Schemes of Trusts to Avoid Legal Difficulties. 133 
operate gas works of its own, was empowered “ to purchase and 
hold or sell the capital stock, or purchase or lease or operate the 
property, plant, good-will, rights and franchises of any gas works 
or gas company or companies ” in the City of Chicago or else¬ 
where in Illinois. But the real object of the new company was 
to bring about a consolidation of the existing companies, and it 
proposed and promptly proceeded to obtain control of the four 
gas companies in Chicago by the very simple device of buying 
up and owning a controlling interest in the stock of each of 
them, instead of having the stock of these companies assigned 
to a board of trustees as in the partnership trust. 
The power of the company to do this having been questioned 
by quo warranto, the Supreme Court of Illinois held, 9 first, that 
the company could not lawfully exercise the power to purchase 
and hold the stock of other gas companies as incidental to the 
main purpose of maintaining and operating works for the manu¬ 
facture and sale of gas; and secondly, that the power to pur¬ 
chase and hold such stock could not be assumed by the company 
as its main purpose, since such an object, as tending to create a 
monopoly, was not a “ lawful purpose ” within the meaning of 
the law. Judge Magruder said that “ to grant to the appellee the 
privilege of purchasing and holding the capital stock of any gas 
company in Chicago is to grant to it a privilege which is ex¬ 
clusive in its nature. It is making use of the general incorpo¬ 
ration law to secure a special privilege; it is obtaining a special 
charter under the cover and through the machinery of that law, 
for a purpose forbidden by the Constitution. To create one cor¬ 
poration that it may destroy the energies of all other corpora¬ 
tions of a given kind, and suck their life blood out of them, is 
not a “ lawful purpose. ” 
This decision is the standard for this class of cases, and there 
have been many other subsequent decisions in harmony with 
this one. 10 It is now a well settled principle in the law of cor¬ 
porations that in the absence of express legislative permisson, 
a corporation has no power to become a shareholder in another 
9 People ex rel. Peabody v. Chicago Gas Trust Co., 1889,130 Ill. 268. 
10 Valley Ry. Co. v. Lake Erie Iron Co., 46 Ohio St. 44, 1888 ; Central 
Ry Co. v. Penna. Ry. Co., 31 N. J. Eq. 475,1879. 
