Academic journal article Law and Contemporary Problems

Legal Capital and the Model Business Corporation Act: An Essay for Bayless Manning

Academic journal article Law and Contemporary Problems

Legal Capital and the Model Business Corporation Act: An Essay for Bayless Manning

Article excerpt


Bayless Manning, now living in well-earned retirement in Boise, has been one of the most original thinkers and writers on American law of our time. His influence on corporation law in the United States can be favorably compared with that of Justice Story in the nineteenth century.

As a practicing lawyer, teacher, writer, lecturer, legislative drafter, director of publicly held companies in the United States and abroad, advisor to the New York Stock Exchange, and active member of The American Law Institute and of the American Bar Association's Committee on Corporate Laws, Bay Manning has had an unsurpassed influence on the evolution of the law of corporations in this country and elsewhere. His impact can be found in the legal capital provisions of the Model Business Corporation Act (MBCA), now enacted in whole or in part by over thirty states; in the MBCA's former director-conflicting-interest provisions, (1) for which he was the principal drafter; in The American Law Institute's Principles of Corporate Governance; (2) and in the overgrown field of appraisal rights, where his seminal article, published in 1962, is still the single most influential statement on that neglected subject. (3)

Descended from a chief justice of Kentucky and raised by a single mother in pre-World War II Washington, Bay graduated from Yale in 1942 at nineteen and immediately joined the U.S. Army Signal Corps. In remote locations like the island of Kauai, he helped to decrypt the supposedly unbreakable Japanese "Purple" code. After the war, he graduated from Yale Law School (where he was editor in chief of the Yale Law Journal); clerked for Justice Reed on the Supreme Court; practiced law in Cleveland with Jones, Day, Reavis & Pogue; taught at Yale Law School; worked in the State Department; (4) served for seven years as the transformative dean of Stanford Law School; then became president of the Council on Foreign Relations; and thereafter was a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Although he has at one time or another spoken Japanese, Norwegian, Spanish, and Hawaiian, (5) he generally writes in English. When Bay generously associated me in writing the third edition of Legal Capital, it took us a year of weekends laboring in his One Lexington Avenue apartment, punctuated only by brief meals and walks in Gramercy Park. That year was a midcareer postgraduate course in corporate law, accounting, finance, equity pleading, legislative drafting, legal history, and, especially, writing. Bay said his target audience was "a reasonably intelligent, English-speaking, fourteen-year-old." He felt that if he could explain something to her, anyone would understand it. Bay avoids grand words when simpler ones will do. He never uses "myriad" or "plethora" instead of "many" or "a lot." Bay does not need or want to show off in his writing. He draws a sharp distinction between polysyllabic Latinate words and terser Anglo-Saxon ones, and he has a clear preference for the latter. Although he writes with greater elegance than any lawyer I have known, it is the elegance of uncluttered clarity, focus, and brevity--like the writing of another great lawyer, Lincoln.

Because he has significantly influenced the practice, teaching, and writing of countless lawyers and teachers for more than sixty years; because he was the first to expose the intellectual emptiness of the nineteenth-century concepts of par value and stated capital and then created a new legal capital regime that is now widely accepted in the United States and increasingly elsewhere as well; and because I think he just might like it, this essay is for Bayless Manning.


The MBCA followed faithfully from the early nineteenth-century emergence of par value, stated capital, surplus, and the later enactment of statutes employing those concepts to limit the corporation's power to make payments to its shareholders on account of their stock. …

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