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stock. Such special shares are made transferable only to employees or to the corporation, which may provide by its by-laws as to the number of shares which may be held by any employee and the mode of transfer, and for redemption in case of the holder ceasing to be an employee.
In Michigan, provision for the formation of corporations for the cultivation of art and art education, and for maintaining free library and reading rooms by public tax, appear in the statute book. A statute of Connecticut permits corporations, if they see fit, to distribute a portion of their profits among employees.
The recent fearful ravages of cyclones have induced a new form of insurance, and Michigan has enacted a law for the incorporation of mutual insurance companies to insure against cyclones, wind storms and tornadoes.
In South Carolina, the individual liability of holders in corporations, including banks and savings banks, is reduced from ten to four per cent of the par value of the shares held by them at the time the demand of the creditor was created.
LEGAL RIGHTS AND PROCEdure.
In the department of legislation affecting legal rights and procedure, with which we as lawyers are especially concerned, the statutes of this year are in the direction of that simplification of legal methods which marks the progress of the law as a science and a means of social safety.
Georgia, following the example of most of the other States, has abolished the distinction between common law and equity jurisdiction, and permits suitors to avail themselves in all her superior courts of equitable as well as of common-law process and relief.
New Hampshire provides by a special act that all actions and causes of action shall survive; by another, that the depositions of parties, if taken, shall be filed.
Michigan enacts that in all judicial proceedings, civil or criminal, a written statement, to which there is a subscribing witness, may be given in evidence without calling such witness, except when one or more subscribing witnesses are made requisite to the validity of the instrument.
The same State authorizes the specific performance, by guardians of insane or other incompetent persons, of contracts made by their wards for the conveyance of real estate; and by another act forbids the sale of any blank form of deed containing the words “warranty deed," or any other words implying that it is a warranty deed, unless the deed is in fact a warranty deed.
An important regulation by a statute of Michigan of the right of recovery in libel suits is noteworthy for its tender consideration of newspaper publishers. The plaintiff is limited to actual damages sustained and proved when it appears that the alleged libel did not involve a criminal charge, was published in good faith, and that its falsity was due to mistake or misapprehension of facts, provided that in the next regular issue of the newspaper, after the mistake or misapprehension was brought to the notice of the publisher, whether before or after suit, a correction is published in as conspicuous a manner and place as that in which the libellous article appeared. This would seem to be a premium upon scrutiny and care after the libel, to avoid punishment, rather than before it to prevent its utterance.
In Mississippi a special act provides that bills of lading shall be conclusive evidence of what is recited in them, in the hands of bona fide holders; a statutory expression of the commercial law as it has been substantially established by the courts.
South Carolina provides that in actions for the recovery of lands and tenements, whether legal or equitable, betterments made in good faith under the belief that the title was good shall be allowed for, thus incorporating in the statute law a well-settled rule of equity jurisprudence.
Virginia, by a statute which is a transcript of the act of Congress on the same subject, permits persous charged with crime to testify in their own defense. This is the only noteworthy change of the law of procedure in Virginia. The member of our General Council for that State reports that the entire body of the statute law is undergoing revision by a commission, whose report will be ready for the action of the General Assembly at a special session to be called in the fall of this year.
Connecticut provides for appeals by the State, with the permission of the presiding judge, in criminal cases, to the Supreme Court of Errors from rulings and decisions of the Supreme Court on questions of law. Heretofore no appeal was allowed except to the accused. Attorneys-at-law are prohibited by statute from giving bonds in criminal cases. By a special statute no person can be extradited on the requisition of a governor of another State until opportunity is afforded to apply for a writ of habeas corpus.
Analogous to the last-mentioned statute of Connecticut is one passed by Kansas, which makes it a condition of surrender of fugitives from the justice of the State where their alleged crimes were committed, that in addition to authenticated copies of the indictment or information, "sworn evidence shall be furnished that the demand for the surrender of the party charged is made in good faith for the punishment of crime and not for the purpose of collecting a debt or pecuniary mulct, or of removing the alleged fugitive to a foreign jurisdiction with a view there to serve him or her with civil process."
"This law," says the member of the General Council for Kansas, "was doubtless enacted to check the growing practices of eastern wholesale merchants who had become ingenious in converting a purchase of goods on credit into an obtaining of property by false pretenses, and armed with a requisition from the governor of Missouri, Illinos or elsewhere, as the case might be, would haul the luckless country merchant before some criminal court of St Louis or Chicago to answer such a charge, with the sole aim and purpose of collecting their debt and then turning the alleged 'fugitive' loose."
Georgia also has enacted regulations looking to greater caution in the surrender of persons under requisitions by governors of other States.
Reverting to the statutes of Connecticut, a noteworthy departure from the spirit supposed to have at one time characterized the legislation of that State, is a statute providing that no person shall be disqualified as a witness ou account of disbelief in a Supreme Being.
The common law contented itself so far as the relation of innkeeper and guest was concerned in protecting the guest against loss or injury while the relation continued. Modern legislation comes to the aid of the host, and we find a statute of Ohio prohibiting, under the penalty of fine or imprisonment, or both, the obtaining of any accommodation in any hotel, boarding or eating-house with intent to defraud the owner or keeper thereof, and proof that the imposition was effected by any false or fictitious show of baggage, or neglect to pay for the entertainment received, is made prima facie proof of the fraudulent intent.
A statute of Kentucky authorizes the erection of appropriate memorial tablets by the personal represen tatives or heirs at law of a decedent at the expense of his general estate and as a charge of administration; a
somewhat peculiar provision, but apparently a wise
Another step in the line of the humanities is a New York statute which appoints a commission to investigate and report to the next Legislature "the most humane and practical method known to modern science of carrying into effect the sentence of death in capital cases." This is a reflection on the statute book of a public sentiment which has its basis in a benevolence, sometimes misdirected, yet belonging to the better part of human nature. But while these philanthropic measures may comport with the maintenance of justice and the due severity of her penal laws, we cannot shut our eyes to the fact that the cunning and greed and rapacity of crime, in their subtler methods, keep pace with the march of civilization and refinement. In old times the footpad and highwayman contented themselves with the purses and trinkets of an occasional traveller. The modern gang of thieves, as in the case of the main thoroughfare of our greatest commercial metropolis, put Dick Turpin to the blush by stealing the highway itself, and leaving it in such a state of uncertainty as to the ownership of its easements that a special statute of New York was required to disentangle the intricate network woven by its captors.
In Maryland two amendments of the law of legal procedure have been made to expedite proceedings in civil cases. Monthly rule-days have been established in the courts of Baltimore, at which trial calendars are made up in substitution for the three terms formerly held during the year. And an additional yearly term of the Court of Appeals has been created, making three terms instead of two.
Mr. Hinkley reports that these changes will reduce the average time occupied in a contested case, including the hearing in the Court of Appeals, to about nine months, instead of about eighteen months as heretofore. He very naturally connects this substantial reform in the Maryland practice with the action of this association at its last session on the subject of "Delays in judicial administration."
No subject within our cognizance is of greater or more urgent importance, and it is a vital necessity that we should not relax our efforts to secure perma nent changes and reforms in the methods of legal procedure.
Another statute of Kentucky provides that defendants in criminal cases may testify in their own behalf, and still another introduces as a rule of evidence the comparison of handwriting in cases where the genuineness of writing is in dispute.
In the State of New York, with a body of judicial officers numbering-from the judges of the Court of Appeals to the magistrates exercising judicial functions of the lowest grade and excluding coroners
imperilled by useless and vexatious delays, for which
In New York a noteworthy change in the depart-
The duty is enhanced by the almost total neglect of our Legislatures, State and Federal, to meet the emergency by any remedial laws or even to consider the subject at all.
Passing to the wider sphere of government and of general law, I advert briefly to the most conspicuous changes in the statute law of the several States.
Connecticut has enacted a law forbidding and punishing as a crime the receipt by any public officer, trustee or agent, or any member of any board of management of any public or private corporation or institution, of commissions or other compensation, gratuity or interest in any sale or contract connected with the business of such corporation or institution, also forbidding any person connected with any institution receiving aid from the State to furnish supplies or having an interest in furnishing them, unless as the lowest bidder after open competition.
An act of New Hampshire forbids savings bank officers to act as agents for other corporations or to receive any inducement from borrowers to make loans by their banks.
The act to aid and promote purity of elections has, after defeat in previous years, become a law at the last session of the New Hampshire Legislature.
Virginia has passed two separate statutes, one "to define and punish champerty " and the other "to define and punish barratry." The first act provides that any person who shall solicit, procure or induce any suit, action, petition or motion to be brought, filed or made against the State of Virginia or any citizen thereof, by verbal representation or by writing or printing, shall be deemed guilty of the offense of champerty, and on conviction adjudged guilty of a misdemeanor and punished by fine of not less than $100 nor more than $300 for each offense, or by imprisonment for not more than sixty days, or both, in the discretion of the jury. The second act provides that any person licensed to practice law in any of the courts of Virginia, who shall solicit, procure or induce any action, suit, petition or motion as above against the State, or any citizen thereof, by verbal representations or by writing or printing, shall be deemed guilty of the offense of barratry and provide for the disbarring of the offender. If these statutes are to be taken as meaning what they say, the practice of the law in Virginia seems likely to become an expensive luxury unless the lawyers can find an abundant supply of non-resident defendants. Probably the sweeping terms of the law will be confined by construction to cases of stirring up law suits which it is the policy of the State to exclude from her own or the Federal courts.
Free public libraries are authorized by law in Ohio under certain restrictions to be maintained in cities of a population not exceeding thirteen thousand, of two thousand volumes and over, by direct tax not exceeding one-tenth of a mill on the taxable property.
vice president of the United States. The terms of this important statute are well known. They intrust the executive power to the secretary of State, or in case of his disability, to the heads of the departments of the treasury, of war, of justice, of the post-office, the navy, and the interior, successively, in the order Soldiers are exempted from poll-tax, and Decoration named, until the disability of the president or viceDay is made a legal holiday by Kansas. president can be removed, or in case of death, until a president can be elected. This is a rare instance of a statute as to which we may all join in the common wish that it may never take effect. But at the time of its passage and approval, January, 19, 1886, it was a tardy
New Hampshire provides that poor soldiers and their families shall be supported at their own homes, instead of at the county institutions; and Ohio makes special provision for the same class.
Ohio, by a stringent statute, makes the advertising provision for an emergency, the possibility of which
Nor may it be out of place to link with this brief
Kansas also makes a similar provision for public libraries.
In New Jersey a pension of $100 per year is accorded to soldiers of the war 1812. In Michigan all discharged soldiers, sailors and marines are exempted from polltax.
Michigan creates an advisory board of pardons, one of whom is to be an attorney and the other a physician, to investigate and report on all applications for pardon of convicts or commutation of sentence. Mr. Wells, the member of the General Council, reports that the governor has been greatly aided and relieved by the practical operation of this act.
Mississippi, by a series of well-considered acts, protects the rich alluvial district of the Mississippi region from the overflowing of the river.
Acts for the protection of game and fish find a place in the statute books of Georgia, Iowa, Massachusetts, Maryland, Kentucky, New Jersey and Michigan. New York prohibits the killing or shooting of song birds, or wild birds not game birds, at any time or for any purpose, but specially excepts the English sparrow from the benefit of this act.
A brief notice is in place here of what may be called agricultural legislation. Under this head a noteworthy statute is that of South Carolina, giving to landlords a first lien on the crops of the tenant for rent, and to laborers a lien next in order of priority to the extent of sums due them for aiding in making crops, and a special act prohibiting the stealing of vegetables.
Georgia, by a statute, encourages the search for phosphates.
Michigan provides for the publication and dissemination of usual information derived from its agricultural college. Also by another act for the collection of apiarian statistics as to the production of honey and wax.
Connecticut has passed a law to encourage the planting of forest trees, which provides for the appointment by the governor annually, in the spring, of an "arbor day" for tree planting, and exempts from taxation for twenty years land not worth over $20 an acre, on which the owner shall have raised by planting lumber trees, of the average height of six feet, of any of the following kinds, to-wit: chestnut, hickory, ash, white oak, sugar maple, European larch, white pine, black walnut, tulip or spruce, not less in number than 1,200 to the acre.
New Hampshire by a joint resolution makes provision for a like appointment of an arbor day by executive proclamation with the advice and consent of the council.
In the legislation of Congress a careful inspection of the enactments of the session of eight months, just terminated, discloses the fact that out of the 1,101 acts which passed both houses, and the 987 which became laws, those of general interest to the whole country, as distinguished from local or class legislation, or the satisfaction of claims on the treasury, can be counted on the fingers of one hand.
I have already adverted to the act requiring instruction in the public schools in physiology and hygiene, and to the oleomargarine act. Next in order, but first in importance, and the most noteworthy enactment of the national legislature, is the law providing for the event of a vacancy in both the offices of president and
Besides the acts of Congress to which I have adverted, there are hardly any which have been passed in the exercise of the law-making power, from which I exclude all grants of pensions and other moneys and provisions for building bridges, light-houses and other public works. The permission to owners of United States merchant vessels, and of any property on board thereof, to sue the United States for damages by collision arising from mismanagement of any government vessel, is a wise departure from the rule which forbids the bringing of suits against the sovereign power by a citizen or subject, and which worked special injustice in the cases to which the remedial statute applies, while the act for the increase of the navy and that relieving the merchant shipping from fees for measurement of tonnage and other charges, and amending the regulations as to shipment and discharge of crews, all relate to national or commercial needs in the department of our maritime interests too long neglected.
The shortcomings of Congress in the matter of attention to the public interests compared with the long period of its session, have been made the subject of that general criticism and condemnation on the part of the press and the public, by which they content themselves with abusing what they consider abuses.
But as members of the American Bar, we have our special and particular ground of censure in respect to the neglect of Congress to remedy evils in judicial ad
ministration which are of long standing, of the gravest character and the most serious in their consequences.
In the face of an imperative demand for some provision for the relief of the Supreme Court of the United States for the burden imposed upon it by the condition of its docket, Congress has done nothing to meet the emergency. The total number of cases on the docket of the term which ended last May was 1,340; of these 489 were added during the term, while the number of cases disposed of was only 440, so that the docket has gained on the court forty-nine cases, and it will begin next October term with a docket of 900 cases as against 851 last year. These figures, furnished by the clerk of the court, show that the delay to suitors in the court of last resort in our national judicial system is not only a present but a steadilygrowing mischief. The means of relief are within the power of Congress, by the adoption of any one of the various plans which have been under consideration during several sessions, and in respect to which this association has repeatedly expressed its opinion and and urged immediate action in the interest of the right administration of justice. Meanwhile the practical administration of the Federal judiciary, in spite of the indifference and culpable neglect of Congress, has never been more serviceable than during the past year. The task of the reorganization by means of legal proceedings of many of the great railroad systems has necessarily devolved on the Circuit Courts of the United States, and the promptness, ability and impartiality with which novel complicated questions of jurisdiction and of legal and equitable rights and procedure have been disposed of by our Federal judges deserve the high appreciation and commendation of the bar.
If I may be permitted to express an individual opinion, 1 take leave to say that in my judgment the two things most needed to advance the public interest in the matter of legal and judicial procedure are the increase of the number of United States Circuit Court judges, with proper provision for appellate courts and the assimilation of the methods of procedure in the State court to those of the Federal courts in the practical abolition of costs and mere practice motions, and the cutting up, root and branch, of the abuse of the extraordinary remedies of injunction and other provisional writs or orders by expediting the hearing and determination of the main issue.
These things could be accomplished and made effective all over the country, if our legislative bodies would give to practical reform a tithe of the time misspent on trivial affairs.
In the summary which I have thus attempted to give of noteworthy changes in the law, the few laws to which I have referred have been culled from a grand total of over 6,000 statutes; a great mass, including many crude, unwise, ill-considered and useless enactments, whose defects are made more conspicuons by comparing them with each other.
The waste of time, of thought, of physical strength and of public money involved in our legislative methods, would be simply appalling if we look at it solely in reference to the vast amount of labor expended as compared with the apparent results attained. The great mass of legislative acts relating to subjects which might be, and which in many States are remitted to simple judicial action, such as the change of names of individuals, those which deal purely with local matters, which under general laws could be remitted to the local municipalities, and the whole business of the creation and regulating of private corporations might be, and doubtless in time will be, everywhere placed under general law. But meanwhile we
must accept this waste as a necessary part of the complexity of our American system of numerous and intertwined State and Federal sovereignties, an experiment whose basis is direct representative government by popular legislative bodies and which must needs work out its many problems at whatever cost. Happily the evils of our legislation do not touch the core of the public safety so as to be remediless, and a sound public opinion already asserts itself against them. We may be sure that any real improvement and advance toward the perfection of the best government, which in governing least legislates least, must come from our own profession. If lawyers are not willing to aid by intelligent effort, by self-sacrifice, and by wise, discriminating concert of action to simplify, purify and make more serviceable for the general good the methods of making and of administering the law, no one else ever will or ever can undertake the work, for to no other body of men is committed the sacred trust of making human justice, in its manifold application to human wants and interests, conform to its original and divine pattern.
It is in the hope that our action here may conduce in some measure to this desired end that I declare the ninth annual session of the American Bar Association to be now opened.
CORPORATIONS - FOREIGN — LIABILITY OF STOCKHOLDERS-JURISDIC
TION OF COURTS.
MASSACHUSETTS SUPREME JUDICIAL COURT. JULY 6, 1886.
NEW HAVEN HORSESHOE NAIL COMPANY V. LINDEN SPRING COMPANY.
The alleged liability of individual defendants to a foreign corporation cannot be enforced in a court which has ro jurisdiction over such corporation except such as results from an appearance by attorney.
facts appear in the opinion
H. R. Bailey, for plaintiff.
Ambrose Eastman, for defendants.
DEVENS, J. The claim of the plaintiff, a foreign corporation, is upon certain promissory notes signed by the principal defendant, also a foreign corporation. This latter corporation has no property which can be reached so as to be attached, and the plaintiff seeks to establish, as against the individual defendants, that they are under such a liability to the principal defendant that they may be treated as its debtors, and ordered to pay their debt as its equitable trustees, so far as that may be necessary, in order to discharge the plaintiff's claim against the defendant corporation, The plaintiff also contends, that by the facts set forth in his bill, he states a case which is as good as a creditor's bill, under the equity jurisdiction of the court.
The plaintiff does not set forth any contract made by the defendant stockholders, except that they subscribed for and took the capital stock of the corporation. Nor does it allege any promise made by them in relation thereto, or in regard to the liability which it says they incurred "independently of any statute or penal liability." In the absence of any promise definite in its character, on the part of the stockholders, there can be no liability to the corporation, or the creditors of the corporation, which does not proceed from a statute of Connecticut, under which it is created.
The corporation is one formed under general laws of that State, and the liabilities of stockholders, or of
subscribers of the stock, are such as are prescribed by those laws. Their subscription to the stock can have imposed upon them no others. The allegation of the plaintiff must therefore be interpreted as meaning that the alleged obligation of the subscribers is independent of any statutory or penal liability, which is imposed in terms. Where no promise is alleged, the only contracted obligation on the part of the subscribing stockholder must be that which arises from his relation. Whether it be expressed in terms or derived from his relation under the laws of the State of Connecticut as those laws may be interpreted by competent authority, it is not a common-law obligation, but one created by the statute under which the corporation is formed. Terry v. Little, 101 U. S. 216.
The liability of stockholders in a Connecticut corporation must be determined by the laws of that State. Hutchins v. New England Coal Co., 4 Allen, 580; Jones v. Sisson, 6 Gray, 288; Penobscot & K. R. Co. v. Bartlett, 12 id. 244; Blackstone Manuf. Co. v. Blackstone, 13 id. 488.
That the statutes of a State do not operate extraterritorially, proprio vigore, will be conceded. How far they should be enforced beyond the limits of the State which has enacted them must depend upon several considerations; as whether any wrong or injury will be done to the citizens of the State in which they are sought to be enforced, whether the policy of its own laws will be contravened or impaired, and whether its courts are capable of doing complete justice to those liable to be affected by their decrees. Where the rights sought to be passed upon and determined are those which arise from the relation between a corporation and its members, they depend upon the local law which exists at the place of its creation, and true policy would seem to require us to leave them to be there determined. The liability which the stockholders are alleged to be under to the corporation and its creditors has little analogy to a demand for a debt due, according to the generally recognized principles of law. It is of a peculiar character, involving the organic law by which the corporation is created, and requiring local administration. We have heretofore in similar cases declined to pass upon them, and determine the relation existing between a foreign corporation and its members, and the obligations arising therefrom. Halsey v. McLean, 12 Allen, 438; Smith v. Life Ins. Co., 14 id. 336, 341; Kansas Const. Co. v. Topeka, S. & W. R. Co., 135 Mass. 34.
The reasons why we should not in the case at bar undertake to enforce the alleged obligations of the members of this corporation appear decisive. They are quite different from those which arise in Massachusetts from a contract to have and subscribe for shares. By our laws, as settled by many decisions, in the absence of an express promise to pay for shares, Bone is created by a mere subscription therefor. Nor is any created by the mere agreement to take shares. No personal liability exists, as the corporation can by law assess such shares, and sell them for nonpayment of assessments, which is held to be a sufficient remedy. Andover & Medford Turnpike Corp. v. Gould, 6 Mass. 45; Same v. Hay, 7 id. 102; Franklin Glass Co. v. White, 14 id. 285; Ripley v. Sampson, 10 Pick. 371; Mechanics' Foundry & M. Co. v. Hall, 121 Mass. 271; Katama Land Co. v. Jernegan, 126 id. 156. While a different rule prevails in many States, the grounds upon which these decisions rest have also been approved in others. Kennebec & P. R. Co. v. Kendall, 31 Me. 470; Railroad Co. v. Johnson, 10 Fost. 403; Railroad Co. v. Bailey, 24 Vt. 465; Seymour v. Sturgess, 26 N. Y. 134. It does not seem advisable that we should seek to enforce a liability thus differing from any which would have been incurred if the defendants had subscribed for shares of stock in a corporation formed in this State.
Again, the bill alleges that the defendants were bound to have made a full and honest payment for the shares, as subscribed for by them, to the extent of their par value; that they actually paid for the same by a transfer of property, knowingly reckoned by them at a price which exceeded by far its real value; that they are now liable to make further payment for their shares of stock; and that by the laws of Connecticut, and according to the ordinary rules of equity, any stockholder who has not paid up his stock in full, can upon the insolvency of the corporation be made personally and directly iiable at the instance of any creditor, for the amount remaining unpaid and equitably due.
The individual defendants were the sole stockholders and also the officers of the corporation, and the transaction by which they paid for their stock was a transfer of a certain amount of cash, machinery, tools and other property, together with certain inventions, and the letters-patent therefor. It is alleged that in reckoning the payment an exaggerated value was knowingly placed upon all these descriptions of property. That in the absence of fraud an agreement may ordinarily be made by which stockholders may be allowed to pay for their shares in patents, mines or other property, to which it is not easy to assign a determinate value, would appear to be well settled. The bill does not aver any fraud intended to be committed or actually committed on the public or plaintiff by these defendants, by obtaining from those with whom the corporation dealt a false credit. The liability alleged is one due to the corporation, growing out of the relation of these parties to it as stockholders. The extent of that liability, and the mode in which it shall be enforced, and the position in which the stockholders are placed, must be determined by the laws of Connecticut, and by a tribunal that can control the conduct and action of the corporation. The mere appearance by attorney of the defendant corporation does not enable the court so to do.
In a clause subsequent to that we have considered the plaintiff avers that as promoters and officers of the corporation, the defendants owed the duty to see that the stock subscribed for was fully and honestly paid in; that they failed to perform that duty, and were thus guilty of a breach of trust in not requiring the full and fair payment of the capital stock. No allegation is here made of any fraud committed upon the plaintiff as a creditor of the corporation. That which is set forth is a misfeasance on the part of the officers of the corporation for which it may be they would be liable in damages to the corporation, but the plaintiff cannot on this account hold the defendants as debtors of the corporation, who had failed to pay for their stock, which is the ground upon which, in either respect, its bill proceeds. Nor if these averments are sufficient to show that the transaction by which simulated payment was made, constituted a fraud upon the corporation, would the defendants become the debtors of the corporation and liable as such to pay as stockholders. As the corporation retains what it has received, even if it were defrauded in the transaction, its remedy would, according to the ordinary rule of law, be in damages for the wrong it had sustained from the stockholders. Foreman v. Bigelow, 4 Cliff. 508. The bill does indeed aver that by the law of Connecticut the defendants in such a case are liable as stockholders for a further payment upon their stock, so as to make a full and honest payment. If such is the law of Connecticut, and if such a liability may be treated as a debt, this law varies so much from that which ordinarily controls in regard to similar liabilities, and also in the enforcement of contracts, that we are compelled to leave it to local administration.