Page:Harvard Law Review Volume 32.djvu/526

490 49° HARVARD LAW REVIEW in the last twenty years.^ Corporate reorganizations, of course, are usually caused by insolvency; but not infrequently a sound enter- prise, earning an adequate return, will be hampered by an unsound financial structure involving excessive fixed charges, such as bond interest; or again, the difficulty of refunding a matured bonded indebtedness during a time of financial stringency, or the urgent need of additional capital for improvements, or the weight of an imfunded debt, will make a reorganization necessary. Reorganiza- tion, in brief, must be viewed as a normal phase of corporate life; the frequency of reorganizations makes it necessary for the law to provide a facile procedure; and the basis of such procedure must be fair majority control. It is the purpose of the writer to indicate how this right of the majority to control during corporate re- organizations, under the guidance of the court, can be conven- iently secured without the violation of any constitutional rights, thus removing many of the present uncertainties, and much of the delay and cost of corporate reorganizations; and also to show how the authorities, throughout the various phases of corporate re- organization, are slowly recognizing this right of fair majority control. The English procedure of "Arrangements" — such is the apt term used — approaches closely the desired procedure. The control of the majority over the minority, during the reorganization of public service corporations, is fuUy established by Act of Parlia- ment. Formerly an Act was passed for each reorganization, and that is the practice in Canada to-day; ^ a general statute in Eng- land,^ however, provides for all such situations, leaving it to the courts to pass upon the fairness of the reorganization plan instead of Parliament itself. Lord Cairns has tersely described the pur- pose of this act as follows : 2 United States District Judge Hough, of the Southern District of New York, as quoted by Paul D. Cravath in "Reorganization of Corporations," Stetson, Lynde, et al., Some Legal Phases of Corporate Financing, Reorganization and Reg- XJLATION, 154. etc. Ry., 46 U. C. Q. B. 250, 261 (1881), where Osier, J., said, in discussing such statutes, "... Legislation of this kind, of which, be it said, our books are full." See also, Jones, Corporate Bonds and Mortgages, 3 ed., § 617.
 * Canada Southern Ry. v. Gebhard, 109 U. S. 527, 534 (1883). See Jones v. Canada,
 * Railway Companies Act, 1867, 30 & 31 Vict. c. 127.