§ 175. Corporate acts.-Speaking generally, there would seem to be no reason why the form of relief against a corporate act, illegal as in restriction upon competition, should not be the same as if such act were that of an individual. It has been seen that, as a rule, no civil liability results from the existence of such a restriction,38 and clearly this rule applies whether such restriction results from the acts of a mere individual or of a corporation. It has also been seen, however, that on behalf of the public a remedy is allowed against such a restriction, ordinarily by way of injunction, on the application of the attorney-general; that ordinarily, though not necessarily, it is only against acts of a corporation that such relief is granted.39 But relief by injunction has comparatively rarely been sought against such acts of a corporation, a preference being shown for the more drastic remedy of a proceeding for the dissolution of the corporation.40 But, as the application of this severe 105 N. W. 135; 113 Am. St. Rep. 39 See § 166. In Trust Co. oi Georgia v. State, 109 Ga. 736, 747; 35 S. E. 323, 326; 48 L. R. A. 520, 525 (1900), it was held proper for the attorney-general to maintain a proceeding to enjoin a combination among street railroad corporations as tending to restrict competition, the court saying: "The State has no right to an adjudication by the courts declaring void such contracts merely and solely for the reason that they are ultra vires, but she is entitled to this relief when injury to the public is involved." 40 So, in Attorney-General v. Great Northern Ry. Co., 1 Drewry & Smale, 154 (1860), a railway company was enjoined from carrying on the business of coal merchants, the court saying: "These companies being armed with the power of raising large sums of money, if they were allowed to apply their funds to purposes other than those for which they were constituted, might acquire such a preponderating influence and command over some particular branch of trade or commerce, as would enable them to drive the ordinary private traders out of the field, and create in their own favor a practical monopoly, whereby the interests of the public would be most seriously injured." Similarly, in Stockton v. Central R. R. Co. of N. J., 50 N. J. Eq. 52; 24 Atl. 964; 17 L. R. A. 97 (1892), an injunction was granted, on the application of the attorney-general, against a railroad corporation leas remedy deprives the corporation of power for good as well as for ill, there would seem to be, on principle, strong grounds for applying the remedy by injunction, so that the corporate existence may be preserved for legitimate purposes. § 176. Relief to stockholder.-The general rules applicable ing its road to another, such lease being part of a scheme to secure a monopoly of the Pennsylvania anthracite coal traffic. But the distinction between an injury to a mere individual, and an injury to the public, was overlooked in Queen Ins. Co. v. State, 22 S. W. 1048 (Tex. Civ. App., 1893); reversed, however, in 86 Tex. 250, 274; 24 S. W. 397, 406; 22 L. R. A. 483, 496 (1893). Here, in a proceeding by the State, the combination to which the corporation in question was a party, was held not to be illegal. But, on the assumption that it was a combination illegal as in restriction upon competition, the relief demanded, for forfeiture of the right to do business in Texas, and for an injunction against carrying out the agreement, was regarded as improper. This on the general ground that granting such relief would be a departure from the rule that a court of equity will leave parties to an illegal contract as they have left themselves. In Stockton v. American Tobacco Co., 55 N. J. Eq. 352; 36 Atl. 971 (1897); affirmed as Miller v. American Tobacco Co., 56 N. J. Eq. 847; 42 Atl. 1117 (1898), where such an injunction was refused (see § 150), the court distinguished cases wherein a court of equity has enjoined the acts of a corporation as cases (55 N. J. Eq. 365; 36 Atl. 976) "where quasi-public corporations have acted outside of the scope of their charter privileges, or have violated an implied limitation upon its general power, so as to create a nuisance or a public injury." (Distinguishing Stockton v. Central R. R. Co., supra, as a case of an ultra vires agreement.) To similar effect, McCarter (AttorneyGeneral) v. Firemen's Ins. Co., 70 N. J. Eq. 291; 61 Atl. 705 (1905). But is this not begging the question? Whatever the character of the business, is it not outside the scope of the charter powers, to constitute a monopoly? Furthermore, although the question has generally arisen in connection with quasi-public corporations, it is clear that the decisions have not, as a rule, been based on the circumstance of a corporation being a quasi-public one, nor even, it would seem, on the circumstance of the acts in question being those of a corporation. It was held that the result could not be evaded by enjoining the officers in'dividually, instead of restraining the corporation. But in People ex rel. v. American Tobacco Co., 2 Chicago L. J. Weekly (Cook Co. Cir. Ct., 1897?), an injunction was granted to restrain the same corporation (here a foreign one) from transacting business. The doctrine of Stockton v. American Tobacco Co. was, unnecessarily, it would seem (see § 164), applied in Dittman v. Distilling Co. of America, 64 N. J. Eq. 537, 544; 54 Atl. 570, 573 (1903), to a proceeding not by the attorney-general, but by a mere individual. to allowing a stockholder to obtain relief against ultra vires acts seem applicable to allowing him relief against a corporate act illegal as in restriction upon competition.11 § 177. Dissolution or ouster of corporation.-As in case of ultra vires acts generally, corporations have in several instances been dissolved because of the performance of acts illegal as in restriction upon competition.42 But this is not necessarily the 41 Stewart v. Erie & Western Transp. Co., 17 Minn. 372, 400 (1871). See Metcalf v. American School Furniture Co., 122 Fed. 115 (C. C. N. Y., 1903); MacGinniss v. Boston, etc., Consolidated Copper Mining Co., 29 Mont. 428, 447, 457; 75 Pac. 89, 92, 96 (1904); Trimble v. American Sugar Refining Co., 61 N. J. Eq. 340; 48 Atl. 912 (1901); Rafferty v. Buffalo City Gas Co., 37 App. D. 618, 622; 56 N. Y. Suppl. 288, 291 (1899); Lone Star Salt Co. v. Blount, 107 S. W. 1163 (Tex. Civ. App., 1908). Thus, as to his right to relief being barred by participation, acquiescence or delay. Levin v. Chicago Gas Light & Coke Co., 64 Ill. App. 393 (1896); Coquard v. National Linseed Oil Co., note 42, infra (which see also as to right to maintain a suit for dissolution of the corporation). 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), where the combination declared illegal involved the conveyance by each of several corporations of its property to a new corporation organized to conduct the same kind of business, relief against such conveyance was granted at the suit of a stockholder of the conveying corporation. It would seem, however, that the decision might have rested solely on the right of a dissenting stockholder of a solvent going corporation to prevent the sale of its property and abandonment of its business (182 Ill. 631; 55 N. E. 604; 64 L. R. A. 769), without reference to the circumstance of such conveyance being an incident of an illegal restriction upon competition. In Dunbar v. American Telephone, etc., Co., 224 Ill. 9; 79 N. E. 423; 115 Am. St. Rep. 132 (1906); 87 N. E. 521, 534 (1909), in case of purchase by one corporation of stock in another for the purpose of creating a monopoly, relief was allowed to stockholders of the latter corporation. To like effect, Bigelow v. Calumet & Hecla Mining Co., 155 Fed. 869, 879 (C. C. Mich., 1907). See also Continental Securities Co. V. Interborough Rapid Transit Co. 165 Fed. 945 (C. C. N. Y., 1908). For suggestion that right of rescission be allowed to stockholder joining combination in ignorance of its illegality, see 2 Eddy on Combinations, § 1138–40. 42 On this ground judgments were rendered dissolving the corporations, in Distilling & Cattle Feeding Co. v. People, 156 Ill. 448; 41 N. E. 188; 47 Am. St. Rep. 200 (1895); State v. Nebraska Distilling Co., 29 Neb. 700; 46 N. W. 155 (1890); People v. North River Sugar Refining Co., 54 Hun, 354; 7 N. Y. Suppl. 406; 5 L. R. A. 386 (1889); remedy to be applied. It seems to have been well said: "The punishment to be imposed rests in the sound judicial discretion of the court. It need not necessarily be a general judgment of ouster. It may be an ouster of the right to do the particular affirmed in 121 N. Y. 582; 24 N. E. 834; 9 L. R. A. 33; 18 Am. St. Rep. 843 (1890); People v. Milk Exchange, 145 N. Y. 267; 39 N. E. 1062; 27 L. R. A. 437; 45 Am. St. Rep. 609 (1895); People ex rel. v. American Sugar Refining Co., 7 Ry. & Corp. L. J. 83 (Super. Ct. San Francisco, 1890). See People ex rel. v. Chicago Gas Trust Co., 130 Ill. 268; 22 N. E. 798; 8 L. R. A. 497; 17 Am. St. Rep. 319 (1889); People ex rel. v. Chicago Live Stock Exchange, 170 Ill. 556; 48 N. E. 1062; 39 L. R. A. 373; 62 Am. St. Rep. 404 (1897); State ex rel. v. Portland Natural Gas & Oil Co., 153 Ind. 433, 491; 53 N. E. 1089, 1092; 53 L. R. A. 413, 416; 74 Am. St. Rep. 314 (1899). But a suit for dissolution of the corporation cannot be maintained by a mere stockholder. Coquard v. National Linseed Oil Co., 171 Ill. 480; 49 N. E. 563 (1898). Thus, in MacGinniss v. Boston, etc., Consolidated Copper, etc., Mining Co., 29 Mont. 428, 447; 75 Pac. 89, 92 (1904), in a stockholder's suit, it was held not a proper issue whether a combination formed by another corporation through its officers and the stockholders of the plaintiff's corporation and other corporations was a monopoly and in violation of provisions rendering the plaintiff's corporation liable to punishment and a violation of its franchises and property. Upon forfeiture of the charter of a corporation for joining or maintaining a monopoly, held, under the California statutes, that the appointment of a receiver was not proper. Havemeyer v. Superior Court, 84 Cal. 327; 24 Pac. 121; 10 L. R. A. 627; 18 Am. St. Rep. 192 (1890). Compare Cameron v. Havemeyer, 12 N. Y. Suppl. 126 (Supm. Ct., Sp. T., 1890), where receivers were appointed of property held under the Sugar Trust agreement declared illegal in People v. North River Sugar Refining Co., supra. As to proceedings in an action to dissolve the combination to which the North River Sugar Refining Company was a party, see Gray v. De Castro & Donner Co., 10 N. Y. Suppl. 632 (Supm. Ct., Gen. T., 1890). As to appointment. of receiver of foreign corporation, see Waters-Pierce Oil Co. v. Texas, 212 U. S. 112; 29 Supm. 227 (1909); dismissing writ of error to 105 S. W. 851 (Tex. Civ. App., 1907); see also decisions in 106 S. W. 326 (Supm. Ct. Tex., 1907); 103 S. W. 836 (Tex. Civ. App., 1907). As to jurisdiction of State and Federal courts respectively in such case, see Palmer v. Texas, 212 U. S. 118; 29 Supm. 230 (1909). In Gray v. Oxnard, 59 Hun, 387; 13 N. Y. Suppl. 86 (1891), the receiver of the property of the corporation dissolved on the ground of participation in such combination was held not entitled to recover any part of the assets or earnings of the illegal combination, the right to such recovery being in the holders of the trust certificates if in any one. In See v. Heppenheimer, 55 N. J. Eq. 240; 36 Atl. 966 (1897); act complained of, or it may be a suspensive judgment of ouster with a fine accompaniment, or it may be a simple fine if it appears that the trust, pool or conspiracy complained of and proved has been abandoned." 48 affirmed as Naumberg v. See, 56 N. J. Eq. 453; 41 Atl. 1116 (1897), the circumstance that a corporation was formed to create a monopoly, was held not to make the attorney-general a necessary party to a proceeding brought by the receiver of the corporation after its dissolution, the suit relating "wholly to contractual and statutory obligations arising out of its existence and operations." The court said: "The State presumably would be interested either in preventing the organization of such a corporation, or in arresting its work after its organization. Here, however, the company is already dissolved, and therefore harmless." In the antitrust acts provision is commonly made for forfeiture of the rights of a corporation, foreign or domestic, for participation in an act illegal as in restriction upon competition. See c. XX. 43 State ex inf. Crow v. Armour Packing Co., 173 Mo. 356, 392; 73 S. W. 645, 654; 61 L. R. A. 464, 474; 96 Am. St. Rep. 515 (1903). Thus, in State ex rel. v. Standard Oil Co., 49 Ohio St. 137, 189; 30 N. E. 279, 291; 15 L. R. A. 145, 160; 34 Am. St. Rep. 541, 556 (1892), the judgment was of ouster of the corporation from the right to make and perform the agreement. As to quo warranto as remedy, see State ex rel. v. Standard Oil Co., 110 S. W. 565, 572 (Supm. Ct. Tenn., 1908). As to quo warranto proceedings against foreign corporation, see under Mich. (§ 217). As to contempt proceedings for failure to comply with such judgment, see 35 Am. Law Rev. 102 (1901). |