pation, and thus being prevented from supporting himself and his family. It is evident that both these evils occur when the contract is general, not to pursue one's trade at all, or not to pursue it in the entire realm or country. The country suffers the loss in both cases; and the party is deprived of his occupation, or is obliged to expatriate in order to follow it. A contract that is open to such grave objection is clearly against public policy. But if neither of these evils ensue, and if the contract is founded on a valid consideration and a reasonable ground of benefit to the other party, it is free from objection, and may be enforced."

Innumerable cases, however, might be cited to sustain the proposition that combinations among those engaged in business impressed with a public or quasi public character, which are manifestly prejudicial to the public interest, cannot be upheld. And presumptively an agreement between two competing systems of railroads to divide their earnings for traffic between given points, for which they were previously competitors, is against public policy and cannot be enforced.'

The law "cannot recognize as valid any undertaking to do what fundamental doctrine or legal rule directly forbids. Nor can it give effect to any agreement the making whereof was an act violating law. So that, in short, all stipulations to overturn, or in evasion of what the law has established; all promises interfering with the workings of the machinery of the government in any of its departments, or obstructing its officers in their official acts, or corrupting them; all detrimental to the public order and public good, in such manner and degree as the decisions of the courts have defined; all made to promote what a statute had declared to be wrong,―are void.” 2

2

It is also too well settled to admit of doubt that a corporation 1Texas & P. R. Co. v. Southern P. R. Co. 41 La. Ann. 970, 40 Am. & Eng. R. Cas. 475.

Bishop, Contracts, § 549; Woodstock Iron Co. v. Richmond & D. Extension Co. 129 U. S. 644, 32 L. ed. 819; opinion by Mr. Justice Field; Trist v. Child, 88 U. S. 21 Wall. 441, 22 L. ed. 623; Irwin v. Williar, 110 U. S. 499, 28 L. ed. 225; Arnot v. Pittston & E. Coal Co. 68 N. Y. 568; Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666; Woodruff v. Berry, 40 Ark. 261; Hartford & N. H. R. Co. v. New York & N. H. R. Co. 3 Robt. 411; Craft v. McConoughy, 79 Ill. 346; Hooker v. Vandewater, 4 Denio, 349; Stanton v. Allen, 5 Denio, 434; Central R. Co. v. Collins, 40 Ga. 582: Morris Run Coal Co. v. Barclay Coal Co. 68 Pa. 173.

cannot by its own voluntary act disable itself by contract from performing the public duties which it has undertaken, and by agreement compel itself to make public accommodation or convenience subservient to its private interests.'

"Where," says Mr. Justice Miller, delivering the opinion of the court in Thomas v. West Jersey R. Co. 101 U. S. 71, 83, 25 L. ed. 950, 952, "a corporation, like a railroad company, has granted to it by charter a franchise intended in large measure to be exercised for the public good, the due performance of those functions being the consideration of the public grant, any contract which disables the corporation from performing those functions, which undertakes without the consent of the State to transfer to others the rights and powers conferred by the charter, and to relieve the grantees of the burden which it imposes, is a violation of the contract with the State, and is void as against public policy."

But as neither human sympathy, moral principle, personal reputation, nor the fear of punishment have deterred individuals from forming combinations and conspiracies to control and stifle competition, so the temptation to use such combinations for purposes of exacting unlawful tribute has often proved irresistible, where there was neither a soul to save, a body to imprison for corporate crime, nor personal self-respect to sacrifice. And it has been held that the organization of a corporation for the purpose of controlling the manufacture and trade in an article of commerce in the United States and Canada, by getting all manufacturers of such article to enter into a combination giving such corporation the whole control of the business, or by buying out those who would not enter, and buying off any others who might propose to engage in the business, is an unlawful enterprise, being an attempt to create a monopoly; and that an agreement intended to aid in the formation and organization of an illegal corporation designed to secure a monopoly of a certain business, by which, and in consideration of indorsements and other financial aid to a shareholder to enable him to raise funds necessary to join the enterprise, the indorsers are to

'Gibbs v. Consolidated Gas Co. 130 U. S. 396, 32 L. ed. 979; West v. Camden, 135 U. S. 507, 34 L. ed. 254; East Tennessee, V. & G. R. Co. v. Frazier, 139 U. S. 288.

have a share of the net earnings of stock, is void on grounds of public policy.'

§ 56. Union of Corporations in a Partnership to Suppress Competition. Another form with which such combinations are clothed is that of a union of corporations in a partnership for a division among them of the profits upon the production and sale of some article, placed under the control of the partnership, or a division of the charges upon transportation by carriers. But the law does not favor such arrangements, and the general rule is that corporations cannot enter into a partnership agreement pooling all their earnings, the business being managed for them by representatives appointed, and the profits distributed among the partners, unless specially authorized by statute. And it was held by the supreme court of New York that the uniting of corporations into a particular consolidation or partnership, not authorized by their charters or effected under statutes in reference to consolidation of corporations, is ultra vires, and if it destroy the purpose of their creation, warrants the forfeiture of their corporate existence.

Such combinations have frequently been condemned by courts as not only unlawful but against public policy.'

A corporation is a new creature of the law, deriving all its powers from the Act incorporating it, and can exercise the same only in the manner therein authorized.*

A contract between corporations charged with a public duty, such as that of common carriers, providing for the formation of a combination having no other purpose than that of stifling competition and providing means to accomplish that object, is illegal and against public policy.'

1Richardson v. Buhl, 6 L. R. A. 457, 77 Mich. 632.

'Central R. & Bkg. Co. v. Smith, 76 Ala. 572; Charlton v. Newcastle & C. R. Co. 5 Jur. N. S. 1097; Gunn v. Central R. Co. 74 Ga. 509; Elevator Co. v. Memphis & C. R. Co. 85 Tenn. 703; Mallory v. Hanaur Oil Works, 86 Tenn. 598; Whittenton Mills v. Upton, 10 Gray, 582, 71 Am. Dec. 685; Thomas v. West Jersey R. Co. 101 U. S. 71, 25 L. ed. 950.

Craft v. McConaughy, 79 Ill. 346; Alger v. Thacher, 19 Pick. 51; Hannah v. Fife, 27 Mich. 172; Hooker v. Vandewater, 4 Denio, 349; Stanton v. Allen, 5 Denio, 434; Hoffman v. Brooks, 11 Cin. W. L. Bul. 258; Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 672; Morris Run Coal Co. v. Barclay Coal Co. 68 Pa. 186.

Head v. Providence Ins. Co. 6 U. S. 2 Cranch, 127, 2 L. ed. 229; Dartmouth. College v. Woodward, 17 U. S. 4 Wheat. 826, 4 L. ed. 656.

5 Cleveland, C. C. & I. R. Co. v. Closser, 9 L. R. A. 754, 126 Ind. 348.

A resolution to deliver the stock of a corporation to trustees of a certain association or combination, which is carried unanimously by the votes of all who are present, including every member of the trustees of the corporation and all the shareholders except two, who own but a small part of the stock and who are stated in fact to have consented to the delivery of the stock, is sufficient to make the corporation a party to the combination. And where a manufacturing corporation which, instead of manufacturing its product and disposing of it to the public on what might be fair competitive prices, becomes a party to a combination in part at least designed to create a monopoly and exact from the public prices which could not be otherwise obtained, is liable to have its charter vacated and annulled for such subversion of the object for which it was created.'

The Court of Appeals rested its affirmation of the decision in People v. North River Sugar Ref. Co. on the sole ground that it was unlawful for the corporation to enter into a partnership agree ment which in fact consolidated the corporations,' the court simply declining to decide any other question in the case.3

The fact that the control of a corporation is by its charter vested in a board of directors, seems to preclude such corporation from placing itself by contract in relations with other corporations or individuals, which may involve liabilities not assumed by its constituted authorities.*

But there are cases where corporations enter into contracts, which would amount to partnerships if between individuals, and which, whether with other corporations, or with individuals, are in fact in the line of the corporate purpose. Under such circumstances, 'People v. North River Sugar Ref. Co. 5 L. R. A. 387, 54 Hun, 354, 22 Abb. N. C. 164.

People v. North River Sugar Ref. Co. 9 L. R. A. 33, 121 N. Y. 582. 'See on this question as denying the power to unite in partnership, Catskill Bank v. Gray, 14 Barb. 479; Mallory v. Hanaur Oil Works, 86 Tenn. 598; Gunn v. Central R. Co. 74 Ga. 509; Whittenton Mills v. Upton, 10 Gray, 582, 71 Am. Dec. 681; Holmes v. Old Colony R. Co. 5 Gray, 58; Jones v. Parker, 20 N. H. 31, 20 Am. & Eng. Corp. Cas. 485; Gill v. Manchester, S. & L. R. Co. L. R. 8 Q. B. 186; Central R. & Bkg. Co. v. Smith, 76 Ála. 572; Van Kuren v. Trenton L. & Mach. Mfg. Co. 13 N. J. Eq. 302; Lamoille Valley R. Co. v. Bixby, 55 Vt. 235; Ledsinger v. Central Line Steamers, 75 Ga. 567; French v. Donohue, 29 Minn. 111; Bissell v. Michigan S. & N. I. R. Co. 22 N. Y. 258.

Whittenton Mills v. Upton, 10 Gray, 582, 71 Am. Dec. 681; New York & SCanal Co. v. Fulton Bank, 7 Wend. 412.

courts waiving the question of power to enter into a partnership contract, sustain the engagement as being within the object contemplated in the creation of the corporation.'

Of course where the purpose of the creation of the corporation does not appear, an enterprise in which it may engage, even as a partner, cannot readily be shown to be inconsistent with the object

of its creation.'

But the courts are specially solicitous to discountenance all contracts or arrangements by these public servants which savor of a purpose to stifle competition or repress rivalry in the departments of business in which they ply their vocation.'

It has been denied that courts can reach "trusts," where they exist under partnerships; it being claimed that partnerships cannot be restrained on the ground that their purpose is hostile to freedom of trade. But this is too broad an assertion. A partnership of that character is subject to the restraining power of the court. It is impossible under any form of contract to escape the control of a court of equity."

$57. Combination between Corporations without Partnership. It is undoubtedly true that agreements between corporations as to certain mutual interests may rightfully be entered into, without involving partnership liabilities, or constituting a contract of partnership. Under proper circumstances and lawful purposes, there may be a pooling of receipts without a partnership contract. 'Marine Bank v. Ogden, 29 Ill. 248; Cleveland Paper Co. v. Courier Co. 67 Mich. 152; Rider L. Raft Co. v. Roach, 97 N. Y. 378; Hackett v. Multno rah R. Co. 12 Or. 130; French v. Donohue, 29 Minn. 111; Leggett v. Hyde, 58 N. Y. 278; Gill v. Manchester, S. & L. R. Co. L. R. 8 Q. B. 186. Shorb v. Beaudry, 56 Cal. 446; Allen v. Woonsocket Co. 11 R. I. 288; Butler v. American Toy Co. 46 Conn. 136; Dalton City Co. v. Dalton Mfg. Co. 33 Ga. 243.

State v. Hartford & N. H. R. Co. 29 Conn. 538; Hooker v. Vandewater, 4 Denio, 349; Twells v. Pennsylvania R. Co. (Pa.) 3 Am. L. Reg. N. S. 728; Western U. Teleg. Co. v. Chicago & P. R. Co. 86 Ill. 246; Coe v. Louisvile & N. R. Co. 3 Fed. Rep. 775; Munn v. Illinois, 94 U. S. 113, 24 L. ed. 77; Woodstock Iron Co. v. Richmond & D. Extension Co. 129 U. S. 644, 32 L. ed. 819; Santa Clara M. & L. Co. v. Hayes, 76 Cal. 287; Denver & N. 0. R. Co. v. Atchison, T. & S. F. R. Co. 17 Fed. Rep. 667, and note by Hamil

ton.

'Dwight, Trusts, 3 Political Science Quarterly, 592.

5 Richardson v. Buhl, 6 L. R. A. 457, 77 Mich. 632. 'Briggs v. Vanderbilt, 19 Barb. 222; Leslie v. Lorillard, 1 L. R. A. 456, 110 N. Y. 519; Converse v. Norwich & N. Y. Transp. Co. 33 Conn. 166; Pratt v. Ogdensburg & L. C. R. Cɔ. 102 Mass. 557; Benedict v. Western U. Teleg.