poration laws, is my conviction. It is in the larger provinces of the criminal law; the law of torts, and especially the law relating to common carriers, that the great work remains to be done in this direction. I have confined myself to the limited inquiry as to what the policy of the State of Ohio should be, and trust that these somewhat immature generalizations may afford you material worthy of consideration.

REGULATION OF CORPORATIONS

DISCUSSION BY THOS. H. HOGSETT, OF CLEVELAND; CHARLES T.
LEWIS, OF TOLEDO; AND JUDGE HOWARD C. HOLLIS-
TER, OF CINCINNATI.

What changes, if any, can be made in the law defining
the purposes for which corporations may be formed,
and regulating their management, which would operate
for the benefit of the public and obviate the necessity
for Federal action on the subject."

ADDRESS BY CHARLES T. LEWIS.

Mr. President and Gentlemen:

The subject of the organization and the regulation of corporations is now a public question, and it is a foregone conclusion that some regulation, more than is now had, must be exercised, and in order that this may not be of a character destructive to corporations, it is necessary that the subject be thoroughly discussed both to the profession and the public.

The public use the term "corporation" and "trust" as substantially synonymous, and whilst many people have declared the inaccuracy of this opinion, the fact remains that the public in their opinion are substantially correct. We have a very perfect illustration of this fact within our own state. In the 49 O. S., 137, the Supreme Court of Ohio pass upon the validity of a contract entered into by fourteen different corporations, partnerships, associations and individuals, the purpose of which was to merge into one control the various properties of the parties to the contract, and which was legally called a trust, and partly at least by means of judicial legislation, hold that combination of capital and property to be illegal.

It is true that in doing this the court find it necessary to hold that the proposition that a corporation is a legal entity apart from the natural persons who compose it, is a mere fiction introduced for convenience in the transaction of its business and of those who do business with it. This doctrine was again established in 55 O. S., 316, the court saying:

"In contemplation of law a corporation is a legal entity, an ideal person, separate from the real persons who compose it."

This contract of merger having been declared invalid, the same combination of parties and capital go into the State of New Jersey and there organize a corporation, and to that corporation they convey all of the property previously embraced in the trust. In the one case the parties interested in the trust hold certificates of the trustees describing their interest in the combined properties. In the latter case the same parties hold the certificates of the corporation describing their interest in the same properties. So that as a practical proposition exactly the same result is reached by each of the two organizations.

A corporation to be of any force or power is necessarily a combination of capital and property. The history of the organization of corporations discloses the original purpose of their institution, but as we consider that, we will come to the conclusion that the modern corporation is not always organized or managed with any regard to the original idea that brought them into existence.

A municipal corporation is recognized as one of public necessity, in order to enable local communities to exercise some degree of self-government. So, too, the organization of corporations for the purpose of conducting hospitals, maintaining colleges and seminaries, are all recognized as a public necessity and for the public benefit.

It was no doubt because of this public character of such corporations as existed at the time of the decision by the U. S. Supreme Court of the Dartmouth College case, (4 Wheaton, 632,) that Chief Justice Marshall gave the definition that:

"A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law."

It has the elements of immortality and of individuality.

"The benefit to the public is considered as an ample compensation for the faculty it confers, and the corporation is created."

It is quite apparent from this definition that the public is to be considered in the formation of a corporation, and that the public is to receive such compensation as will justify it in granting the charter. This is true also because of the fact as stated by Judge Ranney, 20, O. S. 283:

"That the creation of a corporation is in exercise of sovereign legislative power."

And that being true, that power should always be exerted in behalf of the public. Not only that, but all exercise of sovereign power should be of such a character as will tend to the highest and best development of the individual of the state.

It follows, therefore, that the state should not bring into being an artificial person having the element of immortality and individuality, without protecting the public from any injurious results that may be brought about by such artificial person. It is the state alone that can give life and character and force to such a being, and therefore, the state must assume all the responsibility for the being thus brought into the world. The logical effect of this is to give to all corporations a certain amount of public character.

The state would not be justified in conferring any of its great power upon five or more persons for the sole and exclusive benefit of those persons, without reserving to the state some right to the control and management of the artificial person thus created out of the five or more natural persons. Every one now recognizes that in the growth and development of the business of the world, and the demands made by advancing civilization, a necessity has arisen for such organizations as will enable capital and property to be combined in order to meet the increasing demand of business. If it was necessary that a corporation should be organized for the purpose of carrying on a stage route, much greater is the necessity for a corporation if it desires to build and equip a railroad spanning a continent, but

the stage-coach and the railroad are incorporated because it is presumed the public will receive direct benefit from their operation. The incorporators cannot complain if the state reserves the right of control, because the corporation cannot be made without the aid of the state, and the state can only secure its compensation by this means.

The result of this line of thought is to make all corporations to be quasi public, and indeed leaves no room for what has been termed "a private corporation."

I can conceive of no good reason why the state should exercise its functions of creating an artificial being having the elements of immortality and of individuality solely for the personal benefit of a few individuals, nor can I conceive of any justification on the part of the state in so exercising its function.

If it is true, as stated in our Bill of Rights, "that all political power is inherent in the people," and that "government is instituted for their equal protection and benefit," then there can be no valid excuse for the exercise of this political power in the form of granting a special privilege to a few individuals.

It is well for us when we talk of legislation to refer frequently to the principle involved in the statement from the Bill of Rights just quoted, and to remember that it ought to be the sole purpose of legislation to secure the highest and best development of the individual character.

The dangers to be apprehended from corporations, by reason of their increasing number and magnitude are:

That they will violate their contract with the state embodied in their articles of incorporation.

That they will violate with impunity the laws intended for their regulation.

That they may become so strong as to exert an improper influence on legislation.

That their promoters will defraud the individuals of the state by unloading upon the public alleged securities of little or no value.

In many respects there is no serious danger of harm to the public from want of competition, provided the laws regulating corporations can be and are enforced.