Clarksville weekly chronicle. (Clarksville, Tenn.) 1873-1890, 1878-04-13

tice Waite of the United States SUI
preme Court in commenting upon
that says:
But mere common law regulation OF
trade or business may be changed by statute.
y person has no property, no vested inter
est, in any rule of the common law.
You have no vested interest in
that rule that gives you a right to
distribute these earnings among the
stockholders of this corporation as
against the creditors.
That is only one of the forms of municipal
law, and is no more sacred than any other.
Rights of property which have been created
by the common law cannot be taken away
without due process; but the law itself, as
rule OF conduct may be changed at the
will, or even at the whim, of the Legislature,
unless prevented by constitutional limita-
tions.-1f,tpn as. Illinois, otto, lS5.
But there is another reason which
has been alluded to by the Senator
from Vermont, or which was al
luded to few moments ago, why
this legislation may take place. He
stated, and he stated what is I'M
questionably the law, that the prop
erty of every corporation is a trust
fund for the payment of its debts,
made SO by intendment of law. The
corpOrators are exempted in their
natural persons and in their indi-
vidual property from either arrest
or seizure under execution, and
from all the processes by which pay
ment is compelled as between indi-
viduals in their contracts with each
other; and when these corpOratOrs
have paid into their treasury or
have conveyed to the corporation
money or property which is intend
ed for the corporate use, from that
moment it is dedicated to the cor
pOrate purposes and becomes a trust
fund.
Judge Story rendered a decision
in the case of Wood as. drummer, 3
Mason's Reports, in the year 1924,
where the stockholders of corpo-
ration had met together and their
directors had distributed to them
the money of the corporation, leav-
ing the creditors unpaid. A bill
was filed to compel them to refund
the money and they were compelled
to restore it.
Mr.. Teller-It was capital stock.
Mr.. Bailey-It may have been
capital stock, but it was the property
of the corporation. Do you mean
to say that the net earnings or
profits are not property? Do you
mean to say that no obligations rests
upon the corporation to provide for
the payment of a debt in the future ?
/ will read few lines from this de-
ciSiOn. .ttr.
The individual stockholders are not liable
for the debts of the bank in their private ca
pacities. The charter relieves them nom
capital stock in its stead. Credit is univer-
sally given to this fund by the public as the
only means of repayment. During the ex-
istence of the corporation it is the sole prop
erty of the corporation, and can be applied
only according TO its charter; that is. as the
fund for payment of its debts, upon the Sc
curity of which it may discount and circu-
late notes. Why, otherwise, is any capltai
stock required by our charters? If the stock
may, the next day after it is paid in, be
Withdrawn by the stockholders without pay
ment of the debts of the corporation, why
is its amount so studiously provided for and
its payment by the stockholders so dii1genI-
ly required ? To me this point appears so
plain upon principles of law, as Wen as
common sense, that cannot be brought into
any doubt that the charters of our banks
make the capital stock a trust fund for the
payment of the debtSofthec corporation. The
bill-hOlders and other creditors have the
first claims upon il, and the stockholders
have no rights until all the other creditors
are satisfied
The capital stock was the subject
of litigation in that particular case,
and hence he was speaking of capt.
tai stock; but the idea, the reason,
applies to property Of every descrip-
ton. The decision made by Judge
Story in his case of Wood uS. Dunn
mer has been upheld by the courts
of nearly every State in the Union.
The position has been adopted and
made the basis of frequent decisions
by the Supreme Court of the United
States, one of which is very well
known to some of US in the South,
the caSe.of Curran as. The State of
Arkansas, reported in the fifteenth
volume of Howard's Reports. Here
is a trust fund dedicatad to the pay
ment of debts. Here is an obliga-
ton resting upon the payment of
this great debt. They say, however,
that they will not do so and resist
the attempt on the part of Congress
to compel by law that to be done
which they rest under the highest