venting all competition in the sale of the article manufactured. This is the mode of conducting the business, and the manner of carrying it on. The sole object of the corporation is to make money, by having it in its power to raise the price of the article, or diminish the quantity to be made and used, at its pleasure. Thus, both the supply of the article and the price thereof are made to depend upon the action of a half dozen individuals, more or less, to satisfy their cupidity and avarice, who may happen to have the controlling interest in this corporation, an artificial person, governed by a single motive or purpose, which is to accumulate money regardless of the wants or necessities of over 60,000,000 of people." See under Mich. (§ 217); Tex. (§ 232). Exclusive privileges sought to be secured under a general law were held illegal in People ex rel. v. Chicago Gas Trust Co., 130 Ill. 268, 297; 22 N. E. 798, 804; 8 L. R. A. 497, 506; 17 Am. St. Rep. 319, 336 (1889), a case of a corporation formed with power to purchase and hold the capital stock of any gas company in Chicago. On the other hand, in Central Shade Roller Co. v. Cushman, 143 Mass. 353; 9 N. E. 629 (1887), a combination regarded as not otherwise illegal as in restriction of competition, was held not made so illegal by reason

of the parties to the combination forming themselves into a corporation.

That it will not be presumed that the organization of a corporation is for the purpose of creating an illegal restriction upon competition, see U. S. Vinegar Co. v. Foehrenbach, 148 N. Y. 58, 65; 42 N. E. 403 (1895); Locker v. American Tobacco Co., 121 App. D. 443; 106 N. Y. Suppl. 115 (1907). As to effect of prohibition against combination as including action of single corporation or its stockholders, see under Ill. (§ 209). As to application of Federal act to organization of corporation under State law, see § 178. Whether prohibition against "combination to create or carry out restrictions in trade or commerce" applies to the organization of corporation for that purpose, see under Tex. (§ 232). Compare under Mich. (§ 217).

See, on the general subject, article in 13 Harv. Law Rev. 198, 265 (1899-1900) by E. Q. Keasbey.

4 In Distilling & Cattle Feeding Co. v. People, 156 Ill. 448; 41 N. E. 188; 47 Am. St. Rep. 200 (1895), where the acquiring of distillery property by a corporation was held illegal as in restriction upon competition, it was held no defense that by its charter it was authorized to purchase and own distillery property, there being no limit placed on

the amount of property that it might thus acquire. See, however, under Mo. (§ 220), State ex inf. Crow v. Continental Tobacco Co., 177 Mo. 1, 38; 75 S. W. 737, 748 (1903), a case of a purchase by a duly organized corporation of the assets of another, Distilling and Cattle Feeding Co. v. People being here distinguished. And in Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 524; 43 Atl. 723, 729; 46 L. R. A. 255, 263; 78 Am. St. Rep. 612 (1899), the general statutory authority of a corporation to purchase, hold and use property appropriate for its business, and to purchase and hold the stock of other corporations, was held to enable purchases from competitors that tended to restrict and even temporarily destroy competition. To similar effect, Dittman v. Distilling Co. of America, 64 N. J. Eq. 537, 545; 54 Atl. 570, 573 (1903). See also Metcalf v. American School Furniture Co., 122 Fed. 115, 121 (C. C. N. Y., 1903).

5 The grounds on which corporate acts may be held illegal as ultra vires are very numerous. Here are given only a few instances more or less closely related to restrictions upon competition. In Gulf, Colorado & Santa Fe Ry. Co. v. State, 72 Tex. 404; 10 S. W. 81; 1 L. R. A. 849; 13 Am. St. Rep. 815 (1888), the provision of the Texas constitution that "no railroad agers of any railroad corporation shall consolidate the stock, property or franchises of such corporation

. or man

with

or in any way control any railroad corporation owning or having under its control a parallel or competing line," was held to invalidate an agreement among competing railroad companies for fixing rates of transportation, so as to prevent competition among the parties to the contract. So in Central & Montgomery R. R. Co. v. Morris, 68 Tex. 49; 3 S. W. 457 (1887), it was held to invalidate a lease. See, as to effect of the New Hampshire act of 1867 to prevent railroad monopolies, Manchester & Lawrence R. R. v. Concord R. R., 66 N. H. 100, 130; 20 Atl. 383, 385; 9 L. R. A. 689, 694; 49 Am. St. Rep. 582 (1890); of the Missouri act prohibiting a railroad from owning, etc., a competing line, Kimball v. Atchison, Topeka & Santa Fe R. Co., 46 Fed. 888 (C. C. Mo., 1891); of tne Ohio act against leasing such, Hafer v. Cincinnati, H. & D. R. R. Co., 29 Weekly L. Bull. 68 (Hamilton Co., Ohio, Com. Pl., 1893). See also for instance of unauthorized lease to competing railroad corporation, Eel River R. R. Co. v. State, 155 Ind. 433, 457; 57 N. E. 388, 396 (1900). As to provision of the Pennsylvania constitution forbidding the acquisition of the rights of a parallel and competing railroad by another corporation, see Pennsylvania R. Co. v. Commonwealth, 7 Atl. 368 (Supm. Ct. Pa., 1886); Catawissa R. R. Co. v. Philadelphia & Reading R. R. Co., 14 Pa. Co. 280 (1889). In Colles v. Trow City Directory Co.,

11 Hun (N. Y.), 397 (1877), was held ultra vires the use of funds of a corporation for the purpose of destroying competition.

• See McCutcheon v. Merz Capsule Co., 71 Fed. 787; 19 C. C. A. 108; 31 L. R. A. 415 (6th C., 1896). Thus, in State v. Nebraska Distilling Co., 29 Neb. 700; 46 N. W. 155 (1890), on the ground that it was ultra vires for the corporation to sell all its property, real and personal, together with its franchises and powers necessary to carry on business. So, too, it would seem, in Harding v. American Glucose Co., 182 Ill. 551, 625; 55 N. E. 577, 602; 64 L. R. A. 738, 767; 74 Am. St. Rep. 189 (1899). So, in People ex rel. v. Chicago Gas Trust Co., 130 Ill. 268, 286; 22 N. E. 798, 800; 8 L. R. A. 497, 503; 17 Am. St. Rep. 319, 327 (1889), on the want of power to hold stock in another corporation. Compare Elyton Land Co. v. Dowdell, 113 Ala. 177; 20 So. 981; 59 Am. St. Rep. 105 (1896); Morris v. Elyton Land Co., 125 Ala. 263; 28 So. 513 (1900).

7 Thus, in Stewart v. Erie & Western Transp. Co., 17 Minn. 372, 396 (1871), a traffic contract entered into by a railroad corporation, that

8

it was authorized to make, was held not illegal, though resulting in a practical monopoly. See, however, as to grant of exclusive privilege to manufacture and sell gas, City of St. Louis v. St. Louis Gas-light Co., 70 Mo. 69, 119 (1879).

8 Thus, in People v. North River Sugar Refining Co., 121 N. Y. 582; 24 N. E. 834; 9 L. R. A. 33; 18 Am. St. Rep. 843 (1890), where was affirmed a judgment dissolving a corporation, the court did not, as did the court below in 54 Hun, 354; 7 N. Y. Suppl. 406; 5 L. R. A. 386 (1889), base its decision on the ground that the acts were in restriction upon competition, but on the ground that it is illegal for a corporation to enter into a partnership, in this case a "trust," described as "in substance and effect a partnership of twenty separate corporations." To the same effect, in case of a similar agreement, State ex rel. v. Standard Oil Co., 49 Ohio St. 137, 185; 30 N. E. 279, 290; 15 L. R. A. 145, 159; 34 Am. St. Rep. 541, 552 (1892), where it was said: "Whether the agreement should be regarded as amounting to a partnership between the several com

panies, limited partnerships and individuals who are parties to it, it is clear that its observance must subject the defendant to a control inconsistent with its character as a corporation. Under the agreement, all but seven of the shares of the capital stock of the company have been transferred by the real owners to the trustees of the trust, who hold them in trust for such owners; and, being enjoined by the terms of the agreement to endeavor to have 'the affairs' of the several companies managed in a manner most conducive to the interest of the holders of the trust certificates issued by the trust, have the right, in virtue of their apparent legal ownership, and by the terms of the agreement, to select such directors of the company as they may see fit, nay more, may in fact select themselves. The law requires that a corporation should be controlled and managed by its directors in the interest of its own stockholders, and conformable to the purpose for which it was created by the laws of its State. By this agreement, indirectly it is true, but none the less effectually, the defendant is controlled and managed by the Standard Oil Trust, an association with its principal place of business in New York city, and organized for a purpose contrary to the policy of our laws." And similar agreements were held illegal, as providing for a corporation becoming a partner, in Bishop v. American Preservers' Co., 157 Ill. 284; 41 N. E. 765; 48

Am. St. Rep. 317 (1895); American Preservers' Trust v. Taylor Manuf. Co., 46 Fed. 152 (C. C. Mo., 1891); Mallory v. Hanaur Oil Works, 86 Tenn. 598; 8 S. W. 396 (1888). See also Wallerstein v. Ervin, 112 Fed. 124; 50 C. C. A. 129 (3d C., 1901); Fechteler v. Palm, 133 Fed. 462; 66 C. C. A. 33ú (6th C., 1904); Breinig v. Sparrow, 39 Ind. App. 455; 50 N. E. 37 (1907); Franz v. William Barr Co., 132 Mo. App. 8; 111 S. W. 636 (1908); Geurinck v. Alcott, 66 Ohio St. 94; 63 N. E. 714 (1902). See also Sabine Tram Co. v. Bancroft, 16 Tex. Civ. App. 170; 40 S. W. 837 (1897); Wilson v. Carter Oil Co., 46 W. Va. 469; 33 S. E. 249 (1899); Charleston Gas Co. v. Kanawha Gas Co., 58 W. Va. 22; 50 S. E. 76; 112 Am. St. Rep. 936 (1905). It was declared prima facie illegal for a corporation to enter into a partnership, in Boyd v. American Carbon Black Co., 182 Pa. St. 206; 37 Atl. 937 (1897).

9 See discussion in Green's Brice's Ultra Vires (2d Am. Ed.), p. 423, note; also Bates v. Coronado Beach Co., 109 Cal. 160; 41 Pac. 855 (1895), where it was said: "There is no rule of law that will preclude a corporation from entering into a contract with an individual, which will have the effect to carry out, directly or indirectly, the object of its incorporation, and to provide in that agreement that the gains or losses of the venture shall be borne equally by both parties."

10 On the general subject, see 1

Cook on Corporations, 5th ed., §§ 64, 314. As to holding by foreign corporation of stock of domestic, see MacGinniss v. Boston, etc., Consolidated Copper & Mining Co., 29 Mont. 428, 458; 75 Pac. 89, 96 (1904).

11 In De La Vergne Refrigerating, etc., Co. v. German Savings Inst., 175 U. S. 40; 20 Supm. 20; 44 L. Ed. 65 (1899), the power of a manufacturing corporation to purchase the stock of a rival corporation for the purpose of suppressing competition and obtaining the management of such corporation was denied. See also Joseph Bancroft & Sons Co. v. Bloede, 106 Fed. 396; 45 C. C. A. 354; 52 L. R. A. 734 (4th C., 1901). To like effect, in case of such purchase for the purpose of creating a monopoly in the telephone business, Dunbar v. American Telephone, etc., Co., 224 Ill. 9; 79 N. E. 423; 115 Am. St. Rep. 132 (1906). See subsequent decision in 87 N. E. 521, 532, 534 (1909), where, on the application of minority stockholders the purchasing corporation was required to surrender the stock to the rightful owners upon equitable terms.

In Bigelow v. Calumet & Hecla Mining Co., 155 Fed. 869 (C. C. Mich., 1907), the illegality of an attempt to create a monopoly by purchase of stock of another corporation was held not prevented by the circumstance of it being proposed to be effected in part by the holding of proxies.

See as to power

12

of railroad corporation to acquire stock in another, Central R. R. Co. v. Collins, 40 Ga. 582 (1869); Hazlehurst v. Savannah, etc., R. R. Co., 43 Ga. 13, 57 (1871). See note 12, infra; also under Kan. (§ 212); Mont. (§ 221); article in 22 Harv. Law Rev. 114 (1908) by G. C. Todd.

12 See for instance Dittman v. Distilling Co. of America, 64 N. J. Eq. 537, 541; 54 Atl. 570, 571. (1903); Metcalf V. American School Furniture Co., 122 Fed. 115, 125 (C. C. N. Y., 1903). In Rafferty v. Buffalo City Gas Co., 37 App. D. 618; 56 N. Y. Suppl. 288 (1899), the main question was as to the application of such a statute.

By Ohio R. S. (Bates' Ed., 1906), § 3256, "a private corporation may purchase or otherwise acquire and hold shares of stock in other kindred, but not competing, private corporations, whether domestic or foreign, but this shall not authorize the formation of any trust or combination for the purpose of restricting trade or competition." See also under Ga. (§ 207); Miss. (§ 219); Neb. (§ 222); Okla. (§ 228). In Dittman v. Distilling Co. of America, 64 N. J. Eq. 537, 545; 54 Atl. 570, 573 (1903), was denied relief sought against the acquiring of stock in another corporation, the doctrine being applied that "where a monopoly results or may result from the exercise of the powers of making contracts expressly granted