stocks71. Yet, acknowledging that the issue was the object of “conflicting decisions”, he allowed the parties to seek the opinion of a court of law72. The opinion was rendered by the Court of Common Pleas, which gave certificate against the applicability of Mortmain73. By the time the case reached the Chancery again, however, the Chancellor had changed. The new one (St Leonards, whom we have already encountered in Ex parte The Lancaster Canal Co.) made no difference between incorporated and unincorporated companies: in both cases, he argued, the partners had only a right to receive the dividends – and not to the company’s assets. Hence, he concluded, the shares could never be real property to the purposes of Mortmain74.

18By the 1850s the idea that all joint stock company shares were autonomous forms of property – regardless of the legal status of the company itself – was clearly gaining ground in the eyes of the bench75. Legal commentators soon followed suit. So, for instance, if in the second edition of Thomas Jarman’s Treatise on Wills (1855) property of joint-stock unincorporated partnerships was still being treated differently from property of incorporated companies, six years later the third edition acknowledged that the nature of the shares of any company, “whether incorporated or not”, was always the same76. Lindley’s Treatise on the Law of Partnerships, published in 1860, sought to explain the difference between unincorporated partnerships and incorporated corporations in terms of size. Thus, while a partnership “consists of a few individuals known to each other, bound together by ties of friendship and mutual confidence”, a corporation “consists of a large number of individuals not necessarily acquainted with each other at all”77. Size plays a crucial role on the intuitus personae, reasoned Lindley, whose presence or absence conditions the transferability of the shares. So, in a small partnership the partners “are not at liberty without the consent of all to retire from the firm and substitute other persons in their places”, whereas in a large corporation “it is a matter of comparative indifference whether changes amongst them are effected or not”78. Thus, Lindley concluded, “[n]early all the differences … existing between ordinary partnerships and companies, will be found traceable to the above distinction. Indeed it may be said that the law of companies is composed of little else than the law of partnership modified and adapted to the wants of a large and fluctuating number of members”79. This account, based as it was on logical correspondence between legal principles and economy reality, would struggle when it came to large unincorporated partnerships. These were described as “associations of persons intermediate between corporations known to the common law and ordinary partnerships, and partaking of the nature of both”80. This hybrid formula was a good compromise between law and reality, but it could not hide the fact that the unincorporated joint stocks resembled more and more incorporated ones not just de facto, but also de iure.

19Explaining the rationale for bridging the legal distinction between incorporated and unincorporated companies on the basis of the similarity of their economic structure would also mean reaching a different legal outcome when the structure is different. Indeed, in Ashworth v Munn (1880) it was clearly stated that the distinction between different kinds of unincorporated partnerships lay in their economic structure: a joint stock with freely transferable shares “is to be dealt with precisely as if there was a corporation”81.

20The acceleration in the legal change during the first half of the nineteenth century can be in good part attributed to the booming of the stock market. Throughout the eighteenth century, the stock market largely relied on government loans. Beyond the government, however, little else was traded at the London Stock Exchange82. Things changed dramatically from the mid-1820s, with the booming of railway investments83. By 1842 the Railway Times (a weekly journal almost entirely devoted to railway investment) reached about 27,000 copies84. The exceptional (and exceptionally rapid) success of railways in Britain ensured an exceptional growth of joint-stock investment, and its consequent depersonalisation. Shares became a traded commodity, and no longer the tangible manifestation of the membership of a partnership. It was inevitable for the joint-stock companies to treat their members as investors, and no longer as actual partners. Thus, while the legal structure remained the same, the economic one rapidly evolved85. This of course does not mean that, before such changes happened, all members of a joint-stock company always wanted to be more than simple investors. But it means that, willingly or not, they were tied up to their shares in a way that no longer applied in the middle of the nineteenth century. By then, holding shares in a joint-stock – whether incorporated or not – simply meant holding some liquid asset. A share was no longer just a quota of the company’s assets, but a legal object in its own right. Thus, when the 1856 Joint Stock Companies Act allowed seven or more persons to “form themselves into an incorporated company”86, the law was just seeking to get on a par with the economy.

21Saying that “law matters” is, historically, a vague platitude. Vague, because one should first define what he or she means for “law”; platitude, for reasons – at least for a lawyer – too obvious to be discussed. With the Joint-Stock Companies Registration Act of 1844 the number of companies more than doubled in a year. Ten years later, with the introduction of general limited liability in 1855-56, their number tripled87. Law matters. Advocating for a reassessment of the centrality of legal personality to the development of both the economy and economic law, however, does not mean arguing for the marginality of the law. It is simply an invitation to look at the development and the application of all rules (and not just those enacted by the legislator) within their historical, institutional and especially economic context. There is no clear legal or economic reason for the supremacy of the modern corporation vis-à-vis trust or partnership. Geopolitical (and so, quintessentially contingent) reasons led governments to initially favour corporations up to the early seventeenth century; wars and political conflicts led to their relative decline and the resurgence of trusts and partnerships in the following century. By the time of the railroad booming, the gap between corporations on the one hand and trusts and partnership on the other was closing – but corporations still enjoyed a marginal advantage88. It is not too implausible that a thirty-year delay of the nineteenth-century railroad booming would have led modern company law scholars argue for the progressive but irresistible triumph of trust as the best legal form for a business enterprise.

***

22Let us go back to the unicorn mentioned at the beginning of this contribution. Does it exist a doctrinal approach (a culture juridique) on the history of company law in England (i.e. should we think of unicorns or of horses)? And, if it does not, would reasoning in such terms nonetheless make sense (i.e. if we opt for unicorns, which colour should we paint them)? Answering the first question is relatively straightforward: no. It is only during the twentieth century that the history of English companies begins to be studied from a legal – and no longer exclusively economic – point of view. But, even then, the focus is only from the early nineteenth century onwards. This is not because English legal historians dislike their early modern history89. Rather, it is because the early modern history of most English partnerships is in effect a specific application of trusts to business entities, whereas the traditional object of trusts is land. Studying the history of company law would therefore require to look at a plurality of sources – and perhaps this has not encouraged the efforts. The strong teleological accent in contemporary scholarship labels as a gap what in fact is just a more complex answer.

23Let us come to the second question: if we wanted to compare the development of English company law with that of (most) Continental regions, would it still make sense to use a doctrinal approach (i.e. to think in terms of culture juridique)? In other words, which colour should we use to paint the unicorns – white or pink? Let us take a step back. A Continental lawyer would instinctively distinguish his or her legal analysis between doctrine, statutory law and case law. No common lawyer would do the same, but let us imagine to persuade one of them to play this game and see the outcome. In most works on the legal history of any part of the Continent over the last millennium there are long gaps in the statutory law and/or in the case law, but very seldom in the doctrine. In the history of the common law, both statutory law and especially doctrine will appear only sporadically, whereas the analysis will mostly focus on the case law. The element that bestows continuity to the narrative, therefore, is different: doctrine in the one case, case law in the other90. This difference is not necessarily based on the actual development of the law – as if the high courts counted for little on the Continent, or legal opinions were negligible in England. Rather, it is to be found in something rather self-evident: until the establishment of the Vinerian Chair at Oxford in 1758 not a single common lawyer had a chair (and, even then, things did not change overnight)91. As long as all the “doctrine” (i.e. people paid to teach and write) was supposed to do in England was to study Roman law, it would have been surprising if scholars did play any role at all in the development of the common law. Statutes are a rarity in the common law. Strictly speaking, statutory law and common law are quite distinct: the boundaries of the common law are marked by the scope of statutory law, so that widening the scope of a statute leads to a corresponding withdrawal of the common law. On the history of company law, at least until the early nineteenth century, statutes are even less frequent than in most other subjects. What is left of our trichotomy is case law. And indeed the reader might have noticed that most footnotes in this short and summary paper (especially for the early modern period) deal with case law and, when they do not, refer to other studies that deal with case law. Thinking in terms of doctrine (painting the unicorn white) would mislead the Continental lawyer who wants to look at the common law into believing to have found what he was looking for. This way of doing comparative legal history means creating something in order to find it, and we all do this more often than we realise.

24If chasing unicorns is perhaps best avoided, how can we hope to compare the history of company law – and, for that matter, of any branch of commercial law – on England with that found on the Continent? A starting point would be looking at commercial instruments and letting them speak. We might step in only to understand the symbiotic relationship between instruments and rules: as commercial instruments have always sought to trigger (or to inhibit) the application of some rules, they should be studied against the background of a certain set of rules. Whether those rules derive from statutes, from legal decisions, from customs or perhaps from scholarly elaborations is less important. Doing otherwise will always lead to the creation of strange categories. After all, unicorns are more elegant in white.