Court Opinion

ID: 6544521
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:18:29.744668+00
Date Added: 2024-06-11T15:55:55.775523
License: Public Domain

Battle; J., (concurring). Section 2 of article 12 of the constitution of this state ordains: “The general assembly shall pass no special act conferring corporate powers,” etc.; and section 6 of the same article provides: “Corporations may be formed under general laws; which laws may from time to time be altered or repealed,” etc. Under these sections the general laws under which a corporation is formed constitute its charter. People v. Chicago Gas Trust Company, 130 Ill. 268, 285; Morawetz, Private Corporations (2d. Ed.), § 318. The constitution specially provides that these general laws can be altered or repealed. As they form a part of the charter, the amendment or repeal of them operates as an amendment or repeal of the charter. Durand v. New Haven, etc., Co. 42 Conn. 211; 1 Thompson, Corporations, § 94. There is, however, a limitation upon the power to amend or revoke the charter of a corporation. Section 6 of article 12 of the constitution further provides: “The general assembly shall have power to alter, revoke or annul any charter of incorporation now existing and revocable at the adoption of this constitution, or any that may hereafter be created, whenever, in their opinion, it may be injurious to the citizens of the state; in such manner, however, that no injustice shall be done the corporators.” The last clause of this section, in my opinion, applies to the amendment, as well as the repeal. I can see no reason why injustice should be prohibited in the one case and not in the other. The limitation is not confined by the section to the power to repeal. In the absence of such a limitation, learned judges have held that there is a limit upon the reserved power to amend or repeal the charter, and that it must be exercised upon terms that are just or reasonable. In Lothrop v. Stedman, 42 Conn. 590, Mr. Justice Shipman, in delivering the opinion of the court, said: “When a charter itself or a general statute provides that the charter is subject to repeal by the legislature, at its pleasure, without restrictions or conditions limiting the power of repeal, the legislature has the right to exercise its power summarily and at will, and its action, being a legislative and not a judical act, cannot be reviewed by the courts, unless it should exercise its power so wantonly and causelessly as palpably to violate the principles of natural justice, and in such a case a repeal, like other legislative acts which do thus palpably violate the principles of natural justice, may be reviewed by courts.” In Miller v. State, 15 Wall. 498, Mr. Justice Clifford, in delivering the opinion of the court, and in speaking of the-power to amend or repeal reserved in the charter of a private corporation, said: “Power to legislate, founded upon such a reservation in a charter to a private corporation, is certainly not without limit, and it may well be admitted that it cannot be exercised to take away or destroy rights acquired by virtue of such a charter, and which, by a legitimate use of the powers granted, have become vested in the corporation, but it may be safely affirmed that the reserved power may be exercised, and to .almost any extent, to carry into effect the original purposes of the grant or to exercise the due administration of its affairs so as to protect the rights of the stockholders and of creditors, and for the proper disposition of the assets.” In Shields v. Ohio, 95 U. S. 319, 324, Mr. Justice Swayne, in delivering the opinion of the court, says: “It is urged that the franchise here in question was properly held by a vested right, and that its sanctity, as such, could not be thus invaded. The answer is, consensus facit pis. It was according to the agreement of the parties. The company took the franchise subject expressly to the power of' alteration or repeal by the general assembly. There is, therefore, no ground for just complaint against the state. Where an act of incorporation is repealed, few questions of difficulty can arise. Equity takes charge of all the property and effects which survive the dissolution, and administers them as a trust fund, primarily for the benefit of creditors. If anything is left, it goes to the stockholders. Even the executory contracts of the defunct corporation are not extinguished. The power of alteration and amendment is not without limit. The alterations must be reasonable; they must be made in good faith, and be consistent with the scope and object of the act of incorporation. Sheer oppression and wrong cannot be inflicted under the guise of amendment or alteration/’ In Sinking Fund Cases, 99 U. S. 721, Mr. Justice Waite, in delivering the opinion of the court, after quoting the last two sentences of the last quotation, said: “The rules as here laid down are fully sustained by authorities.” Mr. Cook, in his work on Corporations, says: “The extent of the power of the legislature to amend a charter, where it has reserved that power, is not yet fully settled, and is full of difficulties. There is a strong tendency in the decisions, and a tendency which is deserving of the highest commendation, to limit the power of the legislature to amend a charter under this reserved power.” 2 Cook, Corp. (4th Ed.) § 501. But there is a contrariety of opinion on this subject. 4 Thomp. Corp. §§ 5409, 5411. Finding the law upon this question unsettled, the constitutional convention of 1874, in reserving the power to amend or repeal the charters of corporations, provided that it should be exercised on terms that are just to the corporators, adopting the view of those who hold that the power to amend or repeal shall be exercised in that manner. Does section 2 of the act of April 10, 1899, exceed authority of the general assembly to legislate as to corporations by limiting their rights in an unjust manner ? It does not prohibit the screen-; ing of coal, nor does it interfere with the right of the parties to agree upon the price to be paid for mining coal, but merely provides that “all coal mined and paid for by weight shall be weighed before it is screened, and shall be paid for according to the weight so ascertained.” The object of the act seems to be to secure to the miner pay for all coal mined by him, and in this manner to prevent his employer depriving him of a just reward for his labor. There is nothing in the act prohibiting the employer and miner from agreeing that coal shall be paid for in conformity to its weight before-screened, according to the proportion that so much of the coal as shall pass through a screen shall bear to the whole amount weighed, that is to say, agreeing that so much (the price stipulated) shall be paid according to the total weight, if one-third, one-fourth, one-fifth, or whatever proportion of it passes through a screen after it has been weighed. Construed in this manner, section 2 of the act is just and reasonable, the object of it is accomplished, and it is constitutional, so far as it applies to corporations. I concur with Mr. Justice Riddick in the opinion delivered by him, in so far as it does not conflict with what I have said in this opinion. Hughes, J. I concur in this opinion.