Court Opinion

ID: 7134772
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:22:45.315697+00
Date Added: 2024-06-11T16:14:35.342527
License: Public Domain

Judge DuRelle’s
dissenting opinion:
There is but one question in this case. It is whether the Genman-American Real-Estate & Investment Company, by adopting an amendment to its articles of incorporation whereby it changed its name to the German-American Title Company, and made a few changes, -not particularly material, in the qualifications- of its directors, etc., rendered its stockholders subject to the double liability imposed by the new corporation law. The answer to that question depends solely upon the construction of the new corporation act adopted in 1893. When the new corporation law was adopted, under the new Constitution, the manifest intention was to provide a means whereby, in time, the corporations of the State should be classified, and those of each class placed upon the same footing. It was provided that all corporations thereafter created should be created under the general law, by which their classification was fixed. The statute looked to the ultimate result of bringing all, or' as many as possible, of the corporations theretofore created under the same classification. There existed a large number of corporations established by legislative fiat to which special privileges had been granted by the Legislature. Some of these had been incorporated before the act of 1856, and relied for the maintenance and preservation of their privileges upon the doctrine of contract rights, established in the Dartmouth College cases. Many of those incorporated after 1856 were supposed to be protected in *327their privileges by the recital of contracts in the acts which created them. There was also a large1 number of corporations created under the old general incorporation act, which differed from the new law, especially in the provision as to the liability of stockholders. It was desired that all corporation® which had or claimed special privileges should be brought within the operation of the new Constitution, and their privileges rendered subject to legislative control by repeal or amendment. So, when the new act, some sections of which applied to old corporations, some' to new, and some to all, corporations, was passed, there was inserted in the act a provision which was intended as a temptation to corporations claiming special privileges to subject themselves to the terms of the new Constitution, and a menace to them if they did not do so. That was the provision of section 570, that “no law shall be passed for the benefit of, or in the interest of, any corporation heretofore created or organized by or under the laws of this ¡State or any -other1 State; nor shall any corporation avail itself of the provisions of this chapter, unles-s such corporation shall have previously, by a resolution adopted by its board of directors and filed in the office of the .secretary of this- St-ate, accepted' the provisions of the Constitution of this State; and such resolution, or a certified copy thereof, shall be evidence for and against such corporation.” This section applied, not only to old corporations which had special privileges, but to those which did not; for in terms it applied to “any corporation theretofore created.” But the new law was not to be applied to the old corporations in a summary or drastic manner. Ample tim-e and a locus penitcntiae were afforded them by the terms of the act. The corporation in this case did not need to accept the provisions of the new *328Constitution; for it was incorporated after the Constitution took effect, and it would have been a vain thing for it to file in the office of the secretary of State an acceptance of the provisions of the organic law under which it was created. It was therefore at the time it was created exactly in the condition as to legislation as if it 'had been created before the adoption of the Constitution, and afterwards 'had accepted the terms of that instrument.
As to corporations theretofore created, the stockholders of which did not desire to subject themselves to the liabilities imposed by the new act, provision was made. Under section 573, they were given until September 28, 1897, at which time it was provided that any provision of their charters or articles of incorporations, whether granted by special act or obtained under the general law, which were inconsistent with the provisions of this chapter concerning similar corporations, should stand repealed; and the concluding sentence of this section reads: “After the 28th day of September, 1897, the provisions -of this chapter shall apply to all corporations created or organized under the laws of this State, if said provisions would be applicable to them if organized under this chapter.” The stockholders of such corporations were given some four years to determine whether they would subject themselves to the liabilities imposed by the new corporation law or not. They might dissolve their corporations', or they might continue them, and become subject to the new law. They had that time to consider. If they wished to do so, they might reorganize under the new corporation law, and become a corporation owning all the property of the old corporation, but subject to exactly the same liabilities, and having exactly the same rights, as if they had been incorporated under the new law. This was pro-*329Tided for under section 554. To do this it was- necessary that every corporator should sign and acknowledge the new articles. Section 554 had provided that “any corporation created by, and existing under, the laws of this State, may organize under the provisions of this chapter,” etc. Section 559 then provided that “any corporation may, by the consent in writing of the owners of at least two-thirds of its capital stock, change or amend any of the articles of its incorporation,” etc. The decision of the majority is that section 559 simply provided an easier mode of doing what might have been done with additional trouble under section 554.
There is no constitutional question, here. Nobody doubts that the Legislature might constitutionally have imposed upon every existing corporation (not protected by the provisions of the Federal Constitution) the double liability as to all contracts thereafter made by it. Nobody doubts that it might have attached that consequence to the adoption of amended articles of incorporation. The question is, what did it do? It surely, by section 573, gave four years in which existing corporations might determine whether they would subject themselves to the liabilities of the new law. It surely also provided, in section 554, a mode whereby they might, by unanimous consent, sooner become subject to those liabilities, if they desired. Lid it also, by section 559, which provided that any corporation might .amend its articles in an easier mode than the one which had existed under the old law,— that is, by a two-thirds vote, — intend that it should become subject thereby to the liabilities of the new law. If such •was the intention, it was easy to say so. The courts must presume that all citizens know the law, but thei written law should not be so construed as to make that presumption *330a mockery. Here we have a law which provides in one section that the corporators shall have four years to determine whether they w’ish to be subject to its provisions; in another, that they may become subject to its provisions in a specified mode; and, in still .another, that, by doing something else, they may amend their articles of incorporation. By every fair rule of construction, the latter section should not have the effect of the former section. The Legislature must have meant something when it provided a means whereby a corporation could become subject to the present law. The majority opinion holds that it meant exactly the same thing by the provision for amending corporate articles. It is the court’s duty to give such a construction to a legislative act as will give effect to all its parts.
The .reasoning of the court, would be sound if the Legislature had not, in express terms declared when the double liability should attach to the stockholder. By the express provisions of the statute, it attached immediately in all new corporations formed under the act; but in existing corporations formed before the act was passed it did not attach until September, 1897, unless they reorganized under the act. The plain meaning of this was to give until September, 1897, for the existing corporations and their stockholders to adjust their affairs, and avoid liabilities which it had been expressly agreed they were to be exempt from when the corporation was formed. So, unanimous consent was required of the stockholders to reorganize under the new .act, in order that a part might not, before September, 1897, Impose upon others the double liability which they might be unwilling to assume. The Legislature having seen fit to provide two contingencies in which the double liability should exist, the court is not at liberty to add, *331by implication, a third; for this is to add to the words of the statute, and a statutory liability is never extended by implication beyond its express terms. The Legislature drew a clear distinction between reorganization under the new act and amending the old articles under it. It imposed the double liability' by express terms in the one in-' stance and not in the other. To say that this corporation did reorganize undey the new act, because it changed its corporate name by the amendment, is to say that an- existing corporation might reorganize under the new act by the assent of two-thirds of its stockholders, in disregard of the mandate of the statute that this should be done only with the assent of all of the stockholders. If, as suggested in the opinion, the amendment made in this case was' a reorganization of the corporation, and therefore imposed the double liability on the stockholders, does not it follow that the action was void altogether, because not taken in the manner directed by the statute? In other words, if a reorganization under the statute could only be made by unanimous consent, and what was done in this case was •a -reorganization, does it not follow that it was void because not done as required by the statute? That is, how could part of the stockholders, under the guise of amending the articles, accomplish that for which, by the terms of the statute unanimous consent was required?
'The courts presume that everybody knows the law-. They presume, also, that the laws are published, so that everybody may in fact know the law. The real publication to the world of a statute is sometimes much lat&r than the assumed promulgation. But, in civilized countries', the law exists somewhere, where the citizens can have access-to it, and see what the language is, even if he can not understand its meaning. Since the dawn of legal history, it *332lias always been considered that the laws must be somehow published. The law was published. The citizen had knowledge of what it said. It gave him notice that for four years he was' safe from the double liability, if he did not reorganize his corporation under the new law. Of the construction of the court there has been no publication until the imposition of the liability.
There is no question of acceptance. This corporation was created under the new Constitution. It did not have to accept the provisions of that instrument in order to have the benefit of the provisions of the new law which applied to it. Section 559, as to amendment, did apply to it. It accepted and acted under section 559. It claimed the benefit of that section. But it did not thereby claim the benefit of, or make itself subject to, all the provisions of the whole chapter. If it did, then all corporations which have acted under section 576, and accepted its provisions, have also accepted and become subject to the provisions of the whole chapter, and are subject to the double liability by printing the word “Incorporated” after their corporate names. The opinion imposes a liability without warning. It does more. It imposes the liability after notice that a locus penitenliae was granted, in which the stockholders of corporations might determine whether they would subject themselves to that liability. It was a liability which no corporator could have dreamed he was incurring by continuing a member of the corporation. Its imposition is, in my judgment, to add to the terms of the statute, and create by implication a liability which its express terms forbid. I therefore dissent from the judgment of the court.
Judge Hobson concurs in the dissent.