Page:The Green Bag (1889–1914), Volume 18.pdf/705

 664

THE GREEN BAG

The general principle, however, may be laid down that wherever the public has an interest in the continued operation of a cor poration, that interest would necessarily be prejudiced by any forfeiture or suspension of its rights to continue operations. This principle has been recognized by the courts in the enforcement of the common law and statutory remedy of quo warranto for the forfeiture of corporate franchises in the exer cise of the supervisory power of the state over its own corporations. Courts are ex tremely reluctant to adjudge forfeiture of charters, and this is especially the case, re marks Mr. Thompson in his treatise on Cor porations in the case of corporations organ ized to promote desirable public works which it is the public policy to foster and encour age. It follows that malfeasance and breaches of trust on the part of corporate officials, and even their illegal acts which do not in volve a statutory ground of forfeiture, or an actual nonuser or misuser of corporate franchises affecting the public interests will not authorize the sentence of forfeiture. It has been said by the Supreme Court of Ohio that to visit the perversion of corpor ate objects by a few upon the heads of the entire membership would result in irremedial hardship. Cases quite numerous in recent years are to be distinguished, where the power of the state is directed against the illegal control of corporate action, as the Northern Securities case, where though a corporate organization may be dissolved, there is no interference with the continued business of production, transportation, or distribution by the cor porations actually engaged therein. This includes the cases arising in the enforce ment of statutes directed against unlawful combinations for the suppression of compe tition effected through the medium of socalled holding companies. The true remedy, therefore, for the evils of which we complain, and the only remedy consistent with the interests of the public, is not along the lines suggested by the paper,

of dealing with the corporate entity and thereby damaging not only the innocent stockholders but the general public also; on the contrary the road to effective public control for the prevention and control of corporate abuses lies in exactly the opposite direction, in restricting the corporate fiction to its necessary limitations and enforcing the individual responsibility of the corporate offi cials through whom and by whom it neces sarily acts in any violation of law. The development of our jurisprudence is clearly along the lines of a more rigid enforcement of the personal responsibility of corporate officials for violations of law in the corporate name. This is necessary from another point of view. The disposition inherent in hu man nature to win favor and promotion by successful results tends to dwarf individu ality and to deaden the sense of individual responsibility for the invasion or violation of law. Especially is this the case with our great corporations with their armies of graded officials. It is essential, therefore, that the laws fixing personal responsibility upon the corporate officials should be impar tially and thoroughly enforced. It is fundamental in the law that a fiction will not be carried further than the reasons which led to its introduction necessarily require. This principle obviously applies to the theory of distinct legal entity in the corporate relation. Private corporations, in the language of the United States Supreme Court, are but associated persons, united for some common purpose and permitted by law to use a common name and to change mem bers without dissolution of the association. Mr. Thompson in his treatise on Corporations says that a sensible and practicable concep tion of a corporation is that it is an organized body of men acting within certain prescribed limits and with a certain agency. In our constitutional law, the corporation is not a "citizen," but is a "person," protected against deprivation of property by govern mental action without due process of law. The Supreme Court has recently held, in the