Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/121

PART I.] CONSTRUCTION OF CORPORATE POWERS. [§ 130. the preceding statements regarding the power of a corporation to alienate its property are subject to the following qualifica- tions : a corporation cannot alienate or assign its property re- gardless of the rights of its creditors, or of a dissenting minority of shareholders ; ! and a corporation owing duties to the public cannot, without special authority, alienate, lease, or mortgage its franchises, or do any act that may disable it from perform- ing its public duties in the manner indicated by its constitution.* with another corporation or with an individual. People v. North River Sugar Refining Co., 121 N. Y. 582; Mallory v. Oil Works, 86 Tenn. 598; Marine Bank v. Ogden, 29 111. 248; Whittenton Mills v. Upton, 10 Gray, 582; compare Allen v. Woonsocket Co., 11 R. I. 288; French v. Donohue, 29 Minn. Ill; So. Car. & Ga. Ry. Co. v. Aug. So. R. R. Co. 107 Ga. 164. This proposition certainly holds true when the business for which the partnership is formed is ultra vires the corporation; thus a railroad cor- poration has no power to form a partnership with an individual to run a line of boats. Gunnw. Central Railroad, 74 Ga. 509; compare Cleve- land Paper Co. v. Courier Co., 67 Mich. 152. But one manufacturing company can take shares in another in payment of a debt. Howe v. Bos- ton Carpet Co., 16 Gray, 493; al- though forbidden to purchase stock in other corporations. Holmes, etc., Mfg. Co. v. Holmes, etc., Metal Co., 127 U. S. 252. Whether the purchase of shares in another corporation is ultra vires or not depends on the purpose for which it was made, and whether, under the circumstances, it was a reasonable or necessary means of carrying out corporate ob- jects. Hill v. Nisbet, 100 Ind. 341. There is great difference of opinion on this point. It is frequently held that a corporation cannot, without statutory authority, purchase shares of stock in another corporation; nor can it give itself such power by its articles of incorporation. People v. Chicago Gas Trust Co., 130 111. 268; Railway Co. v. Iron Co., 46 O. St. 44. See also Commercial Fire Ins. Co. v. Board of Revenue, 99 Ala. 1. Lanier Lumber Co. v. Rees, 103 Ala. 622; Hotel Co. v. Schram, 6 Wash. 134. Compare Byrne v. Schuyler, etc., Co., 65 Conn. 336; Nassau Bank v. Jones, 95 N. Y. 115; Military I. Assn. v. S. T. & I. Ry. Co., 105 Ga. 420; State v. Newman, 51 La. An. 833; Means v. Imp't Co., 126 N. C. 662; McAlester Mfg. Co. u. Florence C. & I. Co., 128 Ala. 240; So. B. & L. Assn. v. Casa Grande Stable Co., 128 Ala. 624; De la Vergne Co. v. Germ. Sav. Inst., 175 U. S. 40. Contra, Davis v. U. S., etc., Co., 77 Md. 35; Booth v. Robinson, 55 Md. 419. It has been held that power to take stock in an- other corporation gives no power to transfer all the assets of the corpora^ tionto such other corporation in pay- ment for such stock. Morris v. Ely- ton Land Co., 125 Ala. 263. 1 See §§ 608 and 609 for a discussion of the right of a majority to dispose of the corporate assets and close the business of the corporation. And, for a discussion of assignments by corporations for the benefit of credi- tors, with or without preferences, see § 668. 2 See §§ 304, 305, 125. 101