Gold Hill daily news. [volume] (Gold Hill, N.T. [Nev.]) 1863-1882, 1863-11-03
Union Central Territorial Committee.
Liability of Stockholders.


in the Constitution of the State Of Califor-
MIA, and taking ground against the ad-
option of a similar clause in the ConSti-
tuition of WaShoe. The clause in question
reads as follows:
Each stakeholder of a corporation, or
Joint stock association, shall be individually
and personally liable for his proportion OF all
its debts and liabilities"
Now, we have no right to suppose that
the editor intended to deceive his readers
As to the true intent, meaning and effect
Of the section quoted, but nothing is
more certain than that whether or not he
was laboring under the most serious
error himself, he has totally misrepre-
scented it in the entire article referred to.
Here is his statement of the effect of the
limited liability clause, and a single
reading of the clause itself will show that
he is laboring under a total misapprc-
hension of the subject. He says
"Men will invest few dollars per foot for
the purpose Of prospecting mine, so long as
no possible damage can accrue to them be-
yond the mere loss of the money invested;
but if they are also to be held individuality
liable for all indebtness which thriftleSs or
rascallv management may bring upon cor
poration, they will be less apt to invest
money in mining companies"
Refer to the section itself and see if
there is the least foundation for the de-
duction which the editor draws and
and which constitutes his objection to it.
That section speaks for itself; every
stockholder " shall be individually and
personally liable for has proportion of all
its debts and liabilities" Thus, if
such stockholder held one-half Of all
the stock, his liabilities will extend to
one-half of all the liabilities of the cor
poration. That liability is not limited to
the forfeiture and loss of the amount
which he has invested in the concern; it
is not mere liability attaching to the
thing, the share or shares of stock, but a
personal liability extending to any and all
property of the party to the extent of his
proportion of the debt of the corporation.
If that debt be one thousand dollars and
he is the owner of one-tenth of the stock,
he will be held to the payment of his
share, one hundred dollars, and if there
be no corporation assets his individual
property will be held therefor. There is
no hair splitting about this; the difference
between being liable to theamount of ones
shares of stock and to ones "propOrtion Of
all debts and liabilities is wide enough.
That difference was matter of discussion
in the California Conventional section
which was exactly what the Union sup
poses the actual one to be rejected by the
Convention, and most properly too. That
paper is fighting a proposition which if it
had an existence we should oppose full as
strongly; but it has none. To show the
difference and make it plain to every mind,
we quote from the debates on the Con-
stitution of California" page 1856:
The 36th section of the report of the Com
mittee being under consideration, as follows
IS. The stockholders of every corporation
or Joint stock association shall be indlvldu-
ally responsible to the amount OF their re-
spective share or shares of stock in any such
corporation or association for all its debts and
liabilities OF every kind.
Mr.. Jones moved to strike out the section
and insert the following; which was adopted,
viz:
IS. Each stakeholder of a corporation or
Joint stock association shall be individually
and personally liable for his proportion Of all
it's debts and liabilities.
This provision is eminentlv just, and
has worked so well in California, that
after twelve years of experience Of its
operations, the people of that State, in
making numerous important amendments
10 their Constitution, let that section stand
unaltered. This fact, of itself, ought to be
a strong, even if not sufficient proof of
the soundness and wisdom of the law.
The object of the section is plain. 1t pro-
tects the holder of mere fraction Of the
stock of a corporation from becoming,
through the mismanagement of its affairs,
swamped and burdened with the uhoEe of
its debts, as he would be without such a
limiting clause. No one is injured or
swindled thereby, for being the funda-
mental and well-known law of the land,
the capitalist advancing his money to a
corporation does so with his eyes open.
He knows exactly to what extent each
stakeholder is liable, and governs himself
accordingly. The apprehended evil, that
such clause in our Constitution would
scare capitalists from investing it in our
mines, we look upon as imaginary.
These great capitalists are cautious in their
operations, and have a keen eye to the
main chance, and will always invest
readily where there is prospect of liberal
returns. They are moreover close scruti-
mixers of the law: The injustice which
would result from an absence of limiting
clause, would fall in ninety-nine cases in
every hundred upon persons Of limited
means, and holders of small amounts Of
s.-hE M, lo.- l:l-olz- "a, :.E,.z., +ho-a