St. Landry democrat., 1888-01-07
TRUSTS or A.. KINDS.
q Noted Jurist's Opinion on the Recent
Combinations of Special Interests.

a Noted Jurist's Opinion on the Recent
Combinations of Special Interests
The formation OF several combina-
lions Of special interests, under the
title of trusts for the alleged pur-
pose Of preserving those interests. has
attracted the attention of both lega!
and commercial minds, and re-
porter called on MIR. Austin Abbott,
whose works on law and reports Of
law courts have been acknowledged by
the judges of the Court of Appeals
and others connected with the bench
as authority in all matters before the
courts, to ascertain the nature of these
trusts. Said he:
1.-The mystery which in the minds OF
some obscures this subject is BUSH
ness mystery not legal one. Each
of the legal principles which have
rendered these combinations possible
is easily comprehended and generally
famil lar. Nearly all of them have
long been recognized and fire.
quently separately applied. The
modern spirit of organization has
recently discerned the results that can
be worked out through the combine
tion of these familiar principles, and
the secrecy which has attended the
operation of the device is simply a
matter of business policy. Hereto
fore efforts to obtain concert Of action
among corporations have been princi-
pally made either by one corporation
taking stock in another by one leas-
ing the property of another. or by
contracts between the boards of di-
rectors having one or more common
members. These involve, in one form
or another, embarrassments arising
out of the limits of the powers of cor
porations and their directors, and also
out Of the fiduciary relation of direct
ors to stockholders, and the incapacity
Of q director in two boards to sanction
contract between them. Tt was the
fact that stockholders have not hither-
to been regarded as holding any fidu-
ciary relation to each other, or to their
company, that has led 70 the inven-
ton of these trusts of stock for the
control of corporations. y
'tWhat is trust?''
"a trust. so called. is device to
secure concert of action among anum-
Der of corporations of similar inter-
ests, by separating the voting power
and the ownership Of the stock, in each
one, to a sufficient extent to concen-
trate the voting power of a majority
of the stock, in each corporation. in the
hands of a single committee or assoc
citation. whose policy will, therefore.
animate all the boards of directors. or
who may even put the same persons
in the several boards. SO that the cor
porate action of all may be identical
without contract. Under this arrange
ment it is intended that the bene-
fetal interest in the stock, minus
the voting power, shall rest where it
was before, while the pecuniary value
of the stock may be enhanced by the
termination of all competition between
the corporations thus brought under
one control, and by the consequent
advantage gained from the combined
corporations in their competition with
corporations and individuals in the
same business, but not in the combina-
fion.''
..Are such ordinations legal?''
1.-The legal principles upon which
this device rests are in the first place
the characteristic features of corporate
organization; III the next that the cor
porate combination by trust needs
no corporate act; next the alleged JUS
fification of the objects of trusts
next the legal theory of the trusts,
and lastly, the function Of the
trustees. Half the stock, plus one share,
can elect a board Of direction, to
whose hands all the ordinary powers
of that body are transferred. leaving
the other half no right either of con-
troll or voice in the board These
directors are trustees of the franchise
granted by the State but can not !
bind the corporation by contract !
to exercise corporate powers in /
consistent with the property
rights of the stockholders. Hence all |
attempts TO secure concert Of ac-
ton between such boards are OF un-
certain duration. as is seen in the pool
ing arrangements Of carrying COM
panies. But If the power to elect the
boards in the several companies be
lodged in one, hand. then no contract
is necessary. The directors who would
not act in concert would simply be-
dropped at the next election, and
others more. subservient take theiri
places. This leaves the corporations
in q legal seE5e free. but the boards OF +
direction net Ill concert, without en-
tering into any contract in restriction
of their franchises consequently the
conduct Of the different directories can
not be impeached. The trusts, are
alleged to be justified By the fact that
The Object Of the concert Of action is
the enhancement of the value of the
stock, as the proprietorship remains
where ii was, the owners having only
parted with their right to vote for the
purpose Of enhancing the security Of