176 N.W. 131 | N.D. | 1920
Lead Opinion
The plaintiff corporation is an elevator company engaged in buying, storing, and handling grain. It was incorporated under the laws of this state relating to the formation of general corporations on April 10, 1906, and the certificate of corporate existence was issued to it by the secretary of state on that date. On June 1, 1906, certain by-laws were adopted. Article 8 of such by-laws reads:
“Dividends and Profits.
“Section 1. The profits and accumulations of this corporation shall be divided annually, as follows:
“1st. There shall be reserved and set aside as a surplus fund, 10 per cent of the net earnings of the corporation, annually.
“After the 10 per cent of the net earnings has been deducted as above, it shall he divided between the stockholders, as follows:
“There shall be paid to each shareholder of this corporation the net profits accruing from the number of bushels of grain sold by said shareholders to the corporation, provided nevertheless, that all grain sold by a shareholder to the corporation shall be grown on land owned by said shareholder, or on land rented by him, and if on rented land, only on such share as belongs to him.
“2d. There shall be paid to each shareholder according to his holdings a dividend on the balance of profits remaining.”
This article has never been repealed or altered, but has remained in full force as originally adopted.
The plaintiff corporation has a subscribed capital stock of 190 shares, held by 68 different stockholders. A regular stockholders’ meeting was held July 12, 1919. There was present at such meeting 51 stockholders, owning 158 shares of the capital stock. Fifty of the stockholders present, owing 157 shares of stock, voted in favor of the corporation accepting the benefits of and being bound by the provisions of the above-quoted statute; and one stockholder owning one share of stock voted against the proposition.
On August 4, 1919, plaintiff presented to the defendant secretary of state for filing a written declaration signed and sworn to by its president and secretary, setting forth that at a meeting of the stockholders thereof held on July 12, 1919, said corporation had, by a majority vote of its stockholders, decided to accept the benefits of and to be bound by the provisions of said law, and tendered to the defendant the fee provided by law for filing such declaration. The defendant refused to file the same. The plaintiff thereupon brought this proceeding in the district court of Burleigh county to procure a peremptory writ
The defendant contends that chapter 99, Laws 1919, in so far as it permits a majority of the stockholders in a corporation organized under the general corporation laws of the state to transform the same into a corporation operated on the co-operative plan, is unconstitutional for the reason that it impairs the obligation of contracts as to the stockholders who do not consent to the change, and in effect deprives such stockholders of their property rights without due process.
To this contention the plaintiff makes answer:
(1) That the defendant has no right to raise these constitutional questions; and,
(2) That the state by § 181 of the Constitution and § 4495, Comp. Laws 1913, has reserved the right to enact such legislation.
In the celebrated Dartmouth College Case, 4 Wheat. 518, 4 L. ed. 629, the Supreme Court of the United States held that the charter of a corporation is a contract and entitled to protection under the provision of the Constitution of the United States which prohibits the several states from passing any law impairing the obligation of contracts. The same doctrine is of course applicable to corporations organized under a general corporation law. 7 R. C. L. p. 95. To avoid the rule laid down in the Dartmouth College case many of the states, either by constitutional or statutory provisions, similar to § 131 of the Constitution and § 4495, Comp. Laws 1913, reserved the right to alter or repeal the charters granted to any corporation or the laws under which it was created. Fletcher, Cyc. Corp. § 4007.
But the charter of a corporation constitutes not only a contract between the state and the corporation. It constitutes also a contract between the corporation and its stockholders and between the stockholders inter se, which latter contracts are entitled to protection under the Federal constitutional provision prohibiting the several states from passing any law impairing the obligation of contracts. 7 R. C. L. p. 97. And there is a diversity of judicial opinion as to the extent of
We do not find it necessary in this case to determine which of these views is the correct one. Nor do we find it necessary to determine whether chapter 99, Laws 1919, as applied to corporations organized under the general corporation laws of this state, contravenes the provisions of the Federal Constitution which prohibit the several states from depriving any person of life, liberty, or property without due process of law; and from passing any law impairing the obligation of contracts. For the question of constitutionality should not be determined unless it is necessarily involved and raised by one who has an interest in the question, in that the enforcement of the law would infringe rights guaranteed to him by the constitutional provision or provisions invoked. And “one who is not prejudiced by the enforcement of an act of the legislature cannot question its constitutionality, or obtain a decision as to its invalidity on the ground that it impairs the rights of others.” 6 R. C. L. pp. 89-90.
The United States Supreme Court has held in many cases that a party who asserts that a state statute is violative of the due process or contract clauses of the Federal Constitution must show that he comes within the class protected by the provisions, and that he is • one of
Under the' general principle that the constitutionality of a statute cannot be questioned by one whose rights it does not affect, and who has no interest in defeating it, the question has frequently arisen whether a public officer has such interest as entitles him to question the constitutionality of a statute and refuse to comply with its provisions. There is considerable conflict in the authorities upon the general proposition whether, in an action to enforce the performance of a statutory duty by a ministerial officer, he may question the constitutionality of the statute imposing the duty. In some cases the right is denied. In-other cases it- is held that the constitutionality of a statute imposing a duty may be questioned under certain circumstances. 12 C. J. 765.
It has been said that “the better doctrine, supported by an increasing weight of authority, is that a mere subordinate ministerial officer, to
The order appealed from is reversed, and the cause remanded for further proceedings in conformity with the views expressed in this opinion. No costs will be allowed to either party on this appeal.
Concurrence Opinion
(concurring in result). Section 16 of chapter 97 of the Session Laws of 1917, which is identical with § 16 of chapter 99 of the Session Laws of 1919, was before this court for construction, in the case of the Equity-Co-op. Packing Co. v. Hall, and the decision in that case is reported in 42 N. D. 523, 173 N. W. 796.
In that case, it was in effect held that the plaintiffs were entitled to the benefits of chapter 97. In that case, however, there was presented no constitutional question, as is presented in the present case.
I concur in the result of the opinion of the court, as written by Chief Justice Christianson.