Schemes to Control the Market. afterward adding the business of manufactur ing locomotive engines. In 1857 the Whittenton Mills, which had continued the busi ness of manufacturing goods, and the said firm of William Mason & Company both be came insolvent. Prior to that time the gen eral agent of the Whittenton Mills repre sented to third persons, with whom the firm of William Mason & Company were dealing, that the corporation was a member of the partnership. The court—Thomas, J.—held that all this made no difference, since, as a matter of law, a corporation could not be a member of a partnership. The following extract will show the line of reasoning: "The effect of all our statutes, the settled policy of our Legislature, for the regulation of manufacturing corpora tions is that the corporation is to manage its affairs separately and exclusively; certain powers to be exercised by the stockholders, and others by officers who are the servants of the corporation and act in its name and be half. And the formation of a contract, or the entering into a relation, by which the cor poration or the officers of its appointment should be divested of that power, or by which its franchise should be vested in a partner with equal power to direct and control its business, is entirely inconsistent with that policy. The power to form a partnership is not only not among the powers granted ex pressly or by reasonable implication, but is wholly inconsistent with the scope and tenor of the powers expressly conferred, and the duties expressly imposed, upon a manufac turing corporation under the legislation of the Commonwealth." Such was the state of the law when the trust agreement was sprung upon a startled community. The material features of that notorious scheme are well known; the first of the adjudications recited them at length— People i1. North River Sugar Refining Com pany (121 N. Y. 582). All the shares of the capital stock of all of the confederating cor
porations were transferred to a board of trus tees. These trustees issued tr.ist certificates in lieu of these shares, thus reserving the voting rights in all of the corporations. As a cover for the scheme all of the several cor porations were left in existence, and in form each conducted its own business without any cross agreements between themselves. In one of the most literary opinions in our books Mr. Justice Finch held the trust agreement invalid. He concluded thus: "And here, I think, we gain a definite view of the injurious tendencies developed by its organ ization and operation, and of the public in terests which are menaced by its action. As corporate grants are always assumed to have been made for the public benefit, any conduct which destroys their normal functions, and maims and cripples their separate activity, and takes away their free and independent action, must so far disappoint the purpose of their creation as to affect unfavorably the public interest. It is not a sufficient answer to say that similar results may be lawfully accomplished by an individual. And so v/e have reached our conclusion, and it appearsto us to have been established, that the defend ant corporation has violated its charter and failed in the performance of its corporate duties, and that in respects so material and •mportant as to justify a judgment of dissolu tion. Having reached that result, it becomes needless to advance into the wider discussion over monopolies and competition and re straint of trade and the problems of political economy." Whether the holding corporation is a way out of this last decision may well be doubted. The situation would seem to be the same in all essentials. The case of United States v. Northern Securities Company et al. (120 Fed. Rep. 720) is so much in the mind of everyone that it is needless to recite the facts. It is true that there is no direct agreement be tween the Great Northern Railroad and the Northern Pacific Railroad; it is true that in
