Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1886-01-09
FRUIT-GRowERS' MEETING.
ANOTHER SPIRITED DISCUSSION
HELD YESTERDAY.
Legal Opinions as to Liability OF
Stockholders in the California
Fruit Union, Etc.

Union, proposed at the meeting of last
and w. L. Willis acted as Secretary The
proposed amendments and revision of by
laws were taken up and discussed. During
the remarks, R. D. Stephens stated, as
showing the risk to stockholders under the
plan of the Union purchasing and ship
ping the fruit, that the obligations of the
Union would thus amount to from $220, 900
TO 100000 per month during the busy
shipping season, and that in case of loss
each stakeholder would be liable to such
portion of the debts and liabilities as the
amount of stock held bears to the whole
amount of the capital stock subscribed.
He showed the actual cost of fifteen car
loads shipped last year and purchased at
different times during the season, to have
been Sl0,095. This fact he said would
serve as basis from which fair estimate
of the amount of business might be placed
within the power of the corporation to
transact. His estimate was as follows:
Fifteen carloads cost ................... Sl0,095
Freight, $500 4.5O0
Total cost of train. sl4,5 95
Fifteen trains per month. 2lS92j
And for five months in the season would
make total OF .-.-.................-. l,Uyi, TO
This, said the speaker, it must be remem-
bered, is minimum estimate, since it is
claimed and believed that not to exceed
one-half of the marketable fruit was last
season disposed of, and that which was
sold, by reason of lack of demand, was
sold at ruinous prices. If then, only about
one-half was sold, the transactions per
month would reach nearly half million
dollars, or say, upwards of two million
dollars for the season.
These formidable figures caused con-
siderable surprise as to the extent of bust
ness and values proposed by the Union to
be intrusted to the Board of Directors, or.
more properly, in the hands of the mana
ger and after some further consideration
OF the matter, in which ]. H. Rutter and
other prominent growers took part, it was
ordered by unanimous vote of the assem-
blage, that committee be appointed to
take counsel with attorneys as to the ex-
tent of stockholders liability under the
State laws OF incorporation, and to report
10 an afternoon session of the Convention
The Chair appointed as the committee r.
ID. Stephens, JOS. Reuter-, J. III. Rutter and
Mr.. Plate; and on motion of Mr.. Stephens,
the President was added.
AtIEkAOON SESSION.
AT the afternoon session the committee
appointed to take legal advice presented the
following written opinions of A p Catlin
and Judge Armstrong upon the liability of
stockholders:
OPINION OF HON. a. p. CATLIN.
SACRAMENTO. January 8, 1885,
r. ID. Stephens and Others: With respect
to the liability of stockholders, the law of
this State is that each owner of stock in
corporation organized under the laws of
this State is liable for his proportion of the
debts of the corporation incurred during
the time that he holds the stock as owner
thereof
This portion, or proportion, for which
he is liable is defined by the statute 10 be
such portion of the debts and liabilities as
the amount of stock SO owned bears to the
full amount of subscribed capital stock,
and for like proportion only Of each debt
or claim against the corporation. For ex-
ample, suppose the capital stock provided
for by the articles of incorporation is the
sum of $780, 600, and suppose $4,000 of it is
taken or subscribed; and suppose further
that A has subscribed for 5000 of the
stock, or has by purchase become the
owner OF that amount of stock; and
suppose further that he was the
owner of such stock for the period of six
months. Then he would be liable for the
one-tenth part of each and every debt in
CURED by the corporation during said
period of six months.
He is not liable for any debt incurred
before he subscribed, or became owner
nor is he liable for any debt which may be
incurred after he ceases to be the owner
2. The other question propounded, to wit.
In what way can stakeholder in the cor
poration known as the " California Fruit
Union cease to be stakeholder therein?
is not so easily answered The difficulty
arises from the qualifications of stock |
holder in that corporation, prescribed by
Section of the bylaws proposed to be !
adopted, and Tor the purposes of this in |
CIV assumed to be adopted as the bylaws |
of the corporation.
The effect of this bylaw is to make |
the stock exempt from the claims of
creditors of the owner of the stock |
1t places a restriction upon the owner
wholly inconsistent with the ordinary laws
of trade He cannot sell his stock, how
ever much his needs may require it, unless |
he can find such a purchaser as this bylaw
requires, and this requirement practically |
amounts to prohibition.
Section 3o1 of the Civil Code, part of
the law under which this corporation is in
ton formed under this title must, within
one month after filing articles of incorpor-
alton, adopt code of bylaws for its gov
eminent not inconsistent with the laws of
this State
] think these restrictions upon the right
of the stakeholder to ALLEVIATE his stock
must be imperative. In other words, do
not think the corporation can make such
bylaw legal and binding
Yet, practically, it will prove great en-
barrassment, because the Secretary is for
hidden to transfer stock on the books of
the company unless to a person qualified
as prescribed in Section s.
| conclude that an owner of stock in this
corporation may cease to be such owner by
bona fide sale of his stock. am sensi-
BILE, at the same time, that it is a question
upon which differences of opinion may ex-
list, and that it is question which requires
more time to examine than has been given
ME. Respectfully, A. P. CATLIN.
OPINION OF JUDGE J. W. ARMSTRONG.
SACRAMENTO, January s, 1856.
Hons. r. d. Stephens, Joseph Reuter- and
Others: The time given me to answer the
questions propounded, as to the liability of
stockholders in corporations, is too short to
enable me to give an opinion satisfactory
to myself but, in answer to the question
as to the liability of stockholders in pri-
vate business corporations, it may be OBJ
served that the liability of such stock
holders is of twofold character: First-As
to the liability of stakeholder who be-
comes a stakeholder by purchase of stock,
either from another stakeholder or the cor
poration, at price paid therefore Sec
ond-A stakeholder who becomes such by
subscription to the capital of the corpora
ton as promoter of the corporation.
The liability of stakeholder who be-
comes such by purchase is liability for
all assessments made upon the stock while
he is the holder, and he is individually
and personally liable for such proportion
of all the debts and liabilities contracted
or incurred by the corporation while or
during the time he was a stakeholder as
the amount of stock or shares held by him
bears to the whole of the subscribed capital
St,i- Of h, l,-,al,rnti1ra If St..nI-