Court Opinion

ID: 7365423
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:51:09.13591+00
Date Added: 2024-06-11T16:20:44.718296
License: Public Domain

ANDERSON, J.
(dissenting.) — Alabama, like many other states, realizing the almost powerless condition in Avhich they were placed, as to the right to control corporations, resulting from the influence of the well-known Dartmouth College Case, 4 Wheat. 518, 4 L. Ed. 629, sought protection by the reservation in the Constitution of the power to alter, amend, or revoke the charters of same, and. which we think applies to all cor*388porations organized under the laws of this state subsequent to the adoption of said provision or whose charter was revocable at the time of the adoption of said provision.
Section 10, art. 14, Consti. 1875, reads as follows: “The General Assembly shall have the power to alter, revoke, or amend any charter of incorporation now existing, and revocable at the ratification of the 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 to the corporators. No law hereafter enacted shall create, renew, or extend the charter of more than one corporation.” This section appears as section 238 of the Constitution of 1901, with the last sentence omitted. It will be noted from the above quoted section that the Legislature is given the authority to alter, amend, or revoke, whenever, in its opinion, it may be injurious to the citizens of the state, provided the amendment, alteration, or revocation ’ will work no injustice to the stockholders. The first condition is one for legislative discretion and determination, as section 10 by its own terms leaves it to the opinion of the Legislature. Therefore the enactment of a law on the subject will conclude the citizens as to the first condition. The amendment, alteration, or revocation, however, must work no injustice to the stockholders, and this is a question for judicial consideration and determination. Section 10, art. 14, Const. 1875, was incidentally discussed by the United States Supreme Court in the case of Bienville Co. v. Mobile, 186 U. S. 212, 22 Sup. Ct. 820, 46 L. Ed. 1132; and, while the court did not undertake to construe said section, yet in the discusssion of same the court rather approved the holdings by several courts, with a constitutional provision similar to ours, to the effect that the Legislature was to be the *389judge as to whether or not the charter was injurious to the citizens or the state, hut in exercising the authority to alter, amend, or revoke it must work no injustice to the stockholders.—Leep v. Railway Co., 58 Ark. 407, 25 S. W. 75, 23 L. R. A. 264, 41 Am. St. Rep. 109. This case was cited and approved in the case of St. Louis R. R. Co. v. Paul, 64 Ark. 83, 40 S. W. 705, 37 L. R. A. 504, 62 Am. St. Rep. 154, and which said last case went to the United States Supreme Court, and is reported in 173 U. S. 404, 19 Sup. Ct. 419, 43 L. Ed. 746; Wagner v. Philadelphia, 132 Pa. 612, 19 Atl. 297, 19 Am,. St. Rep. 613; Macon R. R. Co. v. Gibson, 85 Ga. 1, 31 S. E. 442, 21 Am. St. Rep. 135. And our own court in the recent case of South & North Railroad Co. v. Gray, 160 Ala. 508, 49 South. 347, in considering section 3498 of the Code of 1907, and which has reference to the granting of charter powers, held that the things therein authorized were subject to the provision of section 238 of the Constitution of 1901, and that in the exercise of the authority given under the statute it must work no injustice to the stockholders. We therefore hold under the terms of section 10, art. 14, Const. 1875, that, whenever the Legislature passes a law providing for the amendment, alteration, or revocation of the charter of a corporation existing and revocable at the ratification of the Constitution or thereafter created, its action in so doing is conclusive on the state or citizens, but is not binding on the stockholders if they or any of them can show an injustice is being done them or any of them, and which said last question is one for judicial determination. Nor do I think that this constitutional provision applies only to public service corporations upon the theory that the citizens of the state can have no concern as to other corporations. I think it applies to all corporations chartered under *390the laws of this state subsequent to the adoption of the Constitution or who may .have brought themselves within the influence of same under section 231 or 246 of the Constitution of 1901 (sections 3, 25, art. 14, Const. 1875). A state would indeed be helpless if it could not control all corporations chartered under its laws, and majority stockholders would be at the mercy of an obstinate minority, although the authorized action attempted by the majority might be beneficial to all the stockholders.
The Avondale Land Company was chartered subsequent to the Constitution of 1875, and its said charter was therefore subject to the state’s right to alter, amend, or revoke, and section 3462 of the Code of 1907 applies to all corporations chartered under chapter 69 or under any general or special law of this state, unless, of course, otherwise specially provided for; and the proposed alteration or amendment of the charter in question is authorized by said section 3462, and, in the absence of averment of facts showing that the proposed amendment or alteration of the charter, will work an injustice to the stockholders of some of them, so much of the bill as proceeds upon this theory of the case, was defective and subject to the respondents’ demurrer, and it is my opinion that the chancery court erred in not sustaining same. I cannot agree to the opinion of Justice Evans as to this feature of the case, and think that the decree of the chancery court should be reversed and one should be here rendered sustaining the demurrer to paragraph 4 of the bill of complaint.
McClellan, J., concurs with the writer, and joins in this dissent.