dends, and also as to the judicial application of profits. Here, however, the deed treats the directors of the various corporations as mere agents of the trust board, and in unqualified terms requires them to 'pay over the profits.' The effect of this would be the same even if individual members of the trust board were also shareholders in the corporations. As such individuals they would transfer their shares to the board and accept from the board their due proportion of the trust certificates. This board, as a board, takes all the shares of all the corporations, and the corporate shareholders, whether members of the trust board or not, by transferring their shares to these trustees, and accepting from the latter trust certificates, in effect abandon their corporations, relinquish their powers as shareholders, resign their functions as corporators, and look solely to the trust board for future guidance, control and profit. It is the first time in the history of corporations that we have heard of a double trust in their management and controlone set of trustees elected formally to manage the corporate affairs and a second set created to manage the first, the shareholders in seventeen corporations leaving their functions with regard to their regular directors to be thought out and performed for them by what amounts to a board of guardians." Action in the nature of a quo warranto was begun in the name of the people demanding judgment of forfeiture and dissolution of the North River Sugar Refining Company, upon the following grounds: 1. That it was a party to the combination created and constituted by the Sugar Refineries Company deed. 2. That the combination by the Sugar Refineries Company, being injurious to trade, was a criminal conspiracy and an indictable offense. 3. That the Sugar Refineries Company deed created a combination tending to monopoly, the prevention of competition and the enhancement of prices, and as such was illegal. 4. Corporate franchises being granted in trust upon condition that they be exercised to the attainment of the object for which they are granted, and that they be not abused to public detriment, any act of a corporation in violation of this grant and these duties forfeits its franchise. 5. The participation of the North River Sugar Refinery Company in a conspiracy is ground for the forfeiture of its franchise. 6. The transfer by the North River Sugar Refinery Company of its control to a board not recognized by its charter is a forfeiture of its charter.1 1 The counsel engaged in this celebrated case were Charles Tabor, attorney-general, and Roger A. Pryor for the people, and Messrs. Charles P. Dale, James C. Carter and John E. Parsons for the defendant. The briefs of both sides are summarized at length in 5 Ry. & Corp. Law Jour. 57. The principal points relied upon by counsel for the people, together with the authorities cited, are as follows: Corporate franchises are granted upon condition that they be exerted to the attainment of the object for which they are conceded, and that they be not abused to the public detriment. For non-user or misuser they may be reclaimed by the state in the appropriate judicial proceeding. Sir James Smith's Case, 4 Mod. 53; Lord Holt in City of London v. Vanacker, 1 Ld. Raym. 496; People v. Bristol, etc. Co., 23 Wend. 235, 236; People v. Fishkill, etc., 27 Barb. 445, 452; Kent, C., in Slee v. Bloom, 5 Johns. Ch. 380; 2 Waterman on Corp., § 427; Ward v. Farwell, 97 Ill. 593; People v. Phoenix Bank, 24 Wend. 433; People v. Dispensary, 7 Lans. 306; Insurance Co. v. Needles, 113 U. S. 574; Terrett v. Taylor, 9 Cranch, 43; 2 Kent Com. 312; Com. v. Bank, 21 Pick. 542; Ang. & Ames on Corp. (9th ed.), § 774. Any act of a corporation in violation of law and to the public detriment forfeits its franchises. "It is a sufficient cause of forfeiture if the acts complained of are illegal either under the statute or at common law, or in violation of the inherent and fundamental principles or implied conditions of its existence." Agreements tending to monopoly, i. e., "any combination among merchants to raise the price of merchandise, to the detriment of the public" (Bouvier's Law Dict.), are illegal. Arnott v. Coal Co., 68 N. Y. 558; Stanton v. Allen, 5 Denio, 434; Clancy v. Salt Co., 62 Barb. 395; Hooker et al. v. Vandewater, 4 Denio, 349: People v. Fisher, 14 Wend. 9-19; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 172; Salt Co. v. Guthrie, 35 Ohio St. 672; Craft v. McConoughy, 79 Ill. 346; Santa Clara Valley M. & L. Co. v. Hayes, 76 Cal. 387, 18 Pac. R. 391, 38 Alb. Law Jour. 279; Bank v. King, 44 N. Y. 87; Case of Monopolies, 11 Coke, 84b; Raymond v. Leavitt, 46 Mich. 477 (1889); India Bagging Ass'n v. Kock, 14 La. Ann. 164; Ray & Whitney v. Mackin, 100 Ill. 246; People v. Stephens, 71 N. Y. 545; Marsh v. Russell, 66 N. Y. 288; Hartford, etc. v. N. Y. & N. H. R. R. Co., 3 Rob. 411; Hilton v. Eckersley, 6 E. & B. 47; Central, etc. R. R. Co. v. Collins, 40 Ga. 582; Charles River Bridge v. Warren Bridge, 11 Pet. 567; 2 Kent, 271, marginal note c; Stewart v. E. & W. Transp. Co., 17 Minn. 372; Chicago Gas Light Co. v. People's Gas Light Co., 121 III. 530, 13 N. E. R. 169, 2 Am. St. R. 124; City of St. Louis v. Gas Light Co., 70 Mo. 69. "Competition is the life of trade, and whatever destroys or even relaxes competition in trade is injurious if not fatal to it." Hooker et al. v. Vandewater, 4 Denio, 353; People v. Fisher, 14 Wend. 19; Salt Co. v. Guthrie, 35 Ohio St. 666; Case of Monopolies, 11 Coke, 84b; Santa Clara Valley M. & L. Co. v. Hayes, 76 Cal. 387, 18 Pac. R. 391, 38 Alb. L. J. 279; It will be observed that many of the points urged are based upon the general principles governing corporation law, and have nothing to do with the validity of combinations generally. Arnott v. Coal Co., 68 N. Y. 558; West Virginia v. Ohio River Pipe Line Co., 22 W. Va. 600, 46 Am. R. 527; Stanton v. Allen, 5 Denio, 434, 441; People v. Stephens, 71 N. Y. 545; Marsh v. Russell, 66 N. Y. 292; Hartford, etc. R. R. Co. v. N. Y. & N. H. R. R. Co., 3 Robt. 415; Brisbane v. Adams, 3 N. Y. 129; Livermore v. Poor, 5 Hun, 285; Wright v. Rider, 36 Cal. 342; Western Union Tel. Co. v. B. & O. Tel. Co., 23 Fed. R. 12; Balt. etc. Co. v. Western Union Tel. Co., 24 Fed. R. 319; Western Union Tel. Co. v. American Union Tel. Co., 65 Ga. 160; Western Union Tel. Co. v. Chicago & P. R. R. Co., 86 Ill. 246, 29 Am. R. 28; Denver & N. O. R. Co. v. A., T. & S. F. Co., 15 Fed. R. 650; Crawford v. Wick, 18 Ohio St. 190; Parker, J., in Mitchell v. Reynolds, 1 P. Williams, 181; Dunlap v. Gregory, 10 N. Y. 244; Lawrence v. Kidder, 10 Barb. 641; Chappel v. Brockway, 21 Wend. 163. See Leslie v. Lorillard, 110 N. Y. 519. The character of the combination, whether tending to monopoly and injurious to the public, will be determined by the provisions of the instrument constituting it, and without reference to its effects in actual operation. Salt Co. v. Guthrie, 35 Ohio St. 666. In Hilton v. Eckersley, 6 E. & B. 47, 65, Lord Campbell, C. J., construing the monopoly agreement in question, said: "I do not think that any averment is necessary as to what has been done under it, or as to any mischief which it has actually produced. We are to consider what may be done under it, and what mischief may thus arise." Clancy v. Salt Co., 62 Barb. 395; Atcheson v. Mullon, 43 N. Y. 149; Hooker et al. v. Vandewater, 4 Denio, 352; Stanton v. Allen, 5 Denio, 440; Matter of Jacobs, 98 N. Y. 110; Mugler v. Kansas, 123 U. S. 661. The combination created by "The Sugar Refineries Company" deed is a criminal conspiracy and an indictable offense. It was so at common law. Raymond v. Leavitt (1881). 46 Mich. 447; Rex v. De Berenger (1814), 3 M. & S. 67; Rex v. Hilbers (1815), 2 Chitty, 163; Rex v. Waddington, 1 East, 84, 94; People v. Melvin (1810), 2 Wheeler's Cr. Cas. 262; Com. v. Carlisle (1821), Brightley (Pa.), 36; 4 Black. Com. 158, 159; 1 Bish. Cr. Law, sec. 969; 1 Russ. Cr. Law, 168; 3 Inst., ch. 89. It is so in the state of New York by express provision of statute. Penal Code, sec. 168, subd. 6; People v. Fisher, 14 Wend. 9; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 172; Hooker v. Vandewater, 4 Denio, 349; Clancy v. Salt Co., 62 Barb. 395. The contention of defendant is that it is not a party to the agree ment or combination because not made such by any formal, regular corporate action. The controlling question of fact is not whether defendant was a party to the agreement, but whether it is in the combination? It is not a true proposition of law that the board of trustees is the only or the predominant power in a corporation. True, the "concerns of defendant company are "managed" by its board of trustees (Act 1848, § 3); but the trustees are "elected by the stockholders" (Id.), who therefore constitute the ultimate and supreme power in the corporation. Nor is it a true proposition of law that the only misconduct for which a corporation is liable, when challenged for misconduct by the people, is the misconduct of the offi Judgment was rendered against the corporation by Judge Barrett upon the following grounds: 1. The trust agreement violated in effect that provision of the law of New York requiring that each director of a corporation shall be a stockholder in such corporation; the clause of the agreement which provided that the trustees might transfer whatever shares are necessary to qualify directors or other officers being inserted for the sole purpose of evading and not for complying with the law.' 2. The effect of the massing of all of the stock of the corporations, and of all the profits of the corporation, with the intent cers through whom, in the legal sense, it acts. 1st. In fact, the corporators are the corporation; and the notion of a corporate entity, distinct and apart from the natural persons composing the corporationof a substance separate from its constituents is a pure fiction. Defendant corporation has forfeited its charter by the transfer of its control to "The Sugar Refineries Company." "The Sugar Refineries Company" is a body or board foreign to defendant corporation- not recognized by its charter, holding its stock in trust only and not beneficially, and this body or board, by virtue of its right to vote defendant's stock, dominates it by an absolute and exclusive control. By section 3, Act 1848, the exclusive management of "the stock, property and concerns " of defendant is vested in its board of trustees; and it was an act ultra vires for defendant to transfer its control and management to "The Sugar Refineries Company." In Central R. R. Co. v. Collins, 40 Ga. 583, the court say: "It is a part of the public policy of the state to secure a reasonable competition between its railroads, and it is contrary to that policy for one of said roads to attempt to secure a controlling interest in another by the purchase of its stock; and any contract made with that view is illegal." "Trans fers of power of one corporation to another, without the authority of the legislature, are against public policy." Chicago, etc. v. Gas Co., 2 Am. St. Rep. 124. In Bradford, etc. R. R. Co. v. N. Y. etc. R. R. Co. (1888), 16 N. Y. St. Rep. 208, the case was this: The Bradford R. R. Co., a tributary of the New York, Lake Erie & Western R. R. Co., desired the assistance of the latter company in the completion of its road, and to that end the Bradford company engaged "to cause to be deposited" with the Erie company "the right to vote upon the stock so deposited." Accordingly, "a majority of the owners of the Bradford company stock deposited it with the Erie company," but the court, per Daniels, J., held the agreement illegal, because it so transferred the control of the Bradford company to the Erie company. Hafer v. Railroad Co. (1886), 19 Abb. N. C. 454; Vanderbilt v. Bennett (1887), 19 Abb. N. C. 460, 2 Ry. & Corp. L. J. 409; Thomas v. Railroad Co. (1879), 101 U. S. 83. 1 "The holding of this lifeless share of stock by the director without beneficial interest and at the will of the board, 'to be retransferred when requested,' is not a compliance with the statutory requirements that the directors shall respectively be stockholders in such company.'" to share both the profits and losses, amounted to a partnership between these corporations; the corporation had no authority to enter into any partnership agreement, however innocent in itself. "It is well settled that corporations cannot consolidate their funds or form a partnership unless authorized by express grant or necessary implication; nor can they enter into any arrangement amounting to a practical consolidation or copartnership." 3. Corporate franchises are granted upon a trust that the corporate privileges shall not be abused, and the corporation impliedly undertakes that it will so manage and conduct its affairs that it shall not become dangerous or hazardous to the safety of the state or community; a violation of this trust and undertaking is cause for forfeiture of its franchise and dissolution. 4. The combination in question is illegal as tending to monopoly and in restraint of trade. In this connection Judge Barrett said: "The board, under this executed deed, can close every refinery at will; close some and open others; limit the purchase of raw materials (thus jeopardizing and in a considerable degree controlling its production); artifically limit the production of refined sugar; enhance the price to enrich themselves and their associates at the public expense, and depress the price when necessary to crush out and impoverish a foolhardy rival; in brief, can come as near to creating an absolute monopoly as is possible under the social, political and economic conditions of to-day. We are told that this cannot be accomplished with regard to an article like sugar, which can be indefinitely produced by the application of capital and labor, and that monopoly is impossible only where the supply of the article is restricted by nature. This position has been maintained in an argument of exceeding brilliancy, which I confess to have enjoyed as one always enjoys a persuasive manner of presentation. But while the argument was most ingenious, it was neither sound, nor, I say with respect, plausible. Of course a monopoly in the strict technical and absolute sense cannot 1 Angell & Ames, § 272; Taylor, SS 305, 419, 420; Green's Brice, 416; 1 Morawetz, 376, 421, and cases there cited; New York & Sharon Canal Co. v. Fulton Bank (1831), 7 Wend. 412; Whittenton Mills v. Upton (1858), 10 Gray, 582; Marine Bank v. Ogden (1862), 29 Ill. 248. |