§ 307. The same subject continued — The Wisconsin Central Voting Trust.- The Wisconsin Central Voting Trust, which has been in successful operation for a number of years, is a personal contract between each certificate-holuer and the trustees, and no other certificate-holder is privy to it. The only relation is between the trustees and cestui que trust, and is limited to the single purpose declared in the certificate. The fact that the trustees may have ten thousand similar trusts does not concern the individual who holds a certificate. His rights depend alone upon his contract with the trustees, and by the acceptance of his certificate he expressly consents to their trust. He has no right, title or interest in or to the stock itself other than what appears on the face of the certificate, which he therein agrees to be subject to the trustees' perpetual right to vote the stock as its legal owner. While

posed, it does not, we think, vary the case that the end was sought to be obtained through two closely related Boards, one supplementing and operating as a restraint on the other. Without pronouncing an opinion on a point which remains open for consideration on the final hearing, it is enough to say that the case is not sufficiently clear to warrant a preliminary injunction that would prevent an election on the day named in the charter, and might cause the irreparable injury which such remedies are given to prevent."

1 The certificate is as follows: "Trustees certificate for common stock. Shares $100 each. shares. Wisconsin Central Company. No. This is to certify that Charles L. Colby, Edwin H. Abbot and Colgate Hoyt, trustees, own and hola for the benefit of of

shares of the common stock of the Wisconsin Central Company, a corporation duly organized under the laws of Wisconsin for the purpose of acquiring either by purchase of the capital stock or acquisi

tion of leases or purchase of right of way or other property, real, personal or mixed, or by some or all of these methods, as well as by every other lawful method, ownership and control of the railroads already constructed and known as the Wisconsin Central Associated Lines, and of thereafter maintaining and operating them, subject to the following and irrevocable trust, to wit: First. Said trustees, their survivors, survivor, successors and successor, shall hold said shares with full power to fill from time to time each and every vacancy in their number upon the joint nomination of the surviving trustees, approved in writing by the holders of a majority of the stock in said company covered by said trustees' certificate, both common and preferred. Each new trustee shall from and after the filing of said nomination, so approved, in the office of the Farmers' Loan and Trust Company, be as fully vested with said trust as if he was one of the original trustees above named. Second. Said trustees above named, their survivors, survivor,

the trustees are the legal owners of the stock, they retain for themselves simply a naked power to vote as they or a majority of them shall in their discretion think best. The party to whom the certificate is issued, has never received and has not any power of control over that discretion. He accepts his interest in the stock subject to that reserved right and to the lawful exercise of the discretion of the trustees. The rela tion, therefore, between the certificate-holder and the trustee grows out of and rests upon the certificate alone and is gov erned by the general rules of equity only. The trustee must faithfully vote, but is only governed by his own discretion. He can not vote to give himself anything, because the rules of equity prohibit a trustee from doing any such thing, but there is no additional, private relation or private contract between him and the cestui que trust. Under the peculiar circumstances of the Wisconsin Central Voting Trust, two of the trustees who were office holders in the company continued to be the active managers of the property; but their successors are to be disqualified to hold any office in the company except that of director, and the continued ownership of a certain, considerable, specified amount of the stock in their own right is deemed a necessary qualification for the position of trustee. The trustees have power to nominate their own successors, subject to the approval of the holders of a majority of the trust-certificates. The power of ultimate control is thus vested permanently in the body of trustees instead of

successors and successor, shall vote on said shares for all purposes whatsoever upon every question raised at each and every meeting of said company, whether annual or special, as the majority of them shall in their discretion from time to time determine. Said shares are transferable only upon surrender of this certificate by a conveyance in writing signed by the person above named, or his attorney thereunto lawfully authorized, and recorded in the trustees' books therefor by the Farmers' Loan and Trust Company of the city of New York; and

in an irresponsible body of stockholders necessarily ignorant of the corporate affairs. It has been argued in support of this voting trust that when directors have once been selected, whether by trustees or by stockholders, it is they, in either case, who control and manage the corporation, subject only to the visitatorial power of the trustees or the stockholders; that in the trustees that visitatorial power is intelligent and real, while in ordinary stockholders it is shadowy and practically ineffective, the individual stockholders regarding only their own pecuniary interest, and feeling no responsibility for or to any one else; that if directors manage well, they acquire such strength before the public that it would expose the trustees to obloquy if they turned out faithful and efficient officers; that on the other hand, the directors and officers themselves would know that, the visitatorial power being vested in an efficient body of visitors, it would be impossible for unfaithful officers to perpetuate themselves in power and build up a ring inside the corporation for their private advantage. No restraint against alienation is imposed by the Wisconsin Central Voting Trust agreement. The certificates are transferable like ordinary shares of stock, and each of them is endorsed with a suitable form of power of attorney for that purpose.' The question whether this voting trust is within the rule against perpetuities has been submitted to Mr. John C. Gray, author of the work on Perpetuties, and the highest living authority upon this subject, and the trust embodied in the certificate has been pronounced by him to be free from any objection on the ground of remoteness.2

§ 308. Introductory.-A by-law is a private law made by those who are duly authorized thereunto by charter, prescription or custom, for the conservation of good order and good government within some particular place or jurisdiction.' But for the purposes of the present discussion, it is sufficient to consider only those rules, regulations or ordinances of a permanent character which companies and associations are empowered to make for the governance of their affairs. It is observed that in many of the English cases cited in discussions of the subject of by-laws, the term is used as equivalent to what in America are known as municipal ordinances. The word corporations also, as used by English authorities, in this connection, is to be understood to mean municipal corporations. A by-law must provide something in addition to the general law and not be a mere re-enactment thereof." It must

1 Bacon's Abr. tit. "By-Law." 2 Cf. Grant on Corporations, 79. 3 See Lumley on By-Laws, ch. 1, "The Definition."

4" There are several factories in Lowell, each of which belongs to what we should term a Company of

Proprietors, but what they call in
America a corporation." Dicken's
American Notes, ch. 4, “Lowell and
its Factory System."

Queen v. Saddlers' Co., 3 El. & E. 80, saying that otherwise it would be idle.

be free from ambiguity and afford complete direction to those who are to obey it.1

3

309. The province of by-laws.- Persons who form themselves into voluntary associations may agree to be governed by such rules as they see fit to adopt so long as they are not immoral, contrary to public policy, or in contravention of the law of the land. In the case of corporations, however, there are two additional requisites of a valid by-law, to wit, that it be reasonable and that it be in conformity with the charter or enabling act. In this connection it should be noted that express authority to make ordinances in certain cases and for certain purposes is exclusive by implication of all others. s within the province of the by-laws to provide for the appointment of inspectors of elections by the president of the company; and to regulate the counting of ballots, as, for example, to direct that none shall be counted which contain anything besides the name of the officer voted for. Where

It

the charter is silent as to what number of directors shall constitute a quorum, but confers upon them the power to make by-laws necessary and convenient for its business, they may iawfully fix the quorum by by-law. So also a by-law may validly prescribe the qualifications of officers where they are not prescribed by statute or charter," or the qualifications of applicants for admission." Charter power to adopt by-laws "for the regulation of its affairs" and "the transfer of stock," gives the company power to create by by-law a lien upon

1 Nevesby v. Webster, 1 Ken. 243; B. C. sub nom. Leathley v. Webster, Say. 251; Eagleton v. East India Co., 3 Bos. & P. 55.

2 White v. Brownell, 2 Daly, 329, 359; Hyde v. Woods, 2 Sawy. 655, 859; Note to Austin v. Searing, 69 Am. Dec. 672.

3 Vide infra, § 318.

4 Vide infra, § 317. See further as to what may be adopted as byaws by private corporations, 85 Am. Dec. 617, 622.

7 Commonwealth v. Woelper, 3 Serg. & R. 29.

8 Hoyt v. Shelden, 3 Bosw. 267; Hoyt v. Thompson, (1859) 19 N. Y. 207.

9 Queen v. Saddlers' Co., 3 El. & E. 42; s. c. 32 L. J. Q. B. 337.

10 Rex v. Surgeons' Co., 2 Burr. 892, where a by-law that applicants should pass an examination upon their knowledge of Latin, was up

New Orleans v. Phillippi, 9 La. held as reasonable. Ann. 44.