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Mr. Chief Justice Waite, in S. V. W. W. v. Schottler, 110 U. S. 347, 4 Sup. Ct. Rep. 48, says the Constitution puts this reservation into every charter, and that corporations from the moment of their creation are subject to the legislative power of alteration, and if expedient, of absolute extinguishment as corporate bodies.
Constitution, 1849: Lowe v. The Mayor etc. of Marysville, 5 Cal. 216; Cal. State Tel. Co. v. Alta Tel. Co., 22 Cal. 424; Brooks v. Hyde, 37 Cal. 379; Pacific Bank v. De Ro, 37 Cal. 540; S. F. v. S. V. W. W., 48 Cal. 509; Ex parte Frazer, 54 Cal. 95; People v. Stanford, 77 Cal. 371, 18 Pac. 85, 19 Pac. 693; Swamp Land District v. Silver, 98 Cal. 53, 32 Pac. 866; Market St. Ry. v. Hell. inan, 109 Cal. 580, 42 Pac. 225; McGowan v. McDonald, 111 Cal. 66, 52 Am. St. Rep. 149, 43 Pac. 418; Murphy v. Pacific Bank, 119 Cal. 341, 51 Pac. 317. Constitution, 1879: S. V. W. W. v. S. F., 61 Cal. 38; Thomason v. Ashworth, 73 Cal. 77, 14 Pac. 615; People v. Stanford, 77 Cal. 371, 18 Pac. 85, 19 Pac. 693; People v. C. P. R. R., 83 Cal. 396, 413, 23 Pac. 303; In re Madera Irr. Dist., 92 Cal. 316, 27 Am. St. Rep. 106, 28 Pac. 272; Market St. Ry. Co. v. Hellman, 109 Cal. 584, 42 Pac. 225; Matter of La Societe Francaise, ctc., 123 Cal. 527, 56 Pac. 458; Santa Rosa Nat. Bank v. Barnett, 125 Cal. 412, 58 Pac. 85; People v. Levee Dist. No. 6, 131 Cal. 30, 63 Pac. 676.
Corporations Within This Section- What are.- A levee district is not a private corporation, neither is it a municipal corporation, but it belongs to a class by itself, the creation, organization and control of which is not limited by the Constitution. (People v. Levee Dist. No. 6, 131 Cal. 30, 63 Pac. 676.)
Prior to the new Constitution, a reclamation district was held to be a public corporation, which could be created by special act. (Reclamation Dist. No. 124 v. Gray, 95 Cal. 601, 30 Pac. 779; Swamp Land Dist. v. Silver, 98 Cal. 53, 32 Pac. 866.)
Creation of.-The legislature cannot confer upon corporations any powers or grant them any privileges by special act. (San Francisco v. Spring Valley W. W., 48 Cal. 493; Const. 1879, subd. 18, sec. 25, art. IV.)
A corporation sole can be created only by compliance with the provisions of the Civil Code. (Blakeslee v. Hall, 94 Cal. 159, 29 Pac. 623.)
Cannot be created by legislative recognition but only by general law. (Oroville etc. Co. v. Plumas Co., 37 Cal. 354.)
Private corporation to supply city with water cannot be created by special act, nor can power to supply city with water be con, ferred upon private corporation organized under general laws by special act. (San Francisco v. S. V. W. W., 48 Cal. 493. Afirmed: S. V. W. W. v. San Francisco, 61 Cal. 11. See, also, Harris v. Contra Costa Co. W. Co., 5 Saw. 290, Fed. Cas. No. 6235.)
Private Corporations. Must be formed under general laws, and can esercise no powers, except such as are conferred by general laws. Legislature cannot confer on such corporation any powers or grant any privileges by special act. (San Francisco v. S. V. W. W., 48 Cal. 493. Approved: Waterloo etc. Co. v. Cole, 51 Cal. 384; S. V. W. W. v. Bryant, 52 Cal. 140; S. F. v. S. V. W. W., 53 Cal. 611; Omnibus R. R. v. Baldwin, 57 Cal. 166, 170, 174; People v. Stanford, 77 Cal. 379, 18 Pac. 85, 19 Pac. 693; People v. C. P. R. R., 83 Cal. 413, 23 Pac. 303; Home of Inebriates v. Reis, 95 Cal. 150, 30 Pac. 205; South Pasadena v. Terminal Ry. Co., 109 Cal. 320,- 322, 41 Pac. 1093. Distinguished: Ex parte Frazer, 54 Cal. 96.)
The rule that an incorporation is incomplete until the charter is accepted has no application to corporations formed under general laws. (S. V. W. W. v. 8. F., 22 Cal. 434.)
The general and uniform operation of a statute is not affected because it authorizes corporations to adopt or reject a particular provision, if all corporations of a class have the same opportunity and neither of the provisions conflicts with the Constitution. (Mur. phy v. Pacific Bank, 119 Cal. 341, 51 Pac. 317.)
The term “municipal” cannot be extended to embrace commercial corporations. (Lowe v. City of Marysville, 5 Cal. 214.)
Special Franchises or Privileges.—Corporation formed under general laws for purpose of receiving grant of powers and privileges through special act possesses no powers or privileges other than such ae are conferred by general laws. (S. F. v. S. V. W. W., 48 Cal. 493. To same effect: People v. Selfridge, 52 Cal. 331.)
Act granting to individuals certain powers and privileges, act not to take effect unless such individuals organized themselves into & corporation within a specified time, is a grant, not to the individuals as persons, but to the corporation when formed. Such act is attempt to confer powers and privileges upon corporation by special act and is unconstitutional. (S. F. v. S. V. W. W., 48
Act granting special privileges to particular corporation or imposing peculiar obligations on particular corporation not applicable to all similar corporations is void. (Waterloo Turnpike R. Co. v. Cole, 51. Cal. 381.)
The fact that a party is a corporation in exercise of its corporate powers does not tend to establish its right to a special franchise. (Schierhold v. N. B. & M. R. R. Co., 40 Cal. 447.)
An act “to establish water rates in the city and county of San, Francisco," and a supplemental act, held unconstitutional in so far as they attempt to provide a mode of fixing rates to be charged by corporations in San Francisco differing from the mode provided for other corporations by general laws. (San Francisco v. Spring Val. ley W. W., 53 Cal. 608; Spring Valley W. W. v. Bryant, 52 Cal. 132; San Francisco v. Spring Valley W. W., 48 Cal. 493.)
An act which authorizes the board of supervisors of a county to grant certain privileges to a particular corporation is void. (Waterloo etc. Road Co. v. Cole, 51 Cal. 381.)
An act which grants to individuals powers and privileges, and provides that the act shall not take effect unless such persons incorporate within a given time, is a grant to the corporation, and void. (San Francisco v. Spring Valley W. W., 48 Cal. 493. California State Tel. Co. v. Alta Tel. Co., 22 Cal. 398, overruled.
Under this section the legislature cannot by special act change the name of a corporation, but may by general law provide for such change by the superior court upon application of the incorporators, (Matter of La Societe Francaise, etc., 123 Cal. 525, 56 Pac, 458. See also, Pacific Bank v. De Ro, 37 Cal. 538.)
An act granting to certain individuals the exclusive right to a line of telegraph does not violate this section. (California State Tel. Co. v. Alta Tel. Co., 22 Cal. 398. But see San Francisco v. Spring Valley W. W., 48 Cal. 493.)
This section does not prohibit the assignment of a franchise to a legally organized corporation, by persons having the lawful right, to exercise and transfer the same—this section referring only to power directly conferred upon corporations by the legislature. (Peos ple v. Stanford, 77 Cal. 360, 18 Pac. 85, 19 Pac. 693.)
Where a franchise is conferred by the legislature to certain individuals to supply a town with water, and they afterward sell such franchise to a corporation, this section is not violated. (San Luis Water Co. v. Estrada, 117 Cal. 168, 48 Pac. 1075. San Francisca v. Spring Valley W. W., 48 Cal, 493, distinguished.)
A law providing a special method of assessment and collection of taxes against railroads situated in more than one county is not in violation of this section. (People v. Central Pac. R. R. Co., 105 Cal. 576, 38 Pac. 905. People v. Central Pac. R. R. Co., 83 Cal. 393, 23
overruled.) An act conferring the power of appointing boards of examiners upon three named societies, which are said to be "existing corporations,” held not to be in conflict with this section, as the power is not conferred upon them as corporations—the expression "existing corporations” being merely descriptio personarum. (Ex parte Frazer, 54 Cal. 94; Ex parte MeNulty, 77 Cal. 164, 11 Am. St. Rep. 257, 19 Pac. 237; Ex parte Johnson, 62 Cal. 263.)
This provision continued in force section 359 of the Code of Civil Procedure, limiting the time within which an action can be brought to onforce the stockholders' personal liability. (Santa Rosa Nat. Bank v. Barnett, 125 Cal. 407, 58 Pac. 85.)
Alteration and Repeal of Charters.—The right to alter and repeal is not without limit; it must be reasonable. Sheer oppression and wrong cannot be inflicted under the guise of abandonment or alteration. (Spring Valley W. W. v. San Francisco, 61 Cal. 3.)
The power of the legislature to alter and amend under this section does not authorize the legislature, while the corporation exists, to deprive it of the rights guaranteed to it by the federal constitution, to due process of law, and to the equal protection of the laws, nor to alter the charter of foreign corporations doing business in this state. (Johnson v. Goodyear Min. Co., 127 Cal. 4, 78 Am. St. Rep. 17, 59 Pac. 304.)
A provision in the charter of a water company permitting it to name two out of five commissioners to fix water rates is simply a privilege, and not a contract with the company, and may be repealed at any time. (Spring Valley W. W. v. San Francisco, 61 Cal. 3; S. V. W. W. v. Schottler, 110 U. S. 347, 4 Sup. Ct. Rep. 48.)
The legislature may, under the reserved power, provide for the consolidation of corporations by a majority vote of the stockholders, without reference to the will of the dissenting stockholders. (Market Street Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)
Under this provision the people of the state have power to change the law as to the liability of stockholders. (McGowan v. McDonald, 111 Cal. 57, 52 Am. St. Rep. 149, 43 Pac. 418.)
The power of the legislature under this section is limited by the provisions of the federal Constitution inhibiting laws impairing the obligation of contracts, depriving persons of property without due process of law, or denying the equal protection of the laws. Rights acquired and capital invested by a corporation or its stockholders in the lawful exercise of powers conferred by general laws are within the protection of such constitutional provisions, and cannot be arbitrarily destroyed by subsequent state legislation. (San Joaquin etc. Co. v. Stanislaus Co., 113 Fed. 930.)
A statutory right embraced in the charter of a corporation must be reduced to possession to secure the constitutional protection against alteration or repeal. (San Joaquin etc. Co. v. Stanislaus Co., 113 Fed. 930.)
The constitutional rights of an irrigation company are not impaired by a statute authorizing county boards to fix rates below the minimum prescribed in the act under which the company incorporated. (San Joaquin etc. Co. v. Stanislaus Co., 113 Fed. 930.)
DUES TO BE SECURED BY INDIVIDUAL LIABILITY, ETC.
Sec. 2, Art. XII. Dues from corporations shall be secured by such individual liability of the corporators and other means as may be prescribed by law.
See section 3 of this article, and section 322, Civil Code, post.
This section is the same as section 32 of article IV of the old ('onstitution. See, further, under section 3 of this article.
French v. Teschemaker, 24 Cal. 538; Larrabee v. Baldwin, 35 Cal. 166; Harmon v. Page, 62 Cal. 460, 461; McGowan v. McDonald, 111 Cal. 62, 52 Am. St. Rep. 149, 43 Pac. 418; Santa Rosa Nat. Bank v. Barnett, 125 Cal. 410, 58 Pac. 85.
Liability of Corporators. This section is a positive injunction requiring the legislature to provide security for corporate dues, by-laws imposing, in connection with other means, some degree of individual liability upon the members of the corporation, but leaving the extent of that liability to the wisdom and sound discretion of the legislature. (French v. Teschemaker, 24 Cal. 518.)
An act of the legislature making each stockholder liable for his share of all its debts contracted while he is a stockholder is sufficient to meet the requirements of the constitution. (Larrabee v. Baldwin, 35 Cal. 155.)
Neither section 32, nor section 36 of the Constitution of 1849, nor section 322 of the Civil Code, prevent a court of equity from com. pelling a stockholder of an insolvent corporation to pay in the amount of capital stock he has contracted to take. The remedies are concurrent. (Harmon v. Page, 62 Cal. 448.)
STOCKHOLDERS TO BE INDIVIDUALLY LIABLE.
Sec. 3, Art. XII. Each stockholder of a corporation, or joint-stock association, shall be individually and personally liable for such proportion of all its debts and liabilities contracted or incurred, during the time he was a stockholder, as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock, or shares of the corporation or association. The directors or trustees of corporations and joint-stock associa