purchase of any stock of its own or any other corporation, unless the same shall have been bona fide pledged, hypothecated or transferred to it, by way of security for, or in satisfaction or part satisfaction of, a debt previously contracted in the course of its business, or shall be purchased by it at sales upon judgments, orders or decrees which shall be obtained for such debts or in the prosecution thereof. Any domestic corporation transacting business in this State, and also in other States or foreign countries, may invest its funds in the stocks, bonds or securities of other corporations owning lands in this State or other States, if dividends have been paid on such stocks continuously for three years immediately before such loans are made, or if the interest on such bonds or securities is not in default, and such stock, bonds and securities shall be continuously of a market value twenty per cent greater than the amount loaned or continued thereon."

Had the former acts given the unlimited authority to purchase insisted upon by the plaintiffs, this act would have been entirely unnecessary, and instead of enlarging the power previously possessed, would have operated as a restriction upon it. That this act of 1890 does not assist the plaintiffs is evident not only from the fact that the act did not take effect until after the contract was made, but from the further fact that it merely authorizes corporations to invest their funds in the stocks, bonds or securities of other corporations if dividends have been paid for three years before the loans are made; or if the interest on their securities is not in default, and such securities are worth twenty per cent greater than the amount loaned thereon. This act evidently refers to loans and not to purchases, since the section expressly provides that no corporation shall use its funds in the purchase of any stock, either of its own or any other corporation, unless by way of security for antecedent debts.

The truth is, that the legislature of New York, instead of repealing the prohibitory clause in the original act of 1848, concerning the purchase of stock in other corporations, has modified it but slightly, by slow degrees, and in special cases, to enable a manufacturing corporation to control more perfectly its own legitimate business operations, and has thereby manifested the more clearly its intention to preserve the original inhibition.

Our conclusion upon this branch of the case is that, as the main, if not the sole, object of the purchase from the plaintiffs was to acquire their stock in the Consolidated Company, such purchase was ultra vires the Refrigerating Company.

GROUP 2

DIFFERENCE BETWEEN THE TRUST AND THE HOLDING COMPANY EXHIBIT I

STANDARD OIL CHANGES FROM A TRUST TO A HOLDING COMPANY.1 1. On March 2, 1892, a judgment was rendered in a suit brought in the Supreme Court of Ohio by the State of Ohio on the relation of the Attorney General, against the Standard Oil Co. (of Ohio), after hearing upon Bill and Answer. This decision rendered it inadvisable to continue the form of organization provided by the Trust Agreement for the management of the common properties. The certificate holders thereupon adopted the resolution set forth on pages 64-5 of the Government's Bill of Complaint, providing for the dissolution of the Trust. This resolution was adopted pursuant to Article 21st of the Trust Agreement.

Up to the time of the adoption of the resolution for the dissolution of the Trust in 1892, many of the companies named in the Trust Agreement, and most of those organized or acquired subsequent to the formation of the Trust, had continued as separate corporate organizations. At that time a great many of these organizations which no longer served any particular purpose were dissolved.

2. The stocks of a number of important companies that had been held by the trustees were transferred directly to the Standard Oil Company (New Jersey) and have ever since been held by that Company. Among the stocks that have been so held in continuous ownership by the Standard Oil Co. (New Jersey) are the Chesebrough Manufacturing Company, Continental Oil Company, Galena Oil Works, Limited, Signal Oil Works, Limited, Standard Oil Company (Iowa), Vacuum Oil Company and the WatersPierce Oil Company, (Pet. Ex. 253, vol. 7, p. 448).

3. The changes effected in the companies about the time of the resolution for the dissolution of the Trust left in the hands of the Trustees stock of the following companies:

1 United States of America v. Standard Oil Company (N. J.) et al. Brief for Defendants on the Facts, In the Circuit Court of the United States for the Eastern Division of the Eastern Judicial District of Missouri, Vol. I, pp. 76–85.

Of these twenty companies, only three antedate the Trust agreement of 1882, to wit, the Standard Oil Co. (of Ohio) itself, the Atlantic Refining Co., all the stock of which had been held for the benefit of the Standard Oil stockholders since 1874, and the National Transit Co., which had been organized by Standard Oil interests. Of the remaining seventeen companies, six were pipe line companies, all of which had been organized and their properties created by Standard Oil interests for the common benefit of the certificate holders. The Anglo-American Oil Co., Ltd., the Solar Refining Co., the Standard Oil Co. (Indiana), the Standard Oil Co. (Kentucky), the Standard Oil Co. (New Jersey), the Standard Oil Co. of New York and the Union Tank Line had all been organized by the Standard Oil trustees, and no one else had ever held any of their stock. Their capital had been paid for with the common moneys of the holders of the trust certificates, or with the properties of companies whose stocks were held by the trustees for their account. The South Penn Oil Co., the Ohio Oil Co. and the Forest Oil Co. were producing companies. The first had been originally organized by the Standard Oil trustees, and a large part of the properties of the others had been conveyed to them by com

panies organized by the Standard Oil trustees. The only one of the twenty companies of which the Standard Oil trustees did not own the entire stock was the Northwestern Ohio Natural Gas Co. (Def. Exhibits 271 & 272, vol. 19, pp. 643-4). Stocks of these twenty companies were the stocks to be distributed among the holders of Standard Oil Trusts certificates, pursuant to the resolution of March, 1892.

4. The Trustees to liquidate the Standard Oil Trust named in the resolution of March, 1892, notified all the certificate holders of the proposed distribution of stocks and requested them to submit their trust certificates for exchange into the stock of the twenty companies. (J. D. Archbold, vol. 17, p. 3384.) Several of the larger holders of certificates at once made the exchange, receiving shares and fractional shares in each of the several companies, bearing in each case the same proportion to the amount of stocks in those companies held by trustees that the trust certificates previously held by them had borne to the total amount of the trust certificates outstanding. The smaller certificate holders showed great reluctance about making the exchange. (J. D. Archbold, vol. 17, pp. 3384-5).

5. The unity of the business was universally recognized. Stocks in the separate companies had no recognized value, and were not bought or sold except as part of the group of stocks together representing an interest in the business as a whole. The common ownership was necessarily recognized in the conduct of the business of the separate companies and the entire business carried on with a view to the interests of the common owners.

The same people, in the same relations, continued. (J. D. Rockefeller, vol. 16, p. 3190.). . . .

After the dissolution, as I have already stated, the election of the different companies was by this stock, and the administration of its affairs, its particular affairs, and the matter of the sale of its products was made as before, I suppose. Of course, in the matter of the distribution of these products I have not been concerned or interested or taken any part for long years; but let us take, for example, the Standard Oil Company of Ohio, of which I had been the President. As a practical question what would be done, I suppose, would be that the Standard Oil Company of Ohio would. supply the trade which it could supply to the best advantage

and it would be just the thing that was the natural thing to do in that regard. These properties were all of the one ownership. . . . I mean that these people who had not returned their certificates and taken their interests in the constituent companies yet held the original trust certificates, and that was their evidence of their interest in the business; that relation was not changed. (J. D. Rockefeller, vol. 16, p. 3192) I suppose that as a matter of fact these companies, all being owned by the same people, would not be managing their separate businesses except in the way that would be the most productive for all the separate businesses. (J. D. Rockefeller, vol. 16, p. 3193) . . . The control of those different companies in each case was, as I have stated, by the stock holdings, and those companies were then, as now, in this common ownership. . . . There was no change of interest of the parties concerned; that is, every man had just the precise proportion of all this business that he had had before, and so fast as these trust certificates were cancelled, then, instead of having one certificate to represent that precise interest, he had an interest in each one of those companies. (J. D. Rockefeller, vol. 16, p. 3194).

TENTH. Upon the acquisition of the stocks of all the companies by the Standard Oil Company (New Jersey) each shareholder in the twenty companies became a shareholder in the Standard Oil Co. (New Jersey) in the same proportion in which he had held stock in each of the twenty Companies or in which stock therein had been held for his account by the Trustees.

In 1899, the stock of the Standard Oil Company (New Jersey) was increased from $10,000,000, divided into 100,000 shares, to $110,000,000, divided into $100,000 shares preferred stock, and 1,000,000 shares of common stock. The outstanding stock was to be treated as preferred stock.

On June 19, 1899, the following resolution was adopted by the Board of Directors of the Standard Oil Co. (New Jersey). (Pratt, vol. 1, pp. 83-4):

"The president or one of the vice-presidents and the treasurer or one of the assistant treasurers, be and are hereby authorized to issue certificates of common stock of this company and deliver the same, in purchase of the stocks of the following companies,