State v. Merchant

92 P. 890, 48 Wash. 69, 1907 Wash. LEXIS 857
CourtWashington Supreme Court
DecidedDecember 11, 1907
DocketNo. 6931
StatusPublished
Cited by10 cases

This text of 92 P. 890 (State v. Merchant) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. Merchant, 92 P. 890, 48 Wash. 69, 1907 Wash. LEXIS 857 (Wash. 1907).

Opinion

Hadley, C. J.

In this action the state instituted a prosecution against the defendant Merchant, under and by virtue of a statute passed in 1903, the act being found in chapter 93, page 141, Laws of 1903. The act consists of but one section and is as follows:

“Any superintendent, director, secretary, manager, agent, or other officer of any corporation formed or existing under the laws of this state, or transacting business in this state, or any person pretending or holding himself out as such superintendent, director, secretary, manager, agent, or other officer, who shall wilfully subscribe, sign, indorse, verify, or otherwise assent to the publication, either generally or privately, to the stockholders or to other persons dealing with such corporation, or its stock, any wilfully untrue or wilfully and fraudulently exaggerated report, prospectus, account, statement of operations, values, business profits, expenditures, or prospects, or other paper or document intended to produce or give, or having a tendency to produce or give, to the shares of stock in such corporation a greater value than they really possess,, or with the intention of defrauding any particular person or persons, or the public or persons generally, shall be deemed guilty of an offense against the laws of the state of Washington, and, upon conviction thereof, shall be punished by imprisonment in the penitentiary,' not less than one nor more than five years, or in the county jail not more than one year, or by a fine not exceeding two thousand dollars or by both.”

By information the said defendant was charged, jointly with another, with having violated the terms of the statute in that, as secretary and director of the National Brokerage Company, a corporation, he did “wilfully, unlaAvfully, and feloniously subscribe, sign and publish to one Alfred B. Adams, [71]*71a person then and there dealing with said corporation and its stock, a certain wilfully untrue and wilfully and fraudulently exaggerated report, account, or statement of operations, values, and business profits of said corporation, the same being a paper or document intended to produce and give, and having a tendency to produce and give, to the shares of stock in said corporation a greater value than they really possessed, and with the intention of defrauding said Alfred B. Adams.” A copy of the said statement is set forth in the information. The defendant demurred to the information, and the demurrer was overruled. A plea of not guilty was then entered by him, and he was tried separately before a jury. A verdict was returned, finding him guilty as charged, the court fixed the punishment at a fine of $1,000, and the defendant has appealed.

The appellant urges that the statute under which he is being prosecuted is unconstitutional, for the reason that its title is insufficient under § 19, art. 2 of the state constitution, which provides that “No bill shall embrace more than one subject, and that shall be expressed in the title.” The title of the act is as follows: “An act to protect stockholders and persons dealing with corporations in this state.” It is first contended that inasmuch as the act describes a crime, and fixes a penalty, the title is insufficient in that it fails to so indicate. It is argued that, under the title of this act, the legislature could have provided remedies entirely civil in their nature, and that from a reading of the title one would not necessarily expect to find that the body of the act contains a penalty. There has been much conflict of decision upon this subject under similar constitutional provisions. Appellant cites State v. Clark, 43 Wash. 664, 86 Pac. 1067, as involving a title similar to the one now before us. That title was as follows: “An act for the protection of builders and declaring an emergency.” It was held to be insufficient, and the act was declared void. The gravamen of the argument in the opinion was, [72]*72however, directed to the indefinite character of the title in that the words used did not show with sufficient clearness who were to be protected by the act, the term “builders” being one of such elastic application that it might include owners as well as contractors, independent contractors, or even other persons, and the act manifestly could not have been intended for the protection of all. The fact that the title failed to state that the act carried a penalty was not directly discussed. In the later case of State v. Ames, 47 Wash. 328, 92 Pac. 137, this precise point was decided against appellant’s contention. The title of the act there considered was as follows: “An act to establish pilots and pilot regulations for the Straits of Juan de Fuca, Puget Sound, and all American waters pertaining thereto.” The court said of the above title:

“But we think the title sufficient to include the penalty. The general rule under similar constitutional provisions is that a title such as the one in question is sufficiently broad to include a penalty.”

A number of authorities are there cited. However inadvisable such an omission may be from a legislative standpoint, yet by the above decision it is settled in this jurisdiction that the constitutional provision is not necessarily violated by a mere failure to state in the title of an act that the act itself carries a penalty. The fact that the former case involved a statute providing punishment as for misdemeanor only can make no difference in principle.

It is, however, contended that the title is insufficient in another particular. It will be observed that it is limited to the protection of stockholders and persons dealing with corporations, while the body of the act provides that the publication of the fraudulent or exaggerated statement to persons “dealing with such corporation or its stock” shall subject one to punishment. The act thus clearly makes it a penal offense to publish the false statement to persons dealing with the corporation. It is also with equal clearness made an offense to issue such a statement to persons dealing with the stock of [73]*73the corporation. Dealing with a corporation and merely dealing with its stock are distinct subjects. One may deal with the stock of a corporation in the open market and in no sense deal with the corporation. The subject of dealing with the stock is clearly not comprehended in this title, and to that extent the act must be- held invalid.

We think, however, that the act must stand so far as it relates to dealing with corporations. Appellant insists that in any event it must be restricted to stockholders who deal with corporations. It is claimed that in the expression “to stockholders or to other persons dealing with such corporation,” the word “stockholders” preceding “other persons” limits the other persons to stockholders. If stockholders were mentioned in general as an entire class, there might be force in the argument, and the word “ or other persons” under the authorities might then be limited to the same general class as those described in the preceding words. Stockholders as an entire class are, however, not designated, but only those dealing with corporations. The comprehensive class specified therefore includes all persons dealing with corporations, stockholders who so deal as well as others. The dealing with corporations, as mentioned in the act, must mean more than the mere act of holding stock and refers rather to ordinary contractual dealing, which may be done by either stockholders or others.

With the above views of the statute it must first be determined whether the demurrer to the information should have been sustained.

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Cite This Page — Counsel Stack

Bluebook (online)
92 P. 890, 48 Wash. 69, 1907 Wash. LEXIS 857, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-merchant-wash-1907.