378
THE GREEN BAG
if resident within our borders. Fourthly, The principal constitutional argument is rested upon that clause of the Federal Constitution (article i, § 8) which empowers Congress to regulate com merce among the several states. If the water whose transportation is prohibited, including the water of the Passaic river, of whicn the appellant seeks to make merchandise beyond our territorial borders, is the proper subject of interstate com merce, the state, of course, cannot interfere with the proposed traffic. Such right as the appellant claims to withdraw the water from the Passaic river and make merchandise of it is derived by grant from the East Jersey Water Company. Whatever rights this company may have as against the state must rest upon its chartered powers, upon its status as a riparian owner upon the Passaic river, or upon both of these combined." It may be added that the court does not consider the charter of the company to give it the right to divert the state's streams for the purpose of con veying the water beyond the borders of the state. CORPORATIONS. (Fraudulent Issue of Stock to obtain Control.) Mass. — A case of more than passing interest in times when the control of corporations is repeatedly shifting, is that of Elliott v. Baker, 80 N. E. Rep., 450. In this case, it was sought to annul an issue of stock by which a majority of the directors of the corporation at tempted to gain the control of the corporation, the stock having been issued to confederates of such directors. As the reason of the court in upholding the lower court's decree cancelling the stock issued is exceedingly able and of general public interest, and as it lays down important rules of moral con duct, it is herewith given in full. "Mere belief that they are acting for the in terests of the corporation on the part of a majority of the directors, who at the time represent a minority of the stock then outstanding, does not justify the issuing to confederates of a sufficient amount of stock to give to themselves, and to oust their opponents from, the control of the corpora tion, when the issuing of the stock is not required by the condition of the corporation or reasonably necessary for the proper prosecution of its busi ness. The directors of a corporation act in a strictly fiduciary capacity. Their office is one of trust and they are held to the high standard of duty required of trustees. They cannot be per mitted so to manage the affairs of their cestui que trust that the system of business corporations by which so large a part of the world's work is now conducted ' may become a system of frauds.' Peabody v. Flint, 6 Allen, 52, 55; European & North American Railway Co. v. Poor, 59 Me. 277. Corporate directors cannot manipulate the prop erty, of which they have control in a trust charac
ter, primarily with the intent to secure a majority of the stock or of directors in any particular in terest. This is not a fair exercise in good faith of the power with which they are clothed. Punt v. Symons & Co., Ltd. [1903] 2 Ch. 494, 515. This is especially true when the issuance of the stock is for the express purpose of retaining in power the very persons who authorize the issue, and who are therefore distinctly benefitted to the disadvantage of another and substantial part of their stockholders. Gray v. Portland Bank, 3 Mass. 364, 3 Am. Dec. 156; Cannon v. Trask, L. R. 20 Eq. 669; Luther v. Luther Co., 118 Wis. 112, 94 N. W. 69, 99 Am. St. Rep. 977; Way v. Ameri can Grease Co., 60 N. J. Eq. 263, 47 Atl. 44." CORPORATIONS. ("Treasury Stocks.") N.J. — The New Jersey Act concerning corporations, it has been held, impliedly grants power to a cor poration to purchase shares of its own capital stock if such purchase is for legitimate corporate purpose. In Knickerbocker Importation Co. v. State Board of Assessors, 65 At. Rep., 013, the court decides that this implied grant of power does not authorize a corporation to acquire its own stock for the purpose of creating so-called treasury stock, as such purpose is not a legitimate corporate purpose. Furthermore, the court holds that a corporation cannot, by the purchase of its own shares, withdrew such shares from the class ot stock issued and outstanding and thus reduce the amount of franchise tax to the extent of the shares, thus purchased. Stock once issued is and remains outstanding until retired and cancelled by the method provided by statute for the retire ment and cancellation of capital stock. The words " retirement " and " cancellation " when ever used in the franchise tax act or in the amend ment of that act, mean termination, retirement and actual cancellation, not simply purchase of stock. EVIDENCE. (Census Returns.) Mo. — In the absence of official records of births, it is often difficult to prove the ages of persons in our courts. Evidence of varying nature is relied on to supply this want of official records. Recently the United States census has been availed of for this purpose and in Priddy v. Boice, 99 S. W. 1055, the Mis souri Supreme Court gives its sanction to the use of properly certified copies of the United States cen sus to prove the age of a person. These records are by law required to contain not only the sex, color, occupation, etc., of each inhabitant, but also the age. They are therefore available to prove the age of an inhabitant. As bearing directly on the point, the court cites Flora v. Anderson, 75 Fed. 231. and as supporting its position by analogy it further cites Evanston v Gunn, 99 U. S. 666, 25 L. Ed. 306; People v. Wil
