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 STOCK WITH EXCLUSIVE VOTING POWER

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CAN STOCK WITH EXCLUSIVE VOTING POWER BE TREATED AS A TRUST? BY ROBERT RENTOUL REED /CORPORATION' law has been the Bench and Bar, each striving to keep this child of alien birth within obedience to its adopted parentage of common law and equity. In the present generation its large possibilities and peculiar defects have been rapidly developed, and our courts are at times challenged by a corporate prodigy that refuses to be governed in equal justice by the principles and precedents of their jurisprudence. In other words, the corpor ate form, as judicially recognized, has been ingeniously made use of to effect dangerous results not otherwise sanctioned or possible. I have in mind one class of cases now prominent, in which, under the guise of a corporation, the property of B and C is irrevocably entrusted to the exclusive con trol of A, a control that is represented by stock, divisible and transferable at will, and takes the form of a recognized property right, which defies both courts and legis latures to destroy it, even upon proof of its gross abuse. One, if not the most striking, illustration of this class, is the Equitable Life Assurance Society, before whose ingenious structure of corporate fraud, lawyers and judges stand in almost helpless confusion. Here is a property of some $400,000,000, owned, "capital," surplus and profits, by hundreds of thousands of policyholders throughout the country'. The keys to the treasurehouse were until quite lately in the hands of Mr. Hyde, who, as the owner of a little more than $50,000 par value of "stock," held the majority vote in the election of directors and through them the power to manage and control the investment of these enormous funds, subject only, it has been said, to the "contract rights" of the policyholders. But these "contract rights,"
 * ^* patient growth of many generations of

be it noted, were by the charter, by the official statements of the company, and by the policies, or "contracts" themselves defined to include the entire beneficial ownership of its property, while the "stock" or "proprietary" rights of Mr. Hyde en titled him only to the par value of his investment and a limited return by way of "dividend," payable by resolution of his own directors out of the capital contributed by the policyholders. The statute under which the Equitable Life charter was drawn, in 1859, was chapter 463 of the Laws of 1853 as amended by chapter 551 of the same year. It was silent as to, the form of organization, though it required a paid-up "capital" of $100.000, and spoke of the "members or stockholders" as the controlling body of the corporation. The corporate charter, under assumed per mission of the statute, made the original subscribers to this capital the voting stock holders of the society, but authorized the insurance business only on the mutual plan, and made the policyholders in effect the owners or beneficial "members" of the corporation.1 Their position is primarily 1 Its pertinent provisions are as follows: "Article i. The business of this Company shall be to make assurances upon the lives of individ uals, and every insurance appertaining thereto or connected therewith; and to grant, purchase, or dispose of annuities, as set forth in the act aforesaid, passed June 24, 1853, and amendments thereto. And this Company shall possess and enjoy all the powers, privileges, and franchises granted to, and shall be subject to all the regula tions, restrictions, and obligations imposed upon incorporations organized and existing under the said act of the Legislature of the state of New York, passed June 24, 1853, and any amendments thereof. "Article 3. The capital of said Company shall be one hundred thousand dollars in cash.