B004E3WO62 EBOK

by Morton J. Horwitz

  77. Dwight, The Legality of Trusts, 3 POL. SCI. Q 592, 631 (1888).

  78. Thompson, The Power of the People Over Corporate and Individual Monopolies, PROC. ILL. ST. B. ASS'N 81, 84 (1891). Thompson concluded that "as a general rule, we may safely trust to the operation of natural laws and to the inherent weakness of every human combination for a sufficient remedy." Id. at 9o.

  79. A. HADLEY, RAILROAD TRANSPORTATION 69 (G. P. Putnam's Sons 1885) quoted in W. COOK, supra note 55, at 127.

  8o. See M. FURNER, ADVOCACY AND OBJECTIVITY: A CRISIS IN THE PROFESSIONALIZATION OF AMERICAN SOCIAL SCIENCE, 1865-1905, AT 76 and passim (Univ. Press of Kentucky 1975). Cf T. HASKELL, THE EMERGENCE OF PROFESSIONAL SOCIAL SCIENCE 177-89 (Univ. of Illinois Press 1977).

  TREATISE ON THE LAW OF INTERCORPORATE RELATIONS 349-52 (1st ed., Little, Brown 1902).

  116. See Camden & A.R.R. v. May's Landing & E.H.C.R.R., 48 N.J.L. 530, 7 A. 523 (1886).

  117. Bath Gas Light Co. v. Claffy, 151 N.Y. 24, 34, 45 N.E. 390, 395 (1896).

  118. W. CooK, supra note 55, at viii.

  119. 7 S. THOMPSON, supra note 30, at 7032.

  120. See H. THORELLI, supra note 74, at 73-76.

  121. See supra note 97 and accompanying text.

  122. Northern Sec. Co. v. United States, 193 U.S. 197 (1904).

  123. 1 A. EDDY, supra note 111, at 6o1-oz.

  124. See Metcalf v. American School Furniture Co., 122 F. 115 (W.D.N.Y. 1903).

  125. See, e.g., Mason v. Pewabic Mining Co. 133 U.S. 50 (1890); State ex rel. Brown v. Bailey, 16 Ind. 46 (1861); McCray v. Junction R.R., 9 Ind. 358 (1857); Stevens v. Rutland & B.R.R., 29 Vt. 545 (1851). See also Carney, Fundamental Corporate Changes, Minority Shareholders and Business Purposes, AM. B. FOUND. RES. J. 69, 88-89 (1980).

  126. See J. ANGELL & S. AMES, TREATISE ON THE LAW OF PRIVATE CORPORATIONS AGGREGATE 537, 569 (11th ed., Little, Brown 1882).

  127. See 1 V. MORAWETZ, A TREATISE ON THE LAW OF PRIVATE CORPORATIONS iii (2d

  ed., Little, Brown 1886). See also Carney, supra note 125, at 77-78.

  128. W. COOK, TREATISE ON THE LAW OF STOCK AND STOCKHOLDERS 6o (1st ed., Baker, Voorhis 1887).

  129. See statutes cited in W. C. NOYES, supra note 115, at 29 n. i.

  130. W. C. NOYES, supra note 115, at 36 n.l, 84 n.z. These states were: Alabama (1896), Colorado (1891), Connecticut (19o1), Delaware (1899), Illinois (1895), Kentucky (1894), Louisiana (1874), Maryland (1888), Missouri (1889), Nevada (1883), New Jersey (1896), New York (1890), Pennsylvania (1901), Utah (1898). Noyes's list of thirteen states does not include the Pennsylvania statute of 1901. Actual dates of enactment for Colorado (1877), Illinois (1872), Kentucky (1893), and Utah (1896) are found in the following compilations of state laws: 1 J. W. MILLS, MILLS' ANNOTATED STATUTES OF THE STATE OF COLORADO 688 (Mills 1891); 2 W. C. JONES & K. H. ADDINGTON, ANNOTATED STATUTES OF THE STATE OF ILLINOIS 1588-89 (Callaghan 1913); J. BARBOUR & J. CARROLL, KENTUCKY STATUTES 350 (3d ed., Courier-Journal 1903); R. W. YOUNG, G. H. SMITH, & W. A. LEE, REVISED STATUTES OF THE STATE OF UTAH 163 (State Journal 1897).

  131. See Metcalf v. American School Furniture Co., 122 F. 115 (W.D.N.Y. 1903); Traer v. Lucas Prospecting Co., 124 Iowa 107, 99 N.W. 290 (1904); Tanner v. Lindell Ry., 18o Mo. 1, 79 S.W. 155 (1904); Beidenkopf v. Des Moines Life Ins. Co. & National Life Ins. Co., 16o Iowa 629, 142 N.W. 43 (1913); Lange v. Reservation Mining & Smelting Co. 48 Wash 167, 93 P. 208 (1908); Butler v. New Keystone Copper Co., 1o Del. Ch. 371, 93 A. 380 (1915).

  132. W. C. NOYES, supra note 115, at 174-75.

  133. Bowditch v. Jackson Co., 76 N.H. 351, 8z A. 1014, 1017 (1912).

  1 34. Carney, supra note 125, at 88-89.

  135. Id. at 9o.

  136. See In re Timmis, 20o N.Y. 177, 93 N.E. 522 (1910) for the New York statutory history. The leading case on shareholder unanimity is Abbott v. American Hard Rubber Co., 33 Barb. 578 (N.Y. App. Div. 186,1).

  137. The Delaware statute appears in W. C. NOYES, supra note 115, at 94 n.4. The

  81. Adams, The Relation of the State to Industrial Action, 1 PUBLICATIONS AM. ECON. ASSN 7, 61 (1887).

  8z. Id. at 64.

  83. Id.

  84. Andrews, Trusts According to Official Investigations, 3 Q.J. ECON. 117 (1889).

  85. Andrews, The Economic Law of Monopoly, 26 J. Soc. Sci. 1 (189o).

  86. E. BEI.LAMY, PLUTOCRACY OR NATIONALISM-WHICH? 2 (n.p. 1889).

  87. Id. at 3.

  88. Id. at 5.

  89. Id. at 1, 5.

  9o. J. H. FLAGLER, TRUSTS: AN ADDRESS . . . BEFORE THE COMMERCIAL CLUB OF PROVIDENCE, RHODE ISLAND (DECEMBER 15, 1888) (n. p. n.d.) (copy at Univ. of Wisconsin Library).

  91. See People v. Chicago Trust Co., 130 111. z68, 22 N.E. 789 (1887); People v. North River Sugar Ref. Co., 22 Abb. N. Cas. 164 (N.Y. Sup. Ct. 1889); State v. Nebraska Distilling Co., zq Neb. 700, 46 N.W. 155 (1890). See Louisiana v. American Cotton-oil Trust, 1 KY. & CORP. L.J. 509 (1887); California v. American Sugar Refining Co., 7 RY. & CORP. L.J. 83 (1890).

  92. See North River Sugar Ref. Co., 22 Abb. N. Cas. 164; State v. Standard Oil Co., 49 Ohio St. 137, 3o N.E. 279 (1892).

  93• E. VON HALLE, TRUSTS OR INDUSTRIAL COMBINATIONS AND COALITIONS 94 (Macmillan 1895).

  94. A. R. DEAN, A TRIBUTE TO WILLIAM NELSON CROMWELL 69 (n.p. 1955).

  95. Id. at 70.

  96. A. CHANDLER, supra note 42.

  97. 1889 N. J. Laws ch. 269, S 4 at 414.

  98. See A. R. DEAN, supra note 94, at 99.

  99. United States v. E. C. Knight Co., 156 U.S. 1 (1895).

  100. C. BOSTWICK, LEGISLATIVE COMPETITION FOR CORPORATE CAPITAL 22 (n.p. 1899).

  101. W. COOK, supra note 55, at vi.

  102. Steffens, New Jersey: A Traitor State, 25 MCCLURE'S MAC. 41 (1905).

  103. C. BOSTWICK, supra note 100, at I.

  104. Id. at 4.

  105. Id. at 15.

  1o6. Id. at u.

  107. See W. LETWIN, LAW AND ECONOMIC POLICY IN AMERICA 71-85 (Random House 1965).

  108. W. COOK, THE CORPORATION PROBLEM 226 (G. P. Putnam's Sons 1891).

  100. F. VON HALLE, supra note 93, at 113.

  110. See i W. COOK, TREATISE ON THE LAW OF CORPORATIONS HAVING A CAPITAL STOCK vii (5th ed., Callaghan 1903).

  111. 1 A. EDDY, THE LAW OF COMBINATIONS 665-66 (Callaghan 1901).

  112. Id.

  113. W. CooK, supra note 1 10, at vii.

  114. F. VON HALLE, supra note 93, at 113.

  115. Compare St. Louis, V. & T.H.R.R. v. Terre Haute & 1.R.R., 145 U.S. 393 (1892) with Pullman's Palace Car Co. v. Central Transp. Co., 71 U.S. 138 (1898). See Harriman, Ultra Vires Corporation Leases, 14 HARV. L. REV. 332 (190o); W. C. NOYES, New Jersey statute, broadening an 1896 law, appears in W. C. NOYES, TREATISE ON THE LAW OF INTERCORPORATE RELATIONS 232 n.2 (2d ed., Little, Brown 1909). These appraisal statutes, Noyes wrote, "are probably broad enough to be available in aid of a reorganization through the transfer of corporate assets in exchange for stock." Id, at 232.

  138. Weiner, Payment of Dissenting Stockholders, 27 COLUM. L. REV. 547 (1927).

  139. J. ANGELL & S. AMES, TREATISE ON THE LAW OF PRIVATE CORPORATIONS AGGREGATE 166 (6th ed., Little, Brown 1858).

  140. Mason v. Pewabic Mining Co., 133 U.S. 50, 59 (1890).

  141. E. FREUND, supra note z6, at 10.

  142. Id. at 48.

  143. 1 V. MORAWETZ, supra note 127, at iii.

  144. V. MORAWETZ, TREATISE ON THE LAW OF PRIVATE CORPORATIONS 24 (1st ed., Little, Brown 1882).

  145. Id.

  146. H. TAYLOR, A TREATISE ON THE LAW OF PRIVATE CORPORATIONS HAVING CAPITAL STOCK iv (Kay 1884).

  147. Note, The Legal Idea of a Corporation, 19 AM. L. REV, 114, 115 (1885).

  148. See supra note 48 and accompanying text.

  149. H. TAYLOR, supra note 147, at 1 z.

  150. Jones, A Corporation as "A Distinct Entity," 2 COUNS. 78, 81 (1892) (emphasis added).

  151. Dorfman, Introduction to H. C. ADAMS, RELATION OF THE ST
ATE TO INDUSTRIAL ACTION AND ECONOMICS AND JURISPRUDENCE at 47-48 (J. Dorfman ed., Columbia Univ. Press 1954).

  152. Adams, Suggestions for a System of Taxation, PUBLICATIONS MICH. POL. SCI. ASS'N 49, 6o (1894).

  153. C. TIEDEMAN, TREATISE ON STATE AND FEDERAL CONTROL OF PERSONS AND PROPERTY IN THE UNITED STATES (F. H. Thomas 1900).

  154. Id. at 382-83.

  155. Id. at 6oq-1o.

  156. See Shiras, Classification of Corporations, 4 YALE L.J. 97, 99-100 (1895).

  157. See Beardstown Pearl Button Co. v. Oswald, 130 111. App. 290, 294-95 (rgo6).

  158. G. HENDERSON, supra note 6z, at 16q.

  159. J. T. CARTER, THE NATURE OF THE CORPORATION AS A LEGAL ENTITY 16o (M. Curlander 1919).

  16o. 3o F. Cas. 435 (C.C.D. Me. 1824) (No. 17,944). The Supreme Court adopted the trust fund doctrine in Sawyer v. Hoag, 84 U.S. (17 Wall.) 61o (1873).

  161. A second question was whether, in the absence of a national bankruptcy law, the trust fund doctrine prevented an insolvent corporation from exercising a preference about the order in which it paid its creditors, since it was concededly legal for an insolvent individual to exercise such discretion.

  162. W. COOK, supra note 55, at vii.

  163. Hawkins v. Glenn, 131 U.S. 319 (1889). See also Glenn v. Liggett, 135 U.S. 533 (1890); Pincoffs, Corporations: Capital Stock A Trust Fund for Creditors, 26 AM. L. REV. 100, 1 02 (1892).

  164. W. COOK, supra note 55, at v.

  165. The emphasis in histories of limited shareholder liability has been on identifying the periods in which shareholder liability to creditors of an insolvent corporation diverged from unlimited partnership liability. From this perspective, any limitation on otherwise unlimited liability is significant. See, e.g., Dodd, The Evolution of Limited Liability in American Industry: Massachusetts, 61 HARV. L. REV. 1351, 1379 (1948) (identifying when American common law diverged from English common law and assumed limited liability as the norm in the absence of a legislative provision for liability). As a result, scholars have tended to under-emphasize the fact that, in most jurisdictions throughout the nineteenth century, the usual statutory provision made the shareholder liable for much more thannormally twice-the value of his shares.

  166. 1848 N.Y. Laws, ch. 40.

  167. W. COOK, supra note 55, at 203-06.

  168. See 3 S. THOMPSON, supra note 31, at chs. 46, 50.

  16q. Navin & Sears, The Rise of a Market for Industrial Securities, 1887-1902, 29 Bus. HIST. REV. 105, io6 (1955).

  170. Id. at 109.

  171. Id. at 1oq n. 4.

  172. Id. at 109.

  173. See id. at 109-10.

  174. Id. at Io6.

  175. Id. at 137.

  176. See J. W. HURST, LAW AND THE CONDITIONS OF FREEDOM IN THE NINETEENTHCENTURY UNITED STATES 72 (Univ. of Wisconsin Press 1956).

  177. Friedrich, Stocks and Stock Ownership, 14 ENCYCLOPEDIA OF SOCIAL SCIENCES 403 (E. Seligman ed., Macmillan 1934).

  178. S. THOMPSON, supra note 30, at vii.

  179. See Christensen v. Eno, 1o6 N.Y. 97, 102, 12 N.E. 648 (1887); Southworth v. Morgan, 205 N.Y. 293, 93 N.E. 490 (1912); Jeffrey v. Selwyn, 220 N.Y. 77, 115 N.E. 275 (1917). See generally W. COOK, supra note 6o.

  180. Hospes v. Northwestern Mfg, Co., 48 Minn. 174, 5o N.W. 1117 (1892).

  181. Ballantine, Stockholders Liability in Minnesota, 7 MINN. L. REV. 79, 88 (1923); Note, The Nature of the Stockholders Liability for Stock Issued at a Discount, 29 HARV. L. REV. 854, 856 (1916).

  182. 139 U.S. 417 (1891). See also Clark v. Bever, 139 U.S. 96 (1891); Fogg v. Blair, 139 U.S. 118 (1891).

  183. 2 S. THOMPSON, supra note 30, at 1295.

  184. Id. at 1296.

  185. Pepper, Recent Development of Corporation Law by the Supreme Court of the United States (pt. z), 34 AM. L. REG. (n.s.) 448, 457 n.2 (1895)-

  186. Id. at 456. See also Pepper, The "Trust Fund Theory" of the Capital Stock of a Corporation, 32 AM. L. REG. (n.s.) 175 (1893).

  187. See, e.g., Harriman, Corporate Assets as a "Trust Fund for the Benefit of Creditors," 2 Nw. L. REV. 115, 206 (1894); McMurtrie, Is Unpaid Capital a Trust Fund in Any Proper Sense?, 25 AM. L. REV. 749 (1891).

  188. Compare Camden v. Stuart, 144 U.S. 104 (1892) with Hollins v. Brierfield Coal & Iron Co., 150 U.S. 371 (1893), See Pepper, supra note 185, at 450.

  18q. Note, supra note 181, at 856.

  190. Steacy v. Little Rock R.R., 22 F. Cas. 1142, 1152 (C.C.E.D. Ark. 1879) (No. 13,329).

  191. W. COOK, supra note 6o, at 498 n. 1. This idea first appeared in Cook's treatise, , 257 n.2, as early as 1889 (2d ed.), except that he predicted that "some time hereafter" the rule of full negotiability would be established. The statement in the text, from the third edition (1895), was the first to declare it as the "established rule." By the eighth edition in 1023, Cook had eliminated the statement that it had already become the established rule and simply cited cases for the proposition that it was "the better opinion, and the one most in accord with the usages and demands of trade." z W. COOK, TREATISE ON THE LAW OF CORPORATIf":S HAVING A CAPITAL STOCK 257 n.2, at 854 (8th ed., Baker, Voorhis 1923).

  192. See Navin & Sears, supra note 170, at 137-38.

  193. See 1 W. CooK, supra note 191, at 291 nn.4 & 5; Bonbright, The Dangers of Shares without Par Value, 24 COLUM. L. REV. 449, 458 (1924).

  194. Bonbright, supra note 193, at 460.

  195. Id. at 432.

  196. Pepper, Recent Development of Corporation Law by the Supreme Court of the United States (pt. 1), 34 AM. L. REG. (n.s.) 296, 296 (1895).

  197. Pepper, supra note 185, at 453.

  198. Pepper, A Brief Introduction to the Study of the Law of Association, 4o A. L. REG. (n.s.) 255, 267 (1901).

  199. Hunt, The Trust Fund Theory and Some Substitutes for It, 12 YALE L.J. 63, 67 (1902).

  200. H. SPELLMAN, A TREATISE ON THE PRINCIPLES OF LAW GOVERNING CORPORATE DIRECTORS 237 (Prentice-Hall 1931).

  201. Union Pacific Ry. v. Chicago R.I. & P. Ry., 163 U.S. 564, 596 (1896).

  202. Cass v. Manchester Iron & Steel Co., 9 F. 640, 642 (C.C.W.D. Pa. 1881).

  203. See H. SPELLMAN, supra note 200, at 6 n.24.

  204. 3 S. THOMPSON, supra note 30, at 2878.

  205. Id. at 2878-79 (emphasis retained).

  zo6. Bank of the U.S. v. Dandridge, 25 U.S. (12 Wheat.) 64, 76, 78, 114-15 (1827).

  207. 3 S. THOMPSON, supra note 30, at 2881.

  208. Id. at 2881-82.

  209. J. ANGELI. & S. AMES, TREATISE ON THE LAW OF PRIVATE CORPORATIONS AGGREGATE 257 (7th ed., Little, Brown 1861).

  210. Id. See also 3 S. THOMPSON, supra note 30, at 2862-63.

  211. C. FIELD, TREATISE ON THE LAW OF PRIVATE CORPORATIONS (J. D. Parsons, )r. 1877).

  212. E. FREUND, supra note z6, at 53.

  213. Id. at 48.

  214. Manson v. Curtis, 223 N.Y. 313, 322, 119 N.E. 558, 562 (1918). H. SPELLMAN, supra note zoo, at 9-12. The leading case on the subject became Hoyt v. Thompson's Ex'r, 19 N.Y. 207 (1859), which was largely ignored by the New York courts until it later became a favorite "old" citation for recognizing plenary power in the board of directors. See Beveridge v. New York Elevated R.R., 112 N.Y. 1, 22-23, 19 N.E. 489. 494-95 (1889); People ex rel. Manice v. Powell, 201 N.Y. 194, 200, 94 N.E. 634, 637 (1911); Manson, 223 N.Y. at 322, 119 N.E. at 56z. A second early favorite, frequently cited in the twentieth century, was an opinion by Chief Justice Shaw in Burrill v. Nahant Bank, 43 Mass. (2 Met.) 163 (1840). More typical cases reflecting the early view of directors as agents who could not delegate their powers are Mechanics Bank v. New York & N.H.R.R., 22 N.Y. 258, 295 (186o) (opinion of Selden, J.); Brokaw v. New Jersey R.R., 32 N.J.L. 328, 332 (1867).

  215. H. SPELLMAN, supra note 200, at 4-5.

  216. E. FREUND, supra note z6, at 58.

  2 17. Id. at 6o.

  218. 1 A. EDDY, supra note 1 1 1, at 602.

  219. People v. North River Sugar Ref. Co., 121 N.Y. 582, 625, 24 N.E. 834, 84041 (1890).

 
220. See, e.g., Brown, The Personality of the Corporation and the State, 21 L.Q.R. 365 (1905).

  221. See Jones, supra note 150, at 8o-8i.

  222. Davis, The Nature of Corporations, 12 POL. ScL Q. 273, 278 (1897).

  223. E. FREUND, supra note z6, at 13.

  224. Id. at 11.

  225. Id. at 48.

  226. Id. at 51.

  227. Id.

  228. Id. at preface, 5.

  729. Id. at 52.

  230. Id. at 47.

  231. Id. at 59-60.

  232. Williams, An Inquiry into the Nature and Law of Corporations, 38 AM. L. REC. (n.s.) 1, 3 (1899).

  233. Brown, supra note 220, at 379.

  234. See Raymond, The Genesis of the Corporation, 19 HARV. L. REV. 350, 362 (1906).

  235. Machen, Corporate Personality, 24 HARV. L. REV. 253, 261-62 (1911).

  236. Id.

  237. G. HENDERSON, supra note 6z, at 3.

  238. Id. at 166.

  239. Id. at 167.

  240. Id. at 165-66.

  241. Id. at 165-

  242. Id. at 174.

  243. Id.

  244. Id. at 5, 8.

  245. Id. at 169.

  246. Id. at 3-

  247. 201 U.S. 43 (1905). See also cases cited supra note 41.

  248. Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518 (1819).

  Chapter 4

  1. Holmes, Codes, and the Arrangement of the Law, 5 AM. L. REV. 1 (1870), reprinted in 44 HARV. L. REV. 725 (1931).

  2. 0. W. HOLMES, THE COMMON LAW (1st ed., Little, Brown 1881).

  3. Holmes wrote in 1930 that "if a man was to do anything he must do it before 40." Letter from O. W. Holmes to Mrs. Charles S. Hamlin (Oct. 12, 1930), reprinted in M. HOWE, JUSTICE OLIVER WENDELL HOLMES: THE PROVING YEARS, 1870-1882, at 8 n. 18 (Harvard Univ. Press 1963).