render necessary a thorough revisal of the

ST. LOUIS, MARCH 18, 1887.

and municipal corporations.

CURRENT EVENTS.

SUGGESTED LEGISLATION, AGAIN.-Our recent article on this subject has elicited from a subscriber a letter of commendation which is very gratifying. He says: "There is a studied effort made to create the impression that the views you express are entertained only by the women and ministers, and are of little importance in the business of life; and, therefore, such expressions, coming from you, carry with them very great weight."

We have the highest respect for the clergy, but are especially flattered to be "counted in" with the ladies. We do not think, how

ever, that we deserve as much credit as our friend seems disposed to award us, for surely right-minded men may, without any special heroism, protest against the facilities for dissipation and drunkenness afforded to the youth of the country by screened bar-rooms and curtained windows. And, indeed, so harmless an institution as the "dram-shop," to use the unvarnished language of the Missouri statutes, should not fear the light even when transmitted through French plate-glass windows.

INTERSTATE COMMERCE-DRUMMERS' TAX. -It is stated by one of our exchanges, on the authority of its Washington correspondent, that the Supreme Court of the United States decided on the 7th inst. a case involving the constitutionality of the "Drummers' Tax" law of one of the States. The decision is said to be that the law imposing a license tax on traveling salesmen from other States seeking to sell goods by sample or otherwise was repugnant to the constitution of the United States, being an interference with interstate commerce, and therefore invalid.

We look with much interest for the full text of the opinion in that case; for, unless it is less sweeping than is indicated by the Washington letter, it will have a material effect upon the business of the country, and VOL. 24-No. 11.

ATTORNEY AND CLIENT PRIVILEGED COMMUNICATIONS.-Before us is an essay on "The Relation of Attorney and Client," by A. Minis, Jr., of the Savannah bar, to which was, some time ago, awarded a prize by the Georgia Bar Association. The author indulges in none of the platitudes usual in such productions, magnifying the office of attorney and descanting upon the good fortune of the client in having so invaluable a bulwark against wrong in his learned counsel. On the contrary, he gets "right down to his work," treating briefly, bnt thoroughly, the legal relations between attorney and client under appropriate heads That which strikes us as the most important is "privileged communications."

The value of this privilege to the client cannot easily be overestimated. Whenever men are involved in trouble and anxiety, especially when life, liberty, honor or large property interests are endangered, they are reluctant to confide to any adviser, howsoever trustworthy, matters which, if disclosed, might operate to their injury. That the law protects their confidences to their counsel is of infinite importance, for, without such protection, the aid of counsel, either in civil or criminal cases, would be practically of no value whatever. Even with the protection afforded by this privilege, disastrous consequences often follow the ill-timed reticence of anxious and timid litigants, who hope, by concealing even from their own counsel, unpleasant facts to destroy their efficacy against them.

It is a matter of ordinary observation with experienced practitioners that it is often exceedingly difficult to extract necessary information from ignorant or overcautious clients, and that miscarriages of justice frequently occur in consequence.

The privilege is emphatically that of the client and not of the counsel, and the law, in conferring it, has done everything for the cautious litigant that could reasonably be desired. It not only protects the secrets of the client, which have come through his confidences to the knowledge of the attorney, but

also communications to the attorney's clerk, and even to an interpreter in cases in which the services of such a functionary are necessary.

We learn that in New York, where codification seems to be more in favor than elsewhere, there is a movement to codify the law of evidence. It is to be hoped that the zeal for reform of the law will not go to the length of making counsel compellable witnesses against their clients.

NOTES OF RECENT DECISIONS.

LIBELING THE DEAD.-On the 10th ult. Mr. Justice Stephen, at Cardiff, Wales, decided that libeling the dead is no offense against the law of England. The defendant was charged with publishing in a newspaper a proposed epitaph on a deceased citizen of the town, in which it was stated, among other offensive matter, that he was "a traitor to the crown, a reviler of the aristocracy, a hater of the clergy, a panderer to the multitude;" that, as chairman of a school board, he squandered funds to which he did not contribute; that, after a mis-spent life, he died a pauper, mourned by unpaid creditors to the amount of £50,000; that he had devoted his life and energies to setting class against class, etc.

Mr. Justice Stephen fully admitting that, if John Bachelor were living, the language applied to him would be libelous, nevertheless directed the jury to acquit the prisoner, because a libel upon a dead man is, by the law of England, no crime. Of course, there could be no appeal, and the ruling rests upon the sole authority of the judge who made it.

The London Law Journal of the 19th ult. intimates that several of the other judges do not participate in Mr. Justice Stephen's views, and itself controverts them upon grounds which seem to us irrefragable. It says:

"The general principle upon which the law treats a libel as a criminal offense appears to be because of its tendency to lead to a breach of the peace. Mr. Justice Stephen's argument seems to assume that this necessarily means a breach of the peace at the hands of the parties libeled; but in a criminal prosecution the person libeled is not necessarily

the prosecutor, and the crown takes the matter up not in the interests of the prosecutor, but of all the Queen's subjects. Suppose, for example, a big bully libels a lady. The lady is not likely to resort to a thick stick, but her brother or some other male champion may well be expected to do so. Similarly, the dead cannot break the peace, but their surviving friends are all the more likely to do so because the libel is of the dead."

It is notable that Mr. Justice Stephen in his opinion, as reported by the Law Journal, controverts the authority of Lord Coke generally and specially. Generally, as he says, "there are, I think, many instances in which Lord Coke's views of the criminal law are doubtful and go far beyond the authorities he refers to." Specially, Mr. Justice Stephen impugns the authority of Lord Coke on the subject under consideration, because his views are too deeply impressed with the "star chamber practice which no one would now regard as of any authority."

We think the following passage from Lord Coke is not only clear of any star chamber taint, but singularly replete with the common sense and right reason characteristic of the common law of England. He says: "Although the private man or magistrate be dead at the time of making of the libel, yet it is punishable; for, in the one case, it stirs up others of the same family blood and society to revenge and to break the peace; and in the other the libeler traduces and slanders the State, which dies not."

This passage Mr. Justice Stephen quotes, and follows up with this remarkable expression: "If this is or ever was good law, it would follow that all history is unlawful, for every true history must, in many cases, traduce the State, which dies not." As if a true history couid be a libel; or, conceding that "the greater the truth the greater the libel," as if a true history, written without malevolent intention or a design to injure the posterity of the person criticised, and without a tendency to cause a breach of the peace, could, by any possibility, be libelous. It is true, as Mr. Justice Stephen says, that a mere villifying of the dead, without any intention of affecting the living, is not libelous. He says: "The dead have no rights and can suffer no wrongs." But then every man is 15 Rep. 125α.

held to intend the natural consequences of his own acts, and it would seem that the natural consequence of traducing a man who died only some three or four years previously, would be to injure any survivors who were interested in him, and to cause a breach of the peace.

Lord Kenyon said: "Now, to say in general that the conduct of a dead person can at no time be canvassed, to hold that even after ages are passed the conduct of bad men cannot be contrasted with the good, would be to exclude the most useful part of history; and, therefore, it must be allowed that such publications may be made fairly and honestly. But let this be done whenever it may, whether soon or late, after the death of the party, if it be done with a malevolent purpose to villify the memory of the deceased and with a view to injure his posterity (as in Rex v. Critchley), then it comes within the rule stated by Hawkins-then it is done with a design to break the peace, and then it becomes illegal.”

The only plausible ground upon which Mr. Justice Stephen's ruling could possibly be supported is that no intention to injure the living was alleged in the indictment. He says that upon that ground the judgment was arrested in Rex v. Topham, and adds that such an intent "was a fact requiring proof and necessary to be found by the jury, and not an inference by which they were bound by the terms of the writing reflecting on the dead man."

Even if this dictum be correct, it merely reduces the case to a question of pleading, and by no means justifies the broad assertion that "to libel the dead, is not an offense known to our law."

It is to be regretted that Mr. Justice Stephen felt it to be his duty to direct a verdict of acquittal, as otherwise the case might have been reviewed by the appropriate appellate court.

2 Rex v. Topham, 4 T. R. 126.

34 T. R. 129.

4 Supra.

THE DISSOLUTION OF A TRADING CORPORATION BY THE SALE OF ITS ASSETS-MAJORITY RULE.

General Rule.-It is an implied condition in the charter of every trading corporation which is formed solely for the pecuniary benefit of its shareholders, that its business may be wound up by the sale of its assets, whenever the majority, in the exercise of sound discretion, deem this course to be expedient.1 To any adequate conception and appreciation of the force of those varying circumstances which, when brought before courts for adjudication, have produced either a relaxation of the general rule or its more stringent enforcement, a preliminary survey of the arguments for and against the rule itself is essential.

1. The General Power of a Corporation to Alien. A corporation is an artificial being, possessing the same power to purchase and to sell, both real and personal property, as an individual who is sui juris.2 This doctrine has long been settled and repeatedly recognized from the earliest history of corporations to the present day.3 So necessarily incident is this right, that it has been held

a corporation cannot be created which is invested with the power of holding without the power of disposing, and that a clause in the charter restraining a com

1 Treadwell v. Salisbury Mfg. Co., 7 Gray, 393; Wilson v. Props. of Central Bridge, 9 R. I. 590; McCurdy v. Myers, 44 Pa. St. 435; Curran v. State of Arkansas, 15 How. 304, 310; Ward v. Soc. of Attys. 1 Coll. 370; Bank of Switzerland v. Bank of Turkey, 5 L. T. (N. S.) 549; Riddle v. Prop. of Locks, etc., 7 Mass. 185; Hampshire v. Franklin, 16 Id. 86; Savage v. Walshe, 26 Ala. 619; Justice Story in Mumma v. Potomac Co., 8 Pet. 281; Penobscot Boom Co. v. Lamson, 16 Me. 224; Enfield Toll Bridge Co. v. Conn., etc. Riv. Co., 7 Conn. 45; Commonwealth v. Slifer, 53 Pa. St. 71; Reeves v. Copper Co., 15 Pick. 351; Lauman v. Lebanon Valley R. R. Co., 30 Pa. St. 42; Hancock v. Holbrook, 4 Woods, 52; Black v. Delaware, etc., Canal Co., 22 N. J. (Eq.), 404, 415, in which last case Chancellor Zabriskie considers and virtually overrules Kean v. Johnson, 1 Stockt. 401. In England, such dissolution is specifically allowed by statute: Companies Act, 1862, 25 and 26 Vic., ch. 89, § 79.

2 Vice Chancellor Sandford in Barry v. Merchants' Exchange Co., 1 Sandf. Ch. 289; Justice Campbell in Whitewater Canal Co. v. Vallette, 21 How. 424; Dewey, J., in Old Colony R. R. Co. v. Evans, 6 Gray, 38; Nelson, J., in Willmarth v. Crawford, 10 Wend. 342, 344.

3 Reynolds v. Stark Co., 5 Ohio, 204, 206, citing Co. Lit. 44, 300, 306; Siderfin, 162; Smith v. Barrett, Comyns' Digest, Title Franchise, 11, 18; Colchester v. Lowton, 1 Ves. & Beames, 226.

pany from aliening its property, except with the consent of the chancellor, is void. At common law, and independent of positive statute, all corporations have the absolute jus disponendi, neither limited as to objects nor circumstanced as to quantity."

2. Majority Rule in General. The doctrine of majority rule in corporate management is analogous to the fundamental principle incident and necessary to republican form of government existing in that large body politic-the State. "It seems to be the first suggestion of reason that an act done by a simple majority of a collective body of men, which concerns the common interest, should be binding on the whole." "A corporation consists of the whole, formed of its members. The will of a corporation is not merely the concurring will of all its members, but that of even a bare majority of them. This law is founded upon the law of nature, inasmuch as, if unanimity were demanded, it would be quite impossible for any corporation to will and to act. It is also confirmed by the Roman law.' 997 It is hardly necessary to add that if the charter or a statute fixes the majority necessary to effect a dissolution, such rule must be followed.

3. The State Cannot Interfere.-There is a distinction to be drawn between the right of legislative control over public and that over private corporations. Where a quasi public corporation (such as a railroad company) has granted to it by charter a franchise intended, in large measure, to be exercised for the public good, the due performance of those functions being the consideration of the public grant, any contract which disables the corporation from performing those functions which undertakes, without the consent of the

4 Reynolds v. Stark Co., supra, and authority there cited.

2 Kent Com. 281; Mayor of Colchester v. Lowton, 1 Ves. & B. 240-244; Barry v. Merchants' Ex. Co., 1 Sandf. Ch. 280; Burton's Appeal, 57 Pa. St. 213; Whitewater Canal Co. v. Vallette, 21 How. 424; Reynolds v. Stark Co., 5 Ohio, 206; Dupee v. Boston, etc. Co., 114 Mass. 37; Co. Lit. 44; Siderfin, 162; Blackstone's Com., vol. 1, *478.

61 Kyd on Corporations, 422.

7 Argument of Atty. Gen. Legare in Louisville, Cin. & Charleston R. R. v. Letson, 2 How. 522. See also Gibson, J., in St. Mary's Church, 7 Serg. & R. 517; Lawrence, J., in Withnell v. Gartham, 6 T. R. 388; Gifford v. N. J. R. R., 2 Stockt. 171.

8 In re Eclipse Mutual Benefit Ass., Kay App. XXX, 23 L. & E. 309.

State, to transfer to others the rights and powers conferred by the charter-is a violation of the contract between the corporation and the State, and is void as against the State. But there is no ground for legislative interference in the matter of the dissolution of a trading corporation, for with its affairs the public, as such, has no concern.10 The contract relation subsisting between the State and such corporation does not justify the former in the assumption of any direct surveillance over the latter, inasmuch as the charter which is the contract-is merely permissive."

4. Partnerships at Will and Corporations. The reasoning of those authorities which support the general rule as stated, is based upon the analogy existing between the law governing the dissolution of partnerships at will and that of corporations.12 When no time is fixed by copartnership articles for the duration of the contract, it is construed to be a partnership at will, and the legal association may be determined at any time by either partner. 13 In like manner a corporation, formed for the sole object of pecuniary profit to its members, with no definite time set for its dissolution, ought not to be kept in a forced existence after it has become impossible or impracticable to continue the enterprise to advantage.14 Thus far only may the analogy be drawn, for as an obvious corollary to the general rule is the principle that the minority of shareholders cannot effect a

9 Johnson v. Shrewsbury, etc. R. R., 3 DeG., M. & G. 914; Shrewsbury, etc. R. R. v. N. W. R. R., 6 H. L. Cas. 113; McGregor v. Dover & Deal R. R., 18 Q. B. 618; Thomas v. Railway Co., 101 U. S. 71, 83; York & Md. R. R. v. Winans, 17 How. 30, 39; Black v. Delaware, etc. Canal Co., 22 N. J. Eq. 130, 399; Commonwealth v. Smith, 10 Allen, 448, 455; Lauman v. Lebanon, etc. R. R., 30 Pa. St. 42; Troy, etc. R. R. v. Kerr, 17 Barb. 581, 601; American Union Tel. Co. v. Union Pac. R. R. Co., 1 McCrary, 188; Richardson v. Sibley, 11 Allen, 66; O. & M. R. R. v. Ind. & Cin. R. R., 14 Amer. Law Reg. 733; Lyon v. Jerome, 26 Wend. 485.

10 As to this distinction between public and private corporations see Cooley's Constitutional Limitations, p. 279, note 2, and authorities there cited. See also remarks of Pearson, J., in Mills v. Williams, 11 Ired. 561.

11 Clearwater (Ferguson) v. Meredith, 1 Wall. 25. 12 Black v. Delaware, etc. Canal Co., 22 N. J. Eq., at

p. 405.

13 Story on Partnership, §§ 269, 270; Coll. on Part. (2d ed.), ch. 2, § 2; 1 Lindley on Part. (4th ed.) 232235.

14 See the opinion of Chancellor Zabriskie in Black v. Delaware & Raritan Canal Co., 22 N. J. Eq., at p. 405.

dissolution of a corporation against the will of their associates. 15

5. The Contract between Stockholders.— But there is a second contract relation incident to corporate existence that subsisting between the individual stockholders. Is not, therefore, the forced discontinuance of this relation a breach of the contract, so long as a single stockholder remains outstanding? The answer to this question cannot be more clearly stated than in the language of Chancellor Zabriskie, in Black v. Delaware & Raritan Canal Company:16 "Becoming incorporated for a specific object, without any specified. time for the continuance of the business, is no contract to continue it forever, any more than articles of partnership without stipulations as to time. There is no reason why it should be construed into such a contract; such is not implied in the charter, and a doctrine that all the shareholders but one may be compelled to continue a business which they find undesirable and wish to abandon, is so unreasonable and unjust that it will not be held to arise by implication, unless that implication is a necessary one." It is of the very nature of the contract of association that it is dissoluble,17 and he who becomes a member of a corporation must face this possibility.

6. The Fiduciary position of Directors. -Another objection which has been raised against the rule under consideration, is that the sale of assets of one corporation by its directors to another company in which the same persons are directors or members, is a breach of the fiduciary relation between the officers of a corporation and its members. It is to be remembered that the officers of a corporation cannot, in any case, sell the assets and wind up the company without the consent of the large body of the stockholders. 18 In general it may be said that, while the sale of the assets of a corporation must be made through its officers,19 and they occupy a fidu

15 Pratt v. Jewett, 9 Gray, 34, Denike v. N. Y., etc. Lime Co., 80 N. Y. 599; Fountain, etc. T. Co. v. Jewell, 8 B. Mon. 140.

16 22 N. J. Eq. 130, at p. 405. See also remarks of Judge Story in Mumma v. The Patomac Co., 8 Pet 281, at p. 287.

17 Lauman v. Lebanon Valley R. R., 30 Pa. St. 42. 18 Smith v. Smith, 3 Des. Ch. 557.

19 Ang. & Am. Corp., § 221; Morawetz on Corp., § 252; Field on Corp., § 147. See opinion of Judge Story in Bank of U. S. v. Dandridge. 12 Wheat, 64, at p. 113.

ciary position toward the shareholders,20 and, therefore, their dealings with the property held by them in trust are viewed with jealousy by the courts, yet when their act obtains the assent of the majority of their cestuis que trust, and is done with the actual and worthy purpose of abandoning an unprofitable enterprise, and for that reason the official act inures to the benefit of all concerned, such transfer has been upheld by the weight of authority. The case of Abbott v. American Hard Rubber Company,22 is in direct conflict with the opinion stated; but in that case this point was not directly at issue, and the remarks of Allen, J., are, at best, but obiter dicta. And, further, it does not appear from the decision in this case that the dissolution complained of was called for by the financial condition of the concern;23 and, in fact, a clear case of actual fraud on the part of the defendants is made out, such as would in itself vitiate the whole proceeding.

Limitations upon the Generul Rule.-Under the general rule, as stated, the authorities, for the most part, agree that the majority may, without the consent of the minority, sell the entire assets of the corporation, close up the business, distribute the proceeds of this sale and surrender the charter to the State. There are, however, limitations upon the exercise of these rights by the majority.

I. Such sale must be made with the bona fide purpose of winding up the corporation.24 The corporation, and for most purposes the majority is the corporation,25 can make only such uses of the investments of the minority as were contemplated in the original contract of association, the charter,26 and it can cease

20 This is a doctrine so universally approved that reference need be made only to the more leading textbooks and cases. Field on Corp., § 172; Ang. & Am. Corp., § 312; Morawetz on Corp., § 243; Story Eq. Jur., § 1252; Perry on Trusts, §§ 127, 207; Green's Brice's Ultra Vires, 400-409; Drury v. Cross, 7 Wall. 302; Railroad Co. v. Howard, 7 Wall. 392; Jackson v. Ludeling, 21 Wall. 616; Redmond v. Dickerson, 1 Stockt. 507; Koeler v. Hubby, 2 Black, 715.

21 See note 20, and Perry on Trusts, § 430; Green's Brice's Ultra Vires, p. 402, note; Note to Koeler v. Hubby, 2 Black, 715 (L. C. P. Co.'s ed.); Appleton, C. J., in European & N. Amer. R. R. v. Poor, 59 Me.

270.

22 33 Barb. 579.

23 See the quotation from Treadwell v. Salisbury Mfg. Co., infra, note 28.

24 Morawetz on Corp., § 212.

25 See notes 6 and 7.

26 See note 40.