Court Opinion

ID: 9577392
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:34:28.931021+00
Date Added: 2024-06-11T13:20:30.946612
License: Public Domain

Atkinson, Presiding Justice,
dissenting. The majority opinion is based on the legal assumption that the charter of the South Western creates a contract between the State and each *795individual stockholder of the corporation, and that the act of 1933 was ineffective to increase the powers of the corporation in that it was unconstitutional as being an effort to abrogate the contract between the State and each individual stockholder.
It is clear that the charter was a contract between the State and the corporation, but is it a contract between the State and each individual stockholder? Under a charter the corporation is granted express and implied powers, which the State agrees not to impair, and the corporation agrees to operate within the powers granted. The individual stockholder’s contract is not with the State, but with the corporation and with the other individual stockholders; the terms of the charter being his contract with the corporation, and the provisions of the bylaws define his contract with the other stockholders. There is no privity of contract between the State and each individual stockholder. The corporation and the stockholders are separate and distinct entities.
By the act of 1933, p. 235, the State did not abrogate or curtail any charter power it had given the South Western, but granted additional authority not previously conferred. Whether to accept and exercise the additional rights thus given to the corporation, was a matter for the corporation' to decide, to be determined by a majority of the 'stockholders. The mere fact that the State through its General Assembly waived previous limitations upon its corporate powers and expressly broadened the authority of the corporation could not be said to impair its contract even with the corporation, and certainly did not abrogate a contract with the individual stockholders which did not exist.
While it is true that some of our Georgia decisions have inferred that a contract existed between the State and the individual stockholders of a corporation, yet there is no such ruling in any case. In Central Railroad Co. v. Collins, 40 Ga. 582, 632, it is stated: “Each stockholder has rights in the nature of contract, rights in the limitations, as well as in the grants to the corporation.” .Also on page 617 it is said: “These stockholders have a right, at their pleasure, to stand on-their contract.” But in this same case, on page 624, it is plainly stated that the charter is a contract between the State and the corporation. *796This case, though largely relied upon in the majority opinion, did not turn on the question of any contract with the stockholders, but was a proceeding by minority stockholders, based on their contract with the corporation, to enjoin it from undertaking a new enterprise not contemplated by its charter, and therefore exceeding the powers conferred by its charter and also powers subsequently given by the State.
That the contract of the State is with the corporation and the contract of the stockholders is with the corporation, was again stated in Snook v. Georgia Improvement Co., 83 Ga. 61, 65. While the general statement that a contract exists between the State and each stockholder is made in some cases and law publications, I have been unable to find any case which is based on such a ruling. The ruling in Trustees of Dartmouth College v. Woodward, 17 U. S. 518, 4 Wheat, 518 (4 L. ed. 629), went no further than to hold that a charter was a contract between the power granting it and the corporation.
Acts sought to be done which are not contemplated by the charter, and are enterprises vitally and radically different from the original purpose for which the corporation was chartered, are such acts as require unanimous consent of the stockholders. This is the basis of the decisions upon which the majority opinion relies, and such decisions are predicated on the fact that a contract exists between the stockholders and the corporation. But the decision in the instant case is not based upon a breach of such a contract, but by reason of a breach of contract between the State and the stockholders.
To hold that the State, by waiving certain of its rights in the charter and extending additional rights to the corporation, violates the Federal and State Constitutions, in that it impairs the obligation of the contract of each stockholder, is recognizing a contract that does not exist.