Railway Company, which by appropriate legislation in the State of Connecticut became, in part at least, a holding corporation under the name of Consolidated Railway Company of Connecticut. The Consolidated Railway Company of Connecticut in turn acquired all or a majority of the stock of the domestic street railway corporations named in the information of the Attorney-General, except the Springfield Street Railway Company, of which substantially all of the stock was acquired by a voluntary association known as the Springfield Railway Companies, created for that purpose and controlled by the Consolidated Railway Company of Connecticut. The attention of the Legislature of 1905 having been directed to the situation so created with respect to the ownership of the stock in domestic street railways, and being advised by the then AttorneyGeneral that the ownership and control of the capital stock of street railway companies incorporated in Massachusetts by the New York, New Haven & Hartford Railroad Company or the Consolidated Railway Company of Connecticut was illegal (see II Op. Atty.-Gen. 570), an inquiry into the facts relative to such acquisition was begun, but no definite action was taken thereon. In the Legislature of the following year the discussion was renewed; a bill entitled "An Act relative to investments by railroad corporations in street railway companies" was introduced but not finally adopted, and St. 1906, c. 372, which authorized the Attorney-General to proceed by an information in equity against any corporation which assumed or exercised a franchise or transacted a business not authorized by the laws of the Commonwealth, and under which the information in the present case was brought, was enacted. On June 26, 1906, before the conclusion of the session of the Legislature for that year, the Consolidated Railway Company of Connecticut sold and conveyed to the New England Investment and Security Company, a voluntary association, all of the stock, bonds and other securities held by it in the Worcester & Southbridge Street Railway Company, the Worcester & Blackstone Valley Street Railway Company and the Berkshire Street Railway Company, and 102 shares of stock in the

Springfield Street Railway Company, and also sold and conveyed to said company all of its interest in the Springfield Railway Companies, which then held 19,253 shares of the stock of the Springfield Street Railway Company, which, with the 102 shares already referred to, were substantially all of the shares of said stock. In 1907, under authority of an act of the Connecticut Legislature (House Joint Resolution No. 357) the New York, New Haven & Hartford Railroad Company was merged into the Consolidated Railway Company of Connecticut, and the consolidated corporation, by a later statute, became the New York, New Haven & Hartford Railroad Company. So far as I am aware the situation so established continued unchanged until May 8, 1908, when the opinion in the case of Attorney-General v. New York, New Haven & Hartford Railroad Co., 198 Mass. 413, was handed down. In that decision the court held, in substance, that the Consolidated Railway Company of Connecticut and the two voluntary associations, the Springfield Railway Companies and the New England Investment and Security Company, were all instrumentalities of the New York, New Haven & Hartford Railroad Company through which such corporation acquired and owned and used the property of the domestic street railway corporations named in the information, "with as complete control as it has over its locomotive engines," in violation of the provision of St. 1906, c. 463, Part II., § 57, that

A railroad corporation, unless authorized by the general court or by the provisions of the following five sections, shall not directly or indirectly subscribe for, take or hold the stock or bonds of or guarantee the bonds or dividends of any other corporation.

The court further stated, on page 431, that

From the findings and evidence in the very voluminous report of the master, and notably from the testimony of Mr. Mellen, the president of the voluntary associations, and the corporations, and of Harmer, the secretary and comptroller of the New England Investment and Security Company, it is plain that all the street railway companies mentioned in the information are indirectly held and controlled and managed in the

interest of the defendant as absolutely and completely as it holds and manages its line of railroad between Springfield and New York.

It thus appeared that the precise situation to which the decree above quoted was directed was an indirect and illegal control by the New York, New Haven & Hartford Railroad Company of the stock, bonds and other securities of the specified domestic street railway corporations, effected through an ownership by the New York, New Haven & Hartford Railroad Company of all of the stock of the Consolidated Railway Company of Connecticut, which, in turn, controlled the Springfield Railway Companies and the New England Investment and Security Company, which held the legal title to the stock, bonds and other securities of such domestic street railway corporations.

The decree in terms enjoins and restrains the defendant, and its officers, directors, attorneys, agents and employees, in two respects, first, from subscribing for or taking either directly or indirectly, and from assuming to exercise the franchise or privilege of subscribing for or taking directly or indirectly, the stock of the street railways included within its provisions; and second, from holding directly or indirectly, and from assuming the franchise or privilege of holding directly or indirectly, such stock. Briefly stated, those enjoined must not, either directly or indirectly, acquire or hold such stock. It is unnecessary to determine what should be deemed to constitute a direct acquisition or holding of the stock by the New York, New Haven & Hartford Railroad Company or its officers, directors, attorneys, agents and employees, since upon the facts in evidence the court failed to find that the acquisition and holding were direct in the first instance. With respect to an indirect subscription for and taking of such stock subsequent to the date of the decree no question appears to have been raised, and therefore the sole inquiry presented for my determination is whether or not that corporation has ceased to indirectly hold or control the stock of the Springfield Street Railway Company, the corporation named in the order of the General Court.

In Attorney-General v. New York, New Haven & Hartford

Railroad Co., 198 Mass. 413, the court, at page 426, has defined the words "subscribed for, take or hold" in St. 1906, c. 463, Part II., § 57, as

intended to include legal ownership of every kind. The word "indirectly" covers other modes of holding than by taking or holding the legal title. The words together cover every kind of proprietary interest in the stock or bonds referred to. It is immaterial how or where the legal title is held directly, if, indirectly, the railroad corporation is the equitable or beneficial owner of it. What the Legislature was seeking to prevent was influence in the management of the subordinate corporation by the other corporation, however exercised, and whether extending to absolute control or falling short of it. With this in view, language was used in the statute to include every kind of beneficial ownership, however indirectly held.

The situation with respect to the indirect holding of the stock by the New York, New Haven & Hartford Railroad Company was described at length by the court, at pages 426-431:—

The master's summary of facts and the other findings that appear in the report show how completely the defendant controls the street railways in question. The capital stock of all of them but the Springfield Street Railway Company was bought and held by the Consolidated Railway Company, all of whose stock is held by the defendant, and all of whose directors are the defendant's directors. If we assume that this corporation was legally organized and is legally maintained, so as to have a separate corporate existence, it is in reality a piece of legal machinery owned and operated by the defendant. Through this the defendant acquires and owns and uses property with as complete control as it has over its locomotive engines. If it does this indirectly, it does it as effectively as if the ownership were direct. Through the direct purchase and ownership of the street railway corporations, by its creature, the Consolidated Railway Company, the defendant transgressed the law as to all the street railway companies mentioned in the information, except the Springfield Street Railway Company, and is still transgressing in the same way as to the Worcester & Webster Street Railway Company and the Webster & Dudley Street Railway Company, whose ownership is retained in the same form. Some of these street railway companies have been dealt with directly by the defendant, at different times, by votes of its directors while acting in that capacity. The defendant's president is the president of the Consolidated Railway Company and of all these street railway

companies, and he receives no compensation for the performance of these official duties, except his salary as president of the defendant corporation.

The stock of the Springfield Street Railway Company was acquired through action of the Consolidated Railway Company, whose directors voted that it "should be acquired by this company, and that the plan for payment of the same, outlined by the president be approved, namely the establishment of a trust covering the issue of $3,000,000 guaranteed trust certificates, and the sum of $1,500,000 of 4 per cent. debentures of this company." Here was the origin of the Springfield Railway Companies, which was established by the Consolidated Railway Company as a part of a scheme for holding and controlling the stock of the Springfield Street Railway Company. This is a voluntary association, consisting of a board of trustees, of whom all but one are directors of the Consolidated Railway Company and of the defendant corporation, who are designated as trustees in the declaration of trust, together with the members of the firm of Lee, Higginson and Company of Boston, bankers, who are called subscribers. Under the instrument the trustees assume no personal financial liability and have no beneficial ownership, although they are the holders of the legal title to all the property belonging to the association, and are the managers of it. Lee, Higginson and Company are parties for the purpose of disposing of preferred shares to be issued by the association, and managing other matters of finance. As a part of the arrangement, the Consolidated Railway Company entered into a contract with Lee, Higginson and Company which, after the formal part, began with a recital as follows: "Whereas, the Consolidated Railway Company desires to acquire the whole or at least a majority of the capital stock of the Springfield Street Railway Company, and desires Lee, Higginson and Company to offer to the stockholders of said company $225 in cash per share, or $75 in cash per share and $150 in preferred stock of the Springfield Railway Companies issued under a declaration of trust, dated March 15, 1905," etc. It was then agreed that the Consolidated Railway Company should sell its 4 per cent. fifty-year debentures to the amount of $1,500,000 and Lee, Higginson and Company should buy not exceeding that amount of these debentures at a price named, and should underwrite not exceeding $2,937,600 an amount of the preferred shares of the Springfield Railway Companies at $100 per share. Then followed this recital, "which sale of bonds, with cash to be paid by the Consolidated Railway Company, and underwriting, will furnish the funds necessary for the purchase of said street railway stock at the price agreed upon," etc. It was then agreed that the Consolidated Railway Company should forthwith issue, sell and deliver to Lee, Higginson and Company, the debentures, and that there should be "formed a holding trust to be called the Springfield Railway Companies. . . to acquire and hold the whole or at least a majority