Daily Kennebec journal., 1911-03-03

equity would not allow the stock so re-
jccivcd by the promoters to 10 retain
ell by them nor by any person hold
ing under them with no superior
rights.
Revised Statutes, Chapter T.. Sec
ton %. provides that any corporation
may purchase property necessary for
its business and tissue stock 70 the
amouut of the value thereof in pay
mcnt thereforc-and the stock So is
Isued shall be full paid stock and not
liable to any further call or payment
thereon: and in the absence of actual
fraud in the transaction. the judgment
| of the directors az to the value of
the property purchascs-shall h" con-
elusive" This statute contcmplates
two independent contracting parties.
the one buying and the other selling.
leach looking out Tor his own interest.
It does not contemplate onc part%
dealius with himself and acting in two
Ioapncities. 1t meanS also thr honest
and bona tide judgment OF the dircc-
tors.
There are some interesting MasSI-
chusctts decisions on the subject which
lI win not read. but win simply say
that it is a well recognized principle
10! law as well as business honesty
that Il man who is director. or promi-
nent stocliholder in Il corporation has
no right to sell the corporation some
thing that belongs to himself at an
enhanced value, and take a raI"of
Now. gentlemen, this principle just
alluded to | think applies to ordinary
corporations merely SO far as their
Erclations with the stockholders are
lGonccrned, because ii does not matter
So far as the public is concerned what
price any private corporation pays for
property or what they sell it for. hut
when You com" down to Il public SER
i vice corporation. Il different rule, Il
further application Of the same rule
land for n more stringent reason, ap
plies. and YOU will see at once the
point. for Il public service corporation
besides having the ordinary relations
II have alluded TO, has the relation te
the public which requires that in th'
| interest OF th" public its stock. jt1
bonds. and I'll Investments shall not
b. Water"d and increased, inflated IN
value. simply for the reason wherever
that is done III" public have to pay the
increased interest and freight charges
And SO tn" laws Of this State very
properly provid" with regard 10 ths
railroad corporations III Sections II
and - OF Chapter 81 OF the Revised
Statutes. and in other parts of tn" Re.
viSed statutes. that railroads shall no,
| issue their stocks and bonds except
| under certain conditions, but that tht
interests Of the public shall be safe
qua r1el along these lines.
Section Il. Whenever . railroaG
corporation Increases its capital stock
| uadcr the provision of tn" preceding
| scot ion. the new shares to the number
| necessary to produce the amount
necessary for the purposes for which
saclt increases is authorized .ltall b'
! offered proportionately to the stock
| holders at not less than the market
value thereof At the time of Increase
and sHall be determined by tac Board
| of I,&ihoad Commissioners taking i'll
t. account preVions sales of stock Q
| the corporation and other pertinen'
conditions The directors shall caas,
written notice OF such increase to To-
given to each stockholder Who wa.
such at the date of the vote 10 -
crease. stating tie amount of such in
1 CREASE tuI tip' iltIl liltitbl II
| shares or portions of shares which It
would hc entitled to receive on Iii
| vision OF the same. and the price fiXe5
by the railroad commissioners as here
inbeforc provided at which he is enti-
tied 20 take The same, and fixing I
time. not less than L. days from the
date e such notice, within which H.
MAY subscribe for such additlcna
stock: and each stockholder may
| within the time fixed. subscribe Tor his
portion OF said stock. and tn" same
| shall be paid Cor i'll cash on tlae issue
OF = certificate thereof. Provided, that
| When the increase in the capital does
| not exceed per cent of the existing
capita, stock of the corporation, the
directors may dispose of the same
/ in the manner hereinafter PROVIDED III
this section without first offering the
same to the stockholders. II. after the
| expiration of the motto" above ProNid.
ed fer, any shares of such stock remain
unNabScribed for by the stockholders
| eatitIcd to take them. the directors
I Shall sell the same at auction. All
| share: of stock to be disposed of al
| auction under the provisions of this
| Sccti n shall be Offered for sale to IA,
highest bidder in the city of Boston
or in such cit or town as may be pre-
| scribcd hy the railroad commissioners
4 and notice Of the time and place oi
such sale shall be published at leas
tixp days during the 10 days immed'-
ately preceding the time fixed for ths
| sale in such daily newspapers. no
less than three in number as may ID
prescribed b. the commissioners.
would call Your special attention &
the last paragraph of this section M
! shares shall bc sold Or issued for .
less sum, To be actually paid III cash
tEan the par value thereof"
Section - provides penalties ior Tn
| violation OF thos" provisions.
| have said that the general pVjH
ciplc Of law is that director ol q
corporation cannQt take rake oil on j
sale rnQdc by himself to his oWn cor
poretion. Then it is provided that rail
/ road corporations cannot issue theii
securities without proper consideration
therefor. or cash. will say further
tnat the Bangor * Aroostook Tail-yad
not only does not need this particulal
charter to allow it 10 extend up tie Al