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ness of its own. Under the famous Northern Securities decision, a holding company may not hold stock in various corporations, if such holding amounts to a combination in restraint of trade within the provisions of the Sherman Anti-Trust Act.1

Corporations which act as stockholders in other corporations have all the rights and liabilities of natural persons. Should one company without authority hold stock in another, the stockholders of the holding company may object, but the stockholders in the corporation whose stock has been purchased have no standing in equity. Control of one corporation by another requires at most but a holding of a bare majority of its stock. A large corporation is controlled by a holding of sometimes less than 1/3 of its stock, the other 2/3 being widely distributed and held in a large measure by investors who do not exert their voting power. Besides providing an effective method of controlling several corporations, and enabling perpetual control, a holding company permits the capitalization of the controlling stock interests. Thus a $10,000,000 corporation may be controlled through a series of holding companies by stockholders who hold 51 per cent of the stock in a $1,000,000 corporation, for the first corporation may be controlled by another which holds $5,100,000 of its stock, and that in turn may be controlled by another which holds $2,600,000 of the holder's stock, and so on.

455. Special purposes of intercorporate relations.Intercorporate relations are formed for many other purposes than for complete merger through consolidation, sale, lease or stock control. Thus, corporations some

1 A good example of a holding company is the Metropolitan Securities Company of New York. See chart between pages 102 and 103 in CORPORATION FINANCE, Vol. VIII of MODERN BUSINESS. See also Appendix V.

times form pools to fix the scale of prices or to limit the amount of production of each member of the pool or to give rebates. These contracts usually have been set aside as being in restraint of trade.

456. Promoters.-The promoters of a corporation are the men interested in the formation of the corporation and who take it upon themselves to secure incorporators by whom the certificate of incorporation is executed. Their duties and rights as promoters cease the moment the corporation is taken over by the duly elected directors and officers.

Before the corporation is formed a promoter may be regarded as either an agent or a principal depending upon circumstances. Inasmuch as the corporation is not in existence he is most frequently regarded as a principal. Under some circumstances he is said to occupy a fiduciary relation to the proposed stockholders.

In making contracts he is personally liable unless there is an agreement to the contrary, or unless the third party avowedly relies upon the corporation. One of several promoters is not liable for the acts of the others.

457. Relation of promoter to corporation.—A promoter who owns property may sell it to the corporation at whatever price the corporation is willing to pay, but after he has entered upon the promotion of the company he cannot buy property in order to resell it to the corporation at an advanced price. A promoter who makes a contract on behalf of the corporation may have his contract accepted and adopted by the corporation. When a company adopts the contracts made by its promoters it agrees to indemnify the promoter for any loss that may be occasioned by the contract. If the party with whom the promoter makes the contract agrees to accept the obligation of the corporation in place of the

obligation of the promoter, the latter is freed from further responsibility and the corporation alone is bound. If, however, a corporation does not take voluntary action on a contract made before organization by a promoter on behalf of the corporation, the corporation will not be bound although it receives some benefits. 458. Promoter's right to compensation.-In most jurisdictions a corporation is not bound to pay a promoter for his services rendered before or after incorporation and before organization; in some jurisdictions a contrary rule prevails.

459. Dissolution of corporation.-Corporations may be dissolved for any one of the following reasons: 1. Expiration of the charter.

2. Consent of stockholders.

3. Breach of corporation laws. 4. Bankruptcy or insolvency.

The usual period of duration of a corporation is indefinite, but where a definite period is expressed the corporation ceases to exist as a de jure corporation when the time limited has expired. In some states, as for example, Arizona, the corporate period of existence is limited by statute, but may be extended by filing a new certificate.

The stockholders of a private corporation always have the right to dissolve and this right is usually vested in the majority. Quasi-public corporations have a public duty to perform and may not dissolve without the express consent of the state.

The existence of a corporation may be terminated by an abuse of its corporate powers or by failure to exercise them. In the case of People v. North River Sugar Refining Company, 121 N. Y. 582, it was held that the defendant had attempted to form a partnership or a

consolidation with other corporations or individuals without the consent of the state, and that it should, therefore, be dissolved. The statutes of most states provide that non-user of corporate powers for a certain period, usually one year, is sufficient cause for the dissolution of a corporation in a proper action usually brought by the attorney general.

A corporation is not necessarily dissolved by reason. of its insolvency or bankruptcy. Indeed the bankruptcy law provides for the discharge of a corporation, and several cases of the discharge of a bankrupt corporation are known.

460. Corporate receivers.-When a corporation becomes involved in financial difficulties and the rights of creditors, secured and unsecured, and of stockholders are endangered, a receiver is usually appointed. A receiver is a ministerial officer of an equitable court appointed as an impartial and indifferent person between the parties to a suit, to take possession of and to preserve during litigation, and for the benefit of those ultimately entitled, the fund or property which is the subject of the suit, whenever it does not seem equitable for any party to the contest to have possession and control thereof.

461. Classification of receivers.-There are two kinds of receivers, common law and statutory. At common law a receiver may be appointed before or after final judgment on the application of a party who establishes an apparent right to, or interest in certain property, where it is in the possession of an adverse party, and there is danger that it will be removed beyond the jurisdiction of the court, lost, materially injured or destroyed. In each state the statutes provide for the appointment of a receiver for various reasons, as for

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example, to preserve property during insolvency proceedings against a corporation. The cases in which equity without special statutory sanction will appoint a receiver may be enumerated as follows:

1. To right some fraud of corporate officers.

2. To set aside a fraudulent transfer of corporate property.

3. To convey corporate property for the benefit of creditors, which property by law cannot be seized in execution by a sheriff.

4. To foreclose a mortgage.

5. To carry on the affairs of a corporation where there is a dead-lock in the management of the corporation's business by reason of dissensions among the directors.

6. In insolvency proceedings, to take possession of the property and to distribute it amongst the creditors and those ultimately entitled to it.

462. Appointment of a receiver.-Receivers may be appointed on the petition of a secured creditor, an unsecured creditor or of a stockholder, although equity courts are reluctant to grant the petitions of stockholders or unsecured creditors. Where, however, a stockholder is in the minority and the directors are guilty of gross mismanagement or fraud or manifest oppression the conduct of the corporation will be withdrawn from the directors and given to a receiver.

Sometimes the corporation itself through its directors will apply for a receiver, to whom has been applied the term "friendly receiver." Inasmuch as a receiver should be an impartial and indifferent person it has been objected quite frequently that the term "friendly receiver" is a misnomer, and that where a person is appointed on the petition and on the nomination of the

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