parting with the power of self-government and control or merging itself without express authority of law in another corporation. Thus, gas companies, being engaged in a business of a public character, are charged with the performance of public duties. Their use of the streets whose fee is held by the municipal corporation, in trust for the benefit of the public, has been likened to the exercise of the power of eminent domain.'

In Gibbs v. Consolidated Gas Co. 130 U. S. 396, 32 L. ed. 979, the Supreme Court of the United States, in an able opinion delivered by Mr. Chief Justice Fuller, uses these words: "These gas companies entered the streets of Baltimore under their charters, in the exercise of the equivalent of the power of eminent domain, and are to be held as having assumed an obligation to fulfill the public purposes to subserve which they were incorporated."

The privileges awarded to the gas companies under their respective charters were given them in return for and in consideration of services to be rendered by them to the public. When they entered the streets they assumed the performance of the public duty of furnishing light to the inhabitants. That they should be permitted or required or forced to abandon the performance of such public duty is against the policy of the law. The public duty is imposed upon each company separately, and not upon them com. bined. Each for itself, when it accepted the articles of association, assumed an obligation to perform the objects of its incorporation. But the corporation which stands for the combined corporations, through the control which it does or may exercise over the companies by reason of its ownership of a majority of their stock, renders it impossible for them to discharge their public duties, except at the dictation of an outside force, and in the manner prescribed by a corporation operating independently of them. They are thus virtually forced to abandon the performance of their duty to the public. The freedom and effectiveness of their action in carrying out the purposes of their creation are seriously interfered with, if not actually destroyed. A power whose exercise leads to such a result cannot be lawfully intrusted to any corporate body."

Chicago Gaslight & C. Co. v. People's Gaslight & C. Co. 11 West. Rep. 63, 121 Ill. 530.

People v. Chicago Gas Trust Co. 8 L. R. A. 497, 130 Ill. 268.

An agreement between corporations engaged in the manufacture of cotton-seed oil, to select a committee from each corporation, and to turn over to this committee the properties, including the entire operative machinery of each company, to be managed and operated for a specified term by the committee, for the common benefit, the profits and losses to be shared in agreed proportions, is not a mere "traffic arrangement," but a contract of partnership, which is ultra vires and consequently void so far as it is unexecuted, even though it be authorized by both shareholders and directors.'

It is the general rule that corporate franchises are granted upon a trust or condition that the corporate privileges shall not be abused; that the corporation undertakes and agrees, upon condition of forfeiture, that it will so manage and conduct is affairs that it shall not become dangerous or hazardous to the safety of the State or community in and with which it transacts business; and that the franchise may be forfeited and the corporation dissolved for acts ultra vires, or for breach of the trust condition and perversion of the objects of the grant.'

But to warrant a forfeiture of franchise for misuser, the misuser must be such as to work or threaten a substantial injury to the public.

A corporation violating the Organic Law forfeits its franchise, but does not thereby become subject to the escheat or confiscation of its property.

To justify such forfeiture the ultra vires acts must be so substantial and continued as to so derange or destroy the business of the corporation that it no longer fulfills the end for which it was

created.

1Mallory v. Hanaur Oil Works, 86 Tenn. 598.

2 Ward v. Farwell, 97 Ill. 593.

Chicago L. Ins. Co. v. Needles, 113 U. S. 574, 28 L. ed. 1084; People v. Dispensary & H. Society of the Women's Inst. 7 Lans. 304; People v. Bristol & R. Turnp. Road, 23 Wend. 235; People v. Fishkill & B. Pl. Road Co. 27 Barb. 445; State v. Milwaukee, L. S. & W. R. Co. 45 Wis. 590; Chesapeake & O. Canal Co. v. Baltimore & O. R. Co. 4 Gill & J. 1, 106; People v. North River Sugar Ref. Co. 2 L. R. A. 33, and note, 54 Hun, 355. 'Com. v. New York, L. E. & W. R. Co. 7 L. R. A. 634, 132 Pa. 591. 'State v. Minnesota Thresher Mfg. Co. 3 L. R. A. 510, 40 Minn. 213.

§ 60. General Acts of Incorporation will not Authorize the Formation of Trusts.-No court could construe a general Act for the incorporation of associations to authorize one hostile in its purpose to the life of the State, or to its declared or recognized policy. Indeed if the state Constitution oppose the purpose of the intended incorporation, the Act authorizing it would be as void as would be that of a State, in chartering a corporation to resist the authority of the general government.'

Centainly no special charter was ever granted to create a combination to rob the public by destroying competition in production or sale. General statutes do not contemplate or authorize the organization of a corporation for such a purpose.

Since a sugar-refining company organized to create a trust or monopoly is unlawful, the franchises of a refining company are subject to forfeiture if it surrenders its business to such monopoly and becomes a party to the trust.

It is a condition on which a corporation is allowed to be created and maintained that it shall exercise and use its franchises for the benefit of the public. And when it voluntarily declines to do that, or places itself in a situation in which that may be prevented as a consequence of its voluntary action, under the statute, as well as the decisions of the courts, its charter may be annulled. If it has disabled itself for exercising its functions and employing its franchises as it was intended it should by the Act under which it was incorporated, and has placed itself in complete subordination to another and different organization to be used for an unlawful purpose, detrimental and injurious to the public; if instead of manufacturing its product and disposing of it to the public on what might be fair competitive prices, it has become a party to a combination, in part, at least, designed to create a monopoly and exact from the public prices which could not otherwise be obtained, this is a subversion of the object for which the company was created and it authorizes the attorney-general to maintain and prosecute an action to vacate and annul its charter."

Trustees of N. C. Endow. Fund v. Satchwell, 71 N. C. 111; Chicora Co. v. Crews, 6 S. C. 243.

People v. American Sugar Ref. Co. (Cal.) 7 Ry. &'Corp. L. J. 83.

People v. North River Sugar Ref. Co. 5 L. R. A. 387, 54 Hun, 354.

Indeed it may well be questioned whether it is not against the policy of the State creating a corporation and giving its stockholders power to vote their stock, to permit them to deprive themselves of that power by placing the stock in a trust, with power in the trustee to vote the stock for any definite or indefinite period. It is the policy of the law that ownership of stock shall control the property and management of the corporation, and this cannot be accomplished, and this good policy is defeated, if stockholders are permitted to surrender all their discretion and will in the important matter of voting and suffer themselves to be the passive instruments in the hands of some agent, who has no interest in the stock, equitable or legal, and no interest in the general prosperity of the corporation. This personal right to vote his stock is not given entirely for the protection of the stockholder himself, but it equally protects the interest of every stockholder, when each discharges the duty each owes his fellow stockholder, to use such power and means as the law and his ownership of stock gives him, so that the general interest of the stockholders is promoted and protected, and the general welfare of the corporation is sustained, and the business conducted by its agents, managers and officers, so far as may be upon prudent and honest principles of business and with just as little temptation to and opportunity for fraud, and the seeking of individual gains, at the sacrifice of the general welfare of the corporation, as is possible.' The case is far stronger where the voting trust is with trustees, whose personal interests in any way are hostile to the interests of the stockholders, as stockholders of the corporation whose stock the trustees vote.

When underlying a pooling contract, there is between the members of the syndicate, who are directors, or a majority of the directors of the corporation, a secret agreement or interest which enters into this pooling contract, and forms the object of its creation, and by which they are to take to themselves profits arising from contracts which they as directors make, elements of unfairness, and opportunity for fraudulent and dishonest practices are introduced which the courts cannot but condemn. Such pooling contract or voting trust is in violation of the most elementary 'Starbuck v. Mercantile Trust Co. (Conn.) 9 Ry. & Corp. L. J. 203

principles of law governing the dealings of trustees with trust property and their cestuis que trust. The union of corporations in partnerships involves many of these evil consequences.

The purpose for which a corporation is formed under general laws must be a lawful purpose. The formation of a corporation to purchase all the shares in other corporations competing with each other, to supply the public with some necessary or usefu] article, is not an organization for a lawful purpose, and all acts done towards the accomplishment of such object are illegal and void. The word "unlawful," as applied to corporations, is not used exclusively in the sense of malum in se or malum prohibitum. It is also used to designate powers which corporations are not authorized to exercise, or contracts which they are not authorized to make, or acts which they are not authorized to do; or in other words, such acts, powers and contracts as are ultra vires.3

The business of manufacturing and distributing illuminating gas, by means of pipes laid in the streets of a city, is a business of a public character. It is the exercise of a franchise belonging to the State. The services rendered and to be rendered for such a grant are of a public nature. Companies engaged in such business owe a duty to the public. Any unreasonable restraint upon the performance of such duty is prejudicial to the public interest, and in contravention of public policy."

Whatever tends to prevent competition between those engaged in a public employment or business impressed with a public character is opposed to public policy, and therefore unlawful. What ever tends to create a monopoly is unlawful, as being contrary to public policy.*

In Craft v. MeConoughy, 79 Ill. 346, where the opinion was

'Barnes v. Brown, 80 N. Y. 535; Butts v. Wood, 37 N. Y. 318; Starbuck v. Mercantile Trust Co. (Conn.) 9 Ry. & Corp. L. J. 203.

2 Franklin Co. v. Lewiston Sav. Inst. 68 Me. 48; Oregon R. & Nav. Co. v. Oregonian R. Co. 130 U. S. 1, 32 L. ed. 837.

3 Chicago Gaslight & C. Co. v. People's Gaslight & C. Co. 11 West. Rep. 63, 121 Ill. 530; Gibbs v. Consolidated Gas Co. 130 U. S. 396, 32 L. ed. 979. 42 Addison, Cont. 743; Greenhood, Pub. Pol. 180, 643, 654, 655, 670; Morris Run Coal Co. v. Barclay Coal Co. 68 Pa. 173; Craft v. McConoughy, 79 Ill. 346; Central R. Co. v. Collins, 40 Ga. 582; Hazlehurst v. Savannah, G. & N. A. R. Co. 43 Ga. 13; West Virginia Transp. Co. v. Ohio River P. L. Co. 22 W.Va. 600.