VOTING TRUST. A term applied to the accumulation in a single hand or in a few hands of shares of corporate stock, belonging to several or many owners, in order, thereby, to control the business of the company. In some instances the certificates are placed in the hands of a single holder or of a commit tee, accompanied by irrevocable proxies to vote on them. in other instances the stock is placed in the name of such committee. Certificates are usually issued to the benefi cial owners of the stock, and these certifi cates are bought and sold in the market. It has been held that all agreements to tie up stocks by irrevocable proxies or by placing them in the hands of trustees are illegal, and any beneficial owner may withdraw his stock from them at pleasure: Fisher v. Bush, 35 Hun (N. Y.) 641; Havemeyer v. Havemeyer, 43 N. Y. Super. Ct. 506; Moses v. Scott, 84 Ala. 608, 4 South. 742 ; whether he be a par ty to the agreement or an assignee of the stock of such party; Shepaug Voting Trust Cases, 60 Conn. 553, 24 Atl. 32 ; In re Ger micide Co., 65 Hun 606, 20 N. Y. Supp. 495; White v. Tire Co., 52 N. J. Eq. 178, 28 Atl. 75.
An agreement not to sell stock except by consent of all parties to the agreement is held to be in restraint of trade and void ; Fisher v. Bush, 35 Hun (N. Y.) 641. It has, how ever, been held that an agreement among the stockholders to hold the stock together and to sell it together Is valid ; Havemeyer v. Havemeyer, 43 N. Y. Super. Ct. 507.
Where stock is transferred to a trustee un der a contract by which he agrees to hold and vote it for the benefit of two other per sons and himself jointly, to dispose of it when and as agreed upon by himself and one of the other parties, the other parties have no such title or right of possession thereof as would give either of them a right of action against the trustee for conversion upon his refusal to transfer to such party one-third of the stock; Louisville T. Co. v. Stockton, 75 Fed. 62, 21 C. C. A. 225.
Where a statute forbade a consolidation of competing lines, the purchase by a railroad company of the stock of a competing line which was then vested in a third party as trustee, was held void and the trustee was enjoined from voting thereon ; Clarke v. Banking Co., 50 Fed. 338, 15 L. R. A. 683.
See RESTRAINT OF TRADE, for other cases ; See also TRUST, for the use of voting trusts in combinations of capital known as trusts.
Where stock was vested in a trustee under an agreement that it was to remain with such trustee for four years, certain stock holders agreeing not to sell their holdings without first offering them to the remaining parties to the agreement, and the trustee holding an irrevocable power of attorney to vote the stock, it was held that the trust agreement was not void per se, and that as long as the beneficial owners did not make any effort to withdraw from the trust there was no reason why the trustee should not vote upon It ; Brown v. S. S. Co., 5 Blatch. 525, Fed. Cas. No. 2,025.
The holders of a majority of the stock of a railroad company agreed that it should be vested in the name of the president of an other railroad company, who should deliver to an appointee of the directors of the com pany in question an irrevocable proxy to vote upon such stock ; certificates were issued to the stockholders who were parties to the agreement. Certain parties purchased a mi nority of the trust certificates and requested the return of the stock, which was refused. The court enjoined the trustee from voting on the stock and compelled a transfer to the beneficial owners thereof, holding that the right was vested in the latter and the trustee could not lawfully refuse it to them ; 14 Wkly. L. Bull. (Ohio) 68. See 15 id. 419, 423. See also Woodruff v. R. Co., 30 Fed. 91, sub stantially to the same effect.
In the Reading railroad trust (Shelmerdine v. Welsh, 8 Pa. Co. Ct. R. 330), on the reor ganization of the company, certain securities and stock were vested in a reconstruction board under a voting trust, by which certifi cates of beneficial interest_ were issued. On a bill by a stockholder to restrain the trus tees from voting upon the stock held by them at an election soon to occur, a preliminary in junction was refused because the interests were too complicated to permit of interfer ence upon such short notice. The court (Hare, P. J.) was of opinion that the voting trust was necessary to sustain and carry out the provisions of the reorganization and that the voting trustees represented not only the stock but the other securities and liens on the property, under the reorganization.