STOCK WITH EXCLUSIVE VOTING POWER the capital, profits, and surplus of a cor poration is in B, the exclusive control is vested in A, the holder of a so-called voting stock, with none or but a minimum share in such ownership, and the holder of such con trol is guilty of fraud sufficient with any other form of contract to terminate the trust under decree of equity. Assuming that the courts have power to remedy past abuses and to compel the restitution of property wrongfully acquired from the corporation by those acting as its directors and officers we ask further, first — have they power to treat the holder of this stock control as a trustee in the fullest sense, and as such to compel him to account for all profits, other wise lawful, acquired through such owner ship directly or indirectly by his control over the officers of the company; and second — have they the power to in any way restrict or cancel his control? As a pertinent illustration to my first question, I would instance the well-known sequel to the Equitable Life situation. The owner of this stock control sold it, it seems, for a sum based, not upon his property interest in the corporation, but upon the value of the control given to the $51,000 stock over the $400,000,000 assets of the company. If there is any difference in equity between the sale of this control and the sale of a majority interest in any other corporation, then is this difference sufficient to impose upon the vendor the ordinary liability of a trustee to account for his profit on the sale of his power? Is the fact that his control rests in the ownership of "stock" sufficient to protect him from the plain duties and liabilities which would attach to it if it rested in any other form of contract? In other words, can the corporation recover front him the money he received for such control, ever and above the full fair value of his stock as an assured and permanent seven per cent investment? The New York Court of Appeals has held directors of an insurance company liable to an action to refund to the corporation moneys received by them
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for resigning and turning over its control to other parties.1 The same ruling would apply to the above case of the Philadelphia Savings Institution. If its charter members or their successors should, by successive resignations and new elections, transfer their membership for a cash consideration, they would undoubtedly be held as indi vidual trustees, liable to the corporation for their unlawful profit. The difference in the case of the Equitable, as we have seen, is that this control is made incident to a so-called stock, divided among the original members, representing an actual invest ment, relatively small, but, assuming the legality of the scheme, a proper subject of sale. This stock by subsequent transfers has vested the majority interest in one man. We have seen, however, that this device was resorted to for the very purpose of taking from ownership that control which is otherwise its incident. Does it also take from the actual trust thereby created all the incidents and safeguards otherwise belonging to it2 Such a sale is, one might think, clearly distinguishable from a mere sale of a majority interest, carrying* the control as an incident, and should be within the principle of the New York cases to which I have just referred. But these adjudged cases lie within precedent, and the case we are now considering is somewhat with out precedent. Counsel of repute have advised and effected the sale referred to, relying no doubt on the inviolability of the corporate contract and on the general assumption that the owner of stock may sell it for the best price obtainable. Their judgment has apparently not been influenced by the consideration that this stock control was in any sense a trust, not for the minority stockholders, but for the $400,000,000 of policyholders, who by the charter contract are the real owners of the capital, surplus, and profits of the company. Are these ^tf. Law, 161 N. Y. 78; Bosworth v. Allen, 168 N. Y. 157.
