A TREATISE ON THE LAW OF PRIVATE CORPORATIONS BY HENRY OSBORN TAYLOR OF THE NEW YORK BAR FIFTH EDITION THE BANKS LAW PUBLISHING CO. 21 MURRAY STREET, NEW YORK Entered according to Act of Congress, in the year 1884, BY HENRY O. TAYLOR, in the Office of the Librarian of Congress at Washington. Entered according to Act of Congress, in the year 1888. in the Office of the Librarian of Congress at Washington. Entered according to Act of Congress, in the year 1894, in the Office of the Librarian of Congress at Washington. Entered according to Act of Congress, in the year 1898, in the Office of the Librarian of Congress at Washington. Copyright 1902 BY THE BANKS LAW PUBLISHING CO. LIBRARY OF THE LELA STAMFORD, JR., UNIVERSITY LAW SEPARTMENT. PREFACE TO THE FIFTH EDITION. THE preface to the third edition refers to certain features of corporation law which are still of present interest. Besides these, the matter of trusts and monopolies' has been for some years of great importance. Its latest phase is the 'Securities Company,' which is briefly discussed in § 309d of this edition. The decisions of the higher courts regarding the legality of this plan are awaited with interest. It may be remarked in passing that the term 'trust-fund,' as applied to the capital of a corporation, is falling into disfavor. Mr. J. Alfred Kay, the sole surviving member of the publishing firm of Kay & Brother, died in January. I take this opportunity to record my esteem for that high-minded gentleman. Mr. Kay published the previous four editions of this book. It has now been transferred to The Banks Law Publishing Company, who have spared neither pains nor money in the preparation of this edition. On my part the work has been done with care. Some eight hundred selected cases of the last four years upon corporation law have been inserted. The book has been thoroughly examined, and has been revised wherever recent adjudications have suggested some modification of state ment. My sincere thanks are due to Professor Robert D. Petty, of the New York Law School, for many valuable suggestions, which I have utilized in this edition; and to my brother Howard Taylor for writing an appendix on the present methods of forming corporations. NEW YORK, September, 1902. H. O. TAYLOR. iii PREFACE TO THE THIRD EDITION. Ir is generally recognized that, while legislatures may endeavor to direct, courts should follow the business habits of the people, and, without thwarting what custom has found convenient, render decisions in accordance with scientifically adjusted principles of justice. Even then the law must be somewhat behind the practice of the business community; for questions cannot be litigated until the transactions giving rise to them have been engaged in, and although business men seek to act with reference to the law, occasions for novel methods of business continually arise, and novel questions come before the courts. It is clear, moreover, that though a court bring the decision of the novel point within recognized legal principles, some extension or modification of the law has occurred. And thus courts continually change the law by endeavoring to keep it abreast of the people's life. In deciding a case, judges apply the rules which best fit the facts. These rules will usually depend on broader legal principles lying back of them, one stage further from direct application to the case. Consequently, novel facts tend to modify the rules directly applied to them, and have less effect on legal principles in the background; and it may be that through application to novel instances of fact, the more special rules of law will become so modified as no longer to accord with the broader principle from which they were originally deduced. And when special rules cease to accord with the general rule once back of them, if no further convenient rules can be drawn from the general rule, it drops from the body of the law, to which it is no longer organic, unless it chance to be expressed in some apt phrase. Thus it is at present with the rule or fiction that a corporation is a legal person: it still represents a convenient phrase, nay, a convenient point of view; but it is dead as a principle because legal propositions are no longer deduced from it, nor is it in |