Page:The Green Bag (1889–1914), Volume 15.pdf/315

tion Mr. Harkins appeared for Anderson and ing, and the wisdom of making this purchase made a brief argument. He cited Hotel Co. of the Kauffmann stock had been so clearly zp. Schram, 6 Wash. 134, wherein it was held demonstrated that nine thousand six hundred .that one corporation in Washington cannot and forty shares had been voted in favor of giving the board this authority. He attacked subscribe for the stock of another corpora tion. He then cited a more recent decision the good faith of the plaintiff in bringing the of the Washington Supreme Court, Parsons suit, and declaimed against the injustice of v. Tacoma Smelting Company, 65 Pac. 765, allowing so small a minority of the stock to thwart the purposes of so large a majority. wherein it was squarely held that a Washing He showed by affidavit that of the three hun ton corporation could not own stock in an other corporation, even where the stock was dred and fifty shares of stock not represented held by an individual in trust for the corpora at the meeting, three hundred were held by tion, and that any contract looking to the two men then traveling in Europe, who would purchase of corporate stock by a corporation have favored the purchase of the stock if they was ultra vires, void, and gave the purchasing could have been reached. On the legal ques corporation or its trustee no right to vote tion involved, Mr. Budd showed that the arti the stock attempted to be purchased. cles of incorporation expressly named the While these decisions were binding on the purchase, sale and ownership of corporate court and controlled the case at bar, thereby stock as one of the objects and pursuits to obviating the need of further argument, Mr. carry out which the corporation was formed. Harkins added that they did not stand alone, In reply, Mr. Harkins called attention to the fact that in Parsons v. Tacoma Smelting but that the same rule prevailed in Maim1 Company the articles of incorporation con (see Franklin Co. v. Lewiston Institute, 08 Me. 43), in Connecticut (see Mechanics' As tained the same provision relied on by the sociation v. Meriden Co., 24 Conn. 159), in defendants in this case, and the Supreme Court held that it made no difference, that Georgia (see Central Co. v. Collins, 40 Ga. 582), in Tennessee (see Buckeye Marble Co. the corporation could exercise only the powers granted by the statute and these v. Harvey, 92 Tenn. 115, 20 S. W. 427), in Ohio (sec Franklin Bank v. Commercial powers could not be enlarged by the language Bank, 36 Ohio St. 350), in Illinois (see Peo of the articles of incorporation. ple v. Chicago Gas Trust Co., 130 Ill. 268, After hearing the argument, the court an 22 N. E. 798), and elsewhere; in fact, Green's nounced, his decision from the bench: Brice's Ultra Vires, page 91, note b, and "It is true that this plaintiff owns only a Morawitz on Private Corporations (sections small block of stock in the defendant cor 431, 433,) stated it as settled law that in the poration. But the ear of the court is open to absence of express legislative authority ' the man of small property rights as well as to American corporations cannot become stock the rich man. A small sum of money may be holders in other corporations. as important to a poor man as a large sum Mr. Budd, counsel for the company, then to a rich man. The question involved here made his argument. He produced and read is one purely of law. The court is satisfied counter affidavits, showing that Anderson from the authorities relied on by plaintiff that was the owner of only ten share* out of the it is not lawful for this defendant corporation ten thousand which made up the capital stock to become a stockholder in the Seattle and of the Puget Sound Electric Company; that Suburban Railway Company and that this nine thousand six hundred and fifty shares of plaintiff has standing to enjoin the purchase of the Kauffmann stock. It is not contro the stock had been represented at the meet