The San Francisco call., 1895-10-08
CausIic Comments of
Judge Thompson on
the Stanford
Case.
AN ANALYSIS OF THE
ARGUMENTS.
Believed That the Government
Had a Good Case Against
the Original Stock
holders.
HISTORY OF The COMPANY
REVIEWED.
According 70 the Writer the Found
ers OF the Corporation We're
Set Of Reckless
Pirates.
HISTORY OF The COMPANY
REVIEWED.

founded the Southern Pacific system.
The decision of Judge Ross in the Stan
ford case has ELECTED good deal of lively
comment in legal circles but nothing so
terse, trenchant and driving approaches
the notes on the case published by Judge
Thompson in the August number of the
American Law journal.
The writer possesses one of the keenest
and most forcible legal minds in the coun-
try. When Judge Thompson's name is
found as the author on 4 leather-coYered
lawbook that book IS an authority by the
profession. Ee is now engaged in fn-
ishing the monument of his life work,
Commentaries on the Law of Corpora
tions," SO he knows what he is talking
about when ne discusses the pleas o! the
Kentucky corporation.
The Stanford case, arguments and all,
and the railroads position under the law,
have never received such pen-j jabbing as
he has given them IN this article covering
twenty pages. Withal the work is done in
a calm, judicial way; no pen-thrust IS
thrown away, and each one covers the
point arrived at in an artistic, easeful and
forceful way.
In a SQUARE manly way the writer tells
why he differs in opinion with Judge Ross
on some Of the main points raised e the
issue.
On more than one occasion Judge
Thompson has been led in his writings to
express some very forcihle opinions on the
decisions of the Supreme Court of Califor-
MIA. Ii the present article he pays that tri-
bGnal the usual caustic, left-handed COM
pliments.
The article is full of biting bits of sar-
cnsm, one of the sharpest being on the
argument, Judge Ross deciding in favor
OF Mrs. Stanford on ground neither raised
by the demurrer nor discussed by Judge
CARRIER in his argument"
After quoting Judge Ross decision in
the railroad case, Judge Thompson goes
on to say:
Judge Ross stands high N the profess
sional and public estimation on the Pacific
Coast. We share N that estimate of his
character and talents. We nave often had
occasion to refer TO his decisions n terms
of comm endation. But we are in this case
unable TO follow mis- reasoning to the re-
suit which he reaches. We have regarded
the question as a very important public
question, and one suitable to be discussed
IN a public journal. We have, therefore,
investigated it with some care, in the light
of collection OF rules and principles ap-
piled by the courts in determining the la
bility of stockholders in corporations,
which rules and principles are familiar
to US.
"The result was that we came to the
ever that the United States would succeed
in enforcing the liability of such of the
stockholders of the Central Pacific Rail-
road Company as were stockholders at the
time when the indebtedness of the COM
pany to the United States was created, so
far as the estates Of those stockholders are
still amenable to legal process, provided
the law were only enforced. At the same
time We predicted that the law would not
be enforced. We now renew that pre-
diction. This language implies very
firm prediction in our minds as to what
the law governing the case really is. If
anything could shake it it would be the
opinion of such a Judge as the one who
has now decided the case to the contrary,
after the fullest argument and the most
thorough and careful consideration.
His conclusion is not, however, to be
judged by the arguments which he has
heard, nor by the time consumed by him
in preparing his decision, out by the rea-
sons which he gives for that decision.
And we submit to the profession that those
reasons are entirely untenable.
Judge Ross proceeds, in the first place,
on the proposition that the individual liza
bilIty of stockholders for the debts of the
corporation is always creature of statute.
This is a disputable proposition.
''The true theory of that immunity from
liability to pay the debts contracted by
their agents in their behalf is that it is in
does not exist, in the absence of an affirma-
tive grant of t from the Legislature. Such
an affirmative grantl IS indeed implied from
the grant of the franchise of being corpo-
ration, and it is said that the individual
liability of stockholders is always 3 crea-
ture OF statute, because when the Legisla-
ture desires to negative the implication il
generally does so by a statutory provision
Behind it all, however, there remains
the proposition that, since the exemption
from individual liability is a franchise
granted by the Legislature, the exemption
does not exist unless the Legislature has
the power to grant it. Bnt there never has
been an hour since California was State
during which its Legislature had the
power to create private corporation with
limited liability. This power is excluded
Dy the following provision OF the first con-
stitution of California: Each stockholdel
of corporation, or joint stock association
shall be individually and personally liable
for his proportion OF all its debts and liza
bilities.'
''The Legislature of California could not
if it should attempt to do SO, in the face OF
this constitutional provision, create q pri.
vate corporation of limited liability.
''This makes the proposition that indi
vidual liability is always creature of stat
ute totally inappiicable to the subject un
der consideration.
"The next proposition decided by
Judge Ross is that this provision
was read out of the constitution
of California in 1864 in its 1.-THE court s.
decision in the case of French VS.. Tesche.
maker, and ne holds that decision binding
upon him in this case. 1t is true that the
Supreme Court of California did decide ir
that case-which was not railroad case
that this provision of the constitution o.
California was not self-enforcing because
of its indefniteness and because the same
constitution contained another provision
in the following language: Dues from
corporations shall be secured by such indi
yidual liability of the corporators and othel
means as may be prescribed by law
This decision is so extraordinary, SC
utterly opposed to common-sense, that il
has not met with much favor in Other
Jurisdictions. The true construc
ton was to give effect to the positive anc