New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1890-06-25
AGAINST THE SUGAR TRUST.
TIE COURT OF APPEALS RENDERING IT'S
DECISION.
THE JUDGMENT OF THE GENERAL TERM AF-
FIRMED ~ THE CASE OF THE NORTH
RIVER REFINING COMPANY
POINTS OF TILE ITNION.

Saratoga, y. Y, June 24.-The following is the
decision Of the Court OF Appeals in the Sugar
! Trust case:
The People Of the state Of NewYork aet the North
River sugar Refining Company. Appeal from order
| OF General Term affirming order Of special Term,
denying In part defendants motion for stay Of pro
cecdingS, dismissed and judgment affirmed. with costs
Albany, June 24.-The decision in the case Of
the People agt. the North River Sugar Refining
Company was written by Judge Finch, and says.
in part
Thc Judgment sought against the defendant Is q
corporate Death. The State which created asks us to
DESTROY. and the penalty invoked represents the extreme
ngor Of law It's innlctlon must rect upon grave
cause. and be waTraAtcd by material misconduct. .
Two charges preferred in the complaint have dropPd
ont OF sight. They Of little Importance and have
been prudcnty dismissed from the inquiry for that reason
and lett 70 consider tho and serious accusation
20 which alone the proofs and arguments have been
directed That is adequate 10 the purpose for
which 10 is framed but upon two conditions which die
hte the line Of inquiry and limit the area Of discussion
Corporations and often do exceed their authority
in wherein their private rights affected When
these adjusted all mischief ends. aud al harm is
avcrcd whore the transgrcssion has wider scope
and threatens the welfare Of the people they NAV summon
the offender n answer for the abus" Of It's franchise n
the violation @ ~ coryorat" duty. The Code Of Civil
Procedure authorizes action for that purpose when the
corporation has violated provision Of law whereby
i has forfeited Its charter become liable to lie dis
solved by tho abuse Of Us powers"
4 number of recent decisions in keeping with
this line Of policy are here quoted The opinion
continues:
Two questions therefore. o?cn before first has the
defendant corporation exceeded abused s powe~ and
second docs that cNcrss or abuse the
public welfa'cl We md disclosed that Il has become
integral part and element Il combination which pos
II absolute control and dictates the extent
and manner and Of IT, entire business activity
{. In tho ont a
trstc.s aud consisting of only eleven individuals,
and distributed TO It's stockholders certificates
Of board carving proportonate interest in what II
descTibes ~ - capital stock
The defendant corporation has lost the power b make
dividend and compelled paw it, net earnings
10 tie master whose servant 1t ha. become. Under the
rdDr u tha, ra-,.r u refused To refine and
ly much has c~s'ned the supply upon th" market
unless tho approves. and yet j. 'n
uod from The earnings of the other rcnn"r"s
ama-,rd as pioAt. IN treasury Of The board it, pro-
lortiona;c share of division among H. own stockoHe'S
vho now the substitute c"r,hcat"' In rtnrn fof
hi, id,1niagc It has become liable "a b" morgaa'd not
fof own corpornt- benefit alone. but u supply with
controlling hoard when tla. boaid ra'h"- ont
Other coveted rcnner!rs.
Al ~ thi. 3, admitted b. th6 defendant. Tho question
De- determined !, whether the corporation hc'au h'
.er,an l,ari b ~ voluntary action or through
te viii and power - Others II what has happened Is
ccr'an~d that the stockholders of this corIoron
one or many od absolutely 20 h' board their ont" stock
and tc a'fo- have merely chosen directors ~ their own
inter 4 and nic managing he property absolute own =
NAV then ~ dGcnlt wherein The corporation has
sinn,,i or wha. done than or time TO omit
to DO husinoss. This i' the appellants story.
ON me other h-nf con,r1ded that thcr- never was
sale but trust Constituted bv mutual oRr""inont; uA'
,.v who agreed whole body Of stockholders In
.ch coipoiaton nrccssnrly rIr-"tina ana binding The
coronation isef nt they transferred h"it shares To '
hoard upon trusts declared Ia N" deed ult ID" ''r
d IL ate, issued by board tho formal declaration o
stockholders parted Win Nlf
local title - stock o The chosen trustees" with u'
power 10 ,o,~ uron it but retld itS hnri a o"n'rnp
through the o,aroi OF hc certificates and 30 me cor
por,on ,crd ntn partnership h thc Board of control
In constituting these TWO theories the court
SAWS that IN contracts the buyer. which in the
case was the board, should bind itself to term
Of sale: but. according 70 the stockholders. this
WAS mo-, done the board fixing no price. In this
Gaze thc Stockholders alone fixed the prlce, ana
,hc ycudccs did not sign 'hc contract, but left II
10 be- supplied hy inference Of their action Inc
stock kholdcrs allowed the board, however, l" IN
the price Of the corporations personal properly.
I'm thc liQh Of these facts thc board was simply an
agent. which is the Characteristic Of a trust Ihc
action which placed the stock m the hands oi th'
board cf trustees shows that no sale was intended,
but simply a transfer In trust inns IS ais"
proved by the mortgage clause. NO absolute
owner requires any permission whatever 10 mort
gaze his property, but hcm III this contract the
supposed buyers are authorized to put mortgage
ON the property of this corporation, notwlths'and-
ing that the board themselves had no capital or
power 10 mortgage property We hhh' tne
court adds twenty rcfncries willing Ia put them
selves under its control IL Is conceded th''
this constitutes trust.
4 summary Of the proceedings on the part OF
the corporation, preparatory 10 its joining III"
ND no nnininn nroC,clS
The h,.,or, shows that there conoratc action on
m. uat of the North Ryrr Refinery Company which
bound The corporation thus became an element OF th'
trust; The the companies could have prevented the
trust being founded by refusing 70 register, ~ To
recognize tho Illegal transfer Of that stock and they should
haye refused to rceistcr The transfer upon their books
appealing the aw to sustain them thus shatrhg th'
ru.t At tile outset OF IT. career. To be- hMiui All cor
oot, acts should have been done by all Of the Nnrous
COMPANY ,,o khodcrs and trustees instead Of by the board
Il trustees slon".
Tn. question to bc determined whether the conduct
Of the defendant In aiding TO form the trust was Illegal
IA ali of These points which have been reviewed II l.
found that the corporation doing the public an injury.
and in avoiding the State law which conpes reservation
Of corporate rights had proved nnfaithin to It's charter
1, I. violation Of law for corporation 10 enter INTO
rarncrshp las shown In the case Of Whittcnton aet
nop,on 10 Gray 50Gl. which furnishes the rra-ons at
i.,oth II the trust had been properly formed
a. corponton under the laws the twenty separate com
panics would have been dissolved and not have remained
Ina eA
trust. nut. upon the market capita stock proudly DC
nant OF actual values and capable Of unlimited expansion
IL f. one thing the state % respect the rights OF
ovncrship and quite another thing to add TO th" pos~i
bility Of further extension u those consequences by
creating artificial authority In the management Of such
aggrcgatons i corporations can combine and mass
their forces In solid trust. with little added risk TO capi.
tai already In, without limit to magnitude tempting aud
easy road Is opened TO enormous combinations vastly eN-
rcedine I'm number strength any possibilities Of indi
vtdua ownership Tho State protect indiNid.
uals rather than combinations
Ia closing. the opinion says:
The defendant corporation has violated its charter and
failed In the performance Of - coroat" duties and that
in rcpct 40 mat rial and Import 10 jus y Judpmcnt
of dissolution without either approval dlsapmoNal
Of the views expressed by the courts below We are enabled
TO decide that In this state there be no partnerships Of
cparae and Independent cotpoatons whether directly or
indirectly through a medium Of trust no substantial
lions which avoid and disregard the statutory
visions but that manufacturing corporations
must be- aud remain several they were created, or one
under the statute.