Page:The Green Bag (1889–1914), Volume 19.pdf/220

 NOTES OF RECENT CASES case of Dunbar v. American Telephone & Tele graph Company, 79 N. E. Rep. 423. In this case the court laid down several propositions which are of interest. It is held that the company cannot purchase the majority of the capital stock of another company in its own name for the pur pose of controlling the latter and thereby prevent the competition between itself and the latter company. Furthermore, the court says that it cannot be seriously contended that a purchase by the company in the name of others as agents or trustees will relieve the transaction of its illegalityIn support of the latter proposition, the court cites Northern Securities Co. v. United States, 193 U. S. 197, 24 Sup. Ct. 436. Furthermore, the court holds that it was not material that the corporations whose control was sought were not the only corporations engaged in the same line of business as the purchasing corporation. Though a complete monopoly or a complete restraint of competition would not necessarily result if such were the case, the tendency, nevertheless, would be in that direction, which the court regards as sufficient to condemn the transaction as unlawful. People v. Chicago Gas Trust Co., 130 Ill. 288, 22 N. E. 798; More v. Bennett, 140 Ill. 69, 29 N. E. 888. As to the right to test the validity of the purchasing company, the court holds that in this case this could be done by minority stockholders. The purchase was made in excess of the authority of the purchasing company under its charter, and was therefore null and void; hence, the minority stockholders of the purchased corporation had the right to relief in equity to restrain the purchasing company from voting the stock which it illegallyheld. Stebbins v. Perry County, 167 Ill. 567, 47 N. E. 1048. Aside from the question that the purchase was ultra vires and thus a nullity, the court was of the opinion that in the case at bar complainants were entitled to equitable relief, inasmuch as it appeared that the purchase of a controlling interest in the other corporation was made to stifle competition in trade and create a monopoly, and for the purpose of enabling it to secure and maintain unreasonable and excessive rates and charges. This end was to be accom plished by selecting and maintaining a board of directors of the purchased corporation which would act in the real interests of and subservient to the purchaser. Ultimately, this would operate to injure and finally destroy the purchased cor poration. Such conduct on the part of the pur chaser, the court held, was fraudulent as against the stockholders of the purchase corporations. On the plainest principles of equity, the minority stockholders were therefore entitled to relief. Menier v. Hooper Telegraph Works, L. R. 9 Ch. 350. And on principle: Chicago Hansom Cab Co.

197

v. Yerkes, 141 Ill. 320, 30 N. E. 667; Wheeler v. Pullman Iron & Steel Co., 143 Ill. 197, 32 N. E. 420; Gamble v. Queens County Water Co., 123 N. Y. 91, 25 N. E. 201, and Fougeray v. Cord, 51 N. J. Eq. 185, 24 Atl. 499 are in point. Further authorities cited are: Memphis, etc. R. Co. v. Woods, 88 Ala. 630, 7 South. 108; Milbank v. New York, Lake Erie & Western R. Co., 64 How. Prac. 20; Franklin Bank v. Commercial Bank, 36 Ohio St. 350. CORPORATIONS. (Powers.) Mass. — The right of the Onset Bay Grove Association, whose incorporators were Spiritualists, to use its property as a summer resort and to provide for holding of camp meetings there, was decided in favor of the association in Nye v. Whittemore, 79 N. E. Rep. 253. The act incorporating the association stated that its purpose was to hold personal and real property where a wharf, hotel, or other public buildings might be erected and building lots sold or leased for the erection of private residences under regulations prescribed by the corporation, and provided that buildings erected on the prem ises should, for the purpose of taxation, be con sidered real estate. The corporation when formed, purchased a tract of land on a bay and proceeded to lay out parks; streets, building lots, and to con struct a wharf and erect cottages and an auditorium and temple for the holding of camp meetings. The master in the court below was of the opinion that the provision for taxation of the booths and the grounds of the association indicated that the legislature in incorporating the association had in mind and proceeded upon the theory that the corporation was to carry on camp meetings, and this view is sustained by the appellate court. CORPORATIONS. (Ultra Vires — Religious Societies.) Iowa. — The right of the Amana Society, a religious communistic association incorporated as a religious association, to engage in agricultural pursuits and in business and manufacturing enterprises was questioned in State v. Amana Society, 109 N. W. Rep. 894. The articles and constitution of the society make it manifest that the corporation was organized to aid in effectuat ing certain ideals in religious life, especially those relating to communistic ownership of property. The state in seeking the dissolution of the society insisted that such ownership and management of property for the maintenance of the community could not be other than purely secular, and there fore inappropriate to religious purposes. The court notes that in many instances members of religious associations have held property in common, as for instance the Moravians, the Shakers, the Oneida Community, and more recently the Zionists, and portions of the Holy