French v. Teschemaker

24 Cal. 518
CourtCalifornia Supreme Court
DecidedJuly 1, 1864
StatusPublished
Cited by40 cases

This text of 24 Cal. 518 (French v. Teschemaker) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
French v. Teschemaker, 24 Cal. 518 (Cal. 1864).

Opinions

By the Court, Sanderson, C. J.

The only question presented for our consideration in this case relates to the constitutionality of an Act passed by the Legislature in 1863, entitled “An Act to authorize the Board of Supervisors of the City and County of San Francisco to take and subscribe one million dollars to the capital stock of the Western Pacific Railroad Company, and the Central Pacific Railroad Company of California, and to provide for the [538]*538payment of the same, and other matters relating thereto.” (Statutes of 1863, p. 380.)

The charge that this Act is unconstitutional is founded upon certain provisions contained in the seventeenth section, which reads as follows :

“ Sec. 17. The subscriptions of stock authorized by the provisions of this Act shall be made by said Board of Supervisors on the books of each of said companies, upon the express condition that the said city and county shall not be liable for any of the debts or liabilities of either of said companies beyond the amount so subscribed; and this provision as to the liability of said city and county shall' be a part of and so expressly stipulated in all contracts made by said com.panies for the construction and equipment of said roads; and, in case either of said companies shall fail or refuse to make such stipulation in all of their said contracts, then the said Board of Supervisors shall have power to declare the said subscription to the capital stock of such company void and of no effect, and may recover of said company any previous payments that may have been made thereon at the time of such failure or refusal, and the said city and county shall never make any other or further subscription to the capital stock of said companies, or either of them, than that provided for by this Act.”

It is claimed by counsel for appellant that the foregoing section exempts the City and County of San Francisco from all liability for the debts and other liabilities of the railroad corporations mentioned in the Act, and is therefore in direct conflict with the thirty-sixth section of Article IV of the Constitution. And it is further contended that the provisions of the section in question are so interwoven and interblended with the whole scope and purpose of the Act as to entirely vitiate the same and render it unconstitutional and void.

I. There are two sections (thirty-two and thirty-six) in the foiu'th Article of the Constitution touching the individual and [539]*539personal liability of members of a corporation, between which there is an apparent repugnancy. They provide as follows :

“ Sec. 32. Dues from corporations shall be secured by such individual liability of the corporators and other means as may be prescribed by law.”
“ Sec. 36. Each stockholder of a corporation or joint stock association shall be individually and personally liable for his proportion of all its debts and liabilities.”

The first is a positive injunction requiring the legislative department of the Government 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 that department. But the latter section, by itself considered, seems to fix, upon first impression, the precise degree of liability, leaving no room for the exercise of legislative judgment. To harmonize these apparently conflicting provisions, or, if the conflict is irreconcilable, to determine which is to furnish the rule of conduct, is the office of judicial construction.

Constitutions, like statutes and private instruments, must be so construed, if possible, as to give some force and effect to each of their provisions. The legal intendment is that each and every clause has been inserted for some useful purpose, and when rightly understood may have some practical operation. For the purpose of harmonizing apparently conflicting clauses, each must be read with direct reference to every other which relates to the same subject, and so read, if possible, as to avoid repugnancy. And, to that end, sections, paragraphs, and sentences may be transposed; elegance of composition may be sacrificed; and the meaning of words and phrases may be restricted or enlarged.

If we read the thirty-sixth section as imposing a liability separate and distinct from that imposed by the thirty-second section, it is clear that the latter has no office to perform, and is, in effect, stricken from the Constitution. This result, how[540]*540ever, must be avoided, if possible, and some practical operation accorded to the latter section. And this may be done, if it appear, upon a careful examination, that the thirty-sixth section, when considered by itself or with the aid of some established rule of the common law, is not complete or self-executing, or, in other words, does not, within its own terms, provide a complete rule of conduct, and such defect is not cured by any rule of common law.' If such be the case, the power of supplying the needed element exists in the legislative department, and its-exercise is enjoined by the provisions of the thirty-second section. Is the thirty-sixth section, then, complete in itself? Is it self-executing, and does it contain within its own terms, aided or unaided by the established rules of the common law, a complete rule of conduct broad enough to embrace and definitely settle, in all its relations, every question that may arise touching the individual and personal liability which it imposes upon stockholders?

That it does not contain such a rule in its own terms is manifest. It declares that each stockholder of a corporation or joint stock association shall be individually and personally liable for his proportion of all its debts and liabilities, but does not determine what that proportion shall be, nor does it prescribe any rule by which it shall be ascertained. Is this manifest omission supplied by any established rule of common law? If so, it may be intended that the section was framed with direct reference to such rule, and that in legal contemplation such rule was impliedly incorporated in the section, with the same force and effect as if expressed in terms.

At common law no individual liability is imposed upon the members of a corporation, and there is therefore no department of the common law to which we can look for such a rule, except that which relates to partnerships or associations formed for trading purposes. Upon examination it will be found that that fountain fails to supply the needed element. By the law of partnership each member, as to third persons, is jointly and severally liable for the full amount of the liabilities of the firm. As between themselves, each one’s proper[541]*541tion of liability may or may not be regulated by private agreement. In the absence of any such agreement they are bound to share the burden equally, and the right to contribution exists. It will not do, therefore, to say that the section in question has adopted the common law rule of partnership liability and extended it to stockholders of a corporation, because that proves too much, and carries us beyond the express terms of the section.

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Bluebook (online)
24 Cal. 518, Counsel Stack Legal Research, https://law.counselstack.com/opinion/french-v-teschemaker-cal-1864.