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"The first assignment of error is that the The same question recently came before the Circuit Court erred in overruling the demurrer Court of Appeals of California, which, in a very to the declaration. The ground upon which
admirable opinion, reached the conclusion that this contention is based is that the action is in form ex delicto, and is against the defendants
stockholders who receive the benefits of an ilas executors, and is therefore not maintain legal dividend are not estopped from suing the able. The general principle, undoubtedly, is directors on behalf of the corporation to comthat, unless authorized by statute, a personal
pel them to pay back to the corporation the representative cannot be sued as such for his
amount of the illegal dividend which they had own tort. But this principle does not apply to the case in hand; for here the action is not
voted. Southern California Home Builriers v. against the defendants in their representative Young, 188 Pac. 586. In this case five directors capacity, but is against them personally. It is
voted three dividends, amounting to $30,000 true they are described as executors, but this
which the trial Court found were not paid out is merely descriptio personae, and may be
of surplus profits. The directors offered in evi. stricken out as surplusage, inasmuch as no cause of action is set forth in the declaration dence the balance sheet prepared by their bookfor which, under any circumstances, they can keeper showing profits of more than $30,000, be held responsible as executors. Besides,
but the Court found that this result was caused there is no well-founded objection to the decla
by carrying fixed assets at a valuation greatly ration as it is, for by describing the defendants as executors it merely sets forth their relation
in excess of their real worth. In reply to the to and consequent duties respecting the proper contention that the directors were liable for ty mentioned therein, and then it further al
illegal dividends only to creditors the Court leges that for their failure to perform those du
said: ties, namely, in negligently permitting the area light to be and continue in an unsafe condi "Although one of the purposes of such a stattion, they are answerable personally to the
ute was to protect creditors, that was not its plaintiff in this action; at least such is the sub sole purpose. The statute affords protection in stance and effect of the allegations in this dec. proper cases to the corporation, regardless of laration.”
whether or not there are creditors. It would
be nothing short of absurd, therefore, to hold In Bannigan v. Woodbury, 158 Mich. 206, 122 that no suit could be maintained to enforce the N. W. 531, 133 Am. St. Rep. 371, it was said liability, except one on behalf of stockholders,
Kohl v. Lilienthal, 81 Cal. 387, 20 Pac. 401, 22 that "the allegation that one is administrator
Pac. 689, 6 L. R. A. 520. The cases of Winchesand that as such he is in possession of the prop ter v. Mabury, 122 Cal. 522, 55 Pac 393, and erty does not necessarily negative his personal Moss v. Smith, 171 Cal, 777, 155 Pac. 90, when liability.” See, also, Shepard v. Craemer, 160
read in connection with the facts upon which
they were based, lend no support to the conMass. 496, 36 N. E. 475; Rose v. Cash, 58 Ind.
tentions of the appellants." 278; McCue v, Finck, 2 Misc. Rep. 506, 46 N. Y. Supp. 242; Brown v. Floyd, 163 Ala. 163. 50 So.
The clearest exposition of the reason for the Rep. 995. The underlying principle in this
common law liability of directors for declaring class of cases is that an agent in control of
illegal dividends, is found in the opinproperty is responsible for his own tortious
ion of Chief Justice Gummere of the acts. Ellis v. McNaughton, 76 Mich. 237, 42 x.
Court of Errors and Appeals of New Jersey in W. Rep. 1113, 15 Am. St. Rep. 308.
the case of Appleton v. American Malting Co., 65 N. J. Eq. 375, 54 Atl. Rep. 454, where that
learned jurist, in answer to the argument that LIABILITY OF DIRECTORS OF CORPORA
it would be inequitable to permit stockholders TION FOR VOTING DIVIDENDS IN EXCESS
to recover from directors money which they OF PROFITS.—To show how liable one is to
| themselves had received as dividends, said: err in the law by following first impressions
"The argument assumes there will be no of the justice of a case, Justice Pitney, then
transfer of the stock of the company during Vice Chancellor of New Jersey, declared at one the period of the liability of the directors. The time that it "would be unjust for the stock
assumption is unwarranted. The very declaraholders directly to recover from the directors
tion of the dividend, evidencing, as it does, the
apparent prosperity of the company, creates a the very moneys which they had already re.
desire on the part of outsiders to become holdceived." Siegman v. Maloney, 63 N. J. Eq. 422.
ors of the stock. It at the same time decreases In a later case, when Mr. Justice Pitney became the actual, while increasing the apparent, value a member of the Court of Errors and Appeals,
of the stock. The result is to afford un he reached just the opposite conclusion. Sieg
scrupuious directors, and stockholders who are
cognizant of the illegal action of the board, an man v. Electric Vehicle Co., 72 N. J. Eq. 408, 65 |
opportunity to unload their holdings upon innoAtl. 912.
cent purchasers at fraudulently inflated prices.
* * * Nor is it inequitable that stockholders “The legislature must exercise its power who have innocently participated in the distri.
within the lines laid down by the constitubution of the illegal dividends should have
tion. What it shall do within these lines, their stock restored to its normal value by contribution from the directors who have impaired
is a question that addresses itself to the the capital without being first required to pay wisdom and discretion of its members. back the dividend so paid to them. The ordi Whether it shall disregard them, and do nary purchaser of corporate stock holds it as an that which the constitution forbids, is a investment. He rightly considers and treats
question which, when such legislation is atthe dividends paid upon it as income. In many instances the income is required to meet the
tempted, belong to the Courts. When expenses of livng, and is entirely expended for they decline, if they ever do, to compel obethat purpose. To say that a person who has dience to the constitution, all check upon been unwittingly induced to exhaust his princi
legislative powers will be gone."1 pal by the mistaken or fraudulent representation of those to whom he has intrusted it, that
Speaking of the three departments of what has been paid to him as income suffers government, Chief Justice Marshall said: no injury, is absurd. To refuse him redress
“The difference between the departments except upon the condition that he return the moneys which he has expended in the belief undoubtedly is, that the legislature makes, that his capital was intact, notwithstanding the executive executes, and the judiciary that by such expenditure he is rendered penni. less, is to put a premium upon fraud in cor
construes the law.”2 porate management."
In an Illinois case it is said that "The legislative power extends only to the making of laws, and in its exercise it is limited
and restrained by the paramount authority LEGISLATIVE DEFINITION OF
of the federal and state constitutions."3 CONSTITUTIONAL TERMS
In an early Virginia case it was said: "INTOXICATING LIQUORS."
"The interpretation of the law is the
proper and particular province of the It is very common practice of a legis
Courts. A constitution is in fact, and must
| be regarded by the judges, as a fundamentlature to adopt a statute and define the
al law. It therefore belongs to them to asterms used in it. There is no question over certain its meaning, as well as the meaning the power of a legislature to do this, but of any particular act proceeding from the the Courts have universally held that af
legislative body.”4 ter a statutory term or expression has been
Speaking of the power of the legislature, judicially defined or its meaning deter- Gibson, C. J., of the Supreme Court of mined the legislature thereafter has no
Pennsylvania, said: “It is limited to the power to adopt a statute declaring the
making of laws; not to the exposition or meaning or defining the terms used in such
| explanation of them."5 former statute.
In Maine it has been said: This is merely preliminary, in order to
"It is, however, a fundamental duty of draw a distinction between the kind of
the Court and within its exclusive province
to construe both the statutes and the conlegislation and legislation attempting to de
stitution and to ascertain not only from fine or extend phrases or terms used in the the words themselves, but from the conconstitution.
(1) In Re Ruan Street. 132 Pa. St. 257; 19 Can the legislature do this?. At first
Atl. 219; 7 L. R. A. 183. In matter of Lafayblush it would seem such a question is pre ette Co., 2 Pinney 523.
(2) Wayman v. Southard, 10 Wheat. 46. See posterous; and yet legislatures (and even
also Greenough v. Greenough, 11 Pa. St. 494, Congress recently in the Federal Prohibi
and Westinghausen v. People, 44 Mich. 265; 6 tion Act) have at least occasionally at
N. W. 641.
(3) Newland v. Marsh, 19 Ill. 383. tempted to do this.
(4) Tucker, J., in Kamper v. Hawkins, 1 Va
Cas. (3 Va.) 20, 82. Somewhat apropos of this question the
(5) De Chastellux V. Fairchild, 15 Pa. St. Supreme Court of Pennsylvania has said: | 18; 53 Am. Dec. 570.
text, from the purpose to be sought, and sense that would make it binding upon the in some cases from the result attending Courts."'16 upon one construction or the other, what
Let us now turn to a few concrete exthe real intention of the law-making pow
amples. er was and how the expressed intention should be interpreted.”
In Georgia, where the constitution used "The construction and force of this con the phrase "head of a family," the quesstitutional provision presents a legal ques tion arose whether the legislature could so tion to be decided by the Courts."
extend its provisions as to cover a bachelor “The course of legislation on this sub- not maintaining a household, and it was ject by the legislature, while it is entitled | held that it could not, the Court saying: to respect, cannot be permitted to control the decisions of the judicial department in | "The constitution in using the terms its construction of the constitutional pro ‘each head of a family,' left the question vision; for, as was said by Chief Justice of what constituted the head of a family Marshall in Cohens v. Virginia,* 'the power open for interpretation; and the Courts to make, or unmake the fundamental in alone had the right to interpret the quesstrument of government, resides only in the tion, or to say who was, within the meaning whole body of the people, and not in any of the constitution, the head of a family. subdivision of them.'”
While we have great respect for the law“Where a constitution defines the quali
making power, we cannot defer to its confication of an office, it is not within the
struction of the constitution or laws. That power of the legislature to change or super
power is lodged in the judiciary. In the add to it, unless the power be expressly,
dividing line of power between these co-oror by necessary implication, given to it."10
dinate branches we find here the boundary
-construction belongs to Courts, legislation Nor can the legislature add to the con
to the legislature. We cannot add a line to stitutional qualifications of voters. 11
the law, nor can the legislature enlarge or
diminish a law by construction. There are Neither can it diminish them.12
cases where the legislative intent guides the Neither can it add to or diminish the Court in the construction or exposition of qualifications of an officer as fixed by the
what the law is, the Courts look to the in
tent of the legislature as an element in their constitution,13 nor shorten14 the limit
construction. But when the constitution is fixed by the constitution.15
the subject matter of construction, the "It is not within the province of the leg Courts are the authority. And we have islature to construe the constitution in any
no hesitation in saying the legislature cannot, by the declaration of an act, make a
single person living to him or herself the (6) Moulton v. Scully, 111 Me. 428; 89 Atl. 944.
head of a family."i7 (7) Citing State v. Rogers, 56 N. J. L., 480; 28 Atl. 726, 29 Atl. 173.
(16) State v. Speers, 53 S. W. 247 (Tenn. (8) 6 Wheat. 264.
Chancery.) (9) Wauser v. Hoos, 60 N. J. L. 482; 38 Atl. (17) Calhoun v. McLenden, 42 Ga. 405. 449; 64 Am. St. 600.
The constitution of Georgia declared that (10) C. J. LeGrand in Thomas v. Owens, 4 "Each head of a family . * * shall be enMd. 189, 223.
titled to homestead" exempt from levy and (11) Rison v. Farr, 24 Ark. 161; Quinn v. sale; and the legislature undertook to extend State, 35 Ind. 485; Morris v. Powell, 125 Ind. its provisions by declaring "That any single 280; 25 N. E. 221; 9 L. R. A. 326; State v. Will person male or female, or married person, who, iams, 5 Wis. 308: Monroe v. Collins, 17 Ohio St. at the time of the adoption of the present State 665; State v. Staten, 6 Cold. 233; Randolph v. Constitution, or before, lived habitually as Good, 3 W. Va. 551; McCafferty v. Guyer, 59 Pa. housekeeper to himself or herself, on his or her St. 109.
own land, is hereby declared to be the head of (12) Allison v. Blake, 57 N. J. L 6; 29 Atl. a family." The statute was declared void; on 417; 25 L. R. A. 480.
the ground that it was an endeavor to extend (13) Feibleman v. State, 98 Ind. 516.
the meaning of the term "head of a family." (14) Howard v. State, 10 Ind. 99; State v. The Supreme Court had, before the enactment Askew, 48 Ark. 82; 2 S. W. 349.
of this statute, decided what constituted a head (15) People v. Bull, 46 N. Y. 57; State v. Bre of a family (40 Ga. 173). It is true that the witer, 44 Ohio St. 589; 6 N. E. 653; Kahn v. statute was void, because it was an effort to Sutro, 114 Cal. 316; 46 Pac. 87; 33 L. R. A. 620. I give an interpretation to the term "head of a
A constitutional provision providing that stood meaning as therein employed, or add benevolent associations shall be exempt ‘liquors' thereto which are not intoxicating. from the payment of an incorporation fee Where words, terms or language are plain cannot be extended by the legislature so as and definite, there is no room for constructo exempt a building association organized tion, for such language is self-construing, "whereby the shareholders, out of their and to be taken in its ordinary meaning and savings, may be enabled to secure homes, or acceptance at the time of the adoption of loan their savings to others at higher rates the constitution. If this were not true, of interest, to be fixed by the directors."'18 the legislature could carve or legislate away In Texas an act was adopted by the leg
the plainest provisions of that instrument, islature providing that in case of a sale
or these provisions could be construed to and shipment of intoxicating liquor the
mean anything to suit the passing fancy of
the hour, or as clamor might demand."19 place of sale should be deemed to be the
A statute of Nevada created and authorplace of receipt and not at the place of de
ized the Nevada Benevolent Association to livery to the shipper. The constitution
give not exceeding three entertainments or prohibited the sale of liquors within a geographical division of the state where local
gift concerts, and to sell tickets of admis
sion to it entitling the holder to participate option had been adopted. Thus the stat
in a distribution of awards “by raffle or ute sought to make a sale invalid by chang
other schemes of like character," and then ing the well-known rule of law that a sale
declared that "nothing in this act contained is completed at the point of shipment, and
shall be construed as authorizing a lottery not at the point of destination. The Supreme Court of Criminal Appeals held the
in this state, or as allowing the sale of lotstatute unconstitutional, saying: “Sale,
tery tickets contrary to the provisions of
the constitution.” The Supreme Court held used in article 16, Section 20, had as thoroughly known and definite meaning as did
that the statute in fact provided for a lot
tery in direct violation of a provision in the expression “intoxicating liquors,' used in the same action. The legislature could
the state constitution, that it was void ; and
that the provision of the statute just quotwith as much propriety pass an act defining ‘intoxicating liquors' entirely destructive of
ed could not save it from the charge of units meaning as used in the constitution, as
“The state government is divided by the it could the definition and meaning of the
organic law into executive, legislative and term 'sale' as therein used. The same reas
judicial departments, and no person charged oning which justified one would authorize with the exercise of powers properly bethe other, and one proposition is as subver longing to one of these departments shall sive of the constitution as would be the
exercise any functions appertaining to
either of the others except in cases expressother. Those who would sustain the act of
ly directed or permitted. The construction the legislature defining C. 0. D. sales as
to be placed upon this act must be deteroccurring at the point of consignment de- i mined by the Court alone. The attempted spite the real contract, would scarcely agree exercise of this power by the legislature that that body could eliminate ‘intoxicating
was an assumption of the functions of the liquors' by giving that term a definition out
judiciary, and must be disregarded."'20 of accord with its ordinary and well-under
The constitution of Texas provided that
"no person for the same offense shall be family" after the Supreme Court had inter
twice put in jeopardy of life or liberty"; preted that term, which all the courts declare | and in 1856 the legislature provided that cannot be done; but the language quoted is amply broad enough to cover an instance (19) Keller v. State (Tex. Crim. Apps.); 87 where no interpretation of even a statute had S. W. 669; 1 L. R. A. (N. S.) 489. See the comprevious to its enactment been made.
ments of Chief Justice Bronson on this subject (18) State v. McGrath, 95 Mo. 193; 8 S. W. | in Oakley y. Askinwell, 3 N. Y. 547, 568.
(20) Exparte Blanchard, 9 Nev. 101.
"no person for the same offense can be i The recent amendment to our federal contwice put in jeopardy of life or liberty"; stitution provides that and added, “This is intended to mean that
"After one year from the ratification of no person can be subjected to a second pros- | this article the manufacture, sale, or transecution for the same offense after having
portation of intoxicating liquors within, once been prosecuted in a Court of com
the importation thereof into, or the expor
tation thereof from the United States and petent jurisdiction and duly convicted." This was followed by a clause explaining S. W. 849; Pike v. State, 40 Tex. Cr. Rep. 613; the words italicized: “The foregoing ar 31 S. W. 395; Commonwealth v. Timothy, 8
Gray 480; State v. Coulter, 40 Kan. 87; 19 Pac. ticle will exempt no person from a second
368; James v. State, 49 Tex. Cr. Rep. 334; 91 S. trial who has been convicted upon an ille W. 227; Mason v. State, 1 Ga. App. 534; 58 S. E.
139; Walker v. State (Tex.) 98 S. W. 265; State gal indictment or information and the judg
V. Burk, 234 Mo. 574; 137 S. W. 969; Heintz v. ment thereon arrested, nor where a new La Page, 100 Me. 542; 62 Atl. 605; Exparte trial has been granted to the defendant,
Townsend (Tex.) 144 S. W. 628; State v, Burk,
151 Mo. App. 188; 131 S. W. 883; Sandolski v. nor where a jury has been discharged with
State (Tex.) 143 S. W. 151; Murray v. State, 56 out rendering a verdict, nor for any cause Tex. Cr. App. 438; 120 S. W. 437; State v. Piche, other than that of a legal conviction.” This
98 Me. 348; 56 Atl. 1052; Murray v. State, 46
Tex. Cr. Rep. 128; 79 S. W. 568; Mason v. State, statute was almost literally re-enacted in 56 Tex. Cr. Rep. 261; 119 S. W. 852; Arburth1879.
not V. State, 56 Tex. Cr. Rep. 517; 120 S. W.
478, The Court of Appeals of that state con
"The language of said [constitutional] pro
hibition ordinance, reasonably construed, sidered that part of the statute above itali
means liquors which will intoxicate, and which cized void, saying: “The construction of are commonly used as beverages for such purthe term jeopardy in our constitution being
pose, and also any mixture thereof, compounds,
or substitutes for such liquors that possess inthe proper one, as settled by the decisions toxicating qualities. The use of intoxicating of the Courts before the constitution was liquors as a beverage was the evil to be pre
vented, and by the adoption of prohibition as adopted, it is to be presumed that the
a part of the organic law it was intended to word was used in that sense when our con put a stop to such use." Markinson v. State,
2 Okl. 323; 101 Pac. 353.
. stitution makers put it into the constitution.
State v. Witt, 39 Ark. 216; Snyder v. State, If this be so, then it must follow that the 81 Ga. 753; 7 S. E. 631; 17 Am. St. 350; Decker legislature had no authority to give it an
v. State, 39 Tex. Cr. Rep. 20; 44 S. W. 845; Tay.
lor v. State (Tex.), 49 S. W. 589; Malone v. other and different meaning from that
State (Tex.), 51 S. W. 381; Pike v. State, 40 which it must have intended it should have. Tex. Cr. Rep, 613; 51 S. W. 395; City of Topeka And it must further follow that the at
v. Zufall, 40 Kan. 47; 19 Pac. 361; 47 L. R. A.
387; Commonwealth v. Morgan, 149 Mass. 314; tempted act on the part of the legislature 21 N. E. 369; State y. May, 52 Kan, 53; 34 Pac. was without authority, and is not binding
407; State v. Intoxicating Liquors, 76 Iowa 243;
41 N. W. 6; 2 L. R. A. 408; State v. Barron, 37 upon the Courts.''21
Vt. 57; Johnson v. State, 23 Ohio St. 556; State
v. Biddle, 54 N. H. 379 (question for jury); In (21) Powell v. State, 17 Tex. Cr. App. 343.
Re Intoxicating Liquor Cases, 25 Kan. 751; 37 "But the Legislature has no authority to in
Am. Rep. 284; Mullen v. State, 96 Ind. 304; State terpret or declare a matter of constitutional V. Lewis, 86 Minn. 174; 90 N. W. 318; Holland v. construction of a constitutional provision
Commonwealth, 7 Ky. Law Rep. 223 (brandy which has become fixed and settled by judicial
peaches); Ryall v. State, 78 Ala. 410 (brandy determination." Ibid.
peaches); Rabe v. State, 39 Ark. 204 (brandy "Evidently, to our minds, medicated bitters
peaches); Commonwealth v. Chappel, 116 Mass. producing intoxication are intoxicating liquors,
7; Hewitt v. People, 186 III, 336; 57 N. E. 1057; within the meaning of the constitution. If we
Johnson v. State, 23 Ohio St. 556; State v. Page, held otherwise, these local option districts 66 Me. 418 (question for jury); Anderson v. would be flooded with intoxicating liquors con Commonwealth, 9 Bush. 569; State v. Muncey, taining some stuff called 'medicines.'" James 28 W. la. 494; Holcomb v. People, 49 Ill. App. v. State, 21 Tex. App. 353; 17 S. W. 422.
73; Peop! v. Schew, 29 Hun. 122; People v. "Intoxicating liquors" has been defined in Zeiger (N. Y.), 6 Parker Cr. Rep. 359; Bertrand the following cases: People v. Hawley, 3 Mich. v. State, 73 Miss. 51; 18 So. 545; U. S. V. Stub330; People v. Sweetser, 1 Dak. 308; 46 N. W. blefield. 40 Fed. 459; Wadsworth v. Dunnam, 452; State v. Oliver, 26 W. Va. 422; 53 Am. Rep. 98 Ala. 610; 13 So. 597; State v. Lillard, 78 Mo. 79; Sebastian v. State, 44 Tex. Cr. Rep. 508; 72 | 136; Russell v. Sloan, 33 Vt. 656; Common