The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-06-27
Articles Are Amended.

1t appears that the company was organ
lzed in 1888 and that the capital stock is
divided into 100000 shares of the par
value of 81 each, of which the plaintiffs
were the owners of 149,SS1 shares The
original articles of Incorporation provided
that the stock of this company shall be
worcestershire" and that under the laws
OF Utah in force at that time and up until
1903 the articles could not be so amended
so as to make the capital stock of the
corporation aSseSSable without the con-
sent OF all the stockholders. Pursuant to
call made by the board of directors a
stockholders meeting was held February
), 1917, for the purpose of amending the
articles so as to authorize the board of
directors Tor the purpose of paying the
debts and conducting the business of the
corporation, to levy and collect an assess
ment in the manner and form provided by
law.
At the meeting s19s86 shares of the cap
ltal stock OF the company were represent
ed of which 635, 464 voted for the amend
ment 1S4,1l2 against it. 122 1854 not being
represented. AS result on February 15
Ihe assessment was levied amounting to
cents share and the appellants not
paying. it was ordered on April 16 that
their shares be sold at auction because
Of this fact. A temporary injunction pre-
venting the sale was obtained in the dis
trict court and then the respondents. here
in filed a demurrer which was sustained
by Judge Morse, the temporary iniunc-
ton, however being kept in force until
the supreme court might pass on the mat
ter.
Position of Respondents.
In chapter 81 of the Session Laws of 1909
upon which the respondents rely for their
authority, it is provided that the articles
of incorporation of any corporation now
existing, or that hereafter may be organ
lied, may be amended in any respect con-
fOrmable TO the laws of the state by a
vote representing tWO-thirdS of the out
standing capital stock. This law goes on
to say, however. that the provision above
stated must not be made to apply to affect
holder Of fully paid nom ssessabie stock
The respondents maintained that under
this law twO-thirds of the stockholders
were authorized TO amend the articles of
incOrpOra ton as to make non-assess-
able fully paid capital stock asseSsable
and that the legislature under the re-
served power Of the constitution was au-
thOTi7ed to make such legislation and
thereby TO affect existing corporations.
Appellants Appealed.
It was contended by the appellants that
this law did not give any number of
stockholders less than the whole number
the right to make such an amendment and
that if it was intended by the legislature
to confer such power the right to do so
was not within the reservation of the con-
stitutiOn for it was d violation of the fed
eral constitution prohibiting states from
impairing the obligations of contracts and
the taking of property without due pro-
cess of law.
This last view is the one maintained by
the supreme court. 1t is held that under
the constitutional reservation referred to
the state is not only unauthorized to al
ter or amend charters of existing corpora
lions in such way as will change the
fundamental character of the corporation
but it is also unauthorized to alter or
amend them in such way as will impair
the COntractUal relations of the stockhold-
ers among themselves or between the
stockholders and the corporation.
The celebrated Dartmouth college case
is cited by the court. to show that in it
the relation of the corporators among
themselves was not called into question
but only the relation of the corporation
to the state was involved. Because of this
reserved power the state may alter the
charter Of any corporation so far as af-
fecting the contract with itself and so
long as it does not change the fundamen-
tai characted of the corporation or i'm
pair any of the vested right acquired
Hereunder