Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/609

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 581. to control a corporate election and elect proper officers in the best interests of the corporation. 1 But ^on^o?*" it has been held that such agreements must not con- f 11 *"; 6 " ° _ holders ; tain provisions restricting the right of shareholders voting to alienate their shares and vote by proxy. 2 And in Massachusetts it is held that an agreement between sharehold- ers to vote for one of them or for a third person as manager, and to vote to increase the salaries of all the officers, including the manager, is void as against public policy ; at least unless assented to by all the shareholders. 3 § 581. A court of law is the proper tribunal to determine the validity of a corporate election. For, unless specially authorized by statute, a court of equity has no authority to try this question, and pronounce judgment of amotion. 4 But when the question of the validity of a corporate election necessarily arises in the determination of a suit properly cognizable by a court of equity, it will determine that question as it would any other question of law or fact necessary to be decided in order to settle the rights of the parties. 5 And a court of equity has jurisdiction of a bill brought by a shareholder to procure the cancellation of illegal shares and incidentally to restrain the A court of law the tri- bunal to de- termine the validity of corporate elections. Injunctions iFaulds v. Yates, 57 111. 516; Havemeyer ». Havemeyer, 11 J. & S. 506; affirmed 86 New York, 618; Beitman v. Steiner, 98 Alabama, 241: see Barnes v. Brown, 80 New York, 527, 537. Shareholders may place their stock in the hands of a deposi- tary, with directions to vote it as di- rected by a committee appointed by themselves and subject to their con- trol. Railway Co. v. State, 49 O. St. 668. See, also, Chapman v. Bates, 60 N. J. Eq. 17; Clowes v. Miller, ib. 179; Kreissl 0. Distilling Co., 47 Atl. Rep. 471. Compare Brightmau v. Davis, 175 Mass. 105. See § 559a. 2 Fisher v. Bush, 45 Hun (N. Y.), 641. But see Argus Company, Peti- tion of, 138 N. Y. 557. 3 Woodruff r. Wentworth, 133 Mass. 309; Guernsey v. Cood, 120 Mass. 501. See § 788. On so-called "voting trusts," see article by R. L. Cutting in Albany Law Journal, June, 1902. For New York statute on this subject see section 20 of the General Corporation Law as amended by chapter 355 of the laws of 1901. nett Manuf. Co., 32 N. J. Eq. 236 Owen o. Whitaker, 20 N. J. Eq. 122 Kean v. Union Water Co., 52 N. J Eq. 813; Neall e. Hill, 16 Cal. 146 Supreme Lodge v. Simering, 88 Md 276; Triesler v. Wilson, 89 Md. 169; Whitehead v. Sweet, 126 Cal. 67. 5 Mechanics' Nat. Bank v. Burnett Manufr'ing Co., supra. Compare New England Mut. Life Ins. Co. v. Phillips, 141 Mass. 535; Walker V. Johnson, 17 D. C. App. Ca. 144. 589
 * Mechanics' National Bk. v. Bur-