St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1896-03-11
OUGHT TO BE RESPONSIBLE.

OUGHT TO BE RESPONSIBLE.
The most remarkable comment that
we have seen on the decision of the
supreme court of the United States in
the Stanford case is furnished by the
Boston Herald, which says that it
would have been unfortunate had any
other conclusion been reached. "It
would not only have established the
ruling that stockholders are RESPONSE
BILE for the debts of a corporation, but
1t would also have impaired the conf
dence of those having it in their power
to give large sums for public uses.'
The Herald then goes on to say that it
is important that public trusts Of
this sort should be secured It COM
pares the Sanford case with the great
Dartmouth college case, and says that
this later decision has established an
other principle that will be felt
| throughout the country for all time.
The confusion Of ideas in this criticism
is as singular as the principle which it
upholds. The Dartmouth college case
related to the proposition Of vested
| rights, and denied the power of legis-
! lative authority to impair the obliga-
ton of contract. It does stand as a
great constitutional landmark, but
there is not the least similarity be-
tween it and the Stanford decision.
In the first place, this last declara-
ton Of the supreme court does not say
what the Herald attributes to it at all
Not in line or syllable does it indi-
cate that the stockholders of corpora
lions are not liable for it's debts. On
the contrary, 1t very strongly implies
that they can be held so liable, under
the constitution of the state Of Cali
fornia. 1t says that the United States
government cannot enforce it's obliga-
ton under the laws Of California. be-
cause the loan made to the Central
Pacific was made by authority Of a par
tlcular act OF congress, in which it did
not retain its right to enforce any such
remedy against stockholders. The
whole question turned, not upon any
general principles of stockholders liza
b1lity, but upon the reading and inter-
probation of the acts of congress under
which the Central Pacific Railroad
company obtained it's subsidy from the
government. The case thus relates to
particular and not to general questions.
and ia not Tho
with the Dartmouth college case.
We cannot conceive of the supreme
court laying down any such PROPOSE
ton as the Herald announces. that
the stockholders of a corporation are
not responsible for it's debts. If the
time should ever come when that was
an admitted rule Of law, there would
be lively turning over in the courts
and legislatures of this country. 1t is
true that stockholders of great corpo-
rations have been able, in the past. to
evade such liabilities altogether too
readily. 1t is also true that the con-
situations and laws of many of our
states do not adequately guard this
point. But nothing is surer than that
justice and equity and the popular will
require rigorous enforcement of the
liability Of stockholders. If thew are
not to be held for the debts of a. como
ration, pray who are? Past practice
has consisted in the formation of cor
porations under a general law. sub
scriptions for their stock by those who
believed they would be paying con-
Germs, total Indifference on the part
of stockholders as to the management
of the company, and the acts of direct
ors and other officers, the piling I'D of
huge debts by these latter, and the
mulcting of creditors by subsequent
insolvency and reorganization.
We believe that the time has come
for the end of this practice. It will be
terminated only when the liability of
stockholders is increased and upheld in
all its severity by the courts The
comparative infrequency of bank fail
ures is due much less to the nat
ure of the business in which they en-
gage, than it is to the heavy liability
to which they are exposed and which
requires greater attention on their part
and less recklessness in speculative
ventures. Three-fourths of the feeling
that exists among the people against
corporations is due to the fact that
their stockholders have, in the past,
divided profits and escaped losses.
With the extension of stockholders
liabilities this hostility will begin to
disappear, because the principal rea-
son for it will have vanished. Not
only did the supreme court not invah-
date the general liability of stockhold-
ers, but it and every other court in
this country is bound in the future to
make more severe and more sure the
punishment Of holders of stock in cor
porations that are sc unwisely man
aged as to be unable or unwilling to
pay their just debts.
REQUEST VAINLY MADE.