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great many law-suits, as to whether they had organized or not, and as to whether work had been commenced in good faith or not. It seems to me we had better strike it out.

REMARKS OF MR. CROSS.

MR. CROSS. Mr. Chairman: Now, this forenoon, gentlemen of the Convention were in such a hurry that they could not take time to go to dinner. Now they propose to talk for hours over this section. Now all of them agree that it can do no harm, but the only objection is that it cannot do any good. The section might possibly do some good, but it is doubtful, and I think it would be more beneficial to the people and taxpayers of this State to devote the time of this Convention to the consideration of taxation and other important subjects.

REMARKS OF MR. HAGER.

MR. HAGER. Mr. Chairman: The provision, as the gentleman has said, is contained in the Pennsylvania Constitution, and also in the last Constitution of Missouri, adopted recently. The reasons for its adoption are very different-the causes do not exist here that exist there. In Pennsylvania and Missouri, as well as other States, charters were obtained from the Legislature. Corporations were incorporated under charters from the Legislature. We have no such things here. Therefore, when you say charters, grants, etc., shall have no validity unless they do thus and so, does not have the same significance as there. It might be put in a different shape. I would say that no exclusive privileges heretofore granted, and that hereafter may be granted, shall have no validity in this State, etc. I am against exclusive privileges of any kind being granted to any person. But, this is in the Constitution of Missouri and Pennsylvania, and I cannot see that it can do any

harm.

REMARKS OF MR. SHAFTER.

MR. SHAFTER. Mr. Chairman: The objection I have to this, is that it does not cover a class of cases where special charters have been assumed under the general laws, and which form a very large share of the evils complained of. Therefore, I have drawn an amend ment to that effect. Perhaps the phraseology may be defective, but it is open to debate and criticism. I will read it:

"All special or exclusive privileges, whether claimed under general laws or by special grants, shall have no validity unless such claim for special or exclusive privilege shall have been appropriated by occupancy or organization, and business commenced in good faith before the adoption of this Constitution." MR. JONES. I would ask if it would not be better to substitute the word "and" in place of the word "or," before the word "organization?" THE CHAIRMAN. The question is on the motion of the gentleman from Santa Clara, Mr. Laine, to strike out the section. Lost.

THE CHAIRMAN. The question is on the amendment offered by the gentleman from San Francisco, Chairman of the Committee on Corporations, as follows:

THE SECRETARY read:

SEC. 6. All existing chartefs or grants of exclusive or special privileges, under which an actual and bona fide organization shall not have taken place, and business been commenced in good faith, at the time of the adoption of this Constitution, shall thereafter have no validity. MR. SHAFTER. I offer an amendment to the amendment: "SEC. 6. All special or exclusive privileges, whether claimed under general laws or by special grants, shall have no validity unless such claim for special or exclusive privilege shall have been appropriated by occupancy and organization, and business commenced in good faith before the adoption of this Constitution."

THE CHAIRMAN. The question is on the amendment to the amend

ment.

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MR. MILLS. The proposition is to confirm all the grants we have made. That is the proposition. You can't go into the Supreme Court against any man under this provision. Not much. No, sir. Leave it as it is, and let us get down to business.

MR. SMITH, of Fourth District. I ask the Chairman of the committee whether or not this will not have the effect of confirming all these grants, as the gentleman has just suggested? That question has been on my mind also. This section says, they shall have no validity unless they do certain things. Would it not be inferred that they shall have validity if they do certain things, whether they are legal or not? Will not this section go to that extent?

THE CHAIRMAN. The question is on the amendment of the gentleman from Marin, Mr. Shafter.

MR. HOWARD, of Los Angeles. I think the amendment proposed by the gentleman from Marin is a great improvement, and I hope it will be adopted.

REMARKS OF MR. CROSS.

MR. CROSS. Mr. Chairman: There is a question about this provision which bothers me some, and perhaps either the gentleman who proposes this amendment, or some other gentleman, will set me right. Now we have in this State such a thing as mining claims, which becomes a special privilege. Also a claim for water rights, the claiming of the waters of

certain streams, and springs, and lakes. These claims are necessary and are certainly an important interest in this State. As I understand this amendment, as proposed by the gentleman, it will amount to this: that immediately after the Constitution takes effect, any claim which is now recognized by the laws of this State is liable to be cut off by this provision, and the benefits arising from such claim will be cut off. If I am wrong I wish to be corrected and informed as to the true meaning of the provision. I want to understand it, but my judgment is that this will be the result. The laws of this State provide that a man may go on to a stream of water and there make a location, and claim all or a portion of the water of such stream. For instance, this Constitution is to be voted for on the fifth of next May. As the law exists I may locate a water right on the third of May, for instance, and the law allows me sixty days in which to commence constructing a ditch, or canal, or other works, by which to conduct the water to the place where it is to be used. Now, as understand this amendment, if I locate a water claim the day before this Constitution is adopted, if it should be adopted, by the adoption of the Constitution, I lose that right unless I commence work on the very same day. I understand if I commence work on the day after the adop tion of this Constitution that my claim will have no validity, because I did not commence to perform some act to appropriate that right previous to the adoption of the Constitution. This will be true of corporations and individuals, because it is a special privilege, a special grant.

REMARKS OF MR. ESTEE.

MR. ESTEE. Mr. Chairman: The original section reads: "SEC. 6. All existing charters, grants, franchises, special or exclusive have taken place, and business been commenced in good faith at the time privileges, under which an actual and bona fide organization shall not

of the adoption of this Constitution, shall thereafter have no validity." Then the committee amended it so as to read as follows: "SEC. 6. All existing charters or grants of exclusive or special privileges under which an actual and bona fide organization shall not have taken place, and business been commenced in good faith at the time of the adoption of this Constitution, shall thereafter have no validity."

Now, I do not see how any intelligent man can put such a construction on the section, because the question of compliance or non-compliance with the law would constitute a question of good faith, and on that every lawyer will agree with me, I think. Now, as to the amendment of the gentleman from Marin, I think it is more explicit, and as far as I am concerned, I am in favor of it. I wish to say to the gentlemen of the Convention that there is nothing unique in this-we did not invent it, but found it in the Constitutions of Missouri, Colorado, and Pennsylvania; and it will be found in all, I think, of the more recent Constitutions, and it commended itself to the committee as a proper provision to be put in this Constitution, and I am unable to see how it can injure anything. I think the amendment proposed by the gentleman from Marin is a little more explicit.

THE CHAIRMAN. The question is on the amendment of the gentleman from Marin, Judge Shafter.

from Marin, but I suggested the word "and" in place of the word “or." MR. JONES. I do not know as to the meaning of the gentleman MR. CROSS. I want an answer to my question, whether that will not cut off all such things as mining claims or water claims.

MR. SHAFTER. Everything of that kind will enter into the question of good faith.

MR. CROSS. Suppose these claims are made after the adoption of the Constitution?

MR. SHAFTER. It will have no effect at all. Division was called for, and the amendment of the gentleman from Marin, Judge Shafter, was adopted by a vote of 65 ayes to 43 noes. THE CHAIRMAN. The question is on the amendment as amended. MR. BARNES. Mr. Chairman: I am opposed to the amendment and to the section simply because, whatever is intended by it, it will be utterly futile and a waste of words. Whatever rights have been Rights that have been forfeited by non-compliance with the law can acquired cannot be overthrown by any provision in this Constitution. be set aside by law without any constitutional provisions. It will neither invalidate anything that is good, nor overthrow anything that is bad. The whole section, as covered by the amendment of the gentleman from Marin, is, in my judgment, not only useless, but worse than useless it is vicious.

THE CHAIRMAN. The question is on the amendment as amended. Division was called for, the committee divided, and the amendment as amended was adopted-ayes, 65; noes, 48.

EXTENSION OF FRANCHISES.

THE CHAIRMAN. The Secretary will read section seven.
THE SECRETARY read:

SEC. 7. The Legislature shall not extend any franchise or charter, or remit the forfeiture of any franchise or charter of any corporation now existing, or which shall hereafter exist under the laws of this State.

MR. BARTON. Mr. Chairman: I offer an amendment.
THE SECRETARY read:

"SEC. 7. The Legislature shall not extend or renew any franchise or charter," etc.

MR. BARTON. My object in offering this amendment is to make it a little more plain and explicit.

MR. WILSON, of First District. Mr. Chairman: I would ask whether a motion to strike out the whole section is in order, and if it will carry with the amendment?

THE CHAIRMAN. Yes, sir.

MR. WILSON. I move that the whole section be stricken out. THE CHAIRMAN. The question is on the motion to strike out the whole section.

SPEECH OF MR. WILSON.

MR. WILSON, of First District. Mr. Chairman: I desire briefly to express the views I entertain upon the section before us. It is practically modeled after the Pennsylvania Constitution. It certainly is borrowed from that Constitution, although the phraseology has been somewhat altered. In Pennsylvania, at the time of the adoption of that Constitution, they had no law or previous Constitution resembling ours. They had no incorporations existing under general laws. They had merely the old fashioned system of special charters, and under the decisions of the Supreme Court of the United States all these special charters were placed beyond the control or power of the Legislature. They were held to be inviolable contracts, and every one familiar with the subject must know that the Legislature could not alter or repeal them, or impair them in any manner. When the new Constitution of Pennsylvania of eighteen hundred and seventy-three was adopted, they accepted and adopted substantially our system, providing for incorporations under general laws, and providing that all such corporations should thereafter be subject to alteration and amendment by the Legislature, and at the same time, in order to coerce the old corporations then existing under special charters to accept the new Constitution of eighteen hundred and seventy-three, and to place themselves in a position where the Legislature could control them by enacting laws which would affect them, the Constitution contained the following clause by way of inducement. Section two, of article sixteen, provides:

"SEC. 2. The general assembly shall not remit the forfeiture of the charter of any corporation now in existence, or alter or amend the same, or pass any other general or special law for the benefit of such corpora-shown already that this section does not contemplate performing the tion, except upon the condition that such corporation shall thereafter hold its charter subject to the provisions of this Constitution."

In other words, the Legislature of Pennsylvania was denied the power to remit forfeitures, or to enact any laws for the benefit of corporations existing under special charters, except upon the conditions set out in section two, which I have just read. That section notified all corporations then existing under special charters, that unless they gave their unqualified consent to the provisions of the new Constitution, and placed themselves entirely subject to it, the Legislature in the future could pass no laws of which they could receive the benefit. When they did accept the new Constitution, the Legislature might then, in its discretion and judgment, remit forfeitures, or otherwise make them the recipients of its bounty. Such a provision is utterly inapplicable in California, because every corporation heretofore and now existing has been and still is under the control of the Legislature, and the existing general law under which they all exist may be altered or amended at any time in the wisdom of the Legislature; and the amendment proposed by the gentleman from Santa Clara to section one of this report, and adopted by the committee, provides that these general laws may be altered or repealed, not only as to corporations hereafter to be formed, but as to those which already exist under the present Constitution. Now this section in the Pennsylvania Constitution, as any one may perceive by reading it, was intended merely as a standing inducement to these older corporations, with special charters, to place themselves in the same position as our present corporations are placed, and within the reasonable control of the Legislature. Every corporation now existing in this State has been organized under the general law, and they are all subject to the general power of the Legislature to alter, repeal, or amend the general law. But in the State of Pennsylvania, as I have said, many corporations were acting under special charters, and the Legislature could not control or interfere with them. They could not be affected in any manner by the Legislature of that State, and this provision of their Constitution of eighteen hundred and seventy-three was to induce them to place themselves in a position where the Legislature could legislate with reference to them. But if they preferred to stand on their special charters, and defy the Legislature, they could legally do so, but as a penalty in consequence of such election, they could never receive the benefit of any future legislation, because they refused to place themselves on a common platform with the other corporations of the State. We have no such special charters in California, and therefore we would receive no benefit whatever from such a provision in our Constitution; and as altered by the committee here--with all deference to them-it would work irreparable injury. As altered, the committee has ignored the entire latter part of the provision contained in the Pennsylvania Constitution, and has taken from the Legislature of California the power which the Constitution of Pennsylvania confers upon the Legislature of that State. The difference in the two is this: that whereas the power was reserved to the Legislature in Pennsylvania, there is no reservation whatever made in favor of our Legislature. There they have absolute power in the premises, while here the power is entirely denied to our Legislature. I do not think it is right. This section provides as follows: "The Legislature shall not extend any franchise or charter, or remit the forfeiture of any franchise or charter of any corporation now existing, or which shall hereafter exist under the laws of this State."

We have a vast number of corporations in this State which will be injuriously affected by this provision. Benevolent associations, and all that great class of corporations will be affected. Why should we to-day declare that the Legislature of this State fifteen years hence shall not extend or renew the charter of any of these worthy institutions which may expire at that time; in other words, why should not the Legislature, at some future time, pass general laws under which existing corporations may renew their corporate existence for an additional period of time, by adopting certain forms and complying with certain conditions to be prescribed by the Legislature?

Why is it that the purely benevolent associations of this State, or any other class of associations incorporated for fifty years, and whose charters are about expiring, should not be permitted to renew their existence

under general laws uniform in their operation? Why is it that the banks of this State fifteen years hence should not be allowed to renew their existence under general law? Why is it that all the corporations in this State hereafter, when their terms expire, must be compelled to withdraw from business and cease to exist? A bank may be prosperous, or a corporation organized for benevolent purposes may be in a flourishing condition; they may be beneficial, worthy, and deserving, and one of a class of institutions which the people of the State desire to continue and foster, and yet, under the provision suggested, they would be cornpelled to wind up their business and pass out of existence. Many of the corporations in this State now doing an extensive business were organized twenty years ago, and their charters and corporate powers are therefore limited to a few years hence. Why should we compel them to abruptly wind up their business? Why drive them thus out of existence? Gentlemen may say they can reorganize; but they cannot reorganize and transfer their property except at a very great risk and possible disaster to depositors, stockholders, and creditors. Suppose that the charter of the Hibernia Savings Bank should expire at the end of five years, under this provision it would be compelled to wind up its business at an immense sacrifice, call in its money and settle up with its depositors, and legally terminate its existence before a new organization could be effected. I am apprehensive that if the section is adopted as at present drawn, it would prevent the Legislature from hereafter passing any general laws under which a corporation whose existence is about to expire, can reorganize without entirely winding up its business and legally passing out of existence. There is no just reason for adopting such a course, and in my judgment there is no sense in it. I have same functions here, as the one in Pennsylvania, and that the reasons which there exist for the enactment of such a provision do not exist here, and under our laws can never exist in California. I claim that our Legislature should be invested with the power to pass a general law by which corporations about to expire may continue their existence upon the terms and conditions which the Legislature in its wisdom may see fit to impose; and as to the question of forfeiture, I do not see why the Legislature should not be vested with equal discretion on that subject. Forfeiture may arise in various ways. A corporation may forfeit its charter by non-user; it may forfeit its charter by undertaking to perform an act beyond the scope of its corporate powers, and in various other ways may incur a forfeiture of its charter-still the forfeiture does not occur forthwith upon the act being committed, it is only a ground of forfeiture which requires proceedings by the Attorney-General of State, who files a petition setting forth that the corporation has committed or omitted certain specified acts, and seeks the judgment of a Court to declare the forfeiture or asking for a writ of quo warranto. Sometimes questions of law arise upon the construction of the charter, and often it is difficult to tell whether a corporation has exceeded its powers or not. A corporation may in good faith have been acting outside of its powers through inadvertence, and without intending to violate its charter. Any person aggrieved is at liberty to apply to the Attorney-General for the purpose of having him file or institute proceedings against the corporation, and in such cases the Attorney-General occupies the position, so to speak, of a Judge. He carefully reviews the matter, and takes a judicial, as well as a judicious view. If he ascertains to his satisfaction that the corporation has willfully committed an act or omitted the performance of an act which the law requires to be done, he may proceed by due course of law to have the charter forfeited. Should he find simply a technical violation, and yet no actual bad faith, no intent to disregard the law, he may in the exercise of a sound discretion dismiss the proceeding. Sometimes he notifies corporations of their failure to comply with the strict letter of the law where he is satisfied there is no bad faith or intention of omission, and requires their compliance with the law forthwith. I remember upon one occasion of presenting that question before the Attorney-General of this State, and I found from an examination of the authorities that such was the universal rule and custom. The Attorney-General would afford the parties a full and fair hearing, and then determine from all the facts adduced whether he would institute proceedings or not, and he acted upon this exact proposition which I have stated. If it were a mere technical forfeiture-that is a forfeiture based upon mere technical grounds, where the corporation was acting in good faith, he would never institute proceedings. Every lawyer knows that questions often arise as to whether the act sought to be done by a corporation is inside or outside of the line of its power, and it requires at times a nice discrimination to define the limit. It is frequently a difficult question to determine. In a case of that character, where an innocent mistake has been made, it is never the rule to institute a forfeiture. The law in its bounty does not favor forfeitures. I believe the question of forfeitures should be left as it is at present, to the judgment, discrimination, and wisdom of the official law officer of the State. If the violation is merely technical and no wrong intended, the Attorney-General may condone the offense upon terms, but if there is a willful or intentional violation, then proceedings should be instituted by him to declare the forfeiture. It is wrong in my judgment, to take from the Legislature the power to remit forfeitures in any instance, because the principle would apply to charitable and benevolent institutions, as well as to all other classes of corporations; and why should the Legislature, in the exercise of a sound discretion, be debarred from remitting forfeitures, based on violations of a technical character, looking fairly at the good faith and honesty of the transaction. For the reasons stated I say that this section seven, taken from the Pennsylvania Constitution, does not apply in California with the same force that it does in Pennsylvania. I think such action here would be highly injurious, and tend to tie the hands of the Legislature and embarrass it in the exercise of powers which should properly be vested in the Legislature. I therefore move to strike out the entire section as reported by the committee.

SPEECH OF MR. BARBOUR.

MR. BARBOUR. Mr. Chairman: We claim, and claim justly, that the present policy of granting leases to corporations is liberal enough, and in the judgment of the people of this State, is too liberal. Granting them that power for a lifetime with the power of accumulating as they do, and consolidating as they will, the present term is long enough, sir, and if the terms are not satisfactory, there is no compulsion upon any corporation to accept them and incorporate. Now, sir, it is a usual argument presented here-always brought forward in this Convention-when any proposition looking to the regulation of corporations is up for consideration, to point out the danger to various benevolent institutions, and to one or two popular banks, notably the Hibernia Bank. Does not the gentleman know that whenever he proposes to extend by the general law, or to renew by general law, the franchise of a corporation which has done good service to the public, that it brings under the same general law every corporation in the State, granting to them the identical power to further continue the oppression under which the people groan? Why they seek, sir, to establish a principle here by an exceptional rule. Why? Because there are scattered over the State, may be, one or two benevolent institutions, they seek to lodge in the Legislature the power to grant an unlimited renewal of life to all the corporations in the State. We are here for a purpose, and we are commanded by the people of this State to take away from the Legislature the power to grant any further privileges, or of enacting any further special legislation. Now, how much better is it--how it would improve it-if at the close of their lease of life you notify them that their franchise shall not be renewed. They took the franchise with these conditions. They

knew what those conditions were.

The proposition here is right; it is correct in both of its branches, not only as to depriving the Legislature of the power to extend or renew franchises, but also as to the power of prohibiting the Legislature from remitting forfeitures of charters. Why, sir, how much justice is there in allowing a Legislature to remit a forfeiture, where it has been determined by a judicial trial? The Legislature has no place to go for the purpose of obtaining evidence to reverse a judicial decision. make the provision binding, so that corporations can no longer openly violate the terms of the charter, and then go to the Legislature and obtain a remission of the forfeitures. These life-long franchises never expire, and it is high time that the people should have some protection as well as the corporations.

REMARKS OF MR. CROSS.

Let us

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under the laws of this State.''

Many corporations exist in this State to-day that are doing business which is beneficial to the State. Now, corporations are organized in the State of California for a period of fifty years. If this provision is adopted as proposed by the committee, whenever that fifty years expires that corporation must dissolve and distribute its property, and wind up its business. Take, for instance, the case of some banking association that is conducting an honorable business. Say its charter expires in twenty When its charter expires, there must be a distribution of all its corporate property among the stockholders. Now, pass this provision, and it is absolutely necessary that the corporation shall be wiped out of existence, without any remedy. If we insert this amendinent, the Legislature can provide by general law that corporations now existing

years.

may continue their existence.

MR. WILSON. I will accept an amendment of that kind. That is sufficient for the purposes I desire to accomplish. I withdraw the

motion to strike out the section, and allow this to be substituted. MR. CROSS. This would be a great improvement, I think. When the Legislature passes a law which allows corporations to continue their existence, they can attach to that general law just such conditions or limitations as it sees fit, and thereby we will have every corporation which continues existence under the general law just where we want it-under the absolute control of the law of the State, and the general

law at that.

SPEECH OF MR. ESTEE.

MR. ESTEE. Mr. Chairman: It was not thought by the Committee on Corporations, when section seven of the article on corporations was reported, that there could be any objection to its adoption. The natural inquiry is, what is wrong with this section; what material interest of the State does it injure; why should it not be adopted? On its adoption or rejection will, in a large degree, depend the future action of this Convention on subjects necessarily akin to it. Now, what is the objection made by the gentleman from San Francisco? He first claimed that it would be wrong to adopt this section, because it is copied from the Pennsylvania Constitution, and that under their Constitution no grant of exclusive privileges could be made by the Legislature, and hence, while it was very proper there, it would be very improper here. have to remind the gentleman that we have just passed section one of this article, which provides that corporations may be framed under general laws, but shall not be created by special Act-that all laws passed pursuant to the section may be altered or repealed. Hence, there is no such thing-if we wipe this out to-day-no such thing as granting a charter under the Constitution by special Act. That would be an impossibility. This section provides that the Legislature shall not extend the franchise of any corporation. What is the point about the extending of franchises? Why, sir, the point is-and the gentleman has admitted it-the point is-and the only point-when the life of a

corporation expires, the corporations reincorporate, just exactly as any other persons engaged in like business; and thereby come under the provisions and restrictions of the other sections of this article, and will be a termination of the time for which a charter has been granted by be bound by them. In other words, in the future, whenever there shall Act to any corporation, they shall come in and reincorporate, if they wish to continue, under the general laws of this State, and be bound by all its provisions. And why not? I want to know why they should not? Can there be any rational reasons given why they should not conform to the same rule as all other persons in this State are bound by?

It is true,

There is no question but that they can be incorporated. Any person or set of persons, engaging in business, who have a certain amount of property, can incorporate under the general laws of the State. They can do it. But it prohibits them from coming before the Legislature and asking for special privileges which they could not get under the other provisions of the Constitution. In other words, these corporations want the adoption of the Constitution, and therefore we come before you and to come to the Legislature and say, now we were in existence prior to ask you to extend to us this privilege-extend our franchise for twentyfive or fifty years upon the same terms that we now have. nobody else can get any such privileges, but we ask you to do it for us." And, sir, there might be influence sufficient brought to bear on the Legislature to induce them to do it, and it is against that right to come before the Legislature and get a special Act passed granting them Privileges that they could not get under the general law, that your committee adopted this section. Hibernia Bank would not be a general law, it would be a special law. Why, sir, a law extending the time of the corporate existence of the from San Francisco, Mr. Wilson, that there is very little that will benefit So with regard to every other corporation. Let me say to my friend benevolent societies in this, and a great deal of something else, in my judgment.

MR. WILSON. Please define what you mean, sir.

MR. ESTEE. What I mean is this: there is no benevolent society in this State, not a solitary one, but what can afford to come in under the time expires. All honestly conducted institutions can afford to come in general law, and incorporate just as other institutions can, when their under the general law and incorporate. But there are special grants to street railroads; there are special grants to hundreds and thousands of mining corporations; they could not afford to come in under the general law, because new penalties would be imposed upon them. Benevolent institutions and honest corporations can afford to and will incorporate under the provisions of this article.

There is nothing peculiar about this section. You will find it in secIn the Illinois tion three, of article eleven, of the Missouri Constitution. Constitution, section two, of article eleven. It is a good and wise provision, and has elsewhere proved of great utility. I have not had time to look through any other recent Constitutions. It strikes me, sir, however, that this provision must necessarily commend itself to the popular It does not take the property from judgment. It cannot harm any one. these people when their time expires. The gentleman is very much mistaken when he thinks that every one of these corporations would have to go into liquidation. They would simply have to reincorporate under the existing general law. This provision does not prevent them. The Constitution says corporations may be formed under general laws, and been incorporated once is no reason why they cannot incorporate again. that means everybody that wants to incorporate. Because they have The Constitution allows it, and there is no question but what the Legislature would provide the means by which every proper institution could Let us make this Constitution incorporate under the laws of the State. belongs to them, and so that it will give no special immunities to any in such a manner that it will take nothing away from any body that When the time of these corporations expires, let them reincorporate if they choose, but they must put themselves under the new provisions of law which the exigencies of the times have made necessary. I think this section will commend itself to the thoughtful examination of the gentleman from San Francisco, Mr. Wilson, and the gentleman tions which the committee have reported. from Nevada, Mr. Cross. I think it is one of the most important secunanimous action of the committee. There was no objection made to It was adopted by the it is this section, which is not a similar provision. It was recently it. I believe if there is one section in this article that should be adopted, adopted in the new Constitutions of Pennsylvania, Missouri, Illinois, and, I believe, in Colorado, though the latter Constitution I have not examined. Therefore I hope that the amendment which the gentleman from San Francisco, Mr. Wilson, has proposed, will not be adopted. Better strike out the section entirely, because it would allow the Legislature to grant extensions to charters to corporations.

class.

MR. CROSS. All corporations under this amendment can reincorporate, and become subject to the provisions of the general laws. MR. ESTEE. Imagine twenty thousand corporations coming here and reincorporating under special laws.

MR. CROSS. And why not, as well as twenty thousand could incorporate in the first place?

MR. ESTEE. Let them reincorporate under the general laws; we do Inot want the Legislature to have the power to extend any franchise or charter, but leave it to the general laws. Let a corporation act under the law just as every other person. My friend from San Francisco spoke about there being cases of technical forfeiture where the AttorneyGeneral was always willing to decide justly. If there is a case of technical forfeiture, the Courts will protect them, and I would leave it to the Courts rather than to the Legislature. My experience has been that it is much safer in the Courts.

SPEECH OF MR. WILSON.

MR. WILSON, of First District. Mr. Chairman: I occupy a very dif

house. That is a misuse. It has incurred a forfeiture, and what sense
is there in allowing that church to go to the Legislature and claim and
obtain a remission of the forfeiture?
MR. CROSS. Do you think the Legislature would be apt to pass a
general law remitting that class of forfeitures?

REMARKS OF MR. BARTON.

ferent position here from that of the Chairman of the Committee on Corporations. He has a great deal of pride of opinion on this subject, and very sensitive as to any alteration of the section reported by the committee. With due deference to his feelings, I occupy a different position as a member of this Convention, and my duty will not permit me to sanction anything which my judgment tells me is wrong. The ques- MR. HOWARD. God only knows what they would do. [Laughter.] tion here upon the amendment offered by the gentleman from Nevada, The time may come when Joss" will have influence enough to get a Mr. Cross, is this: whether or not that amendment is an improvement provision passed to remit forfeitures on the Joss house. (Laughter.] upon the section as reported by the committee. Now, my objection to Again, sir, a railroad company has a charter in carrying freight and pasthe section, as it stands, was that it would prevent the Legislature from sengers. It abandons that business and goes into merchandising, or into passing general laws on the subject. My objection was, and my judg-insurance, or runs a steamboat. It has forfeited its franchise, and what ment is, that passing that in the shape in which it is, that no corporation right, what propriety is there in permitting them to go in the Legislature, could ever be reincorporated under general laws. I think so still. The and influence the Legislature to remit the forfeiture? Why, sir, I see old Constitution did not contain any such provision. Therefore, not that the President of the Central Pacific Railroad Company is the presidcontaining any such provision, the Legislature had passed a Civil Code ing officer of the Oregon Steamship Company, and the company whose by which, when their time expires, corporations may renew. My judg- steamers are plying between here and China. What propriety is there ment is that if we pass this provision in the shape in which it is reported, in permitting that corporation in going to the Legislature for a remission no such legislation in future could be enacted, as no special legislation of its forfeiture? I am opposed to it. I say this is a necessary and could take place under this Constitution as we expect to adopt it, therefore wise provision which we have adopted here from the Constitutions of I thought the whole section should be stricken out. But as the amend-other States, and the adoption of it here will be a curb upon these abuses. ment proposed by the gentleman from Nevada meets the question exactly, I hope the Convention will have good sense enough to stick to this report. and presents it fairly to the Convention, I withdraw my motion to strike out, so as to allow his to come before the Convention. I think the amendment is a very proper one. The Legislature is not allowed, by special Act, to extend any franchise, or to remit forfeitures. Whatever they do must be done by general law. Now, the Chairman of the Committee on Corporations says, you will have the entire lot of corporations coming to the Legislature for an extension of charters. With all respect to the gentleman, I say it is absurd; it is an impossibility. Because the Legislature could only legislate by general law; they cannot legislate for the benefit of anybody, and the distinction between general and special law ought to be too marked to require any explanation. A general law is one passed which affects all alike, the provisions of which are applicable to all alike, and which benefits one as well as another. If any individual wants to take advantage of the general law, he must bring himself within its provisions; while a special law is intended to advance the interests of some particular person, or some particular corporation. He agrees that there should be a general law upon the subject of these corporations which would enable these institutions to continue their existence at the expiration of their charters. We all agree upon that, and I do not argue anything else --I do not seek anything else. He admits, therefore, that the Legislature should have power to pass such laws as will enable corporations to continue their existence, and that these laws must be general laws. The gentleman from Nevada desires to obtain the same, and so we are all in accord on this part of the proposition. MR. ESTEE. I have here section one of the report, which I will "SECTION 1. Corporations may be formed under general laws, but shall not be created by special Act. All laws now in force in this State concerning corporations, and all laws that may be hereafter passed pursuant to this section, may be altered from time to time, or repealed."

read:

That would certainly apply to every corporation.

MR. WILSON. It seems to me that anybody ought to know that this applies to the original formation of corporations. It has nothing to do with the renewal of a charter after the fifty years has expired. They cannot form under this section without first disincorporating and then reincorporating. These are the facts, and there is no use in trying to avoid them. The object of this amendment to the section is to permit existing corporations, under the general law, to continue their existence without having to disincorporate; without having to start anew; and it seems to me that it would be wise to pass such a general law, one that will operate upon all alike. There has been considerable talk here about some gigantic corporations that come to ask some special privileges, and that there is no benevolence in any of the corporations. I asked the gentleman to explain his meaning, and his definition was one that failed to reach my comprehension. I do not yet fully understand what he was endeavoring to come at. Now, under the amendment offered by the gentleman from Nevada, Mr. Cross, there is a prohibition against the passage of any special law on the subject, and any measure passed by the Legislature must be general. They cannot legislate in favor of any one or against any one. I think the provision is right and proper, and ought to be adopted.

REMARKS OF MR. HOWARD.

MR. HOWARD, of Los Angeles. In regard to the second clause, Mr. Chairman, I do not see any great necessity for it. Yet I disagree with my learned friend, the Chairman of the Judiciary Committee. I shall not enlarge upon the powers of corporations to reincorporate under existing franchises. As to the next clause, the gentleman says that the same law does not exist here that exists in Pennsylvania. It is not material whether the franchise is granted directly by the Legislature to incorporate, or obtained under the general law; the franchise is equally a contract. That doctrine has been distinctly enunciated in a celebrated case. A man commences one day before the adoption of this Constitution to appropriate the waters of a stream. The law gives him sixty days in which to commence operations. It is a part of the contract, and he still has sixty days to commence operations. The Constitution cannot annul that contract.

MR. BARTON. Mr. Chairman: This section seven is very brief and very short, but it embodies a great deal. I hope this Convention will not pass upon it without due consideration. My amendment reads that hundreds of charters extended, and the people of this State, I think, are the Legislature shall not extend or renew any charter. Now there are When the people, in their generosity, have becoming tired of it. granted them a franchise for a number of years, I think when the time expires they should be compelled to reincorporate. I hope the Convention will consider this matter carefully before voting on it. MR. STEDMAN. I move that the committee rise, report progress, and ask leave to set again. Lost, ayes 47.

[Cries of "question," "question."]

REMARKS OF MR. HILBORN.

MR. HILBORN. Mr. Chairman: It does seem to me that the proposition here is so mischievous that it ought not to be tolerated. It seems to me that gentlemen have not fully comprehended the meaning of the word franchise, as it is used in this seventh section. They seem to confine it entirely to corporations. Now a franchise may be held by an individual as well as by a corporation. Now what do we mean by the word franchise? instance, to a party to build a bridge and collect tolls for twenty years. We mean a privilege given by the Legislature, for Now, if you adopt this proposition you provide that at the end of twenty

years the man who has put his money in there, who has accommodated granted, and I see no reason why we should prohibit the Legislature the community, cannot renew that franchise. A franchise is a privilege from extending that privilege at the end of the time for which it was originally granted. I cannot see any reason for it.

THE PREVIOUS QUESTION.

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Now, then, as to the second point. He says that it would apply to every religious society, to every benevolent society, and that the Legislature ought to have power to remit forfeitures in such cases. I don't see it. Suppose a religious society is incorporated for the purpose of estab- Beerstecher, lishing a Christian church. Money is collected for that purpose, but Bell, afterwards the funds were diverted and used in the erection of a Joss

Blackmer,

PRESENT.

Boggs,
Boucher,

Brown,

Burt,

Cowden,
Cross,

Crouch,

Caples,

Casserly,

Davis,
Dowling,

Doyle,

Charles,

Condon,

Dudley, of Solano,
Dunlap,

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MR. GRACE. I mode that the resolution be allowed to lay on the table.

MR. LAINE. I accept the amendment to make it one o'clock. MR. SCHELL. I wish to explain that the amendment which I offered was in relation to the time of adjournment, making it one o'clock this afternoon.

MR. WHITE. I move to amend by making it two o'clock to-day. MR. TERRY. I second the motion to lay on the table.

The motion to lay on the table was lost.

THE PRESIDENT. The question is on the amendment offered by the gentleman from Santa Cruz, Mr. White.

The amendment was adopted.

THE PRESIDENT. The question recurs on the adoption of the resolution as amended.

MR. STEDMAN. I move to amend so that it will read, "Monday at ten o'clock A. M.," instead of " Monday at two o'clock P. M." MR. BEERSTECHER. Make it seven o'clock on Monday.

MR. WELLIN. I rise to second that motion.

MR. HOWARD. I move the previous question.

The main question was ordered.

THE PRESIDENT. The main question has been ordered. The first question is on the amendment offered by the gentleman from San Francisco, Mr. Stedman.

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Resolved, That all committee clerks are hereby discharged.

MR. LARKIN. Mr. President: I ascertain that all the committees have reported that have business before them. There may be some committees that have some propositions left to act upon, but if so they can do the little work that is required. I think the resolution should pass. We have no need for them.

MR. CONDON. I second the resolution.

MR. BEERSTECHER. I would like to ask whether it will not be necessary to retain the Engrossing and Enrolling Clerks?

MR. LARKIN. I think we can employ them when needed.
The resolution was adopted.

STATE UNIVERSITY REPORT.

MR. HERRINGTON. Mr. Chairman: I desire to present a report of the Regents of the State University. I do this in the absence of the Chairman of the Committee on Education. It is addressed to J. West Martin, of that committee, in obedience to a former resolution offered this body. I move that it be printed and laid on the desks of the members. The motion prevailed.

Leave of absence for two days was granted Messrs. Dean and Winans. Leave of absence for one day was granted Messrs. Shoemaker, Chap-in man, and Wilson, of San Francisco.

THE JOURNAL.

Following is the report and accompanying documents, as subsequently

MR. CAPLES. I move that the reading of the Journal be dispensed printed by order of the Convention:

with. Carried.

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MR. SCHELL. I move to amend by inserting, "one o'clock" in place and disbursements.

of" two o'clock."

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Totals...

Act of March 26th, 1868.

$48,456 00 $140,053 70 $129,885 05 $30,844 20 $143,811 82 $425,516 49 $220,986 37 $301,574 33 $171,723 28 $208,823 91

†Tide Land Appropriation Act of March 30th, 1868.

Appropriation to meet monthly deficiencies, March 26th, 1872.

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1,821,675 65

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