grants not connected with the operation of the road. Shirley v. Waco Tap. R. Co., Texas; 10 S. W. 543.

A gravel road was sold on execution; the purchasers organized as a corporation; held, on quo warranto, that they have a right to operate the road. State v. Hare, 121 Ind. 308; 23 N. E. 145.

The employes of a Tennessee corporation being exempt from road work, the same corporation is incorporated in Alabama with the same privileges; the employes are held exempt in Alabama. The court declines to consider, because not put in evidence, a Tennessee case, which is said to declare the exemp tion unconstitutional. Johnson v. State, 88 Ala. 176; 7 So. 253.

The constitutional provision against issuing fictitious stocks or bonds is not violated by issuing $2,600,000 in payment for property admitted to be worth only one half that much. The provision is aimed at stock issued fraudulently and to deceive the public; whereas in this case the purchasers at the foreclosure, though buying the property at the lower figure, had a right to sell it at their own price, namely, the higher figure. Memphis & L. R. R. Co. v. Dow, 7 S. C. R. 482.

Under the statute prohibiting the consolidation from issuing more stock than the "fair aggregate value of the property, franchises," etc., of the constituents, the new stock is limited to the net value of the property, etc., of the component corporations in excess of their liabilities. A stockholder may obtain injunction against issue of excess. Langan v. Francklyn, 20 N. Y. Supp. 404.

Unauthorized transfer of franchise held cured by subsequent legislative recognition. Hatcher v. Toledo, etc., R. R. Co., 62 Ill. 477.

The assignment of a charter is inoperative to convey the franchise, especially when, as in this case, the assignment itself is found to have been unauthorized and fraudulent. Welch v. Old Dominion M. & R. Co., 10 N. Y. Supp. 174.

A foreign corporation does not, by deed from a domestic one, acquire latter's power of eminent domain, unless there is legislative consent, which consent may, however, be inferred from a series of acts, or from recognition or ratification, and need not be so expressly proven as an original grant of corporate power. Abbott v. R. R. Co., 145 Mass. 450, 453.

CHAPTER XVII.

CORPORATION HOLDING STOCK IN ANOTHER.

A stockholder can object to the funds of the corporation being diverted from the corporate purpose and used for purchasing stock in another corporation; nor can such purchase be made as an incident to the power granted to buy such property as may be needed for completing the corporate enterprise; corporate funds can not be used for any new and distinct undertaking involving new risks to the stockholders and not fairly within the terms of the original grant.

Public policy also requires that corporations be restricted in their power of accumulating property, and that they do not restrict competition; forfeiture may be incurred if the corporations violate these principles; hence the stockholder has a standing in court to prevent their so doing.

It seems that one corporation may hold of the stock of another where the holding is quite incidental and altogether appropriate to and in keeping with the main object of the corporation; as for instance that an insurance company, which must keep a reserve fund on hand, may invest the same in stocks of other corporations.

Even when the stock is thus held, the holder can not, if its interests conflict with those of the other corporation, vote such stock to the detriment of such other corporation.

Competition should be left untrammeled, and should not be exposed to the danger of restriction by means of the purchase by the one corporation of the stock in a competing one. The interests of the people will be protected by injunction at the suit of the attorney-general; nor will this be tolerated by indirection, as where a non-competing road buys such stock, but for the benefit of a competing one.

These principles do not, however, apply to purely private corporations, owing no duties to the public; they may hold stock in other corporations, certainly when appropriate as an investment, or taken for debt, or from some other sufficient reason. The public can not complain, nor can the stockholder,

unless, perhaps, upon the ground that it is a diversion of the funds from the corporate purposes.

Even corporations of a quasi public nature may hold stock in each other when it is but a means to an ultimate legitimate conclusion, as for instance, an authorized consolidation.

SECTION ONE.

Central Railroad and Banking Co. v. Collins, 40 Ga. 582.

Company restrained at suit of its own stockholders from obtaining control of another.

Bill by stockholders in the Central Railroad and Banking Company, stockholders in the Southwestern Railroad Company and sundry citizens of Georgia, charging that said companies are about to buy from the city of Savannah 12,383 shares of the stock of the Atlantic & Gulf Railroad Company (a competing line), with the intent and purpose to use the stock thus purchased to affect the management of the Atlantic & Gulf road. Injunction granted below, sustained above. Opinion by McCay, J.; concurring opinion by Brown, C. J.; dissenting opinion by Warner, J., substantially as follows:

MCCAY, J. The citizens, simply as such, have no standing in court; it is a mere private suit to enjoin the making of a contract; only those having a pecuniary interest can complain; the wrong done the public can not be reached in this decree; the stockholders are proper parties.

The profitableness of the contract has nothing to do with the matter; any one stockholder has the right to object; the charters do not give the companies the right to go into the contract; each stockholder can stand upon his rights as secured by the charter; he is not to be forced into an enterprise not included in the charter; the company's funds can not, without his consent, be used for any purpose not included in the charter.'

Powers declared in the charters do not include the right to

'1 Shelford on Railways, 71; 1 My. & K. 162-3; 4 Y. & Coll. 618; 2 Dan. P. C. 521; 5 Hill 386; 18 Barbour

318; 43 N. Hamp. 525; 6 Angell & Ames on Corp., 4th Ed., and cases cited.

buy any other real or personal property than such as may be needed for building the roads described in the charters. Charters are to be strictly construed.' It is not a valid reason for the contemplated purchase, to plead that the Atlantic & Gulf Railroad is so competing with the defendant roads and so reducing rates, that they are compelled, from a duty of selfpreservation, to make the purchase.

The power granted to maintain the road does not include the power to take part in the management of the Atlantic & Gulf Railroad; "maintaining" has reference to keeping it in repair, and not to extending its business or lessening its rivalries by schemes and enterprises not contemplated and expressed in clear, unambiguous terms, by the charter itself.

2

The stockholder must abide by the decision of the majority, but can insist that the acts which they direct shall be within the objects and purposes of the charter; neither the state nor the stockholders have consented that any rights should be exercised other than those which are clearly and expressly set down in the charter;' a corporation can undertake no enterprise not expressly mentioned in its charter."

The power to do acts necessary to enable a corporation to answer the ends of its creation, like the express grant of power, is also to be strictly construed; and even for this purpose it can not engage in any new and distinct enterprise, involving new risks to its stockholders and not fairly within the terms of the original grant. If the defendant can buy the stock in question it could buy all of it, and thus, though chartered to run one road, it would really be managing and maintaining two. Its

'Revised Code, § 2331; Charles Ry. Cases, 573; Solomons v. Lang, River Bridge v. Warren Bridge, 14th jurist, December, 1840; Merritt 11 Peters 543; Stansbridge Canal v. v. Shrewsbury & Chester Ry., 3 Eng. Wheeley, 2 Barn. & Ad. 793. L. & E. R. 149; 16th Eng. L. & Eq. R. 180; E. A. R. R. Co. v. The Eastern Co. Ry. Co., 21 L. Rep. (N. S.); 10 Beavan 1; 6 Railway Cases 152; 43 N. H. 5115.

2 Young v. Harris, 6 Ga. R. 130. 813 Penn. 133; 28 Penn. 352; 18 How. 341.

Frederick v. City of Augusta, 5 Ga. 561; Mayor, etc., v. Macon & W.R. R. Co., 7 Ga. 221; 8 Ga. 23; 9 Ga. 213; Winter v. Mus. R. R., 11 Ga. 438; East Anglian, etc., v. Eastern, etc., Co., 7 Eng. L. and Eq. 505; Wood v. Greenville, etc., Co., 3 Jones' Eq. (N. C.) 183; Coleman v. Eastern, etc., Ry., 6 Eng.

518 How. 341, 485; 2 Russ. & My. 480, 470; 4 Railway Cases, 492; 7 Hare Chan. R. 114; 4 My. & Craty, 134; 1 Edwards, 84; 22 N. Y. 274; 13 Eng. L. & Eq. 513; 4 Russ. 562; 1 Black. U. S. 149.

stockholders, by their subscriptions, did not bind themselves to any such indefinite and unlimited enterprise.

The stockholder has also a standing in court, though a citizen, merely as such, has none, to insist that the corporate property shall not be used in violation of the public policy of the state; he may protect it against the danger of forfeiture. Public policy requires that corporations be restricted in their power of accumulating property; large accumulations remaining intact for a long period of time are dangerous to the public weal."Freed, as such bodies are, from the sure bound to the schemes of individuals the grave-they are able to add field to field, and power to power, until they become entirely too strong for that society which is made up of those whose plans are limited by a single life."

Competition begets energy, economy, skill and enterprise, that have had much to do with the remarkable progress which has been made.

The sole purpose which prompts the contemplated purchase is to prevent the ruinous competition which the Gulf Road has entered into. Even a petty tradesman can not legally bind another not to carry on a particular business over any large extent of territory; and here is a contract, the "object of which is unblushingly avowed to be" to get control of the Atlantic & Gulf Road, so that it shall cease to carry freight at low rates, and thus thwart the very object of the legislature in granting the charter and becoming itself a large stockholder.

It is contended that the bill comes too late; the contract was consummated before the bill was filed. The city of Savannah, the seller of the stock, is not bound to take notice of the company's want of power to make the purchase. But the facts show that the city had notice thereof. Moreover, the contract is illegal on the grounds of public policy, and hence notice is not necessary, as in such case, by settled rule, no person is innocent, as everybody is presumed to know the law.'

BROWN, C. J., concurring, finds that the city had actual notice of the provisions of the charter. A railroad company, without express authority given by the legislature, can not purchase stock in another railroad company. A corporation can