Court Opinion

ID: 4012427
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:16:40.435559+00
Date Added: 2024-06-11T07:44:48.785696
License: Public Domain

ON PETITION FOR REHEARING
A petition for a rehearing has been filed herein. We have read over the brief in support thereof with care. Counsel re-argues that the clause in the legislative act of 1911 reading "any corporation organized under any law of this state" does not include corporations organized in territorial days, and he insists that we have not given the words their ordinary meaning. But as pointed out in the original opinion, the laws of the territory, including the laws under which the corporation here in question was organized, were by specific constitutional provision made a part of the laws of the state. We are unable to see how we can ignore this plain provision, and how, in view thereof, we could in fairness, and without resorting to technical construction, say that the corporation here in question *Page 170 
was not organized under a law of this state. If we should so hold we should not, we think, give the words of the statute their ordinary meaning. Counsel mentions in this connection the fact that the bill for the 1911 act, Senate File 33, "was introduced and sponsored by the justice who wrote the opinion now under discussion, then a member of the state senate, which suggests some question of the propriety of his so doing." The point is new. The writer hereof was unaware of any impropriety in writing the opinion, and unaware that he was less qualified to construe the legislative act above mentioned by reason of the fact that he sponsored it in the state senate. It is generally thought that thorough knowledge of the history of legislation — and sponsoring an act could only involve such knowledge — is an aid in the construction thereof, rather than a disqualification. Some of our predecessors, namely, Justices Knight, Conaway, Scott, and Potter, were members of the constitutional convention. They, particularly the last named, were frequently called upon to construe provisions of the constitution, yet it has never been suggested, so far as we know, that they were disqualified to do so, or that it was improper for them to write an opinion in that connection. If participation in the legislation disqualifies a man to construe it judicially, then the president of the United States commits an act of impropriety every time that a member of the Senate of the United States is appointed to a seat on the Federal bench, including the highest bench in the land, and that would be particularly true in the case of a man who has long served in the Senate, for such appointees are doubtless frequently called upon to interpret statutes in the making of which they participated. Of course, counsel is much too complimentary to the writer hereof in thinking that he, after the expiration of thirty years, would remember, either the intention of the legislature or his *Page 171 
own, in connection with the phrase "organized under any law of this state," used in the legislative act of 1911. Reference to the writer's connection with that act was probably made by reason of the disappointment of counsel in the result of the case. And such disappointment is natural. Yet the members of the bar well know that the lot of lawyers is, unfortunately, in the nature of things, one of frequent disappointment. But in that connection they should remember that it gives no pleasure to the court to be the cause thereof. An opinion in cold type may seem to come from a bloodless heart, when in fact it found birth only after much travail.
Counsel re-argues that the right to have the corporation dissolved after fifty years is a contractual right of which plaintiffs could not be deprived. The brief does not shed any new light on the subject. We made an exhaustive investigation of the point, and found that the thought of the courts has been nearly unanimous that under statutory and constitutional provisions similar to ours, the extension of corporate life is not, ordinarily, a fundamental change. Counsel evidently overlooked our statement in the original opinion, supported by authority, that "it is not a valid argument that the contract herein was changed." The power of the state, reserved in our statute and constitution, to alter and amend the laws governing corporations is, on its face, plenary, enabling the legislature to change them in any and every respect without impairing any contractual right. If that can not be done in a particular respect, it is an exception to the rule. Counsel has evidently not appreciated that fact. Courts have made exceptions. They have protected vested property rights. They have held that the change must not be unreasonable. Is a law enabling the extension of corporate life unreasonable as to a dissenter? We have seen that the authorities have answered in *Page 172 
the negative. We also find a negative answer when we consider the history of corporations. Originally, it seems, all corporations existed for an unlimited time. In Roman law, it seems, the corporation continued to exist whether "all of its members remain, whether only part of them remain, or whether all of them have been changed." D. 3, 4, 7, 2. In the middle ages the idea prevailed that if all the members of a private corporation disappeared, the corporation came to an end. 9 Holdsworth, History of English Law, 62. That view was adopted by Blackstone. 1 Comm. 485. Thomas Cooley, his annotator, states that "this result would not follow where the corporators had interests represented by shares, which would pass on their death to their personal representatives." And Holdsworth, supra, states that the statement of Blackstone is "by no means a self-evident rule, and it was not the rule of Roman law." However that may be, aside from the instance mentioned, all corporations seem to have had a continued existence. Elliott on Private Corporations (4th ed.) Sec. 142, states that "it is said to be of the very essence of a common law corporation that it have perpetual succession." Blackstone, 1 Comm. 475, states that "after a corporation is so formed * * * and named, it acquires many powers, rights, capacities. * * * Some of these are necessarily and inseparably incident to every corporation, * * * as first, to have perpetual succession." Thompson on Corporations (3rd ed.) Section 8, tells us that "it was chiefly for the purpose of clothing the bodies of men in succession with the quality of immortality and individuality that corporations originated and are still perpetuated * * * Indeed the essential idea of a corporation is perpetual succession." See also, Trustees of Dartmouth College v. Woodward, 4 Wheat. 578, 636. It is clear then that under common law theory extension of corporate life was consistent with the nature of the organization, *Page 173 
and hence could not be considered a fundamental or unreasonable change. Elliott, supra, explains how the former idea came to be modified, stating that "after the decision in the Dartmouth College case, it became the practice to limit the life of a corporation to a certain period in order that the state might retain proper control over it." That is corroborated by Morawitz on Private Corporations (2nd ed.) Sec. 418, where he states that provisions limiting the life of corporations "are usually inserted for the benefit of the state" — a thought expressed by some of the authorities cited in our original opinion. Since the time when such limitation was first made, and particularly in the last century, a tremendous growth and development of corporations has taken place. That indicates a general thought and agreement that corporations are a necessity in the industrial and economic development of our nation. It is not a far step from that thought to the return of the thought of at least partial perpetuity, and hence that extension of corporate life is a natural step and not a fundamental and unreasonable change. It cannot, accordingly, be surprising that state after state has adopted legislation to that end. But it is plain that that has resulted merely in the restoration, in part, of an element considered at common law inherent in the nature of corporations, namely, that of perpetual succession, and to give back to them, under certain conditions, a right or capacity which they formerly possessed. The contention of counsel, accordingly, has been shown not to be well taken both by history as well as by authority.
And looking at the situation from an independent and broad standpoint, we are unable to say that the courts have reached the wrong conclusion. Rules of law cannot be made to conform to every individual's conception of what is just and right, even though not without merit. Differences of opinion are apt to arise, *Page 174 
since interests are apt to clash. And they are apt to clash when majorities and minorities are involved. It may be that the legislature might be able to make a more ideal law than we have on our statute books. But it must, at best, be difficult to make a law which is ideally just under all circumstances. When courts are confronted by a situation such as that before us, all they can do, and must do, is to measure and balance the various interests, and, in the absence of specific legislation, and when no inherently unmoral action is involved, protect all of them, as nearly as possible, in due proportion. Minority interests must, in the case of corporations, be necessarily subordinated to majority interests in many respects. As we pointed out in the original opinion, the extension of corporate life may at times be detrimental to shareholders — taking them as a whole — but we doubt that that can be said to be true as a rule, and that is the reason why courts have taken the view above mentioned. That is not to say that the holders of a majority or two thirds of any other proportion of the stock have the right to act oppressively. Rules of law regulate that, and under proper circumstances a single stockholder with a single share of stock can bring his oppressors to account. In this manner courts have attempted to harmonize the interests of stockholders as a whole, and though the result may not be ideally just under all circumstances, it is at least an approximation thereto.
Exception is taken to our statement in the original opinion that at least some of the minority stockholders permitted Carlisle to complete his purchase, and did not raise any objection to the continued existence of the corporation until after that time. Counsel contend that Mr. Spaulding raised the point that the corporate life had expired on April 3, 1939, and that on that date Carlisle had not completed his purchase of the majority of the stock, for the reason that he testified that he *Page 175 
made his contract on April 4, 1939. Counsel lay too much stress upon the exact date. Whatever was done on April 4, negotiations had been carried on long previously. Carlisle specifically testified that he had completed his purchase on April 3, 1939. On that date, the stock purchased and the first payment due therefor were in a bank in Chicago, and counsel have not suggested how Carlisle could have rescinded the transaction at that time. We think that our statement was substantially correct.
In the trial below plaintiffs contended that the affairs of the corporation had been mismanaged, and among other things claimed that a lease on the corporate property was given to Moyle in order to induce him to buy the stock of the Chicago stockholders — presumably claiming that the rental for the property should have been greater. The trial court found against plaintiffs, and we held that we could not reverse such holding, stating in substance that the record indicates that the lease was not made as an inducement such as claimed. Exception is taken to such statement, and it is asserted that there is nothing in the record to justify it. The lease is dated May 1, 1938, and recites that "it is expected that a formal option will be given" for the stock. On June 13, 1938, the corporation and Moyle entered into an agreement, and therein, among other things, Moyle agreed to buy all the stock of the corporation, if offered, at $14.00 per share, and the agreement recites that it is given for the purpose of inducing Moyle to enter into the lease-agreement. The witness Judson denied specifically that the lease was made as an inducement such as is claimed. He testified that the lease would have been made whether an option to purchase stock had been granted or not; that the reason for leasing the land was because the operations of the corporate affairs had previously resulted in a loss. We *Page 176 
would not, under such testimony, be justified in reversing the trial court's finding on this point.
We find no reason for a rehearing, and it is, accordingly, denied.
Rehearing denied.
RINER, Ch. J., and KIMBALL, J., concur.