An example of the use of such an association as the above is that of the Massachusetts Electric Companies, a "voluntary association " managed by a board of trustees, who hold the title to its assets, consisting of the majority and, in most cases, practically all of the stock of certain street railway and lighting companies. These companies were already in existence and their capitalization fixed, so far as the property owned was concerned, when this association was formed. By the " voluntary association " plan, shares and notes may be issued at the pleasure of the association, they being secured by the stock of the constituent companies bought and deposited with the board of trustees. This amounts to a virtual consolidation of the several properties, and allows of a greater capital stock and indebtedness than permissible to the companies direct. The " voluntary association " is unknown to the law, but the subsidiary companies are not, and their integrity is preserved. Each company is amenable to the law and recognized as if the " voluntary association " did not exist.

1 Act 265, P. A. 1905.

To make this clearer, suppose a railway company is limited by law to an issue of $100,000 worth of stock. John Jones buys all, or substantially all, of this, and puts it up as collateral for a loan of some greater sum, say $200,000, than the par value of the stock. There is no legal obstacle in the way of his doing this provided he can find somebody to lend him the $200,000.