428 HARVARD LAW REVIEW liberal use, of epithets does not constitute argument. Of course a cor- poration is useful to those who control it, — it acts " for " its stockholders. Now if one legal unit acts "for" a second legal unit, the second legal unit is usually hable for the act of the first unit; the importance of the corporate franchise lies precisely in the fact that, although the corporation acts "for" its stockholders, its stockholders are not liable for its acts. If this distinction is not kept bright, but is clouded by the use of double- meaning words, the law of corporation will lose much, if not most, of its usefulness. The legislative grant of the privilege to control a legal unit, but to be unburdened by the liabilities of that unit, is a matter of sub- stance, and not of mere form. In the principal case, the bondholders were content in the reorganiza- tion to take the bonds of the coal company. They recognized the railway company as a distinct legal unit, and the trustee for the bondholders contracted with the railway company for the payment, not of the bonds in their entirety, but of a fund which it was expected would discharge the prior obligations and provide something toward the payment of the bonds. The bondholders later contended successfully that the rail- way company was under an implied liability to supply cars, so that the expected fund should be forthcoming. The action of the bondholders in seeking to treat the bonds themselves as the obligations of the railway company was inconsistent both with the bargain made in the reorgani- zation and also with the relief obtained against the railway company in the prior phases of the litigation. In Marsch v. Southern N. E. R. Corp.* the plaintiff sought to hold the Grand Trunk Railway Company of Canada liable for the breach of a contract which the plaintiff had made with the Southern New England Railroad Corporation, practically all of the stock of which was owned by the first corporation, on the ground that the second corporation, being so controlled, was but the "alter ego" of the first corporation. The Massachusetts court denied, with fitting brevity, the right of the plaintiff to subject the first corporation to liability on this groimd. Rate Statute ^— Change of Decision — Right of Carrier to Recover Excess Value of Services. — A statute prescribing a sched- ule of maximum rates to be charged for hauling lignite coal was passed in 1907 by the legislature of North Dakota. The carriers declined to comply with it: but their violation was successfully enjoined.^ On supersedeas the statutory rate did not go into operation until March, 19 10, when the Supreme Court of the United States affirmed the de- cision below. The case was later reopened in accordance with the terms of the Supreme Court's decree "without prejudice." The North Dakota court again held the rates to be reasonable,^ but on appeal
- 120 N. E. 120 (1918).
1 North Dakota ex rel. McCue v. Northern Pacific Ry. Co., 19 N. D. 45, 120 N. W. 869, 216 U. S. 579- 2 North Dakota ex rel. McCue v. Northern Pacific Ry. Co., 26 N. D. 438, 145 N. W. 135-
