ERTHE COLA ASuperiorandDistinct of Administration DistinguishedfromPartnerships ContrastedwithCorporations TwopaperssubmittedtotheTaxCommissionerof Massachusetts,under Chapter 55oftheResolves of1911, areportfromhimon "VOLUNTARYASSOCIATIONS" Dy. -< \... ,, ALFRED ESQ. __ .. _ __ ... OFTilEBOSTONBAR . BOSTON LITTLE,BROWN&Co. 1912 ' .' ' q - ~ 6 .' COP\'RIGIIT,1912 IhALFREDD.CHANDLER TheRiverdalePress, Brookline,Mass.,U.S.A ' .. ' ' .--........ ...~ : l : . . ~ ~\\''...":'t" .'' ,.. 'v.,.- - ./' '. I...,.' '' ?.... :' /\ '\ :\\~ ''-.:J:\1 ~ o.. ~ ~ I ' -\ \........_~ ....1 IAW\11'\:/ ~ ~ -Bychapter 55,Resolvesof1911,theTaxCommissioner ofMassachusettswasdirectedtomakeaninvestigation of Voluntary Associations organized or doingbusinessinthnt Commonwealthunderawritteninstrumentordeclaration oftrust,thebeneficialinterestunderwhichisdividedinto transferablecertificatesofparticipationorshares,witha viewtodeterminingthepresentlegalstatusof suchVolun-taryAssociationsandwhetherornottheirprohibitionor furthercontrolandregulationbythatCommonwealthis advisableandinthepublicinterest.Theresolveisas follows:-CHAPTER55. RESOLVETOPROVIDEFORANINVESTIGATIONOF1'0/.UNT,IRY ASSOCIATIONSORG.ANIZimORDOINGBUSINESSIN_ TillS COMMONWEALTHUNDERWRITTENINSTRU MENTSOR DECLARATIONS oF TRUST. 4 RESOLVED,Thatthetaxcommissionerisherebyauthorizednnd directedtomakeaninvestigation ofvoluntaryassociationsorganizedor doing business In this Commonwealth under awritten Instrument or declaration oftrust,thebeneficialinterestunderwhichisdividedIntotransferable certificates of participation or shares,with aviewto determiningthe pres-ent legalstatusofsuchvoluntaryassociations,andwhetherornottheir prohibitionor/urtlurcontrolandregulationbytheCommonwealthisndvlsable and in the public Interest.The attorney-generalis hereby directedto give the tax commissioner suchassistance asthelattermaydesireInmaking thisinvestigation,andsaidcommissionermayIfhedeemsitadvisable holdpublic hearings,after due notice, and 11hallconsult withthe board of railroadcommissionersandtheboardofgasandelectriclightcommis-sionerswith especialreferencetothe effectof such voluntaryassociations upon the supervision and regulation of gas, electric light and street railway companies Inthis Commonwealth.The tax commissioner shall reportthe result of his Investigation to the general court on or before the second Satur- day of January, r.lneteen hundred nndtwelve,with such recommendations ashemaydeemadvisable:nndheshallsubmit,withhisreport,drafts of nny bill or bills necessary to carry Into effect any recommendation which hemaymake.InconductingtheaboveInvestigation,thetaxcomcnls slonermayemploysuchassistanceandIncursuchreasonableexpenses, notexceedingtwenty-fivehundreddollars,asmaybeapprovedbythe governor andcouncil;andsaidcommissioner shallhave powerto require the attendance and testimony of witnesses and the productionof all books and documents relating to any matter within the scope of thesaidInvest! gatlon.Witnesses shall be summoned In the same m11nner and be paid the samefeesas are witnessesInthe municipalcourtofthecityofBoston. (ApprovedApril15,1911.) -CITATIONS. An1es'Cases on Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..33 Bank of Topeka v.Eaton.100 Fed. Rep. 8. . . . . . . . . . . . . . . . . . . . . . . .31,33 Black's Constitutional Law........................ . . . . . . . . . . . . . . . . . . .10 Broadway Nat. Bank v. Wood, 165 Mass. 312. . . . . . . . . . . . . . . . . . . . . . . . . . .33 Brown v.Eastern Slate Co., 134 Mass. 590. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Cooley's Constitutional Limitations.................................... 34 Coxv. Hickman, 9 C. 8. N. S. 47;811. of 1.. Cases 268. . . . . . . . . . .28,29, 30 Eliot v.Freemnn, 220U. S.l78. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .13,26 Everett v.Drew, 129 !\ta!ls. ISO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28, 31 Farmers' Loan andTrust Co. v. etc., 27 Fed. Rep. 1.46. . . . . . . .9 Federal Constitution, Art. IV, Sec. 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Federal Statutes, Annotated, \'Ol. 9, pp. 178-9............................ 9 Georae on Pu:-tnershlp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 Gilmore onPnrtnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 Gleason v.McKay, B4 Mass. 419 ...................... 17, 18, 19, 23, 28, 29, 34 Governor Fernald of Maine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Hamilton's (Alexander)Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6, 23 Hewitt v.Phelp11,lOSU.S.393. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... .33 lluascy v.Arnold, 185!\lass. 202. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Johnson v.Lewis,6Fed. Rep. 27................... . . .. . . . . . .19, 28,29 l.ackett v.Rumbaugh, 45Fed.Rep. 2.\. . . . . . . . . . . . . . . . . . . . . . . . . . . .19, 27 Law Quarterly Review,Oct., 1905,p. 365........... . .. . . . . . . . . . . . . . . .18 Mason v.Pomeroy,151Mass.164;71..H. A.771. . . . . . . . . .19, 28,29, 33 Massachusetts Business Corporations, llnll . . . . . . . . . . . .. . . . . . . . . . . . . .18 1\layo v.Moritz,1511\lnss. 481. . . . . . . . . . . . . . . . . . . . . . . . . . .19, 28, 29, 31,33 Miller v.Simpson, 107 Va. 476;18 L. R. A.lN.S.) 963, note. . . . . . . . . . . .30 l\linotv. Winthrop,l62l\1nss.ll3....................................34 Norton v.Phelps, S-1Miss. 467. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Odd Fellows llnll Association v.McAIIIster,IS3Mns!l.liJ2. . . . . . . . . . . . . .33 O'Keetlev. Somerville, 1901\lass.IIO................................17 Opinion of the Justices, 1961\lass. 603. . . . . . . . . . . . . . . . . . . . . .17, 18, 23,34 on Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Parsons on Con tracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Parsons on Partnership........................................ 15,27,33 Paul v. Virginia, 8 Wall. 168. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 on Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9, 32 v.Blatchford, 137 Mass. 510. . . . . . . . . . . . . . . . . . . . . . . . .20, 28, 29 Ricker v.American Load and Trust Co., 140 1\lnss. 3-16. . . . . . . . . . . . . . . .26 Roby v. Smith, 13llnd. 342;15 L. R. A. 792. . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Shirk v. City of Ln Fnyette, 52 Fed. Rep. 857.. . . . . . . . . . . . . . . . . . . . . . . .9 Shumaker's Law of Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 Simmons,1\lr. J. Edward (Bunker). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Smith v.Anderson, L. R.15, Ch. D. 247. . . . . . . . . . . . . . . . . . . . . .19,27,28 Spotswood v.Morris,12Idaho, 360;6 L.R.A.(N.S.) 665. . . . . . . . . . . . . .16 Story's :quity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Taftv.Wnrd, 106l\lnss. 51'8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Taylorv.Davis,110U.S.330.................................. 19,27,31 Trustees' Hand Book, l.ori.1g ....................... -. . . . . . . . . . . . . . . . .32 Und!rhlll on Trusts. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9, 33 Wald's Pollock onContracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22, 26 Warner v.Beers, 23Wendell, 103.............................. 18, 22,23, 32 Welles-Stone Mercantile Co. v.Grover, 7 N.D. 460; 41L.R. A.252.... 27, 28, .29,32, 33 Woerner onAdministrution . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Wilson, The lion.Woodrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5, 6,20, 35 Trusts.Corporations. "VoluntaryAssociations." ----------FirstPaper,November20,1911. Thel-Ion.\Voodrow in cogent address P.ntitled "TheLawyerandtheCommunity,"beforetheAmerican BarAssociation,atChattanooga,Tenn.,August31,Hl10, transmittedlaterinpamphletform,challengedtheprofes-sionindemandingthattheimperso11atfeatureofcorpora-tionsshouldberestrictedastheoneobstaclethathas blockedprogresstowardeffectivecorporationreform.This question,hesays:-"StandsIntheforelo\roundofnilmoderneconomicquestionssof:uus theUnitedStutesIscP::!:erned.".,,"UbertyIsalwaysfltnonal,never a(lgre!1ate;alwaysnthinglnherlnlo\InIndividualsH;kensinltly,nenr In groupsor corpomtlons or communities.TheIndividualunitofsocietyIs theIndividual."..."ThutIswhyIplendsoearnestlyforthelndl-vlduallzutlon ofresponsibility withinthe corporation, forthe estubllshment ofthe principleoflawthutnmanhasnomore ri(lhtto donas n member of ncorporationthnnasnnIndividual." ?vir.WilsonwaspromptlyadvisedfromBostonthathis callupontheprofessionhadbeenanticipatedinMassachu-settsbymunerousExpressTrustsdeclaredinthatstate, andwhichexercisethe common-lawnaturalrighttoemploy allthemereincidentsoracces.;ariesusedinthemanage-mentormobilityofproperty,suchastransferableshares, iJundissues,promissorynotesetc.,butwhichdonotand neednotarrogateanyessentialofacorporation,suchas merging naturalpersonsinto animpersonal, artificial entity, orsuingorbeingsuedundertheirdesignatedname,and which(withproper provisionforreimbursement)placeupon Trusteesapersonalresponsibilitythatcorporatelaws. . 6 arcespeciallydesignedtoevade,andwhichevasion,legal-izedbyStateLi.:gislatures,bothconfirmsthepopularity andcausesthecondemnationofcorporations. Mr.\Vilsonwasreferredto,amongothers,theexample furnishedacenturyagobyAlexanderHamilton,whoem-ployedthistrustmethodinusclongbeforehisday-inorganizingthel\lcrchantsBankofNewYork;andhe wasfurtherremindedthatsomecorporationpromoters mightdiscouragethiseffectivepersonalbulwark;andthat States like:L\laine New thathave coinedmoney bymarketingcorporationcharterscreatedontheimper-sonalbasis,mightfrownuponthissound,independent, common-lawtrustmethodofadministration. l\'lr.\Vilsonpromptlyexpressedhissincereappreciation oftheinformationthathadcalledhisattention"to amost interestingmatter"whichhewished 41l11orccarefullyto lookinto afterthedistractionsofthepresentcampaign arc over." InguardingtheStateandthebusinessworldfromthe pitfalls ofimpersonal corporate bodies, boththe Bar anclthe Benchshouldencouragetheapplicationtoaffairsofthe clastic,effective,andwell-groundedprinciples ofcommon-lawExpressTrusts.Mr.\Vilson,inhisChattanooga address,insistedthatalthough "Corporationsmustcontinue tobe usedas aconvenienceInthetrans-action ofbusiness,yettheymustceasetobeusedasacoverttowron!l doers." Andhe added: -"It isthe duty oflawyers,of alllawyers,to assistthe makers of law and the reformers ofabusesby out the best and most effective way:to makeit." ExpressTrusts,whichnowmeetwithaugmentedap-provalinMassachusetts,andthemeritsofwhichthe countryatlargebeginstoappreciate,putthelegalestate 7 ' ' entirelyinone or more,whileothers have abeneficialinter-est in and out of the same, but arc neither partners nor agents. Thissimple,adequate,common-lawright,anypersonor groupofpersonssu.\jurismayexercise,theTrustees issuingcertificatesofLeneficialinterestdividedintoshares, aswellasissuingbondsandotherobligations,asfreelyas they openabankaccount,haveapassbook,anddraw and circulatechecks,ormakewhatevercontractualrelations arcallowedtopersonsas anaturalright. Express Trusts have been in successfuloperationinGreat BritainandAmericaforgenerations.Theyhavebeen andarcappliedwiselyinbothhemispherestoproperty valuedathundredsofmillionsofdollars.Toaffirmat this date that considerations ofpublicpolicy donot counte-nance Truststhatutilizeconventionalbusiness necessariesistochallengesoundeconomics.Publicpolicy isnotalwaysimmutable.Neitherlawyersnorlaymen canignoreexperienceorthetruth.ItwasColeridgC: whowrotethat"Amanwhosquareshisconscience bythelawwasacommonparaphraseorsynonymeofa wretchwithoutanyconscienceatall."Ifpublicpolicy inthisinstanceistobemeasuredasit shouldbeby a standard of stabilityrather than ofinstability,thestartling contrast presented later betweenExpress Trusts andMassa-chusettscorporationsoughttomodifysomenotionsof publicpolicy.It isthe substantiality ofthetrustbaseduponpersonalresponsibilityandefficiency,thathas socommendedit overloose,evasivecorporationlawsfound fromtheAtlantictothePacific. Well-drawnmodernExpress Trusts avoidnolegalobliga-tion,muchlessdotheyevadeany.Ifpervertedthey shouldofcourseberestrained.Theyavoidneedlessbusi-nessobstacles;theyrequirenoarbitraryfixedcapitaliza-tion;theycandispensewiththedeceptivefictionofapar value,afictionthatthe:NewYorkStateBarAssociation isreportedtohaveindorsed"asatoolofmanyrascals 8 andthehonestservantofnoman";theypromotesound administration;they stimulatemercantileintercourse;and theysecureahigherstandardofefficiencythroughactive Trusteesthanisgenerallyattainedthroughtheusualper-functory,oftenirresponsible,dummy,corporatedirectors whofailto direct,andwhowhencalledto accountinCourt areadmonishedthatthehighcriterionofatrusteeship shouldbetheir canon of conduct rather thanthat of ashifty directorate. TrusteesunderExpressTrustspaytaxesontheirreal andpersonalproperty.Trusteeshavetoreportfullyto theirbeneficiaries, or becalledto account inCourt by them. Publicity,aswithpartnerships,issecuredtoallwhoarc entitledtoit.Publiccuriositymereprying,orprurient curiosityisnotgratified,andoughtnottobe.The Trusteesarcprotected,astheyshouldbe,frompersonal loss,byaprovisionforexonerationorreimbursementfrom the estate,exceptincaseofwilfulldefaultor of fraud.The customaryprovisioninthedeclarationoftrustrequiring allpartieswhodealwiththeTrusteestolooktotheestate forultimate security,ratherthantotheTrustees ortothe beneficiariesconformswithacommon-lawprinciplelong sanctioned.Suchaprovisionisastrongassuranceofthe meritsoftheTrust;becauseifitsfoundationdoesnot permitofasubstantialsuperstructure,asthebasisof credit,theTrustisnotlikelytobedeclaredortoinduce desirableTrusteestoacceptit.Corporations ontheother hand offer apremium, as it were, fora weak foundationbased uponanirresponsibleartificiality,andhencegotothewall bythethousands. ExpressTrusts,underthecommonlaw,regulatedby equitableprinciplesandpractice,furnishsomeofthe highestmodelsforadministration.Corporationsunder Statelawsinviteandareresponsibleforthegreatestbusi-nessscandalsinourhistory.Onewhopreferstodrink fromapure spring onacommoncannotjustlybecharged 9. withevadinganearbylicensedbarroom.Thelattermay oftenbewiselyavoided. Asfortheequitablelawsthat regulatetrusts andTrus-tees,theyare awell-formedsystemwhich.Mr.JusticcStory pronouncedasevenmoresymmetricalintheUnitedStates thanthe originalsysteminEngland. l\'Ir.Perry,oneofAmerica'sleadingauthoritiesupon trusts,attlrmsthat:-"Everykindofvaluableproperty,bothrentnndpersonul,thutcnnhe assignedutlawmuy bethe subject-matter of atrust."Andfurther:-"The personwhocreatesthetrustmaymouldItIntowhnteverformhe pleases."(Perry on Trusts, I,67,287; Underhill on Trusts, p.57, Anll'r.Ed.) TheFederalConstitutionprotects Trustee:;as"citizens" throughoutcontinentalUnitedStates;butcorporations, notbeing"citizens"asthatwordisusedintheConstitu tion,donothavetheprivilegesandimmunitiesofCorporations cannot enter another State except ontheterm:; whichthat Stateprescribes.But Trustees underawill,or underanexpressdeclarationoftrust,arcnaturalpersons andarc"citizens"inthefullestsenseundertheConstitu-tion,and,asnaturalpersonspossessedofbothstateand nationalcitizenship,arc"entitledtoalltheprivilegesand immunities ofthecitizensintheseveralStates." Fed.Con.,Art.IV.Sec.2. Farmers'I.oan&TrustCo.\',Chicago,etc.,27Fed.Rep.146,149. Shirkv.Cityof/.aFayette,52Fed.Rep.857. Rohyv.Smith,131Ind. 342, 345-6;15L.R.A.792,71J4-5 9 Federal Statutes Annot.,pp. 178-9. Mr.justiceFieldoftheSupremeCourtoftheU.S.,in hisopinioninthefamouscaseofPaulv.Virginia,8Wal-lace,168,180,wrote:-"It has been justly saidthat no provision Inthe Constitution hastended sostronglytoconstitutethecitizensoftheUnitedStutesonepeopleas this." 10 Thepurposeforwhichthisclausewasinsertedinthe Constitution "was to preventthe States frommakinginvidiousdiscriminationagainst non-residents,andtopromote the unificationofthe Americanpeople,by breaking downState lines,in respecttothe enjoyment of social and busi-nessprivileges andthe favorandprotection ofthe laws."(Black'sConst. Law,p.292.) Inmostcasesbusinessmendonotneedacorporate charter,exceptforrailroads,fortherightofeminentdo-main,forbanks,forinsurance,andforcertainpublicser-vicefunctions.Inmostcasesthe Stategivesnoadequate equivalentforitscharter.Itisoftenauselessincum-brance;andit oftenstimulatesmercantileiniquity. Ourcorporationlawsthroughoutthiscountryhavebe-comesuchalegalizedmeansofel'ast"onbecauseofthe impersonality,theartificialentitywhichtheysanction, thattheyhaveelicitedcausticcriticismfromexecutives, economists,educators,andbusinessmen. In conservativeMassachusetts over fourthousand(4,154) ofitsStatecorporatecharters,representingmanymillions ofdollarsofauthorizedcapitalstock,weredissolvedbyits Legislatureinthelastfiveyears,anaverageofovertwoa day,omittingthoseotherwisedissolved.This showsthat evenMassachusetts'conservativecorporationlawsarea delusivewill-o' -the-wisptothousandsofimpressionable, misdirectedpeople.ThisStateincorporatesabout1,200 or1,300companiesayear,makingforthepastfiveyears fromabout6,000to6,500,andover4,000orabout64 per centwere dissolvedinthattime.A verylargenum-ber ofMassachusetts corporations appear to be mere fugitive organizations,baseduponcredulity,andtobepluckedin transit.ThisStatecannotinjustice demandtheapplica-tionofsuchanadministrativesystemto everyenterprise. It cannotproperlyinsistuponauniform,undiscriminating, and ofteninferior businessmethod,whetherfor industrialor 11 taxation purposes,andthen as an excuse say that it isnot its function''tojoininthefutileattempttosaYethefoolish fromthe consequencesoftheirfolly."The State's corpora-tionrecordinalargepart on this score isself-incriminating. Hereitiscondensed,thelistcoveringaboutninety-four pagesoftheStatelaws:-MASSACHUSETTSCORPORATIONSDlSSOLVEl> INTHELASTFIVEYEARS. Actsof 1907,ch. 290,pp.226-250 1909,ch. 347,pp.296-324 1910,ch. 609,pp.662-{)84 1911,ch. 363,pp. 331-351 0 0 0 00 Number dl&&olved 1,164 1,185 932 873 4,154 Contrasttheaboveexcessivecorporatemortalitywith theremarkablevitalityofExpressTrustsasfumishedby thelistsofrealestatetrustsinBoston,publishedbyBur-roughs& DeBlois,*thefirstofwhichappearedin1899,and containedseventeensuchtrusts,everyoneofwhicharc foundtoday,withmanymore,onthemonthlylistwhich thatfirmpublishes,andwhichlistnowrepresentsinvest-mentsof about onehundredandtenmilliondollars. \Vcdonotknowthewholenumberofrealestateandof industrialcommon-lawtrusts,aswellaspartnerships,that makeuscoftransferableshares,andarcnowoperatingin Massachusettsandelsewhere.ButExpressTrustsunder testamentary and otherwritteninstruments affectinginter-estslargeandsmall,aswellaspartnerships,numbermany thousands., SomeStatesopenlydependupontheliberalityoftheir corporatecharterstopaytheirexpensesandtocancel their debts.Such acourse iscondemnatory.Soundfinance repudiatesit. RealEstate TrustStocks,30Kilb>Street,Boston. 12 GovernorFernaldofMaine,inhisaddresstotheLegis-latureofthatStatein1909,whilesuggestingreforminits corporatelaws,stigmatizedhisStatethus:-"While it is true that the State is receiving large revenue from this source, it isulsotrue that,in aconsiderable measure,itistheprice of prostitution.I hopeyoutakestepstoremodelthem,alongevidentlinesofreform, thus restoringtoMaineher self-respect." Severerthanthiscanbeproducedfromrecog-nizedauthoritiesinthiscountry,astothe dishonorofcor-poratelegislation,andastotheiniquitiesofimpersonal andnon-moralcorporate-bodyactsthatwouldexposeindi-vidualtrusteesunderExpressTruststopersonalliability. \VhilcrelativeJythe goodwroughtby corporations hasbeen verygreat,yetabsolutelythevolumeofmischieftheyarc responsiblefor,andcontinuetoinvite,hasbeenandis enormous. Nowadaystherighttoorganizeacorporationisalmost asfreeastherighttoexecuteadeedofrealestate;it has beencarriedtotheutmostirresponsibility;andonemay orderandmayreceive,throughthemediumofcharter purveyors,anumberofcorporatechartersrepresenting millionsofcapital,fromanychosenState,almostwith the celeritythat onemayorderandreceiveasmanyboxes ofcigars.Ordinaryconveyancing,orconstructivelegal drafting,areutterlyoutmatchedinsuchaperformance. Theproperinitialdeliberationandafterresponsibility andattentionthatarerespectivelyaconditionprecedent totheforroatbnandconditionssubsequenttothe accep-tanceandperformanceofameritoriousExpressTrust, profferawholesomecorrectivetotherashmultiplication ofthemanyanemic,moribundcorporationsthatMassa-chusettsimprovidentlycreates,[eelsboundtonursefora while,andisthencompelledtoburybythethousands. OurnextStateCommissionmightwellbeoneonCorpo-ration Eugenics. 13 Longbeforeitwasgiven,thedecisionoftheSupreme CourtoftheUnitedStateslastwinterinEliotv.Freemau, 220U.S.Rep.,p.178,holdingthatExpressTrustsin vogueinMassachusettsandelsewherearcasfreeaspart-nershipsfromtheapplicationoftheFederaltaxondoing businessunderacorporatecharter,hadbeenanticipated andacteduponaccordinglyin.Massachusetts.Thatdcci- sionhasawidersignificancethanmayucrealizedinthe transcontinentalscopeofitssalutaryapplication . Afewstrong,permanentExpressTrustsarcworthmore tothis State andtotheUnitedStatesthanthe entire4,000 charteredMassachusettscorporationscastbythewhole-saleintooblivioninthelastfiveyearsuytheirownpro- gem tor . The Massachusetts passed aresolve(Resolves 'of1911,Chap.55)toprovidethattheTaxCommissioner shallmakean"investigationofVoluntaryAssociations organizedor doingbusinessinthisCommonwealthundera writteninstrumentordeclarationoftrust,thebeneficial interestunderwhichisdividedintotransferable certificates of .participationorshares,withaviewtodeterminingthe presentlegalstatusofsuchVoluntaryAssociations,and whetherornottheirprohibitionor furthercontrolandregu-lationbytheCommonwealthisadvisableandinthepublic interests."TheTaxCommissionerwastoreportonthb onorbeforeJanuary13,1912.* If suchaninquiryisaimedatoneortwoexceptional organizationsaffectingcertainpublicservice utilities,the public shouldbefrankly informedthereof.Butifits object istoputeverypersonalExpressTrust,andeverypartner-ship,thatmakesuseoftransferableshares,onalevelwith impersonalcorporations,andtoprohibit,oreventosub-- --- isdatedjanuary17,191:.!,andfounrlinHouse DocumentNo.1040. 14 jecteverysuchExpressTrust,andeverysuchpartnership, to an inquisitorial State control,though they are notcreated bythe State,andarcnotallclothed withapublicinterest, thenitspurposeassumesascopethatrequiresextreme cautiononthepart oftheLegislature. Putinsyllogisticformtheprohibitionaimofthis inquiryinvolvesthefollowingfallacy:-Some"voluntaryassociations"havebeenholdingcom- pames. Someholdingcompanies are saidto have cloneharm. Thereforepublicpolicydemandsthathereafterall "voluntaryassociations"shallbeprohibited. Theirrationalityoftheabovewillbemoreapparent ifthesyllogismisparaphrasedthus: -SomelawyershavebeenPresidents of theUnited States. SomePresidents aresaidtohave doneharm. Thereforepublic policy demands that hereafter alllawyers shallbe prohibited. Thisinquiryisdirectedtoso-called"VoluntaryAsso-ciations."Cananyonesatisfactorilydefine,orexplainthe originof,orjustifythe retentionofthatindefiniteexpres-sion,"VoluntaryAssociation"?Isitsantithesis,an"In-voluntaryAssociation,"everused,eithercolloquiallyor technically?Thedifferencebetweencreationbysovereign powerandcreationbyprivatecontractisnotasufficient basisfortheterm.Thecreationinbothcasesrestsupon volition.Thesovereigndocsnotforcecitizenstocreate; organizationisoptionalunderthegeneralcorporation laws.Theterm,howeverold,hasnofixedapplication . Itisnotanalogoustoavoluntarysettlementor convey-ancewhichdependsuponameritoriousornaturalrather thanavaluableconsideration,uponbloodoraffectionor 15 liberalitythan upon acompensatory or materialadvantage . Thedefinitionofa"VoluntaryAssociation"asgiven inthe CenturyDictionary is:. "Asocietywhichisunincorporated,butIInota/)artntrJhip,Inthatthe membersarenota(tentsforoneanother." Theword"Voluntary"addsnothingdefinitetothe word "Association."The word"Association" isunderstood to mean abody of persons united without a charter."Asso-ciations"aresometimespartnerships,andoftentimesnot partnerships."Thetruetestofpartnershipistheinten-tionoftheparties."(ParsonsonPart. 54.)Associa-tionstoproducesomethinganddividetheproductarcnot partnerships.(Id. 61):Astoworkagoldmineand dividethegold;tomakeanddividebricks;tofishand dividethefishcaught;tomanufacture anddividelumber. (Id. 61note,and445,446.)Clubsandassociations forsocialorcharitablepurposesarcnotpartnerships. (Id. 60.) Colloquially a"Voluntary Association"may be any group ofpersons,whetherincorporatedornot,fromtheUnited StatesSteelCompanytoaboys'baseballclub,ora women'ssewingcircle,unitedoftheirownvolition;and oneandallwillhavearighttoissue"transferablecertifi-cates ofparticipationorshares,"withouttherebyaffecting their legalstatus. The"Ladies'Soldiers'andSailors'Monument Association"(161N.Y.353),orafarmers'association toconstructandoperateatelephoneline(122N.Y.S. 610),orthe"\VashingtonTentNo.1,IndependentOrder ofRechabites,"associatedfortemperance,sympathy,and decentfuneralobsequies(81N.Y.507),noneofwhich wereheldtobepartnerships,mightanyorallhavebeen organizedtousctransferableshares,asweltastheNew EnglandGasandCokeCo.andtheNewEnglandInvest-mentandSecurityCo.(198Mass.413,425,430),the 16 lattertworepresentingmanymillionsofdollarsofcapital, andalloftheabovemaybe,astheyare,referredtoas "Voluntary Associations."* \Vehavecorporations,joint-stockcompanies(common lawandstatutoryt),partnerships,"trusts"(meaningcom-binationsofcorporations,amodernperversionorrestric-tionofthetermtrust);andnowthatinapposite,sweep-ing,indefinitedesignation"VoluntaryAssociation"has becomethesubjectofalegislativeinquiryinMassachu-setts,whichif itresultsonlyinhelpingtodrivethatex-pressioninto disuse,willbebeneficial. Toattemptthroughlegislationtosynonymizeorto putonaparity"VoluntaryAssociations,"Partnerships, andExpressTrustscreatedbyprivatecontract,and maintainthatallthreearclikecorporationscreatedby theState,andtoberegulatedlikecorporations,merely becausethecommon-lawrightofissuingsharesisexercised by anyoneor allofthem,istoinvitecontention.Andto maintainthatbecausesomequestionable"VoluntaryAsso-ciations"haveoversteppedthemark,that,therefore,all ExpressTrusts,andPartnerships,and"good""Voluntary Associations,"shall,withoutdistinguishingbetweenpub-licutilitiesandprivateenterprises,be"prohibited"or "controlledandregulated"bytheState,isfallaciousand prcj udicial. Theconfusionandtheconstitutionalconflictsucha coursemightinciterecallstheswiftdispositionthe. writer madewiththeState thirtyyearsago,in1881, *Thedefinitiongivenof"VoluntaryAssociation"bytheTaxCommissionerin hisReportHouseDocumentNo.1646,p.2is as follows:-"The term voluntary associationas !lenerallyusedslllnlftesan associationorpenona with acombined capital, repreentedbytransferable aharea, forthepurposeorcarrylna on acommon project for llaln." Butthisattempttonarrowthetermbysorestrictingitsscopeisarbitrary.It seek!\to accentuate thefeaturesoftransferableshares amiofgain.Butthereare innumerablesocallcd"VoluntaryAssociations"withouttransferableshares,a.nd verymanywithsuchsharescarried onwithouttradingwiththirdpersonsforgain. tScetheleadingcaseofSpotsu'Ood\',Morris,12Idaho,360;6 1..R.A.(N.S.) 665(1900). 17 oftheActof1878,Chap.275,totax'\:ompanies,co-partnerships andotherassociations,inwhichthebeneficial interest isheldinshareswhicharcassignable,"etc.,which Act,notlongafter,receiveditsjudicialquietusasun-constitutionalbythedecisioninGleasonv.1llcKay,134 Mass.,419(1883),reaffirmedandgivenanewapplication in0' Keeffev.Somenillc,190Mass.,110(1906),anddis-cussedintheOpinionofthejusticesinHl6Mass.,603 (1908). Thesuppositionthattransferablesharesarcapeculiar prerogative orspecialprivilegeor attributeofcorporations, andthat whoeverusesthemistobedisciplinedas copying anessentialofacorporateStatecharter,uras ofanimportantcharacteristicofcorporations,isamis-take.Transferablesharesarcnotanessential,notc\en anattribute,notaninseparableormarkof anycorporation,butamereincidentor::tlTl'ssaryofsonw corporatiOns. Thecorporationsthatrepresentthelargestaggregateof capital,andwhosetotalbusinessnowexceedsthat oftheNationitself,issuenoshares;thesearcmunicipal corporations.So,too,transferabilityofsharesisnot essentialtocharteredcolleges,academics,hospi tats,and othercorporateinstitutions,foundedbypublicendow-mentorprivatebeneficence.Norarcsuchsharesneces-saryinmanyscientificandliterarysocietiesformutual benefitorcharity,inthefundsofwhichthemembers haveabeneficialinterest.Ontheotherhandsucharight oftransfermaybeincorporatedintopartnershiparticles orintotestamentaryorotherexpresstrusts,andbecome afundamentalconditionofthem,withoutaiteringtheir legalcharacter, ortrespassinguponany corporateattribute. LegislaturesandevenCourtshaveoccasionallyfostered theabovemisconception;andCourtshavehadtocorrect themselvesthereon.Mistakenideasastotransferable 18 shares,aswellast::>othermereincidentsofcorporations, wereanalyzedandexposedoverseventyyearsagoin New York inthe leading case of Wanzerv.Beers, 23 Wendell Reports,pp.103,116,12-li,145to151,174to176(1840). TransferabilityofsharesisrecognizedinMassachusetts asanaturalrightatcommonlaw.Gleasonv.1\fc Kay, 134Mass.,419,425(1883).Opinionofthejustices,196 Mass.603,627(1908). Itistobehopedthathereinl'vlassachusettsnorevival oftheabove-mentionedmistakewillmisleadeitherits Executive,Legislative,orjudicialDepartmentstobelieve thatsuchanerrorcanbejustifiedeitheruponeconomic or uponlegalgrounds.Our freecommon-lawrights inthat respectrestontoobroadandsoundafootingtobecur-tailedbyanassumptionsonarrowandmistaken.The acquisitionofaformalcharterofincorporationonly recognizes,butdocsnotbest01.v,theserights.(Sec"The PersonalityoftheCorporation andtheState,"in21Law QuarterlyReview,p.365;atp.370,Oct.,1905.)Asfo:-listingshares onStockExchanges,thoseExchangeshave theirownrigidrulesofacceptanceorrejectionwhichform apublic safeguard. ThereturnstotheStaterequiredofcorporationsare notbecauseacorporationissuestransferableshares,but becausetheStateistokeepinformationathandofits owncorporate creations,or,asMr.Hall expressesit:-"The present law,passedin 1903,adoptsthe modern viewthat the State owesnodutytoinvestorsto lookafter the solvencyofcorporations,and thatItssoleobligationIsto seethatcreditorsandstockholdersshallbeat all times Informed as to the organization and management of the corpora-tionstowhichittivts franchises."(Mags,Business Corp.Hall,p.3,2dEd.) ThepresentLegislativeinquiryunderResolve55,Acts of1911,atthehandsoftheTaxCommissionerofthe State,appearstobebasedonthemistakenideas(1) thatthereisacorporateusurpationinallso-called"Volun-taryAssociations"whosebeneficiali n t r s t ~ arc"divided 19 intotransferablecertificatesofparticipationorshan.'s"; and(2)thatbecausetheStatefeelsbcmndtofurnishin-formationastoitsimpersonalgcmra.llytransitory-corporationstowhichitghes andtoregulate thosethatarcclothedwithapublic thereforeit mustfurnishsimilarinformationastoprimtcpersonsto whomitgh.esnofrcmc/zisesandwhichtheydonotnct>d, andmustregulateprivateinterestsevenwhc:1notclothed withapublic character. Ifsuchregulativeorinquisitoriallawsarctobevalid theyshouldbeuniform(Gleasonv.}.fc Kay,134i\lass., 419,425-6),applyingtoallwithoutdiscrimination,and shouldincludealsoallpartnerships,forsuchmayissue transferablesharesrepresentingmillionsofdollars.But Constitutionaiprovisionsthatprohibitunreasonableintcr-fcnnccwithprivaterightscannotbeignored. TheproperappellationforDeclarationsofTrustthat recognizecommon-lawrightsinmattersofadministration, andthatrestorethepersonalequationwhichStatecor-porationsevade,is"ExpressTrusts,"thelawsinregard towhicharcwellestablished.NosuchDeclarationof Trustshouldemploythat all-inclusive,unfitterm"Volun-taryAssociation." TrusteesunderExpressTrustsare1zotagents,butprin-cipals,having the fulltitle and control; and the beneficiaries thereunderarcneitherpartnersnoragents.T.llisis elementary.If someauthoritiesarcwantedthereonthe followingarctothepoint: v./Uoril,151Mass.481,484. AfaJonv.151Mass.164;7L.R.A.771. Johruonv.uwis,6Fed.Rep.27,28. v.Davis,110U.S.330,334-5;L. Ed.163,165. I.acitll v.Rumbaugh,45Fed.Rep.23,29. Smith\',Andtrson,L.R.15,Ch.D.,247,2756,284-5. The abo\'eruling casesarc readily distinguishedfromthe familiarclassthatascribeapartnershipcharactertoccr-' 20 tain"joint-stock companies,""associations,"andadmitted tobe"co-partnerships,"ofwhichTaft-v.lf'arcl,106Mass. 518,andPhillipsv. Blatchford,137Mass.,p.510,are types. Thelatei\'lr.J.EdwardSimmons,Presidentofthe NewYorkChamberof.Commerce,andfortwenty-two yearsPresidentoftheFourthNationalBankinNew York,inhisaddressonOct.5,1905,beforetheMaryland Bankers'Association,on"HonestyistheBestPolicy," forciblyemphasizedthebasicprincipleinvolvedherein. According to theNewYork Daily Tribune of Ort. 7,1905, he "laid his finger on the real trouble when he declared that the most demoral-IzingforceInbusinesstodayistheJivtslitureof/Jtrsonallwnorandpersonal responsibilit,allowedbymodernmethods.Theextensionoftheprinciple ofincorporationhasenabledleadersinbusinesstosetuptwostandards of morality,to maintain aJekyllandHyde duality, and to do as members ofanim/Jtrsonolandnon-moralcorporatebodyactswhichtheywould shrink fromas individuals.""What Iswanted,If weareto preserve ' ~ ( :!tandardsofhonestyinbusinessdealings,isadherencetotheold notionof;.:rsonalresponsibilityandpersonalintegrity." "Men(saidM ~ . Simmons),whoposeasthe salt oftheearthandwho condemn,without :eserve,thosewho steal.$50,or forgeacheckfor$100, or acceptabribe,willthemselves make millions by lying,by fraudand by bribery.In private ll!.ethey are stainless,but in the interests of corpora-tions, ofthe 'trusts,'ofthegas company, ofthe railroad company, of the insurancecompany,theywillhaverecoursetoeveryvillainydamnedIn the decaloaue." TheHon.\Voodrow\Vilson,inhisaddressatChatta-nooga,echoedthedistinguishedNewYorkbanker,Mr. Simmons;anditbehoovesMassachusetts,n0wadvancing torestorethatpers01ialityinadministrationwhich isthe basis of liberty and of soundfinance,not to embarrass thatmovementwhichfindsanefficientbulwarkin ExpressTrustsbuttoconsiderlegislationthatwillim-plantmorevitalityattheinceptionofitsimpersonal corporatecreations,andthusprotecttheseartificial entitiesfromprematureoblivion. ExpressTrusts.Corporations. "VoluntaryAssociations." SecondPaper,December li,1911. ThepublichearingsghenunderResolve,Ch.55,Acts of 1911,haveemphasizedsomecommonerrors:-FIRST:ThatCorporationsarcsupposedtobtstounumerousprlvl h:ges.Whereasforthemostparttheymerelyrtcognistandadoptcertain natural common-law riQhtsthat are notcorporattprerognthes or SECOND:ThatCorporationspresentthehighestmodelforcapital.Whereasofthethreestandardsofadministrationofferedby(1) Corporations,(2)Partnerships, and (3)Express Trusts, that of Corporations is the lowest, while that of Express Trusts Isthe hiQhcst. THIRD:ThatExpressTrustsarePartnerships.Whereasthelawof Partnerships is abntnch of the law of Principal and Agent,while Trustees under an Express Trust are the absolute Principals,but accounting to the beneficiaries,whohaveno powerseither as Principals or AgentsInactual administration.This distinction is clear and Indisputable. FOURTH:That prohibitive, or repressive,or regulative legislation aato common-law modes of admlnlatratlon can be partial or unequal.Whereas Inequality In that respect creates aConstitutional conflict '. \, . . ' ' 22 FIRST. ThatCorporations are supposed to bestownumerousprivileges.Whereas forthemost part theymerelyrecogni:uandadoptcertainnatural common lawr i ~ t s that arenotcorporateprerogativesorprivileges. Corporations,asarule,bestownothingsavetheartificial entitythatmergesnaturalpersonsintoanartificialbeing, withtherighttosueandtobesuedinacorporatename; andastheStatecreatesthesefictitiousbeings,itfeels boundtoregulatetheminsomedegree. \Vhatevcrelsemostcorporationspossessbeyondtheir artificialentityandrightofsuitintheirrespectivenames, arcmere"consequences orincidents ofincorporationrather thanprimaryconstituents"(\Vald'sPollockonCon., p.126),suchasissuingtransferableshares,orlimitinglia-bility,orusingaseal,ormakingby-laws,orpurchasing landsandchattels,thesebeingmerelyarecognitionand adoptionofnaturalcommon-lawrightsthatanyperson orpersonssui }urismayexercisewithoutacharter.(See Warnerv. Beers,23wendell,pp.103,116,130,145to151, 174to176.\Vald'sPollockonCon.,p.296.) "Thereareseveralveryusefulandbeneficialaccessorypowersorattri-butes,veryoftenaccompanyingcorporateprivileges,especiallyIn moneyedcorporations,which,inthe existing state of our law,asmodified by statutes, are more prominent in the public eye, and perhaps sometimes intheviewofourcourtsandlegislatures,thanthosewhichareessential tothebeing of acorporation.Suchaddedpowers,howevervaluable,are merelyaccessory.Theydonotinthemselvesaloneconfirmacorporate character,andmaybeenjoyedbyunincorporatedindividuals.Suchapoweris thetransferabilityof shares.Such,too,isthelimitedresponsibility.. So,too,theconvenienceof holdingrealestateforthecommonpurposes,exempt fr&nl the/ega/inconvenienceof jointtenancyortenancyincommon.Again:Thereisthe COntinuanceof thejointpropertyforthebenefitandpreservationofthecommonfund, indissolublebythedeathorlegaldisabilityofanypartner.Everyoneofthese attributesorpowers,thoughcommonlyfallingwithinournotionsofa moneyedcorporation.,isquiteunessentialtothelegalityof acorporation,maybe foundUJherethereisnopretenseof abodycorporate;norwilltheymakeoneifall werecombined,withoutthepresenceoftheessentialqualityoflegalindividuality," etc., perSenatorVerplanck, in.,farnerv.Beers,23Wend. 103,145-6, et.seq. 23 Thecourtinthatcase(pp.149-155)referstoseveral trusts,andunincorporatedassociations,havingtheright toemploysuchaccessaries,oneofthemoreprominent beingthatoftheMerchants'Bank,inthecityofNew York,withlimitedliability,aswellastran4crablcshares, thearticlesofassociationforwhichweredrawnbvAlex- anderHamilton.(Hamilton's\Vorks,CongressionalEel., VI I. "The mostpeculiar andthestrictly essentialcharacteristicofacorpo-rate body, which makes It to be such, and not some otherin lt>galcon-templation,isthe ofthelndhlduals the bodyintoo11edistinct,artificialindividualtxiste11u.NowthisIs11otfoundIn the associationsunderthe act."(!d.23Wend. p.155.) "ByourcommonltiWasitwouldexistnow,independentlyofstatu-toryrestrictions,associations beformedandtrustscreated, havingeveryoneof theaboteenumeratedchartlcteristics,whichhave beenInsisted onasessentialtoacorporation,e.-rceptthatpersorwlityformingitsstricta1Jd necessaryesstntialle11aldefinition."(/d.23Wend.pp.152-3.Secalso174-u.: IntheopinionoftheJusticesoftheSuprem(Judicial Courtofi\lassachusettsgiventotheStateLegislature, in1908,onthetaxationoftransfersofstock,isthefol-lowing:-"NoneofthesestatutesImpliesthatanexcisetaxmaybelaidUJlona company,association,orpartnership Inasimplebusiness,like husbandry,merelybecausethemembersthemselvesthat theirownershipshallberepresentedbytransferableurtificatesofshares. Suchanarrangementbetweentwoormoreassociatesisasimpl.460:411..It./\,2!2, undcusescited. Brown\',/:'asttrnSlatt Co.,134 1\luss. 51JO. Norton\',l'htlfls,Miss.467,S.G.Ames'GasesonTru!lts,420 (2dEd.), und casl'Ncited. "UubllltyofTru11tEstatesforGontructsMadeforTheir. Benefit."15Am.l.awHtt.449-462. "Undisclosed Prlncipul." By James Barr Ames, Inl'alt J.aw Journal, l\luy,1909,pp.450,451. Banltof 1optltav.Eaton,100Fed.Rep. 8(C.C.-:\Iuss.-1900). PursonsonPartnership, 447,nnd cl\ses(4th 1-:d.). UnderhillonTrust!!&Trustees,347,348(lJth Ed.). ' . ' ''" ' ' ' 34 FOURTH. Thatprohibitiveorrepressiveorregulativelegislationastocommon-law modes of administration can be partial or unequal.Whereas inequality inthat respect creates aConstitutional conftict. Prohibitive,repressive,orregulatinglawsshouldbeuni-form;andifanyattemptismadetoselectTrusteeswho issuetransferablecertificatesunderExpressTrustsandto omit Trustees who do not issue such certificates, or to select partnerswhoissuetr;tnsferablcsharesandtoomitpart-nerswho U'Jnotissuesuchshares,orto select Trustees and toomitpartners,theConstitutionalpointofinequality islikelytoarise,asinGleasonv.:McKay,134Mass.419, 425-6,whichcasesetasideasunconstitutionaltheAct of1878,Chap.275,totax"companies,copartnerships,and otherassociations,inwhichthebeneficialinterestisheld inshares,whicharcassignable,"etc.;forasChief Justice Fieldsaid,in1llinotv.lVinthrop,162Mass.113,122, andquotedwithapprovalbyChiefJusticeKnowltonand othersintheopinionoftheJusticesin196:\lass.603, 628:-"AsthetaxconsideredinGleasonv.McA'aywasnotuponabusinessor employment,and11stherewasnofrancl1111e-.: conferredbythe LeJtislature,thedistinctionbttwttnpartnerships;;oi1'h!rans/trabltshartsandthose withoutrtndtrtdthttaxunequaland11nreasonablt,bt :austitwasadiscrimination foundeduponanimmaterialfact." ' "Every one has arightto demandthathe be by generalrules, andaspecialstntutewhich,withouthisconsent,singleshiscnseoutns onetoberegulatedbyadiflerentlawfromthatwhichlsappliedInall similar cases,wouldnotbell'tUtimate andwouldbesuchan arbitrary mandate as is not withinthe province of free ,,, "Equalityofrights,privileges,andcapacitiesunquestionablyshouldbe the aim ofthe law.".."The State, it isto be presumed, has no fnvor11 to bestow, and designs to Inflict no arbitrary deprivation of rights."(Cooley's Const. Limitations, pp. 559, 562,563,7th Ed.) ' 35 Thestampedetoorganizeundercorporationlaws,and thustryinmanycasestoobtainsomethingfornothing, byevadingpersonalresponsibility,hasbeenperwrtcdinto anationaldisgrace,astheHon.\VoodrowWibonsoforce-ablypresentedtothelegalprofessioninhisaddnssat Chattanoogain1910. It isthedutyofthatprofessionandoftheLegislature, ifanylcgh;lationisreallynecessaryuponthissrorc,rather toconfirmthecommon-lawnaturalrightofallpersons sul }uristomanageaffairs,whetherasindividuals,oras partners,orasassignees,ortrusteesunderExpressTrusts, asthe):now,jo,thantoencouraget l ~ uscofe\asivceor-poratccharters.Intlwgreatmajorityofcasesadminis-trationthroughExpressTrustsissuperiortothatofany othermet hod. Mortalityini\lassachustt tsforhumanbeingshasaver-agedduringthepastliYcyrnrsaboutsixteen( W)percent forevery1,000persons.i\lortalityforcorporatebciugs withl\Iassachusetts'imprimaturhasawragcdforthe sameperiodaboutsixty-four((H)percent. ExpressTrustsarcconstitution allyfarmorehealthy. Corporateimpersonalityinadministrationinvitesboth fraudanddisaster.TntstjJcrsoualityisthestrongest safeguardagainstthem. . . '. ' .' '.. .. .. .' . ' ' ''' ' " "EYPRESSTRUSTSUNDERTHECOMMONLA\V." '.....'..... .. 1 ' ByAlfredo:Chandler,Esq., ....... SUPPLEMENT. June15,1912. .() - --- -...-- -TheLegislatureof.Massachusettsduringitssession of101 2hasactedupontheReportoftheStateTaxCom-missioner,made under Chapter ilf'i,oftheResolvesof1911, requiringhimtoitn-estigatcandreportupon"Voluntary Associations,''withaviewtotheirprohibitionorfurthtr cuntrolandregulation,andtwonewlawshaveresulted, neitherofwhichprohibitExpressTntstsor"Voluntary \ ..' ' ."ssoctattons. Onelaw(Chap.;)!H),Actsof1 0 1 ~ authorizescorpora-tionstoheformedinMassachusettstoacquire,manage andsellrealestate,foratermnottoexceedfiftyyears. Theotherlaw(Chap.1 t:-3,oftheResolvesofln12)pro-virksforaCommissiontoinvestigatetheHoldingsof ''VoluntaryAssociations"andCertainCorporationsand 'theConsolidationofCompaniescontrolledbythem,such Investigationbeingspecificallydirectedtocertainpublic utilityCompanies. TheCommissionistobecomposedoftheAttorney General,theBoardofRailroadCommissioners,theBoard ofGasand.ElectricLightCommission,twomembersof theSenate,andf'\illrmembersoftheHouseofRepresen-tatives,anditistoreporttothenextGeneralCourtnot laterthanJanuary5th,HH:J. OtherwiseExpressTrustswhetherfortheadministra-tionofrealestateorforindustrialorcommercialusesare notaffected. - ~ ~~ ..,,I ,,I '', /i .'' c. , '! '. .' - . '.' '. .-.~''f "- .' t' C/1;):e CONTINUEDDISSOLUTIONOF MASSACHUSETTSCORPORATIONS. Onpages10andItof"ExpressTrustsundertheCommonLaw" theexcessivemortalityinconservativeMassachusettsofitsStatecor-poratechartersispresented,showingthatin!i\'eyearspriorto Massachusettscorporationstothenumberof4,154wereclissohed,or about 64per cent.ofthewholenumber createdinthatperiod. TheMassachusettsLegislatureof1!11:.?hascontinuedthiselimina-tionbydissolving929moreofthatState'scorporatecreations,acopv oftheActbeinghereprintedinfullasinmressi\eprouf ofthe illusiun ancl instabjl ityofimpersonalcorporatebodiese\eninaconsenativeState. Whatthedeathrate ofcorporationsisinother Statesisnotknown. buttheBostonNewsBureauforDec.1.t Ott.anirmedtl1:1t :-.. InCaliforniaabout4000corporations\\ i!ldissolveonNo\'.:m.bLcauscofthdr failuretopaytherequirldlictnsetax:andinMissouriabout4000morL'arelinbleto dbsolution lx'Causc oftheir h1ilureto lilttill' annual::.tatL'Illl'lltIWJuirldbythe State law. ThecorporateformofOWill'rshipmuchltssprL'\'alentthere(\\'estandSouth): andi11consequence,dept.ndl'llCL'uponcorpora t icJIJOiisgL'IIL'nl I,andtolerationof theirmethodsiskssinLAWSOFMASSACHUSETTS, "A;o.;ACT toDissolveCertainCorporations. lJeitcnactctJ,etc.,ns Section1.Suo:hofthe porationsasarcnot.alread} dissolvedarc herebydissolvt.d,suhjtcttothepro\isinnsofsec tionsfirty-twoamifirt>-thn-cr,fchapterfour hunclrrdunc..lthirty-sevenofthlactsofthenineteenhumlr{'tiandthree:- A.E.EllisBuildingCo. A.II.RiceLumberCompanr A.j, Legt:BakcrCompany,The A.L.Whittemore Company A.LowensteinrmdSons A.!\1.Abels,Inc. A.l\1.ThomasCompanr A.S.Aile>Coml.:my Abbott-Detroit ..Jm;tonCompan}' Abraml"rcnchCompany AckotistPlaytrPianoCompanr AcmeWrtWashCompan)' ArlamsTmstCompanr Ada1nsonPublishingCompany Adco,Inc..The AeroplaneCompany ofAmerica Cotnpany AlbcrlnCcr..aCompanr Alden andTnrbox,Inc:orporatcrl AlhambraCompany Alhm.(;uihl(ne. Alln-RamlallCompany Alon;:The Coastl'ublishinllCo. Alstead Companr AltonChemicalCompanr Amalgam!\liningnntlMillinK('onrpan)',The AmtricanAutomobileCompnn1 CHAPTER313,ACTSOF1912. AmericanBiscuitCotnJ)tlfl'i AmericanBuilders L'n. AmericanCanatlian AntLricnnCan\'iL'"iCrr.tit.ryCmnpany llakin1:Comr>anr PmkingandRupplyComp.un lJJac k -cm- \ \h i tc t ionl'uru p:a n v Blackmerg:.1'.O'ConnellComtoan)' llnlcynndWanzerAlkrtnnExprCompany Daley'sr\nnta...r;:\pn:ssCnmpanv l>alzdlAxltCurnpan)' l>n\i&('ompany,hlcOrpornltof DavisAutunnint-:Thr lJunstatJicGranite.ComJinO)' lluplc,Springl'rokctur('umr.an)',The 11urnlIL1'.&1..CnmLCompan)' B.\\'a,1;,lluttcrfi..ll('umpan)',Th J>.II.Alii1lCompany llcrbcrt1..SttarnC'ompnn)' HerbertCmnpan\' Herman!\lotnrCnrCo. Hi.:>cncCompany JlillcnstWnurCompany HillsideCoq10rntion &nmFacer.ranittt'mnpnn)' nndRichcnburl(C'n. HollnnlC'omp:any llnlynkCompnny 1..M.Row'Compan)',The l.awlor Goods Companr Lawwncc:\utomaticTl'ltphoncCumpanr LawrenceBaseBallAssoc:mtion( ISSI) l.nwnnccln' LexingtonPentl'ompany LithuanianamiPolishGrocer)'null'ro,ision Com pall)' LithuanianCo-opcrathcAssociation>fllril(hton. Mnssar.husctts LondonCloakCompan)' L;cwlhrlfor;cwllcli\'cryCo. landF'urnaccCmnpan}".The !llotor TrutkCo. :-;,.wEn!llan