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Story
December 1, 1878
The New Orleans Daily Democrat
New Orleans, Orleans County, Louisiana
What is this article about?
In the California Constitutional Convention, an amendment by Judge Terry is adopted, making stockholders personally liable for corporate debts and directors liable for officer embezzlements, amid debate on restricting corporate power to ensure honesty in banking.
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THE RIGHTS OF DIRECTORS.
The California Constitutional Convention Against Corporations.
[Philadelphia Times.]
A good deal of feeling is manifested in the California convention on the subject of the management of banks and savings institutions in that State, and the latest San Francisco papers report the adoption of a stringent provision for the personal liability of stockholders, directors and trustees. The section as adopted was an amendment offered by Judge Terry, and reads as follows:
"Each stockholder of a corporation or joint stock association shall be individually and personally liable for such proportion of all its debts and liabilities contracted or incurred during the time when he was a stockholder as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock or shares of corporation or association. The directors or trustees of corporations and joint stock associations shall be jointly and severally liable to creditors and stockholders for all moneys embezzled or misappropriated by officers of such corporation or joint stock association during the terms of office of such directors or trustees."
There was vigorous opposition made to this, and it was declared that its adoption would break up half the corporations in the State, for no capitalist would be willing to invest his money in banking when he ran so great a risk of personal responsibility. To this the answers were that banks and savings institutions were as much bound to be honest and safe as individuals carrying on business, and should be held to equally strict account; and that if some of the banking corporations were curtailed of power and some of the great capitalists in them induced to retire, it would be a blessing rather than an injury to the State. Nearly two-thirds of the convention took this view, and the tone of this large majority, it is very evident, is strongly in favor of restricting corporative power. Other sections of the proposed constitution will no doubt present the same characteristics.
The California Constitutional Convention Against Corporations.
[Philadelphia Times.]
A good deal of feeling is manifested in the California convention on the subject of the management of banks and savings institutions in that State, and the latest San Francisco papers report the adoption of a stringent provision for the personal liability of stockholders, directors and trustees. The section as adopted was an amendment offered by Judge Terry, and reads as follows:
"Each stockholder of a corporation or joint stock association shall be individually and personally liable for such proportion of all its debts and liabilities contracted or incurred during the time when he was a stockholder as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock or shares of corporation or association. The directors or trustees of corporations and joint stock associations shall be jointly and severally liable to creditors and stockholders for all moneys embezzled or misappropriated by officers of such corporation or joint stock association during the terms of office of such directors or trustees."
There was vigorous opposition made to this, and it was declared that its adoption would break up half the corporations in the State, for no capitalist would be willing to invest his money in banking when he ran so great a risk of personal responsibility. To this the answers were that banks and savings institutions were as much bound to be honest and safe as individuals carrying on business, and should be held to equally strict account; and that if some of the banking corporations were curtailed of power and some of the great capitalists in them induced to retire, it would be a blessing rather than an injury to the State. Nearly two-thirds of the convention took this view, and the tone of this large majority, it is very evident, is strongly in favor of restricting corporative power. Other sections of the proposed constitution will no doubt present the same characteristics.
What sub-type of article is it?
Historical Event
What themes does it cover?
Justice
Crime Punishment
What keywords are associated?
Constitutional Convention
Corporate Liability
Stockholder Responsibility
Director Liability
Embezzlement
Banking Regulation
What entities or persons were involved?
Judge Terry
Where did it happen?
California
Story Details
Key Persons
Judge Terry
Location
California
Story Details
The California Constitutional Convention adopts an amendment by Judge Terry imposing personal liability on stockholders for corporate debts and on directors for embezzlements by officers, despite opposition claiming it would deter investment; the majority favors restricting corporate power.