Lawrence Lewis.

American and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] online

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county the agent of the State in regard to the issuing of the bonds, and
that judgment could be recovered against the county, as the special agent
of the State created to issue the bonds and to be liable on them ; but that
the liability of the county was not a municipal liability to be paid out of
the general funds of the county, but only a special liability to be paid out
of the township funds provided to be raised by special tax through the
county machinery for taxation. Accord, see Davenport v. County of
Dodge, 105 U. S. 237.

The State cannot Appoint Officers or Agents who are to
have Charge of Local Municipal Affairs. — Where the State
wishes to exercise some public funtion, or perform some act of sovereignty
through the agency of the municipal corporation, but by means of special
agents or officers who are to act as agents of the corporation, it must leave
the appointment of the agents to the municipal corporation, especially if
such agents are to have authority to spend corporate funds or pledge the
corporate credit. To allow the State to control or regulate property or
rights of a municipal corporation by agents selected by itself would en-
croach on the vested rights of the municipal corporation.

In the case of Board of Park Commissioners v. Common Council of
Detroit, 28 Mich. 228, by an act of legislature of 187 1 certain commis-
sioners were created to propose a plan for a park for the city of Detroit,
the plan to be submitted to the vote of a citizens' meeting. Commis-
sioners were duly appointed under this act, and their appointment was
ratified by the city. Subsequently the legislature enlarged the powers of
the commissioners, giving them power to locate the site of a park or
boulevard, to expend a certain sum to be furnished by the city council in
the purchase of land, and to condemn land for the park or boulevard.
It was held that this act was unconstitutional as placing municipal rights
and property at the disposal of an independent agency not appointed by
the municipal corporation.

In Sheboygan Co. v, Parker, 3 Wall. (U. S.) 93, an act to authorize the
county of Sheboygan to aid in the construction of a railroad appointed
several persons to act as commissioners, and directed a vote of the people
9 Cor. Cas. — ^40

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of the county to be taken as to whether or not they would have a sub-
scription •* in pursuance of the act." It was held that the commissioners
were lawful agents of the people for the special purpose for which they
were appointed, and, though nominated by the l^islature, they could not
act without the assent of the citizens of the county, ascertained in the
manner directed by law ; and that, having so acted, the county could not
now repudiate their acts.

Authority to Sell Bonds at Par does not Authorize Sale
FOR Less than Par. — It is well settled that the agents, officers, or city
council of a municipality cannot bind the corporation by any contract not
within the scope of its powers.

The act of May 9, 1879, authorized, inter alia, the councils of any city
of the second class, of which Pittsburgh was one, by ordinance, to make,
execute, and negotiate its bonds, to be known as " improvement bonds."
to an amount not exceeding $6,000,000, the proceeds thereof to be used
in paying or retiring bonds previously issued by the city for the pur-
pose of improving the streets and avenues thereof, and also temporary
loan bonds issued to meet the interest on said street bonds, and for no
other purposes whatever. . . . The third section of the act declares "they
shall be sold at not less than par, with accrued interest, but the said coun-
cils may allow a reasonable compensation for the sale or negotiation of the
said bonds."

On the 27th of January, 1880, the city of Pittsburgh passed an ordinance
authorizing an* issue of bonds, substantially in the words of the act of
1879, and declared they should not be sold at lest than par and accrued
interest ; but provided that the finance committee or sub-committee there-
of might allow a reasonable compensation for the n^;otiation, sale, or
exchange thereof.

Said sub-committee entered into several contracts with the appellants,
and, each failing of their object, a final agreement was entered into which
stipulated and declared that "the city of Pittsburgh sells at par and
accrued interest " to the appellants the whole $6,000,000 of bonds which
it was authorized to issue, and allows them a commission of one per cent
on all bonds purchased or exchanged by them under the agreement.

On a bill being filed by citizens and taxpayers of the city to enjoin
against the performance of the contract, ^^/c/.that practically and substan-
tially the transaction was an agreement to sell the bonds to the appellants
for less than par and accrued interest, and, being unauthorized by the
statute, was illegal and void. Whelen's Appeal, Supreme Court of Penn-
sylvania, October, 1885.

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Eames V. Savage.
Same v. Bickford.

{Advance Case, Maine, March 20, 1885.)

Executions upon judgment against towns, may be levied upon the goods
and chattels of the inhabitants. The statute of Maine authorizing this
process is not in conflict with the fourteenth amendment, United States

Strout & Holmes and y. J. Parlin for plaintiflF.
D. D. Stewart and A. H. Ware for defendant.

Emery, J. — ^The plaintiff was an inhabitant of the town of
Embden, at the time Sarah J. Savage began suit, and facts.

recovered judgment against that town in this court The exe-
cution upon that judgment was issued, and was levied upon
the plaintiff's goods, pursuant to R. S. of 1871, chap. 84, §29,
now R. S., chap. 84, § 30, which expressly provides that exe-
cutions against towns shall be issued against the goods and
chattels of the inhabitants thereof, and shall be levied upon
such goods and chattels. The plaintiff, however, claims that
the statute is forbidden, and made null by the last clause of
section 6 of the Maine Bill of Rights, which declares that a
person accused shall not " be deprived of his life, liberty,
property or privileges but by the judgment of his peers, or
by the law of the land,'* and also by that clause in section i of
the fourteenth amendment to the Constitution of the United
States, which declares that no State shall "deprive any
person of life, liberty, or property without due process of

The presumption is the other way, in favor of the validity
of the statute, and it is a presumption of great strength. All
the judges and writers agree upon this. Chief Justice Mar-
shall, in Fletcher v. Peck, 6 Cranch, 87, says that stat™ pm-
to overturn this presumption the judges must be noSL*^""""'
convinced, and " the conviction must be clear and strong."
Judge Washington, in Ogden v. Saunders, 12 Wheat. 270, de-
clared, that if he rested his opinion on no other ground than a
doubt, that alone would be a satisfactory vindication of an

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opinion in favor of the constitutionality of a statute. Chief
Justice Mellen, in Lunt's Case, 6 Me. 413, said, " the court will
never pronounce a statute to be otherwise (than constitutional),
unless in a case where the point is free from all doubt." This
strong presumption is to be constantly borne in mind in con-
sidering the question here presented.

The statute itself in this case has existed for half a century,
since February 27, 1833, but it introduced no new principle
coLLwrxioN, or rule in the jurisprudence of this State. It

FROM IKHABX- , /y» t ,i *

1^* °LiSS merely aflBrmed a well-known custom or law
Town. |.j^^^ }^^j jQjjg before existed. The practice of

bringing suits against a political division or municipal
organization and collecting the judgment, from the in-
dividuals composing it, is believed to have existed in Eng-
land and to have been brought thence to New England.
Actions against " the hundred," were known as far back as
Edw. I. Stat. 13, Edw. I. chap. 2 ; 3 Comyn's Dig., " Hundred,"
chap. 2. As " the hundred" had no property, except that of
individuals, the judgments must have been collected from the
individuals. In Russell v. Men of Devon, 2 T. R. 667, Lord
Kenyon said, that indictments against counties were sanc-
tioned by the common law, though they would be levied on
the men of the county. In Atty.-Gen. v. Exeter, 2 Russ. 45,
the chancellor said : " If the fee farm was charged on the
whole place called Exeter, he who was entitled to the rent
might have demanded it from any one who had a part of, or in
the city, leaving the person who was thus called on, to obtain
contributions from the other inhabitants as best he could." In
New England the practice obtained from the earliest times,
without any statute. " About the year 1790, one Gatehill
was imprisoned on an execution against the town of Marble-
head for a debt the town owed." 5 Dane's Abr., chap. 143,
art. 5, §§ 10 and 11, page 158. Mr. Dane as early as his
Abridgment, said the practice was justified " by immemorial
usage." Ibid. Such an imprisonment so soon after the revo-
lution, when the principles of liberty were so freshly vindi*
cated, would never have been permitted had it not then been
a familiar practice. The practice has been regarded as settied
law in Massachusetts, and has been repeatedly alluded to in the
opinions of the courts, as sanctioned by immemorial usage.
Riddle v. Proprietors on Merrimac River, 7 Mass. 187 ; Sch.

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Dist. V. Wood, 13 Id. 198 ; Brewer v. New Gloucester, 14 Id.
216 ; Marcy v. Clark, 17 Id. 330, 335 ; Merchants' Bank v. Cook,
4 Pick. 414; Chase v, Merrimack Bank, 19 Id. 568 ; Gaskill v.
Dudley, 6 Mete. 546; Hill v. Boston, 122 Mass. 344; s. c,
23 Am. Rep. 332. The constitutionality of the law does not
seem to have been really questioned, till the case of Chase v.
Bank, 19 Pick. 568, as late as 1.837, ^^d its constitutionality
was there said to be so well established as not to be an open
question. The people of Maine, while a part of Massachusetts,
were familiar with the law and the practice. The Maine
courts have repeatedly recognized it as long established, and
as in harmony with the State Constitution. Adams v. Wis-
casset Bank, i Me. 361 ; Femald v. Lewis, 6 Id. 264; Bailey,
ville V. Lowell, 20 Id. 178, 181; Spencer z^. Brighton, 49 Id.
326 ; Hayford v. Everett, 68 Id. 507. Its constitutionality does
not seem to have been questioned by the profession till
ShurtleflF v. Wiscasset, 74 Me. 130. In Connecticut, also, the
antiquity and constitutionality of the law have been repeat-
edly affirmed. Burs z/. Botsford, 3 Day, 159; Beardsley v.
Smith, 16 Conn. 368.

That a statute, or rule or law or custom has so long existed,
unquestioned, and has been so often invoked, and universally
approved, and has become ingrained like this, in the juris-
prudence of State, is a strong, if not conclusive reason for
pronouncing it constitutional, and a part of the " law of the
land." State v. Allen, 2 McCord, 525 ; Sears v. Cottrell, 5
Mich. 251.-

The plaintiff urges that such a method of enforcing execu-
tions against towns arose out of the early theory that all the
inhabitants were parties to the suit, and could u,h^„,^,^ ^
appear personally and be heard. It is claimed JSS'pIJS^'^to
that when New England towns were first formed, ^'^^
they did not have their present corporate character ; that
they were an aggregation of individuals, generally owning
a large amount of territory in common, and with common
rights and common liabilities in respect thereto. These
individuals would necessarily be parties in any suit afifect-
ing their common liabilities, and execution must have
issued against them as individuals. In the progress of
time, such inhabitants were by statute made " bodies politic
and corporate." Massachusetts Laws of 1786. Though

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they continued to be sued by the name of " the inhabitants of

the town of /* the individuals no longer appeax^d in

court, but the defence was conducted by the town as a unit,
through its officers. The argument is, that the town having
been made a corporation, and the individual inhabitants de-
barred from defending personally, he is entitled to his day in
court, through some appropriate mesne process, before final
process of execution can issue against his private property.
It is claimed that a method of enforcing judgments against the
inhabitants, which might not have been unjust, when such in-
habitants were really parties, has become so, and therefore
STATTs OF unconstitutional, since such inhabitants can defend
pSRi'TioNs. ^*" only through a corporate organization. Towns
are not, however, full corporations. They have no capital
stock, and no shares. They are only quasi corporations,
created solely for political and municipal purposes, and given
a quasi corporate character for convenience only. They re-
main still an aggregation of individuals, dwelling within
certain territorial limits, and under the direct jurisdiction of
the legislature. But legislatures in creating purely private
corporations have an unquestioned power to prescribe the
PERSONAL UA P^^so^al liability of a stockholder therein for
corporate debts, and the method of enforcing
it. They can limit this liability to the amount
of his stock, or to his proportionate share, or can make
him liable without limit. Morawetz on Corp. § 606 et seq.;
Pollard V. Bailey, 20 Wall. 520; Hawthorne v. Calef, 2
Id. 10. The common method of enforcement is by first
recovering judgment against the corporation, and then
bringing some specified process against the stockholder. But
under such proceedings against him, the stockholder cannot
question the judgment against the corporation except for
fraud. He is bound by such judgment until reversed. Mora-
wetz on Corp. § 619; Marsh v, Burrough, i Woods, 470;
Milliken v. Whitehouse, 49 Me. 527. The proceedings against
the person alleged to be stockholder are to establish the fact
that he is a stockholder, within the statute liability. In some
instances, the statutes have permitted a judgment creditor of
a corporation to determine for himself at his peril (of course
indemnifying the officer), what persons are stockholders, liable
for the debt, and to levy the execution directly on the prop-


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erty of such persons without any intermediate process. The
question of liability as stockholder would then be tried in a
suit against the officer. This latter mode of enforcement,
though perhaps harsher than the other, has been repeatedly
held to be constitutional, and we do not know of any case
holding otherwise. Morawetz on Corp. §§ 618, 619, and
notes; Leland v. Marsh, 16 Mass. 391 ; Marsy «/. Clark, 17 Id.
330; Stedman v. Eveleth, 6 Mete. 115, 124, 125 ; Gray v. Cof-
fin, 9 Cush. 205 ; Holyoke Bank v, Goodman Paper Co., Id.
576. See, also, Merrill z;. Suffolk Bank, 31 Me. 57; Came v.
Bridgham, 39 Id. 35. In Penniman's Case, 103 U. S. 714, the
statute of Rhode Island authorized the arrest of a stockholder-
on an execution against the corporation. The constitution,
ality of the statute was directly affirmed by the State court,
and was assumed without question by the United States
supreme court. The principle is analogous to that which
permits a creditor holding an execution against A without first
instituting any process to determine their ownership. If B*s
goods be taken, he has a remedy against the officer, or can
successfully resist him. A is not injured in either event. If
the person whose goods are sought to be taken on an execu-
tion against a corporation is liable as stockholder for the debt,
he is not injured thereby. If he is not liable he has the same
rights and remedies as B.

But the plaintiff urges, that whatever may have been the
adjudications heretofore, upon this method of enforcing a
judgment against a municipal or other corporation, by levy-
ins: upon the property of any member, it is levyonpbopeb-

fi.ii -iT^i ri e ,TYOF INHABI-

now forbidden by that clause of the fourteenth pu^J^gS^^'J;;
amendment to the United States Constitution ^'^•
already quoted. He claims that " due process of law," as
there used, requires a notice to him personally and an op-
portunity for him to be heard in court, before execution
issue against his property. The general proposition would
be that ** due process of law" means judicial process with
judex, actor and res. This proposition may seem to be sup-
ported by some general remarks of judges, and writers, but
no case in point is cited, nor, indeed, any direct assertion.

The phrase *' due process of law" in the United States Con-
stitution, and m the Constitutions of many of the States, and the
phrase " law of the land," in the Constitutions of others of the

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States, including Maine, have long had the same meaning. 2
Coke's Inst 50, 51. English political history is full of the
strife between the crown and the people, the crown seeking
to enlarge its irresponsible prerogatives, and the people insist-
ing on fixed and certain laws. The Magna Charta, and the
various Bills of Rights, in which these phrases were used,
were demanded from the kings, as safeguards against arbitrary
action, against partial or unequal decrees. The barons and
people insisted on general laws, legum terra, on uniformity,
" due process of law." They insisted on law, however harsh,
as better security than the prerogative, however indulgent.
These phrases did not mean merciful, not even just laws, but
they did mean equal and general laws, fixed and certain. The
solicitude was to preserve the property of the subject from
inundation of the prerogative. Broom's Const. Law, 228.
The English colonies in America were familiar with the con-
flict between customary law and arbitrary prerogative, and
claimed the protection of those charters. When they came
to form independent governments, they sought to guard
against arbitrary or unequal governmental action, by inserting
the same phrases in their Constitutions. They insisted that
all proceedings against the individual or his property should
be uniform, and by general law. They put the same limita-
tion upon the Federal Government in the fifth constitutional
amendment. In commenting on these phrases, Mr. Cooley
cites with approval the language of Mr. Justice Johnson in
Bank of Columbia v. Okely, 4 Wheat. 235 : "As the words
from Magna Charta, incorporated into the Constitution of
Maryland, after volumes spoken and written with a view to
their exposition, the good sense of mankind has settled down
to this, that they were intended to secure the individual from
the arbitrar}'^ exercise of the powers of government unre-
strained by the established principles of private rights and
distributive justice." Cooley on Const. Law. 335. Judge
Green, in Bank v. Cooper, 2 Yerger, 599 (24 Am. Dec. 523),
saidr ** By law of the land is meant a general and public law,
operating equally on every individual in the community." He
also said that such was the opinion of the distinguished Judge
Catron and of Lord Coke.

Chief Justice Hemphill, in Janes v, Reynolds, 2 Texas, 251,
said: "Theterm3 ' law of theland' . . . are now m their must

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usual acceptation regarded as public laws, binding upon all
the members of the community under their circumstances, and
not partial or private laws." O'Neal, J., in State v. Simmons,
2 Spear, 767, said : '* The words mean the common law, and
the statute law existing in the State at the time of the adop-
tion of the Constitution." But it has been expressly decided,
that due process of law does not always mean judicial process.
The individual's property is often taken for taxes without his
being first warned and heard, and it is nowhere contended
now that such summary process is not due process of law. It is
the fixed, certain process, applicable to all, and not. partial,
nor unequal. McMillen v. Anderson, 95 U. S. 37. Mr. Justice
Miller in the opinion said: "By summary is not meant
arbitrary, or unequal, or illegal. It (the collection of the tax)
must, under our Constitution, be lawfully done."

But that does not mean, nor does the phrase " due process
of law" mean, by a judicial proceeding.

In Murray v. Hoboken Land Co., 18 How. 272, a warrant
of distress was issued by the solicitor of the treasury against
the collector of New York, upon a certificate of the first
comptroller, that the collector was indebted to the treasury.
The collector had not been notified nor heard so far as ap-
pears. The statute authorizing such a process was held con-
stitutional. Judge Curtis, on page 276, said : " The Consti-
tution contains no description of those processes which it was
intended to allow or forbid. It does not even declare what
the principles are to be applied to ascertain whether it be due
process." See, also, Davidson v. New Orleans, 96 U. S. 97 ;
Walker v. Sauvinet, 92 Id. 90. It does not follow that every
statute is the "law of the land," nor that every process author-
ized by a legislature is '* due process of law." It must not oflFend
against" the established principles of private rights and distri-
butive justice." This statute does not. It does not transfer A's
property to B. It only makes A's property liable to be taken
for a debt he, in common with others, owes to 6- A can
save his property by paying the judgment against his town,
which judgment binds him and all the other inhabitants, and
is a judgment he and each of the others ought to pay.
Whether he pays or lets his property be sold, he can recover
full damages of the town, and have the same final process for
the collection of his debt. In the end he only pays his ratable

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share of the common debt The statute is general, and is
uniform in its application, to every town, and every in-
habitant It may not be in theoretical harmony with other
methods of procedure, but it accomplishes its laudable pur-
pose of comi>elling towns to pay their debts, without doing
any injustice. Towns really obtain credit at low rates of in-
terest upon the strength of it, and to now pronounce it void
would destroy this credit, would work widespread disaster
among those who have so confidently invested their savings
in loans to towns.

The words " due process of law" in the fourteenth amend-
ment do not have any enlarged nor different meaning from
that heretofore ascribed to them. The amendment does not
make Federal law, and Federal process of law, the law of the
land and due process of law in each State. Whatever was
due process of law in any State before the amendment, is due
process of law in that State since the amendment. Before the
amendment, the final determination of the question whether a
State statute was according to the law of the land, rested
with the courts of the State. Since the amendment, it rests
with the supreme court of the United States. It is through
this operation of the amendment, that the citizen receives
additional protection against unequal and partial laws.

The United States supreme court considering and de-
termining such a question, will look mainly at the fundamental
law, and general jurisprudence of the State. If the statute or
process is found to be of ancient origin, to have been fully
acquiesced in, to be general in its character, and impartial
in its application, and interwoven with the business of the
people, that court will not pronounce against it because it is
anomalous or has not been adopted elsewhere. The plaintiff
cites Rees v. Watertown, 19 Wall. 107, and Meriwether v.
Garrett, 102 U. S. 472, not as decisive or applicable authori-
ies, but for some general observations in the opinions upon,
* due process of law." In neither case was there a compari-
son of a State statute with the fourteenth amendment, and in
both cases — 19 Wall. 122 and 102 U. S. 519 — the New Eng-
land method of enforcing judgments against municipalities is
expressly noticed as an exception to the application of the
general observations quoted by plaintiff, and is not even inci-
dentally condemned. Elsewhere in the opinions of the same

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court, this method has been alluded to as actual, existing and

Online LibraryLawrence LewisAmerican and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] → online text (page 65 of 73)