New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1889-01-10


Oh corporate property by corporate means
also appears in connection with this particular
purchase OF the stock. became its president and
treasurer put In new directors and at once for reasons
From that hour to this the defendants refinery has
been closed, and yet dividend has been declared
to Mr. searles by the board, upon the transfer TO
II Of the defendants caWta stock Mr. searles as
thai dividend and as of the trust board helped
70 declare It. he knew also that 4 was realized from
defendant had not contributed a penny to the fund
from which 1t was to be paid
SHAREHOLDERS AND CORPORATIONS THE SAME.
1t really seems unnecessary to dweil further upon
this subject. The accumulation OF evidence points
irrcsstiby to the complete practical identity Of share
holders and corporations and II is quite impossible
TO sever the acts Of the persons solely interested
in these corporations from that of the corporations
themselves The purpose to effect corporate combi-
nation cannot be disguised. The form Of the contract
veil was thin enough, but the acts under It sweep
away the gauze and leave the corporate body IN;
substantially hy right t when he told US that after his
purchase OF the defendants entire stock he was the
on SR Re s Subject sSsiT IN hmcny with
Having come to the conclusion that the acts
under consideration were corporate acts, the
Judge examines the question whether they were
illegal and says:
This question may be divided into two branches
First, had the CORPORATIONS authority to enter into
self-such, for example, would have been perfectly
lawful between Individuals Second. was this com
binaticn of the latter character or was IL Inherently
unlawful such, for example again. as would have
been unlawful between individuals
branch be in the negative 1t cannot be doubted
that the arrangement In question amounted to part
consolidation suoh was the effect of the massing of
all the stock Of all the corporations and the co.rela-
The Intention was clearly TO share Dot prohts anu
losses. Such, too was The effect Of uniting all the
II is well settled that corporations cannot consoil
date their funds or form partnership unless a'no
lied by express grant or necessary implication. nor
they enter iqto any arrangement amounting 10
prses sea- Ss aso@ s Gs sS
Bnce Als MoraTeS SIea2i and csSeS VS. 'ee Gc
noh BANK w ena s wssnon Minis vs. Up
ton 10 Gray, 5e2 Marine Bank vs. Ogden. 20 Ill 24sl
KAT the Bank Chief ar S''s h
power Of corporations to do such et.a acts sIS
such as arc necessarily incident to tho grant made
to them. Corporations at common law nave ccr.alh
S1 mo-. Tco or a o wSs Of TWO
panies into one.n IL was doubtless because OF the
ecogniaop of this principle that the acts Of 1867
CHAP. 900, and 1854 CHAP. 36s) wero passed au-
thorizing consultations In certain specified manner
and under fixed conditions.
THH STATE TOO SMALL FOR THEIR OPERATIONS
The corporations whose conduct wo are consider
ing have not taken advantage Of thess acts, doubt
less because Sucn acts are uWIteu 70 tofPUiaNoho
organized under any general special law OF this
Statc7-the promoters of the present combination
evidently desiring to combine all the refinery corpo
rations in the Union-and they have sought, by tho
scheme under review 20 effect q far broader ana
deeper purpose than mere corporate consolidation
under these acts. In doing so they have plainly
abused their powers and have exercised privileges
not conferred upon them BY law: As Legal ooncdu
sions forfeiture OF tbs defendants franchise and dis
solution Justly follow. -
Nor. on Corp, sec. 1,o24) a corporation may IN
cur forfeiture OF its franchises By the doing OF an
hidden by iis charter or by a general rule OF law
and strictly every act which the charter does not
II the doing OF such not is An injury 10 the public, IL
may be sufficient ground Of forfeiture w.,..
Tho same rule IS laid down ia Kent, Taylor; WHcr
Kent sSis; Taylor Sections oss 457, $50 ; . Water.
Sc 2 kyd sS .a 40 n SEC: 5s Ss
7s7 Waterman says thai the state Is not required 10
iuTe II Se act p be such as IN Inc nature Of things
e calculated TO produce injury Inc cases al nolo
the corporate franchises arc granted upon trust or
condition. that The corporate privileges shat not Do
upon condition Of forfeiture. that Il VIII manage
and conduct IT'S Affairs that II shall not eeome dan
eeopm,miy ia ana With which transact. business
ward VS.. Farwe % Ill. $685. and that the franchise
ultra vros or for bresch Of the trust condition and
pcrversion OF the objects OF the grant. Ems. 90.
ing SOC; People Va Bristol 81 wonS. e35 People
VS. Fishlnll, % Barb. AS; state vs. Railroad Com
Gin and Johnson, !. 100, 1911
THE INHERENT RIGHT OF SOVEREIGNTY.
These rules rest upon the inherent right OF soyer
eighty. The franchises. whether resulting from gen
eral or special laws. grants from the sovereignty
OF the people Benefit 10 tho country at lasgc, from
the objects for which the corporations arc created
constitute the consideration and IN most cases the
sole consideration OF the grant Chief Justice Marshall
IN the Dartmouth College case. Wheaton, ols 63Il
IL therefore follows logically that when those objects
perverted when the country suffers injury instead
OF receiving benefit The State because Of such msuser
may withdraw the privilege and resume It's franchise
In regard 20 the second branch OF the question
the Judge says that the combination was In
hercntly unlawful and on this point he adds:
II IL not a case where a few individuals In limited
locality have united for mutual protection against
ruinoas competition Il is DE case of great capital
lists uniting their enormous wealth In mighty corpor-
atoDs and utilizing the franchises granted to them by
the corporate franchises TO guard themselves against
the dangers Incident TO personal association; and
second they centrallzc these franchise I'm single
ggantc and irresponsible power furnished with every
delegated facility for regulating and controlling at WILL
not only In thu state but throughout the entire coun
try the production and price OF particular aud neces
sary article OF commerce. when say an irrfpon-
sbJc power, ] mean no reflection upon The gentle
men personally in whom the pogcr Is vested. mean
O body OF individuals who IN their trust capacity
entirely outside Of the corporate being and ars sub
ject to no legislative power Combinations that were
plgmies in comp arisen with the present have been
peatedly denounced by the courts and pronounced 10
10 be unlawful, az tending 10 breed monopohes.
CONCLUDING REMARKS.
In conclusion Justice Barrett says:
Lastly this appeal to tho law is criticised an
interference with natural state Of things: The
unnatural thing IS sad to be the law, when II
attempts TO check the natural order Unfortunately
for this argument II Is the combination which has re-
sorted 10 what II calls the unnatural thing II not
contant with natural partnerships or associations Of
individuals hut rcsorfcd TO ihe device OF corporate
artiiicality 10 effect lts ends Having asked and
accepted the favor II the law II cannot complain that
It IS taken 10 task for grossly offending its letter and
spirit .
Fortunately the law Is apc to protect itself against
abuses OF the privileges which II grants And while
further legislation, both preventive aud disciplinary;
may be suitable 10 check and punish exceptional
wrongs, yet there Is existing. 10 use the phrase OF
a distinguished English judge In noted case. plain
law and plain sense enough to deal with corporate
abuses IKE the prcscntabuses which, II allowed 10
thrive and become general, must inevitably lead 70 the
oppression OF the people and ultimately 10 the sub
version OF their political rights.
Again, the legal results justly foiow-forfeiture
and dissolution .
Let me say in conclusion that It would quite I'M
of