Page:The Green Bag (1889–1914), Volume 18.pdf/504

 EDITORIAL DEPARTMENT

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and include all the stockholders, or where the majority of the stockholders, both in number and in interest, ratify. Even then slight evi dence of oppression of the minority should be sufficient fully to overcome such presumption. On the other hand a rule that all such con tracts are absolutely void would be unneces sarily rigorous. The decisions show that there is no danger of general adoption of such a doctrine, therefore slight consideration need be given to it. The acceptable rule would CONTRACTS. " Part Payment of Claim as seem to be that which declares the contract Accord and Satisfaction," by Raymond D. voidable whether it be executed or executory. The utmost good faith should be demanded Thurber, Bench and Bar (V. v, p. 90). on the part of those who make such contracts. And therefore to protect fully the interests of CORPORATIONS (Contracts). " The Valid the minority, and of the individual, does it ity of Contracts between Corporations having not seem necessary that the individual stock Common Directors " is the title of an article holder should be given power to institute pro by Harold M. Bowman, in the June Michigan ceedings which would lead to avoidance of Law Review (V. iv, p. 577). The author says, the contract if any unfair advantage had been "The contract between corporations having taken of him or other stockholders? A mere common directors is common in business at showing that the two corporations between the present time. It is oftentimes useful and which the contract is made have common valuable to all concerned. But it offers pecu directors should be sufficient to constrain the liar opportunities for fraud and oppression. court to take jurisdiction. Capable and ad It is an open gateway through which unscru venturous officers and directors otherwise will pulous interests can pass to dishonest advan not be sufficiently deterred from making such tage, and through which the weaker can often contracts in their own peculiar interest. be turned to their ruin." The mere fact that the contract has been After summarizing and classifying the de executed should be of no force if the stock cisions, some of which hold such contracts holders have not been duly apprised of the prima facie valid though subject to strict making and execution of the contract, and scrutiny, others of which hold the contract given a sufficient time in which to have it voidable though for a variety of reasons and set aside. Ratification of a fair and reason with a rather indefinite analysis of the method able contract by a majority of the stockhold and consequences of avoidance, still another ers should be conclusive, but they should have class of which hold the contracts invalid, and complete information and due notice when after a special analysis of the New York de they act. Mere failure to act, their informa cisions, which in the earlier cases condemn tion being insufficient or misleading, should such contracts, and then after a number of have no effect on their right of avoidance, no cases relaxing the severity of the original doc matter how long continued. trine seem to have resumed approximately Rules such as these and legal relations of the original position, the author gives his allied significance will do more than much conclusions as follows. legislation to establish a satisfactory basis for "A rule which exacts of the court any business negotiation and agreement, and do thing less than rigid scrutiny of these con away with its besetting evils. For much of tracts seems dangerous. Perhaps there are no this disease is hidden. It lurks in the secret circumstances which will justify immunity, the places of the law, places with which only the presumption that such contracts are prima lawyer or astute financier can be familiar. It facie fair and valid. If anywhere it would be is all the more invidious in its secrecy. The where the boards of directors are identical cool precision of the judge can do more than language of the courts in important decisions. He has not merely collated the cases, but has also considered and discussed the leading questions in the light of legal principles and has stated his own conclusions. The scope of the work differs from Mr. Judson's book on taxa tion, in that it deals with the limitations im posed by the various state constitutions as well as that of the United States. E. Q. K.