they are entitled to every dollar that it earns. This is the agreement of the stockholders among themselves. They each contract with the other that their money shall be employed for the purposes specified in the certificate of incorporation, and for no other purpose, and that the profits of the enterprise shall be ratably apportioned among them. In the absence of legislation permitting a variation of the provisions of this fundamental contract, by vote of a majority of the stockholders, no majority, however large, has a right to divert any part of the joint capital, however small, to any purpose not consistent with and growing out of this original, fundamental agreement. The scheme, in the carrying out of which the dissolution of the company is a proposed step, is a fraud upon the statute (the word is used in a legal, not moral, sense); and every act done in furtherance thereof, no matter whether it be legal, standing alone, or not, is equally a fraud upon the statute."

The case of Theis v. Durr 20 presented a question analogous to that involved in the dissolution cases. That was a suit by minority stockholders to annul the proceedings of the holders of a majority of the stock in voting to reduce the capital stock of the corporation. The plaintiffs had paid for their stock in full, and the defendants had paid only part of their subscriptions. The defendants, holding a majority of the stock, refused to call in the unpaid subscriptions, and borrowed money to meet the current obligations of the corporation. It was shown that the proceedings for reduction of capital stock, though regular in form and in conformity to statute, were taken to relieve the majority stockholders from liability on their subscriptions. It was held that although the proceedings for reduction, standing alone, might be regular and valid, a court of equity had power to look to the purposes of the majority, and where the mainspring of the transaction was an ulterior motive, which if given effect would work a wrong to the corporation or minority stockholders, the entire proceedings would be annulled.

Dissolution statutes very generally provide for a sale of a corporation's assets and distribution of the proceeds under the supervision of the existing board of directors, who are constituted trustees for the purpose of settling the corporation's affairs. It seems a matter of course that in all such cases the trustees are debarred from purchasing from themselves, or at least that any sale

20 125 Wis. 651, 104 N. W. 985 (1905).

to the trustees or to a corporation controlled by them is voidable at the suit of a stockholder.21

Even where the technical relation of trustee does not exist, it is undoubtedly the law that the majority stockholders, who have the power to elect directors, bear to the corporation and to minority stockholders a relation fiduciary in its nature to the extent that their action is subject in equity to judicial scrutiny and review.22

The familiar and now universal rule by which each stockholder of a corporation has as many votes as he owns shares, is statutory. At common law the members had equal voting power; and it has been held that, in the absence of a statute on the subject, the common-law rule applies to stock corporations.23 The common-law rule, although an arbitrary one, and doubtless imperfect in its operations, gave to the corporation the benefit of the judgment and interest of every member. Perhaps a perfect rule would have allotted to each member a voting power commensurate with his virtues and abilities. Among other changes wrought by the invention of the corporation with a capital stock divided into shares, was a diversity in the quantity of the interest of members, due to the fact that one person might be the owner of a number of shares. Since the stock corporation has been from its origin almost exclusively an instrument of commerce, it was to be expected that any change in the basis of voting power should take account of this diversity of interest, but according to the rule as generally established by statute, voting power is based solely upon interest. It results from this rule that the owner of a bare majority of the shares of a corporation, however numerous or wise or virtuous the holders of the remaining shares may be, has the exclusive power to enact

21 Chicago Hansom Cab Co. v. Yerkes, 141 Ill. 320, 30 N. E. 667 (1892); Cumberland Coal & Iron Co. v. Sherman, 30 Barb. (N. Y.) 553; Hoffman Steam Coal Co. v. Cumberland Coal & Iron Co., 16 Md. 456 (1860).

22 Farmers' Loan & Trust Co. v. New York, etc. R. Co., 150 N. Y. 410, 44 N. E. 1043 (1896); Barr v. New York, etc. R. Co., 96 N. Y. 444 (1884); Memphis & Charleston R. Co. v. Woods, 88 Ala. 630, 641, 7 So. 108, 112 (1889); Wright v. Oroville Mining Co., 40 Cal. 20 (1870); Jackson v. Ludelling, 21 Wall. (U. S.) 616 (1874); Wardell v. Railroad Co., 103 U. S. 651 (1880); Meeker v. Winthrop Iron Co., 17 Fed. 48 (1883); Sidell v. Missouri Pacific Ry. Co., 78 Fed. 724 (1897); Jones . Missouri Edison Co., 144 Fed. 765 (1906); Wheeler v. Abilene Co., 159 Fed. 391 (1908); Menier v. Hooper's Telegraph Works, L. R. 9 Ch. 350 (1874); Noyes, Intercorporate Relations, $ 300.

23 Taylor v. Griswold, 14 N. J. L. 222 (1834).

by-laws, to elect directors, and through them to select officers, to determine the policy of the corporation, and to conduct all its affairs. The only limitation of these powers is that they shall be exercised for the attainment of the objects for which the corporation was chartered, and in the interest of the corporation and all of its stockholders. In addition, he is invested by special provisions of statute with the extraordinary powers of amending the charter, of increasing or decreasing the amount of the capital, of consolidating the corporation with another corporation, and even of bringing the life of the corporation to an end whenever he may decide to withdraw from the enterprise. The possibilities of abuse of the power of majority stockholders to control the property and affairs of others are such that it is likely that the development of the law of corporations must for some time be largely in the direction of limiting the powers of the majority and of safeguarding the interests of the minority. For the present it does not seem too much to require that these extraordinary grants of power shall not be stretched to cover purposes for which they never were designed.

The later decisions which seem to limit the absolute character of the voting power of majority stockholders, when applied to dissolution under statutes, may, it is thought, be sustained upon the narrow ground that these statutes were enacted for a specific purpose, and cannot be perverted to any other use. Given a more general application, the decisions commend themselves as a vindication of the ancient power of equity to pierce forms and shams, to lay bare the controlling realities, and to enforce justice.

NEW YORK CITY.

William H. Fain.

WRITTEN EVIDENCE AND ALTERATIONS.

FOR

OR centuries the law has rightly preferred written instruments to oral testimony as evidence on a disputed point. One of the difficulties often encountered in dealing with writings as evidence is the question of their genuineness. In the last analysis if the document has been altered in a material part without the assent of the parties to it, however genuine it may look to be, it is not, in fact, genuine. In the trial of a case, therefore, we first look to see if the document is genuine and, as a part of the question, consider whether it discloses any alteration, in any material part, not authorized by the parties.

For the purpose of determining if the document is genuine as a preliminary to determining if it has been altered we necessarily resort to many tests seldom disclosed in the works on evidence and difficult to find in the reported cases. Hundreds of years ago when but few of our ancestors could write, they had peculiar marks that they made at the end of the document, or they had signet or other rings which they impressed upon the sealing wax so that either the mark or the seal identified the party who could not write his name. In those cases the act of making the mark or stamping the seal was witnessed by one or more witnesses who could write their names. Most documents of age still disclose evidence of the party's mark, his seal, and witnesses to the mark or the seal. Now, however, the acknowledgment and the recording act have taken the place of such proofs of genuineness. Nevertheless, the acknowledgment and the recording act are by no means proof against alterations, nor are they indubitable proofs of genuineness. Then, too, in a large number of cases the writings are never sealed, are never acknowledged, and are never recorded. So long as those writings were in the handwriting of the party, that handwriting in its individual peculiarities was a strong means of identifying the writing as genuine. Now, however, stenographers and typewriters have come into vogue to such an extent that the signature alone is all we have to prove the genuineness of the writing in a great many cases. And it is so easy to fill in a few words or a sentence or two above the signature, or to pick up a blank piece of paper upon which

a person has written his signature to try the pen and afterwards typewrite a document over that signature, that genuineness and alterations become new problems in evidence. If the document is typewritten above the genuine signature of the person, it may be that a letter out of alignment in the typewriter will show either that the document is genuine or that it is not, according to whether or not the typewriter employed in the office of the person signing the document did or did not betray that particular peculiarity at the time the writing was apparently signed. Then, too, the bulk of the commercial paper of the day, checks, notes, drafts, and the like, are upon printed or lithographed forms in common use or in use in particular establishments, and our only proof of genuineness is the signature of one or more persons at the bottom of the document. Often, unfortunately, a person may be a very busy person and may either resort to an engraved signature or a rubber-stamp signature, or, worse still, to a simulated signature of a secretary who reproduces the genuine signature so faithfully that it is difficult for the most expert to tell the difference between the signature of the secretary and the signature of his principal.

The old tests for alterations are no longer sufficient to meet all the new conditions. More scientific tests have become necessary and have come into common use. Forty years ago the common method of trying the question of whether or not the document was genuine was to call some person who had seen the person in question write, or call some banker who knew the signature of the person, or some banker who had compared genuine writings or signatures of the person with that in dispute, and then to take the opinion of the witness as to whether or not the writing or the signature was genuine. In cases of any importance these methods have almost ceased to be used. It is now very rare that a person is called to testify to handwriting or to a signature just because he knows the handwriting or the signature of the person in question. It is almost equally rare in important cases to rely upon the testimony of the banker who knows the signature of the person in question. So, too, it is now rare that a banker is called as an expert in handwriting to compare genuine writings and questioned writings to determine whether or not the questioned writing is genuine. Instead, expert photographers photograph the ques