Business law

“ We think it is clear that corporations organized for the purpose of doing business, and actually engaged in such activities as leasing property, collecting rents, managing office buildings, making investments of profits, or leasing ore lands and collecting royalties, managing wharves, dividing profits, and in some cases investing the surplus, are engaged in business within the meaning of this statute, and in the capacity necessary to make such organizations subject to the law. ”

“ Philosophy may have gained by the attempts in recent years to look through the fiction to the fact and to generalize corporations, partnerships, and other groups into a single conception. But to generalize is to omit, and, in this instance, to omit one characteristic of the complete corporation, as called into being under modern statutes, that is most important in business and law. A leading purpose of such statutes and of those who act under them is to interpose a nonconductor, through which, in matters of contract, it is impossible to see the men behind. ”

“ The Legislature shall provide by law for the regulation, prohibition, or reasonable restraint of common carriers, partnerships, associations, trusts, monopolies, and combinations of capital, so as to prevent them or any of them from making scarce articles of necessity, trade, or commerce, or from increasing unreasonably the cost thereof to the consumer, or preventing reasonable competition in any calling, trade, or business. ”

“ Of such corporations, all who live within the limits are of course obliged to be members, and to submit to the duties which the law imposes on them as such. Other civil corporations are for the advancement of trade and business, such as banks, insurance companies, and the like. These are created, not by general law, but usually by grant. ”

“ THEORY OF LEGISLATION RECOMMENDED The history of corporations, as well as the logic of the case, shows that there are possible two general theories as to the State's duty in creating corporations: first, the old theory that, being creatures of the State, they should be guaranteed by it to the public in all particulars of responsibility and management; and the modern quite opposite theory that, in the absence of fraud in its organization or government, an ordinary business corporation should be allowed to do anything that an individual may do. ”

“ Or if great size is the test, if the number of customers is the test, if the scope of the business throughout the nation is the test, if the contributions of the many to the value of the business is the test,-or if it takes a combination of all to meet the condition, then every business with great capital and many customers distributed throughout the country, and making a large business possible, must be treated as affected with a public interest, and the price of the goods on its shelves can be fixed by law. ”

“ Such laws as the franchise-tax law in this State, which the Court of Appeals recently unanimously decided constitutional- such a law as that passed in Congress last year for the purpose of establishing a Department of Commerce and Labor, under which there should be a bureau to oversee and secure publicity from the great corporations which do an interstate business--such a law as that passed at the same time for the regulation of the great highways of commerce so as to keep these roads clear on fair terms to all producers in getting their goods to market--these laws are in the interest not merely of the people as a whole, but of the propertied classes. For in no way is the stability of property better assured than by making it patent to our people that property bears its proper share of the burdens of the State; ”

“ Usually such corporations, though organized under the law of one state, make their profits by doing their business in several or all of the states, and, while so doing, receive the protection of their laws. ”

“ Corporations created by the several states are necessary to the conduct of the business of the country; and it is a startling proposition that a state may permit a corporation to do business within its limits, and by that act acquire the right to subject the corporation to regulations that may be inconsistent with the supreme law of the land. ”

“ The profits of a solvent going corporation, whether current profits or those reinvested in the business, are owned absolutely by the owners of the corporation and are subject to their disposition and control, except where the law imposes restrictions. Oftentimes, the stockholders themselves impose restrictions by incorporating restrictive provisions in the charter or by-laws of the corporation. ”

“ ¶The first essential in determining how to deal with the great industrial combinations is knowledge of the facts—publicity. In the interest of the public, the Government should have the right to inspect and examine the workings of the great corporations engaged in interstate business. Publicity is the only sure remedy which we can now invoke. What further remedies are needed in the way of governmental regulation, or taxation, can only be determined after publicity has been obtained, by process of law, and in the course of administration. ”

“ To gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any corporation engaged in commerce, excepting banks and common carriers subject to the Act to regulate commerce, and its relation to other corporations and to individuals, associations, and partnerships. ”

“ Legislation ensuring the punishment of persons responsible for unlawful business practices; (6) prohibition of "holding companies" [i.e. companies controlling others by owning large amounts of their stock] ; and (7) the grant to private persons of the right to bring suits for redress based on the results of Government suits. The Message was conciliatory in tone, and its favourable reception, especially in financial circles, showed that the business world was ready to meet public opinion in attenuating the features of "big business" most resented by the public. ”

“ What, then, is the true sense of the prohibition to erect, establish, institute, or put in operation any banking company, or to issue any bills or notes with intent or purpose to do so? What is meant by putting in operation or establishing a banking company? We think that this language has a much wider import than mere commencement of business. To establish a company for any business means complete and permanent provision for carrying on that business, and putting a company in operation may well include its continued as well as its first or original operation. ”

“ The commerce clause of the Constitution of the United States does not take away from the several states the right to authorize the formation of corporations, define their business, fix the amount of their capital or purchasing power, and regulate the issue, sale, and ownership of their capital stock. ”

“ The tendency of the discussions and judgments of the court of chancery in Great Britain, and of the courts of this country, is to concede the existence of a distinct and positive right of property in the individuals composing the corporation, in its capital and business, which is subject in the main to the management and control of the corporation itself ”

“ Absent substantial additional evidence, [11] furnishing management and other services to corporations for a reward not different from that flowing to an investor in those corporations is not a trade or business under § 23 (k) (4) . ”

“ Exactions for the support of the government may assume the form of duties, imposts, or excises, or they may also assume the form of license fees for permission to carry on particular occupations or to enjoy special franchises, or they may be specific in form, as when levied upon corporations in reference to the amount of capital stock or to the business done or profits earned by the individual or corporation. ”

“ As we have seen, laws are made regulating the freedom of contract, the conditions of labor, the conduct of business, methods of banking and transportation, etc. The terms under which competitive business may be conducted are laid down, and while freedom of industry prevails for every individual it is only on condition that he conforms to the rules of the game thus prescribed. But the conditions are not merely restrictive; sometimes they are designed to promote enterprise, as in the case of gifts, subsidies, protective duties, etc. ”

“ The act has not a word, or a provision, indicating the right to do business after the stock or cash plan, and a corporation can exercise no powers not expressly granted, or that are not necessary to carry into effect those that are granted. ”

“ Those who are responsible for protecting the interests of the revenue as well as of commerce have thus given emphatic indication that a State has a legitimate interest in the regulation of those engaged in the brokerage business within its borders. ”

“ Whether the free operation of the normal laws of competition is a wise and wholesome rule for trade and commerce is an exonomic question which this court need not consider or determine. Undoubtedly, there are those who think that the general business interests and prosperity of the country will be best promoted if the rule of competition is not applied. ”

“ Among the powers which such corporations may exercise are 'to make contracts, acquire and transfer property, possessing the same powers in such respects as private individuals now enjoy,' and 'to establish bylaws, and make all rules and regulations deemed expedient for the management of their affairs in accordance with law, and not incompatible with an honest purpose.' Section 1151. ”

“ It is well settled that a corporation, without special authority, may dispose of land, goods, and chattels, or of any interest in the same, as it deems expedient, and in the course of their legitimate business may make a bond, mortgage, note, or draft ”

“ Article 575 provided that every private corporation, as such, has power 'to enter into any obligation or contract essential to the transaction of its authorized business,' and article 589, that 'no corporation created under the provisions of this title shall employ its stock, means, assets, or other property, directly or indirectly, for any other purpose whatever than to accomplish the legitimate objects of its creation.' Sayles' Civil St. ”

“ Authority to buy for a principal a single article of merchandise by one contract, or to buy several articles from a person named, is a special agency, but authority to make purchases from any persons with whom the agent may choose to deal, or to make an indefinite number of purchases, is a general agency. And it is not the less a general agency because it does not extend over the whole business of the principal. A man may have many general agents-one to buy cotton, another to buy wheat, and another to buy horses. ”

“ It is apparent that the corporation within the limits prescribed by statute has most of the attributes and powers of a person—it can sue and be sued, can hold and pass title to property, real and personal, can carry on business in its own name, is responsible to the extent of its entire property for the payment of its debts, etc.
Growth of the Corporate Form of Organization.—The corporate form of organization is being increasingly utilized for the conduct of business of almost every kind. ”

“ On the other hand, since the Tax Court found, and the petitioner does not dispute, that there was no intention here of developing the corporations as going businesses for sale to customers in the ordinary course, the case before us inexorably rests upon the claim that one who actively engages in serving his own corporations for the purpose of creating future income through those enterprises is in a trade or business. ”

“ Further explanation of the language of the court is contained in the following passage:
'A vast mass of business is now done throughout the country by corporations which are chartered by states other than those in which they are transacting part of their business, and justice requires that some fair and reasonable means should exist for bringing such corporations within the jurisdiction of the courts of the state where the business was done, out of which the dispute arises.' (Italics ours.) ”

“ Negatively, the company is not a commercial institution, or one of business. Its transactions do not enter into or make a part of the ordinary commercial transactions of life. It has no capital and gain, and profit is not made to the corporation or its managers. ”

“ All contracts made by a corporation beyond the scope of those powers are unlawful and void, and no action can be maintained upon them in the courts, and this upon three distinct grounds: The obligation of every one contracting with a corporation to take notice of the legal limits of its powers; the interest of the stockholders, not to be subjected to risks which they have never undertaken; and, above all, the interest of the public that the corporation shall not transcend the powers conferred upon it by law. ”

“ Considered, therefore, as an open question, the court is of the opinion that the objection is without merit. Private corporations may borrow money, or become parties to negotiable paper in the transaction of their legitimate business, unless expressly prohibited ”

“ And when we consider the rapid development of corporations as instrumentalities of the commercial and business world in the last few years, with the corresponding necessity of adapting legal principles to the new and varying exigencies of this business, it is no solid objection to such a principle that it is modern, for the occasion for it could not sooner have arisen. ”

“ But whatever may be the implied powers of aggregate corporations by the common law, and the modes by which those powers are to be carried into operation, corporations created by statute must depend, both for their powers, and the mode of exercising them, upon the true construction of the statute itself. ”

“ It may be established by proof of the course of business between the parties themselves; by the usages and practice which the company may have permitted to grow up in its business; and by the knowledge which the board, charged with the duty of controlling and conducting the transactions and property of the corporation, had, or must be presumed to have had, of the acts and doings of its subordinates in and about the affairs of the corporation. ”