author:
Mr. Justice Scholfield
      Mr. Chief Justice Dickey

text:
    John B. Weidenger v. Harmon Spruance.

      Filed at Ottawa March 18, 1881.

    1. Stockholdebs—changing the conditions as to liability for debts of corporation, by subsequent legislation—under constitution of 1848. Section 2, art. 10, of the constitution of 1848," which provides that “dues from corporations not possessing banking powers or privileges, shall he secured by such individual liability of stockholders of the corporation, or other means, as may be prescribed by law, ” was designed to express the reservation of power in the General Assembly in granting charters, to provide, from time to time, by legislation, as experience should suggest or wisdom dictate, for the securing of dues from corporations, by individual liability of the corporators, or other means.
    2. The language of the section does not seem necessarily to require that this should be done in the charters, and be made a condition precedent to the exercise of corporate powers, hut rather to cast upon the legislature the supervising duty of ascertaining what legislation shall be necessary to attain the desired end, and then to provide it; so that every stockholder in a corporation of a character not within the exception named, organized' under that constitution, took his stock subject to this supervisory power of the General Assembly, and to be affected by whatever legislation in that regard the General Assembly might deem necessary.
    3. The 16th section of the general Insurance law of 1869 provides, that “the trustees and corporators shall be severally liable for all debts or responsibilities of such company, to the amount by him or her subscribed, until the whole amount of the capital of such company shall have been paid in.” The Commercial Insurance Company was organized under a special charter granted in 1865, which did not prescribe as a condition to the liability of the individual stockholders that the entire capital of the company should he paid in, nor did the charter, as considered for the purposes of the decision, contain any reservation to the General Assembly of power to amend it. Nevertheless, that provision of the act of 1869 was given effect as against the corporators or stockholders of the company for liabilities of the corporation accruing after the act went into effect,—and this, by virtue of the reservation of power to the General Assembly, in' the constitution, to supervise, in that regard, the affairs of preexisting corporations.
    4. In giving such effect to the act it was not regarded as an impairment of the obligation of the contract between the prior stockholders and the corporation, or the creditors of the corporation. The act simply required preexisting corporations to cease to carry on their business unless they should comply with its provisions, and the liability imposed upon the stockholder is by way of penalty, only, for disobedience to this mandate.
    5. But the application of the act in respect to the stockholders of the Commercial Insurance Company is sustainable upon another ground. The charter of the company authorized the directory to call in such an installment on stock subscribed as they might deem necessary,—not less than twenty per cent in cash,—and the balance to be secured in a prescribed manner. Even if there was an implied authority, in the absence of any express grant of power to that effect, for the company to commence or prosecute business before the payment so authorized to be required, was made, still such implied authority but amounted to a license, subject to be revoked, except so far as acted upon, at any time, by the. General Assembly.
    6. But the real obligation of the contract of each subscriber was, that he should pay for his stock. A mere expectation on his part that the law would not be enforced in requiring all the capital stock to be paid in, was not a vested right. It became the duty of the corporation to have payment made into its treasury of its capital stock, and if the stockholders failed to exercise their controlling authority in requiring that duty to. be, performed, it was competent for the General Assembly to impose a reasonable penalty, such as that prescribed in the act of 1869, for the non-performance of that duty, although the duty may have been declared, and its performance enjoined, by the principles of the-common law or the provisions of a prior statute.
    Writ oe Error to the Appellate Court for the First District ;—heard in that court on writ of error to the Superior Court of Cook county; the Hon. Joseph E. Gary, Judge, presiding.
    This was an action of debt, brought by Joseph B. Weidenger, for the use of T. B. Elliott, against Harmon Spruance, as a stockholder in the Commercial Insurance Company, upon the individual liability of the defendant for a debt of the company to the amount of his stock, the capital stock of the company never having been paid in. The court overruled demurrers to pleas of the defendant, and gave judgment against the plaintiff for costs. This judgment was affirmed in the Appellate Court.

      Messrs. Shufeldt & Westoveb, for the plaintiff in error: '
    1. The Commercial Insurance Company was organized under the public act of the General Assembly of Illinois, approved February 10, 1865. The constitution of 1848, then in force, contained this clause: “Dues from corporations not possessing, banking powers or privileges, shall be secured by such individual liabilities of the corporators, or other means, as may he prescribed by law.” (Const, of 1848, art. 10.) The Commercial Insurance Company received its charter, subject to such conditions as might be imposed by law, under that constitutional provision. Massachusetts General Hospital v. State Mutual Life Assurance Co. 4 Gray, 227; Suydam v. Moore, 8 Barb. 358; Story v. Jersey City, etc.. Plank Road Co. 1 Green, (16 N. J. Eq.) 13; Attorney General v. Railroad Co. 35 Wis. 435.
    2. The constitution being virtually a reservation of the right to amend the charter of the corporations organized, under it, as to liability of corporators, section 16 of the general law of 1869 became, by the terms of the law, a part of the charter of all such companies. Tomlinson v. Jessup, 15 Wall. 454; Miller v. The State, id. 478; Suydam v. Moore, 8 Barb. 358; McLaren v. Pennington, 1 Paige Ch. 102; Roxbury v. Providence and Boston R. R. Co, 6 Cush. 424; Pennsylvania College Cases, 13 Wall. 190; People v. Manhattan Co. 9 Wend. 351; Schenectady and Saratoga Plank Road Co. v. Thatcher, 11 N. Y. 102.
    3. The legislature thus amended the charter of this company, and by the amendment every stockholder or corporator became bound as to his individual liability. In re Reciprocity Bank, 22 N. Y. 9: Sherman v. Smith, 1 Black, 587; In re Oliver Lee’s Bank, 21 N. Y. 9; Stanley v. Stanley, 26 Maine, 191; Baily v. Hollister, 12 N. Y. 112.
    4. The capital stock of the company not being paid in, the defendant, a corporator in said company, became liable to the plaintiff, individually, for the amount of the debt of the corporation to the plaintiff, not to exceed an amount equal to defendant's stock. Culver v. Third National Bank, 64 Ill. 529; Butler v. Walker, 80 id. 345.
    Messrs. Boutell & Waterman, for the defendant in error:
    Article 10 of the constitution of 1848 was not self-acting, in the sense of imposing upon the stockholders of corporations thereafter created, an individual liability. Legislation was needed to make it active or effective. Hill v. City of Chicago, 60 Ill. 86.
    The charter of the company became and was a contract. It did not impose upon the stockholders any liability for the dues of the company. It exempted them from liability, and no legislature coüld thereafter, without the consent of this company, change its' chatter so as to impose a personal liability upon its stockholders. Washington Bridge Co. v. State, 18 Conn. 65; Wheeler v. Frontier Bank, 23 Me. 308; Enfield Toll Bridge Co. v. Connecticut River Co. 7 Conn. 44; People v. Platt, 17 Johns. 215 ; Dartmouth College v. Woodward, 4 Wheat. 518; Angell & Ames on Corp. sees. 4, 595.
    The charter of the Commercial Insurance Company not containing any reservation to the legislature of a right to change it in any way, and not being subject to any such constitutional provision, the act of 1869 could not operate to impose upon defendant a liability which he was not before under. Wheeler v. Frontier Bank, 23 Maine, 308; Ireland v. Palestine Co. 19 Ohio St. 369.
    The statute does not apply to such a case as the present :
    First—Because companies theretofore organized are by section 19 especially excepted from the operation of the act. (Sec. 16, chap. 73, Bev. Stat.)
    ■ Second—Because section 16 applies only to the original corporators and trustees of companies organized under the act. (Secs. 1, 3, 10, 16, 19, chap. 73, Rev. Stat.) Defendant was neither a corporator nor trusted.
    Third—Because the Commercial Insurance Company was not organized under the act. The statute makes liable only trustees and corporators of companies organized under the act.
    Fourth—Because the provision imposing personal liability is to be strictly construed. Gray v. Coffin et al. 9 Gush. 192.
   Mr. Justice Scholfield

delivered the opinion of the Court:

The present case differs from Gulliver v. Roelle, 100 Ill. 141, in this: In that case the right to amend was expressly reserved in the charter; in the present case such right was reserved in an amendment to the charter, which the pleas aver was never accepted by the company, and so it must be taken for the present that no right of amendment was reserved in the charter; and the question therefore is, treating the 16th section of the general law as an amendment of this charter, does it impair the • obligation of a contract ? We are of opinion the answer should be in the negative.

By sec. 2 of art. 10 of the constitution of 1848 it is provided, that “dues from corporations not possessing banking powers or privileges, shall be secured by such individual liability of the corporators, or other means, as may be prescribed by law. ” This, it is to be observed, is not the expression of a grant of power, for the General Assembly without this, under its general legislative powers, might, in creating such corporations, provide any mode for securing the payment of debts to be contracted by them, deemed advisable. It is not the expression of a prohibition upon the creation of such corporations unless certain prescribed -provisions shall be inserted in the charters, for the mode of securing the dues is left to be determined by the General Assembly; and it could not, therefore, be said that any exercise of that discretion, whatever it might be, is unconstitutional. We can not suppose that in making an instrument of the importance and dignity of a constitution, a mere idle lecture to the General Assembly would be inserted; and so, to give effect to the language, it would seem we might well conclude it was designed to express the reservation of power in the General Assembly in granting charters, to provide, from time to time, as experience should suggest or wisdom dictate, for the securing of dues from the corporations, “by individual liability of the corporators, or other means.” The language employed does not seem to necessarily require that this shall be done in the charter, and be made a condition precedent to the exercise of corporate powers, but rather to cast upon the General Assembly the supervising duty of ascertaining what legislation shall be actually necessary to attain the desired end, and then to provide it. If this be conceded, then every stockholder takes his stock subject to this supervision of the General Assembly, and to be affected by whatever legislation in that regard the General Assembly may deem necessary; and so we have held in Arenz v. Weir, 89 Ill. 25.

But we shall not rest our decision purely on this ground. The 2d section of the charter of the Commercial Insurance Company provides for a capital stock of $200,000, divided into shares of $100 each; and its 3d section authorizes the board of directors to call in such an installment on the stock . subscribed as they may deem necessary,—not less than twenty per cent in cash,—and for the balance of such subscription they may take bonds, secured by mortgages on unincumbered real estate in the State of Illinois, or judgment notes of responsible parties. (Private Laws of 1865, vol. 1, p. 632.)

No authority is expressly given by the charter to commence or prosecute business before the twenty per cent in cash is paid in, and the balance is paid in bonds or judgment notes, secured in the manner provided. But if it may be said that such authority is implied, this implied authority can but amount to a license, subject to be revoked, except so far as acted upon, whenever the General Assembly may so declare. It can not be said the obligation of the contract of the shareholder with the corporation, or with creditors of the corporation, or with the other stockholders, is, that the corporation shall proceed with its business when the capital stock is unpaid. On the contrary, the obligation of the contract of each subscriber is, that he shall pay for his stock, for this is his undertaking; and every creditor has a vested right that this shall be done, for he has become a creditor upon the faith of it. Every stockholder, moreover, has a vested interest in the eontráet of subscription of every other stockholder, for each subscription is a part of a complete whole, and the failure in the payment of one leaves the burdens to be borne by all, proportionally, that much greater. See Chandler v. Brown, 77 Ill. 333.

A mere expectation of property in the future is not a vested right. (Cooley’s Const. Limitations, 359; Richardson v. Aiken, 87 Ill. 138.) And, upon like principle, a mere expectation that the law will not be enforced in requiring all the capital stock of a corporation to be paid in, can not be a vested right, nor can there be a vested right to do business upon a credit, without affording adequate security for the payment of the debts to be contracted. See Richardson v. Aiken, supra.

Whether we shall regard the rights of the corporation, treating it as a legal entity separate and distinct from the stockholders, or the rights of the stockholders as individuals, this must be so. The stockholders derive all their rights, as such, through and by virtue of the charter of the corporation, and they have only the right to demand that shall be done which the corporation may, under its charter, legally claim the right to do. The corporation owes the duty of having payment made into its treasury of its capital stock, but it can only be coerced into the performance of that duty by a power acting upon the persons who control and put in action its corporate functions. The mere intangible entity constituting the legal person, disconnected from the natural persons, through whose agency effect is given to its powers, can not be coerced, for the simple reason there is nothing there upon which coercive power can take effect. It is competent for the General Assembly to impose a reasonable penalty for the non-performance of a legal duty, although the düty may have been declared, and its performance enjoined, by the principles of the common law or the provisions of a prior statute. Chicago, Rock Island and Pacific R. R. Co. v. Reedy, 66 Ill. 43; Chicago and St. Louis R. R. Co. v. Warrington, 92 id. 157; Barnett v. Atlantic and Pacific R. R. Co. 68 Mo. 56.

The 16th section of the general Insurance law of 1869 (Eev. Stat. 1874, p. 595,) provides, that “the trustees and corpora-tors shall be severally liable for all debts Or responsibilities ■ of such company, to the amount by him or her subscribed, until the whole amount of the capital of such company shall have been paid in,” as thereinbefore provided. The object of this was, unmistakably, to compel such companies, before proceeding further, to have their entire capital paid in. ' By the 10th section of the same act, such companies are not authorized to commence business, in the first instance, until this is done. It is, in effect, therefore, saying to old companies whose capital is not all paid in: “Proceed no further! Stop right here until all your capital stock is paid in; and if you shall disregard this mandate, your trustees and corporators shall be liable for all debts or responsibilities you shall hereafter create. ” This is but the imposition of a penalty. Richardson v. Aiken, supra; First National Bank of Maryland v. Price et al. 33 Md. 487; Cameron v. Seaman, 69 N. Y. 396 ; Derrickson v. Smith, 27 N. J. L. 166; Steam Engine Co. v. Hubbard, 101 U. S. 188.

The stockholders elect the directors, and, through them, carry into effect the corporate functions. Presumably, the directors act in obedience to the aggregate wishes of the stockholders, and this, through by-laws and the aid of courts of equity in proper cases, may be made practically so. The board of. directors can not proceed unlawfully in the exercise of the corporate franchise, without being liable to restraint by a court of equity, at the instance of a stockholder. Coleman v. Eastern Counties Ry. Co. 10 Beav. 1; Bliss v. Anderson, 31 Ala. (N. S.) 612.

As is said in Angell & Ames on Corp. (5th ed.) sec. 312, p. 363 : “The directors are the trustees or managing partners, and the stockholders are the cestuis que trust, and have a joint interest in all the property and effects of the corporation ; and no injury that the stockholders may sustain by a fraudulent breach of trust can, upon the general principles of equity, be suffered to pass without a remedy. ”

The case does not present the question of the competency of the General Assembly to increase the liability of the stockholder upon his contract of subscription, but the question is, merely, can the General Assembly, as to corporations already in being, forbid them doing business in the future until all their capital stock is paid in, and impose a penalty upon those by whom the corporate powers and functions are controlled and exercised, if they shall disobey this mandate? The liability upon the stockholder is not because he made a contract, which he- has performed, to take and pay for so much stock, but because he, as a member of the corporation, and, therefore, a responsible agent in controlling and causing to be executed the corporate powers and functions, has allowed tó be done, or failed to prevent the doing of, that which the law prohibited. As a punishment for the wrong he is responsible for, he is made liable to those injured thereby to the extent of his interest in the corporation, and of his agency presumed therefrom in causing or permitting the injury. The courts in Massachusetts and Maine have, as we conceive, gone farther than this, and hold that statutes imposing a personal liability on stockholders for the future debts of corporations are free of constitutional objection. Gray v. Coffin et al. 9 Cush. 192; Stanley v. Stanley, 26 Maine, 191; Coffin et al. v. Rich, 45 id. 507.

In Gray v. Coffin, Shaw, Oh. J. said: “This act was general in its nature, extended to members of all corporations, providing to what extent they should be liable to the claims of creditors and all persons dealing with and becoming creditors of any corporation. It was future and prospective in its operation, regulating the rights of debtor and creditor, as they should arise, expressly securing any right acquired by any person against a holder of stock in any corporation, by force of existing laws. It had no tendency to impair, or in any way affect or modify, any power, privilege or immunity pertaining to the franchise of any corporation, and therefore seems to be within the just limits of legislative power. ” This view is indorsed by the author in Thompson on Liability of Stockholders, see. 65. See, also, secs. 66, 67, 68.

In Ireland v. Palestine Co. 19 Ohio St. 369, a contrary ruling obtained, and it was there held that such a law impaired the obligations of the contract between the stockholder and the corporation.

It is unnecessary that we should, at this time, express any preference as between these rulings. We refer to them merely as showing the tendency of the judicial mind on a kindred question to that here involved, and to distinguish the present case from the cases in which they obtained.

We repeat, the liability here imposed upon the stockholder is by way of penalty, only. He is not, in the first instance, nor at all events, liable for the future debts of the corporation. And so, it is believed, there is nothing, even in the Ohio ease, in conflict with our ruling here. Our conclusion is, no constitutional right is impaired by imposing this liability.

The decree will be reversed, and the cause remanded for further proceedings not inconsistent with this opinion.

Decree reversed.

Mr. Chief Justice Dickey

dissenting:

In the case of Gulliver v. Roelle, 100 Ill. 141, I endeavored to show that the word “corporators, ” in the 16th section of the act of March 11,1869, was not used in that place in a sense .synonymous with the word “stockholders, ” but was intended in that section to designate the original organizers or promoters of a corporation to be formed under that act, whose duties and powers were set forth in the preceding sections. I also endeavored to show, that even if we assume that the word “corporators, ” as used in section 16, was intended to mean all stockholders, still it was not intended by section 19 Of that act to make section 16 applicable to then existing corporations, working under, special charters.

In that case I also expressed the opinion, that as to existing stockholders in companies then doing business under special charters (even where the power of amendment of such charters was reserved to the legislature), the General Assembly did not possess the power to impose such new burden upon such stockholders Without their consent and without their fault.

This latter proposition I did not then discuss, or attempt to support by authority. I now propose to give some reasons for the views I hold on this question, as applicable to the ease at bar. In that case power to amend the charter was reserved to the General Assembly. In this, there is no reservation of that kind.

The decision in this case of this latter question is placed upon two grounds: First, an attempt is made to draw power from certain words in the constitution of 1848; and, secondly, the exercise of the power is defended upon a Supposed or presumed agency resting in the hands of the officers of the corporation to commit offences, for which the stockholder, as principal, may be punished for the sin of his agents. I will consider the latter proposition first, and then examine the source of power supposed to lurk in the language of the constitution of 1848.

When the State, by the act of 1865, adopted by its General Assembly, enacted that the persons named in that act, “and such other persons as might become stockholders, ” should be, and were by the act, declared to be “a body corporate and politic, ” with the powers and privileges mentioned in the act, and as soon as such corporation was duly organized, and the defendant in error became a stockholder under that charter, and his stock was fully paid, the defendant in error was clothed by the act with certain rights which he did not before have, and for which he had paid a valuable consideration. Those rights he held by purchase, and through a grant from the State of Illinois. His title to those rights was as sacred, and as thoroughly beyond the power of the General Assembly to take away or destroy, as is the right of any citizen to his private property. What were those rights ? At common law the defendant in error had the right to associate with the other persons constituting this corporation, in a firm or partnership, and jointly to do an insurance business. In such case he would have rendered himself liable, as a partner, for any, all and every obligation of the association, and unless there had been a provision to the contrary in the articles of partnership, he would have been bound to give his personal attention to the business.

By the act of incorporation under which defendant in error became a stockholder, he acquired the right, upon paying in full for his stock, of being free from personal liability for the debts of the association, and the right to be free from any duty to give to the business his personal attention; and he also acquired the right to have a limitation on the power of his associates to bind him by their action. Without the act of incorporation he would have been liable, to the whole extent of his estate, for every contract made by any one of the associates in behalf of the association. Under the act he had a grant of the right of sharing as a stockholder in the profits of the business, without any one or more having an agency to affect by their action any part of his estate, except that part which he. had placed in then’ hands by becoming a stockholder,—that is, his interest in the corporate property as the owner of his shares. Beyond this interest in the corporate property no part of his estate could, under the act, be controlled or incumbered by any one. He then held three rights .granted by the State: First, the right to be a corporator, without being personally liable for the debts of the company; second, the right to be a stockholder, without giving to any one the power to charge any part of his estate, other than his interest in the corporate property, with any debt of the association; and, third, the right to be a stockholder, without any obligation on him to give his personal attention to the business of the association.

The grant, and the acceptance of the grant, in my judgment, made, by necessary implication, a valid, binding contract between the State and the defendant in error as such stockholder, by which the State undertook, in consideration that he would pay his money for his shares, that no further or other burdens should be imposed upon him, merely because he had, on the invitation of the State, become, and continued to be, such stockholder. If defendant in error held those rights by contract, the State could not impair the obligation of that contract, by imposing new burdens upon him, without violating the constitution of the United States. If it can not be said that the circumstances made a contract binding upon the State, it surely can not be denied that defendant in error held such rights by grant from the State, and hence had a title to them as sacred as any other private property, which the ablest jurists declare to be such that they can not be taken away by the mere fiat of a legislature. To support this position I will refer hereafter to some authorities.

The question in this case is thus squarely presented, whether as to a stockholder holding such rights under a charter, in reference to which no power of amendment was reserved to the legislature, either by the charter or by any statute then in force, the General Assembly had the power, on March 11, 1869, by its mere fiat, to change or violate such rights by imposing upon him, without his consent, the new duty or burden of causing all other, stockholders to pay in full for their shares, or of watching the officers of the company constantly, and preventing them, by suits in equity at his own cost, from incurring any further debts or responsibilities until the capital should be all paid in, and a certificate thereof should be duly filed and recorded, and the power to impose upon him a penalty for no other offence than that he had become a stockholder in this company on the invitation of the General Assembly, and had simply continued to be such stockholder.

I am clearly of opinion that the General Assembly was clothed with no such power. To maintain this position it is not necessary that I should question the power claimed for the General Assembly to say, by that act, to then existing companies, “Stop right here! Do no more business until your capital shall all be paid in, and a certificate thereof shall be recorded.” It may be a legitimate exercise of the police power to compel companies to so conduct their business as not to expose- the public to unreasonable risk of loss, nor need I here question the power of the legislature to enforce such a mandate by penalties imposed upon each of such corporations which should fail to obey the mandate, and for which the property and the franchises of the company might be taken, nor need I deny the power to punish, by personal liability as penalties, any and all persons (whether connected with the corporation or not) who should thereafter aid, abet or encourage the officers of such corporation in a violation of such mandate; and to thus punish the officers of the corporation for failing to prevent the violation' of such mandate, where their duty, voluntarily assumed, required them to supervise vigilantly the doings of the corporation. But it does not follow that penalties can be lawfully imposed upon the mere stockholder. He has no duty, as such, resting upon hfm (either by common law or by statutes in force when he assumed that position) requiring him to give his personal attention to the management of the business of the corporation. The directors chosen by the holders of the majority of the stock have no power to do any act by which that part of this stockholder’s estate not invested in this company can be affected, and neither the legislature, nor any one else except this stockholder, can enlarge the power of attorney under which the directors act. It is error, therefore, to say that as to this new duty and new burden the officers of the company act, presumably, by the authority of the stockholder, so as to make their acts his, in any respect whatever, except in so far as the property of the corporation may be affected by the acts of such officers. By becoming a stock: holder, defendant in error has agreed that, in so far as concerns the property of the corporation, he is to be bound by their acts, but no farther.

The decision of the Supreme Court of Ohio is directly in point in support of my views upon this question, in Ireland v. Palestine Turnpike Co. 19 Ohio St. 369. In that case the company was organized in January, 1852, under an act passed in 1849. Ireland was one of the subscribers to the stock, and had paid in full his subscription. The law under which he became a stockholder (as in this case) imposed no individual responsibility upon the stockholders beyond the payment of the amount of their subscriptions. By acts passed after Ireland became a stockholder, it was provided that turnpike companies might issue bonds for certain purposes, and that the stockholders of all companies which should issue such bonds should be liable individually, to the amount of their stock, for the payment of bonds so issued, and that stockholders in such cases might, if a majority of them should so determine, be assessed upon their stock, and compelled to pay to the company, pro rata of the indebtedness, an amount not exceeding the amount of their stock. Ireland refused to pay an assessment made upon him in pursuance of these statutes, and a judgment was given against him for the amount of his assessment. That judgment was brought before the Supreme Court for review, and was there reversed. That court held that the statute, in so far as it authorized assessments against stockholders who had paid their subscriptions, and who, by the laws in force when they became stockholders, were not liable individually for the debts of the company, was unconstitutional. It was there said of such a statute: “It impairs the validity of the contract between the company and the stockholder. In a contract between the company and a stockholder, or in an action by the former or by its creditors, the stockholder is to be regarded as an individual person, separate and distinct from the corporation. He becomes a stockholder by virtue of a contract with the company, and he has a right to stand upon the terms of that contract, interpreted and limited by the laws under which it was made. By his contract with the company, Ireland agreed to pay a specified sum, and no more. This sum he has paid, and to require him to contribute an additional amount would be to violate the contract. ” It is added: “The stockholder may waive his constitutional right, and become liable by his own act or consent. * * * The burden of showing such consent or acquiescence rests with the party seeking to hold him liable, or estop him from denying his liability. Nor was this a matter as to which the directors, or even a majority of the stockholders, were authorized by law to act for him. The power of a corporation over the rights of a stockholder, whether exercised by the directors or a majority of the stockholders, is limited to his rights in the corporate property, and does not extend to his private and individual property. As to the latter, the stockholder gives the company no authority whatever beyond the amount of his subscription, and no subsequent legislative grant of such power will be valid without his assent. This distinction between the private rights and the corporate rights of the stockholders should never be lost sight of, and its application will go far to reconcile many of the authorities which appear to be conflicting. * * * By becoming a member, the stockholder places a specified amount of his private property in the common fund, and subjects it to the control of the company, * * * but he grants no power whatever over the remainder of his private property, which is wholly unaffected thereby. As to the latter, the company has no more authority than it has over the property or rights of a stranger.”

Chief Justice Shaw, in Steelman v. Eveleth, 6 Metc. 121, speaking of the extent of the powers of officers of a corporation as agents of the respective stockholders, said, very emphatically: “They are .not agents of the stockholders in their personal capacity.

• In the case at bar, therefore, although each stockholder is an individual part of the corporation, it can not properly be said, for that reason alone, that he is to be regarded as a party to and an actor conjointly with the directors, in permitting and causing that to be done which the law forbids, except in so far as concerns his interest in the property tif the corporation. Thus far he is liable to be affected by the action of the company; thus far the majority of the stockholders, or the officers, may be regarded as his agents; but as Chief Justice Shaw has well said, the officers of the corporation “are not agents of the stockholder in his personal capacity.” It is a personal liability with which Spruanee is here charged. In that regard neither the officers of the company, nor a majority of the stockholders, nor the legislature, nor any or all of them combined, can, under our institutions, charge him by contract or tort, or in any other mode, with a personal liability, without his personal consent and without his personal fault.

It is said in support of the conclusion reached in the case at bar: “The stockholder is not made liable because he has made a contract which he has performed, * * * hut because, as a responsible agent in the controlling and executing the corporate powers and functions, he has done that which the law prohibited. As a punishment for the wrong he is responsible for, he is made liable to the extent of his agency, presumed therefrom, in causing the wrong. ” There is nothing in this record tending to show that Spruance ever acted, or had power to act, as the agent of this corporation. It seems to me it is not enough to concede that the contract of the stockholder does not subject him to this new and additional burden; but in addition to that, his contract, by necessary implication, was, that no additional burden should be imposed upon him merely because of his being a stockholder, and this contract is violated by the imposition of a new burden. ' And, aside from this protection by the necessary implication of his contract, we have seen that he is not the agent of the corporation, for he can not hind the corporation by any bargain he may make or by any act he can do, nor is the corporation, or all its officers, his agents “in his personal capacity.” There is no “presumed” agency arising from his relation as stockholder beyond what affects his interest in the corporate property. The acts of the directors outside that sphere are not' his acts,—their guilt is not his guilt. The legislature has no power, by mere fiat, to change innocence into guilt, and punish it as such. It was no crime to be a stockholder when Spruance became a stockholder. The legislature can not, by a subsequent statute, make it penal to be, or to continue to be, a stockholder. It can not, by legislation, make innocence guilt.

In support of this general view of the limited powers of every legislature, under a constitution where the legislative powers alone are conferred upon one department, and in support of the protection to the rights to private property, and the sanctity of contracts against encroachment by State statutes, afforded under our political institutions, I bring the solemn declarations of Marshall, Kent, Story, Shaw, and other great jurists.

The sanctity of the right'of the subject or citizen to his own private property, and the inviolability of private contracts, have been recognized and vindicated by the jurists of all civilized communities, and his right to hold his private property free from confiscation (whether directly or indirectly) by mere legislative fiat, has, in one form or other, been held sacred in all countries where powers legislative, executive and judicial have been each committed to a separate class of officers. All American courts have in some mode or other refused to give effect to statutes whose words seem to warrant violation of such rights. Jurists have not been entirely in harmony as to the mode of reasoning on which they have heretofore refused to render such judgments. Some (asserting the power of a legislature to pass such laws where they are not forbidden by any constitution) avoid such result by pronouncing the same so monstrous that they will not hold that the legislature intended, by the language of the statute, to produce such result. Other jurists avoid such result by holding that the constitutional inhibitions against the passing of any ex post facto law, or any law impairing the obligation of contracts, and against the passing of bills of attainder, prohibit expressly such result. Others (conceiving that such rights of the citizen are not within the protection of these express limitations found in the written constitutions) hold .that statutes doing violence to such private rights are void, because they are not within the scope of legislative authority. The constitution of 1848, by which “the legislative authority of this State” was “vested in” the General Assembly, contains a clause which seems to exclude the power of passing such laws from the general grant of “legislative authority, ” in which clause it is declared that “all men have certain inherent and indefeasible rights, among which are those of acquiring, possessing and protecting property. ” If such rights be indefeasible, they surely can not be abrogated, impaired, or made void, by the exercise of any legislative authority, for such authority does not embrace power to invade, in the slightest degree, an indefeasible right of the private citizen. Thus it will be seen that in that constitution the truth was recognized that many individual rights are not derived from the constitution.

Mr. Webster said: “Written constitutions sanctify and confirm great principles, but the latter are prior in existence to the former. ” Cooley says: “In considering State constitutions we must not commit the mistake of supposing that because individual rights are guarded and protected by them, they must also be considered as owing their origin to them. These instruments measure the powers of the rulers, but they do not measure the rights of the governed. ” (Cooley’s Cqnst. Lim. 37.) He quotes in this connection, with approbation, the happy language of Judge Bates, used in argument, wherein he said of a constitution: “It is not the origin of private rights. * * * It grants no rights to the people, but is the creature of their power, the instrument of their convenience, designed for their protection in the enjoyment of rights * * * which they possessed before the constitution was made. ”

The right of the owner to his private property is of this character. It is a fundamental, “indefeasible ” right in Illinois, and it can not be taken away lawfully, without his consent, given by him directly, or given by reasonable (if not necessary) implication, arising from some contract which he has made, unless it be by way of penalty for his own wrong, or for public use, upon just compensation. A statute passed by the General Assembly to deprive the owner, by mere enactment, of his right to his private property,—a right declared by that constitution to be “indefeasible, ”—is therefore void, for want of constitutional authority to pass it.

In Fletcher v. Peck, 6 Cranch, 138, Chief Justice Mabshall, delivering the opinion of the Supreme Court of the United States, said: “The constitution of the United States contains what may be deemed a bill of rights for the people of each State. No State shall pass any bill of attainder, ex post facto law, or law impairing the obligations of contracts. A bill of attainder may affect the life of an individual, or may confiscate his property, or may do both. In this form the power of the legislature over the lives and fortunes of individuals is expressly restrained. The legislature is then prohibited from passing a law by which a man’s estate, or any part of it, shall be seized for a crime, which was not declared by some previous law, to render him liable to that punishment. Why, then, should violence be done ■ to the natural meaning of words for the purpose of seizing for public use the estate of an individual, in the form of a law annulling the title by which he holds that estate ?”

In that case, the legislature of Georgia, having granted a tract of land to one who conveyed it to another, passed a statute rescinding the act by which the land wras granted. Speaking of this latter statute, Mabshall says: “This rescinding act would have the effect of an ex post facto law. It forfeits the estate of Fletcher for a crime not committed by himself, but by those from whom he purchased. This can not be effected in the form of an ex post facto law, or bill of attainder. Why, then, is it allowed in the form of a law annulling the original grant?”

In the case at. bar, Spruance is punished, by a forfeiture of a part of his private estate, for an offence “not committed by himself, but by the corporation from whom he or his grantor purchased this stock. ” Chief Justice Mabshall says, “this can not be effected' in the form of an ex post facto law, or bill of attainder. Why, then, is it allowable in the form of a law annulling the original grant” to him of the right of being a stockholder of this corporation, holding full paid stock, without being liable for the debts of the corporation ?

In The Society, etc. v. Wheeler et al. 2 Gallison, 139, Judge Stoby declared, that “upon principle, every statute which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty in respect to transactions or considerations already passed, must be deemed, retrospective.” And he adds, that where such a statute affects vested rights and past transactions by “operating only from and after its passage,” to hold such a statute not to be retroactive, and therefore valid, “would enable the legislature to accomplish that indirectly which it could not do directly. ”

Chief Justice Pabkeb, in Medford v. Learnerd, 16 Mass. 215, said: “No legislator could have entertained the opinion that a citizen free of debt could be made a debtor by a legislative act declaring him one. ”

The subject of the invalidity of a statute, in so far as it is made to operate in the future so as to injuriously affect a right vested before the passage of the act, is ably discussed by Chief Justice Kent in Dash v. Van Kleet, 7 Johns. 500, and its invalidity declared as resulting from the nature of our social compact.

Cooley on Constitutional Limitations, p. 19, refers to the constitutional provision against passing bills of attainder, as made to protect individual rights against possible abuse of State power, and on page 47, as to the powers of a State in . making laws, even in its constitution, he says: “It must not assume to violate the obligation of any contract, or attaint persons of crime;” and on page 319 he says this latter constitutional provision was “undoubtedly aimed at any and every species of legislative punishment for criminal or supposed criminal offences.”

In Terret et al. v. Taylor et al. 9 Cranch, 50, Judge Stoby declared, that “if the legislature possessed the authority to make a grant, it is very clear to our minds that it vested an indefeasible and irrevocable title. We have no knowledge of any authority or principle which could support the doctrine that a legislative grant is revocable in its own nature, and held only dwante bene plácito. Such a doctrine would uproot the very foundation of the right of the citizen to the free enjoyment of his property legally acquired. ”

These declarations of fundamental principles are all in support of the teachings of the case of Ireland v. Palestine Turnpike Co., supra, and accord with the view I take of the law, which ought, in my judgment, to govern in the case at bar.

It seems to be supposed that the courts of Massachusetts and of Maine have made decisions which are not in harmony with the views expressed in the.Ohio case, referred to; and Gray v. Coffin et al. 9 Cush. 192 Stanley v. Stanley, 26 Maine, 191, and Coffin v. Rich, 45 id. 507, are cited as incompatible with the ruling in Ohio. This, I think, is an error. • I find nothing in these cases which militates against my views, or those expressed by the Supreme Court of Ohio.

In the case of Gray v. Coffin, by the laws of that State in force when the corporation was organized, each stockholder was made liable for the debts of the corporation. Afterwards, in 1838, a statute was passed preserving the rights of all creditors of the corporation who had become so upon the faith of such personal liability of all the stockholders, and providing, as to all persons who should in future become creditors of the corporation, persons holding stock in trust as trustees, executors, etc., should not be personally liable for such debts of the corporation. After this law passed, the defendants in that case acquired shares of stock as assignees of insolvent owners of such stock. After this, and while this act of 1838 was in full force, the corporation became indebted to the plaintiff. The defendants claimed that they held this stock as trustees. The plaintiff contended that the act providing immunity to stockholders, holding as trustees, was in that respect unconstitutional. It was as to that question Ch. J. Shaw said the act was general, extending to members of all corporations, and providing the extent to which they should be liable to all persons dealing (thereafter) with the corporation, and that the act was future in its operation, regulating the rights of creditor and debtor as they should thereafter arise, expressly securing any right acquired by any person against the holder of stock in any corporation by force of existing laivs, and, as it impaired in no way the franchise of the corporation, he added, the act “therefore seems within the limits of legislative power. ” This great jurist here recognizes the idea that legislative power has limits, and that if the act had impaired the franchise of the corporation, or had not secured the already acquired rights of creditors against stockholders, under laws in force when such rights against the stockholders accrued, the act would not have been within the limits of legislative power. That act was constitutional, because it did not invade the vested right of any creditor; this act is unconstitutional, because (as construed by this court) it did invade the vested right of the stockholder. Stockholders have rights as well as creditors. The same court, in Commonwealth v. Cochituate Bank, 3 Allen, 44, declared, that “the liabilities of the stockholders of” that bank “must be found in the statutes passed previously to its incorporation. ”

In the case of Stanley v. Stanley, 26 Maine, 191, the corporation was chartered in 1833, subject to a general law then in force, reserving power in the legislature to amend all charters. In 1839 an act was passed subjecting stockholders of all corporations created after 1831, to liability for all debts created by the corporation after 1839. The debt of the corporation was created after 1839, and the defendant became a stockholder after that time, and the court held him liable, because, by becoming a stockholder after the passage of the statute imposing the liability, he is regarded, “therefore, as assenting thereto. ” Holding a stockholder to a liability which he voluntarily assumed at the time when he became a stockholder, is one thing, and holding him liable to a new burden imposed by statute after he became a stockholder, and without his assent, is another and very different thing.

In the case of Stanley v. Stanley, supra, the corporation was. organized when there was in force a general statute reserving, in all cases, to the legislature power to amend all charters, and by an act passed in 1839, stockholders in such corporations were made liable for debts of corporations, to the amount of their stock. After this law was passed the debt of the corporation was contracted, and the stockholder in the case became a stockholder after this. And the court said: “The debt was incurred after the act of 1839, and the plaintiff became a stockholder after that time. He may be regarded, therefore, as having become so with a full knowledge of the liability, and therefore as assenting thereto.

Coffin v. Rich, supra, was an action by a creditor of a cor: poration seeking to recover of a stockholder plaintiff’s debt against the corporation. A statute in force at the time when the defendant became a stockholder imposed upon stockholders a personal liability for debts of the corporation, and the court said: “ When stockholders became members, they knew the law held them personally responsible for the corporate debts.” In that case, however, judgment was given for the stockholder, upon the ground that the statute imposing the liability was repealed after he became such stockholder, and he was thereby relieved from the liability.

I find nothing in these cases in conflict with the views presented in the Ohio case. There are some general words found in the opinions, which, when read by themselves, and without reference to the facts under discussion, seem to go farther than this; but this is the extent of their meaning when read in connection with the rest of the opinion, and in reference to the facts before the court. In fact, in an earlier case, which these cases in Maine do not profess to overrule, and with which (when read carefully and at large) they are in entire harmony, this same court expressed views necessarily in full support of the thoughts so well expressed by the Supreme Court of Ohio,—views founded upon the same constitutional principles. I refer to the case of Wheeler v. Frontier Bank, 23 Maine, 239. In that case the court, in commenting upon a statute of that State, the language of which was general, imposing personal liability upon stockholders, without expressly limiting the same to those who might thereafter become stockholders, had said (p. 310) : “We can not think it requires the citation of authority, or an elaborate course of reasoning, to prove that the legislature can not have the power to create a liability of an individual for a debt for which he was not before liable, nor can they authorize an attachment of property of any one, ■ and the disposition of it, to pay a debt which he had not before contracted to pay. After the passage of the act of 1836, those who became stockholders might well be considered as having become so with a view to, and an acquiescence in, the liability created by the act; hut those who previously had become owners of stock, when no such liability had been provided for, would certainly have a right to complain if their stock could be taken from them to pay a debt for which they had not before been in any manner liable. ” When the opinions in Stanley v. Stanley, and in Coffin v. Rich, are read in the light of this clear declaration of the true limitations of legislative authority, their true meaning can not be misunderstood; and they do not at all conflict with the views of the Supreme Court of Ohio in Ireland v. Palestine Turnpike Co. supra.

It may be that the legislatures of Massachusetts and Maine have gone further than ours in the imposition of personal liability upon those who should, in the future, become stockholders in some classes of corporations; but so far as I have been able to discover, their courts have in no case gone so far as to impose new burdens on stockholders by statutes passed after they became such stockholders, where there was no power to do so reserved in laws in force at the time when such stockholders acquired their stock.

The position is, however, taken, that authority in the legislature to impose new liabilities upon a stockholder, by statutes passed after he has become a stockholder (upon the faith of a charter protecting him from such burdens), is to be found in the words of the constitution of 1848, wherein it is said: “Dues from corporations not possessing banking powers or privileges, shall be secured by such individual liability of the corporators, or other means, as may be prescribed by law. ”

It is said this “is not the expression of a grant of power, ” that it is not “the expression of a prohibition” upon the exercise of legislative discretion as to the terms of charters to be granted, and that it is not “a mere idle lecture to the General Assembly;” and “so, to give effect to the language,” it follows that this language was “designed 'to express the reservation of power in the General Assembly in granting charters, to provide, from time to time, ” for the securing of dues from corporations “by individual liability of the corpora-tors, or other means.” I agree that this clause is neither a grant of power, nor a limitation of power, nor a mere idle lecture to the General Assembly; but I can not accede to the postulate implied in the proposition, that if neither, it must be deemed a reservation of authority or power. It may, it seems to me, be an imperative mandate upon the General Assembly, which, by the obligation of the oath of each memher to “support the constitution, ” each member in the General Assembly is bound, in the discharge of his official duty, to regard and obey. This is the view of that clause expressed by this court in the late case of Gulliver v. Roelle et al.

Again,- it can not be a reservation of power in the legislature to rescind a grant of a property right given by the legislature, and accepted and paid for by the grantee, or to violate the obligations of a contract, or to take the private property of one and give it to another; for we have shown, upon the highest authority, that power to do these things does not lurk' within general words vesting in the General Assembly the legislative powers of the State, because such a power is not legislative, in the true sense. * It is impossible to reserve to the legislature a power it does not possess. Nothing, in the nature of things, can be reserved which is not possessed. It is well said, that without this clause the General Assembly, “under its general legislative powers, might, in creating corporations, provide any mode deemed advisable for securing the payment of debts to be contracted by them. ” It might well have been added, under its general legislative powers the General Assembly could not thereby impose any personal and new'liability upon a stockholder, at any time after he had become a stockholder, under law not imposing upon him such liability. That is the power involved here. If not derived from the general grant of legislative authority, but derived from this clause, it follows that this clause must be a grant of power not embraced in the general grant of legislative powers. The opinion says it is not the expression of a grant of power, while the judgment -in this case gives to it the effect of a grant of extra power.

It is said, “the language employed” (in this clause of the constitution) “does not require that this” (the making provision for securing such dues of corporations) “shall be done in'the charters, and made a condition precedent to the exercise of corporate powers,”—in other words, the exercise of this power after the subscription to the stock is not expressly prohibited. This may be true. It is equally true that it is not expressly provided that the power may be exercised after the rights of the stockholder shall have become fixed by his contract, under the law. It seems to me, therefore, that (it being conceded that the clause is not a grant of a new. power) the ' reasonable conclusion is, the General Assembly was thereby commanded to secure the payment of the dues from corporations by the exercise of “the legislative authority” vested in it by the general grant thereof, found in section 1, article 3, of the same constitution; and we have the highest authority, as we have seen, for saying that under that general grant such liability could not be imposed after the rights and liabilities of the stockholder' became fixed. The only individual liabilities ■ required to be used for securing dues from corporations are “such as may be prescribed by law.” If, in the absence of this clause, the General Assembly had no power to prescribe by law new burdens for the stockholder, except such as might be imposed before his rights and liabilities became fixed, then the requirement is by these words expressly limited to liabilities to be fixed prior to the contract of the stockholders.

To me the words of this section of the constitution of 1848 seem simple and plain. They seem to me to constitute, simply, the declaration 'of a duty imposed by the constitution upon the General Assembly to pass siich laws as, in the judgment of the General Assembly, might be wise, to secure dues from corporations, and this was to be done by the imposition upon the corporators of such personal liabilities as should be prescribed by law, or by such other means as might be prescribed by law. The mandate did not impose upon the legislature the duty of imposing upon corporators any liability whatever. The security was to be provided in that way, or by some “other means” to be prescribed by law. There is nothing in these plain and simple words suggestive of a power to be exercised which had been denounced in the highest courts of the land as violations of our social compact, destructive of indefeasible rights, and as not embraced in a general grant of legislative powers. Had it been even suspected that under these plain words lay hidden the power now claimed to arise from them, can any man suppose that capitalists from abroad could ever have been induced to become stockholders in any of the corporations by which the grand network of railroads has been constructed, which now bear off the products of every part of the State? Let it be remembered, that if this construction of that clause be the true one, every holder of a single share in every one of these corporations, successful or unsuccessful, by becoming such a stockholder put himself in the power of the General Assembly, and made himself liable to be made (by a mere statute to be thereafter passed) to pay, to the extent of his entire estate, the millions of debt incurred by the corporation, with no mode of escape which occurs to my mind. Few men would have exposed their entire fortunes voluntarily to such danger of unfriendly legislation. Fortunately for this country they did not then understand the full force of these seemingly harmless words in that constitution.

I am fully pursuaded that the conclusion reached by the court in this case is not that indicated by the law of the land, and it seems to me that the principles upon which it is placed, if carried to their logical results, must disturb rights which have ever been thought well protected under our constitution and institutions.

Mr. Justice Sheldon also dissents.

       At the time of filing this opinion Mr. Justice Dickey was Chief Justice.


source: Caselaw Access Project

author:
Mr. Chief Justice Craig
      Mr. Justice Walker,

license: Public Domain

text:
    The People ex rel. John Longress v. The Board of Education of the City of Quincy.

      Filed at Springfield January 16, 1882.

    1. Quo warranto—when the proper remedy—where boan-d of education undertakes to exercise powers it does not possess. Under our statute an information in the nature of a quo warra/nto lies against a board of education when it undertakes to exercise any powers not conferred by law, and in such proceeding the legality of any rule adopted by the board for the admission of pupils in the public schools may be tested.
    2. Schools—colored pupils■—discrimination against them as to what schools they may attend. The board of education of the city of Quincy divided the city into eight school districts, and by proper rules provided that no pupil should enter a school out of the district in which he or she resided, without permission of the superintendent, etc. The board also adopted a rule that no pupil of African descent should be permitted to attend any of the public schools of the city other than those designated for their use, and that all the colored pupils in the city should attend a certain public school in said city called the Lincoln school, and no other: Held, that the board, under the constitution and laws of the State, had no authority to adopt and enforce the rule in relation to colored pupils.
    3. Under the laws of Illinois, aside from the fourteenth amendment of the constitution of the United States, directors of schools and boards of education have no discretion to deny a pupil of the proper age admission to the public schools on account of nationality, color or religion. They all stand equal under the law, and no discrimination in that regard can be made.
    Writ of Error to the Circuit Court of Adams county; the Hon. John H. Williams, Judge, presiding.
    Messrs. John M. & John Mayo Palmer, for the plaintiff in error, contended that under our statute an information would lie in a case like this. Prima facie the rules and regulations complained of are contrary to the policy of the State, are unreasonable, and are inconsistent with the laws. That the board of education have no power to make class distinctions on account of race or color, counsel cited Chase v. Stephenson, 71 Ill. 385.

      Messrs. Wheat & Marcy, for the defendants in error:
    The question presented is, whether the case will authorize a judgment in quo warranto. At common law the. office of this proceeding was two-fold, viz: first, to oust the corporation from an usurped franchise; and second, to punish the corporation or its members, by fine or dissolution, for the misuse of its lawful franchise. High on Extraordinary Remedies, secs. 679, 680.
    But even for this purpose the proceeding must be against the officers or corporators, and not against the corporation itself. Chicago v. People, 80 Ill. 496.
    That the information does not lie against a public officer or municipal corporation for a particular illegal act, see People v. Whitcomb, 55 Ill. 172; High on Extraordinary Remedies, secs. 618 (and note 6j), 636, 686, 690 (and note 1); State v. Lyons, 31 Iowa, 432; State v. Chahaba, 30 Ala. 66; Cleaver v. Commonwealth, 34 Pa. St. 283.
    The statute (Hurd’s Stat. 1880, p. 800,) does not extend the remedy to cases like the present, because the phrase, “powers not conferred by law,” occurring in section 1, refers to usurped franchises, not powers to do particular acts. This is the construction given to the precisely similar statute of Indiana. State v. Kilbrick T. Co. 38 Ind. 71.
    The statute was never intended to apply to public corporations, the judgment authorized by section 6 being inapplicable to such corporations. Chicago v. People, 80 Ill. 511.
    The information in the nature of a quo warranto, under our statute, is in effect a criminal prosecution. The judgment imposes punishment by fine or ouster, or both, and hence the present proceeding is entirely misdirected. If a penalty for misconduct is to be inflicted, it should fall upon the members of the board, .and not upon the corporation. Donelly v. People, 11 Ill. 552; People v. M. and A. R.. R. Co. 13 id. 66; Wight v. People, 15 id. 417; Lavalle v. People, 68 id. 252; Attorney General v. Barstow, 4 Wis. 803.

      Again, it is settled that this proceeding does not lie to avoid the legislative action of a municipal body. High on Extraordinary Remedies, 689; State v. Lyons, 31 Iowa, 432.
    Again, this remedy lies only when there is no other remedy. High on Extraordinary Remedies, 643, 645.
    In this case mandamus lies. Trustees v. People, 87 Ill. 303.
    Action lies for damages. Rulison v. Post, 79 Ill. 567.
    Indictment lies. Rev. Stat. 1874, p. 983, secs. 100, 101.
   Mr. Chief Justice Craig

delivered the opinion of the Court:

This was an information in the nature of a quo warranto,■brought by the Attorney General, on the relation of John . Congress, against the Board of Education of the City of Quincy,- a corporation created by an act of the General Assembly, approved February 20,1861. Private Laws of 1861, page 252. The board of education is entrusted by law with the exclusive management and control of the public schools in the city of Quincy.

It is alleged in the information, that the board of education did, on, to-wit, the 31st day of July, 1878, divide the city of Quincy into eight districts, suitable and convenient for the inhabitants of the city, and did establish and maintain in each of said districts an efficient and suitable public school, for the accommodation of all the bona fide residents of each of the districts between the ages of six and twenty-one years, and by proper rules providing that no pupil shall enter a school out of- the district in which he or she resides, without permission of the superintendent, and that pupils, to be entitled to admission in any of the public schools, must be between the ages of six and twenty-one years, and bona fide residents of the city; and no pupil can be admitted into any public school without furnishing evidence to the principal that he or she has been vaccinated, or otherwise secured against the small-pox.

It is also averred in the information, .that on the 31st day of July, 1878, before that time and since, there was a large number, to-wit, five hundred persons of African descent, • commonly called “colored persons,” between the ages of six and twenty-one years, who for all that time have been and are now bona fide residents of said city of Quincy, and in the several school districts thereof, and have been and are at all times, and are now, ready to furnish to the principal of the proper school satisfactory evidence that they have been vaccinated; and the said persons do now reside, and at all times heretofore have in good faith resided, in the different school districts of said city so established by the said The Board of Education of the City of Quincy, and are entitled to be admitted into the public schools of the districts in which they respectively reside, without being directly or indirectly excluded therefrom on account of their descent or color; yet the said The Board of Education of the City of Quincy, during all the time aforesaid, without warrant or authority of law, have adopted, maintained and enforced, for the management of the public schools of said city, and to exclude the said persons of African descent, commonly called “colored persons, ” from the said public schools in the districts in which they reside, on account of their descent and color, the following pretended rules and regulations for the government and management of the public schools of said city, that is to say: “That the colored schools of said city shall be composed of colored pupils who shall be of the prescribed age, and bona fide residents of said city; that no pupil of African descent shall be permitted to attend any of the public schools of the city other than the colored schools, and that all the colored pupils in said city shall attend a certain public school in said city, called the Lincoln school, and no other.” All of which pretended rules and regulations for the government and management of said public schools in said city,, the said The Board of Education of the said City of Quincy, without authority of law, do maintain and enforce, to the damage of the People of the State of Illinois, and against the peace and dignity of the same.

The board of education filed- five pleas to the information, to which the Attorney General interposed a demurrer, which the court carried back and sustained to the information, and this decision of the court is assigned for error.

Whether a proceeding in the nature of a quo warranto, ■ instituted by the Attorney General, will lie in a case of this character at common law, is a question which it will not be necessary to determine. The object of the proceeding was to test the legality of the rules adopted by the board of education, -and if the statute is broad enough to authorize the court to inquire into the action of the board in adopting and enforcing the rules which excluded children of color from the public schools, then the information was proper, and the court erred in sustaining the demurrer.

Sec. 1, chap. 112, Rev. Stat. 1874, p. 787, provides, “that in case any person shall usurp, intrude into, or unlawfully hold or execute any office or franchise, * * * . or any corporation does or omits any act which amounts to a surrender or forfeiture of its rights and privileges as a corporation, or exercises powers not conferred by law, * * * the Attorney General, or State’s attorney,of the proper county, either of his own accord or &t the instance of any individual relator, may present a petition to any court of record of competent jurisdiction, or any judge thereof, in vacation, for leave to file an information in the nature of a quo ivarranto, * * * and if such court or judge shall be satisfied that there is probable ground for the proceeding, the court or judge may grant the petition, ” etc.

The board of education is a corporation created by law, clothed with the exercise of certain powers in relation to the public schools of Quincy. Now, if the board, in the discharge of its duties as a corporation, exercises powers not conferred by law, it is apparent that it will fall within the obvious meaning of the statute, unless the plain reading of the statute is to be disregarded. The very gist of the complaint here is, that the board of education, a corporation, is exercising powers not conferred by law, unless it had the right to adopt and enforce the rules set out in the information. We are therefore clearly of opinion that, under the statute, the Attorney General had the right to file the information.

This brings us to a consideration of the rules adopted and enforced by the board.

The board of education of the city of Quincy can exercise such powers, and only such, as are conferred upon it by the constitution and laws of the State. The inquiry then is, whether the rules adopted and enforced by the board, which exclude children of African descent from admission to the public schools which are provided for white children, are authorized by the laws of the State. It will not be necessary to determine what rights colored children had in our public schools prior to the adoption of our present constitution, as this case must be controlled by the terms of that instrument and the legislation which has followed since its adoption and ratification by the people.

Sec. 1, of art. 8, of the constitution of 1870, declares : “The General Assembly shall provide a thorough and efficient system of free schools, whereby all children of this State may receive a good common school education.” In pursuance of this provision of the constitution, which makes no distinction in regard to the race or color of the children of the State who are entitled to share in the benefits to be derived from our public schools, the legislature, in 1872, passed an act to establish and maintain a system of free schools. (Laws of 1870, p. 700.) Sec. 48 of the act provides, that “the directors of each district shall be a body politic and corporate, under a certain name. They shall establish and keep in operation, for at least five months in each year, and longer if practicable, a sufficient number of free schools for the proper accommodation of all children in the district, and shall secure to all such children the right and opportunity to an equal education in such free schools.” This section of the act was doubtless framed and adopted in view of the constitutional provision heretofore cited, and shows the clear intent of the legislature to make all children, regardless of race or color, between the ages of six and twenty-one years, beneficiaries, and entitled to the same rights and privileges in our free schools.

It may be that, under the terms of sec. 79 of the act, the section cited did not apply fully and in all respects to a city like Quincy, acting under a special act; but that fact we do not regard as material, in view of subsequent legislation on the same subject. In March, 1874, the legislature passed an act entitled “An act to protect colored children in their rights to attend public schools, ” the first section of which declares, “that all directors of schools, boards of education, or other school officers whose duty it now is or may be hereafter to provide, in their respective jurisdictions, schools for the education of all children between the ages of six and twenty-one years, are prohibited from excluding, directly or indirectly, any such child from such school on account of the color of such child. ” This section of the statute is so plain, and its terms are so clear, that its purport can not be misunderstood.

Under the amendment of the constitution of the United States, persons of color are citizens of the United States, and of the State where they may reside. Being citizens of the State, upon an equality with other citizens, there can be no doubt in regard to the power of the legislature to provide that no discrimination shall be made on account of color by boards of education who have the management and control of our free schools. Has the board of education disregarded and violated this section of the statute ? The answer to this, in our judgment, can not admit of a reasonable doubt. It appears from the information, that the city of Quincy was divided into eight school districts,—that colored children reside in each of them. Under the rules adopted, these colored children are excluded from the public schools in the district where they reside, and are all required to attend a school composed exclusively of colored children, known as the Lincoln school. Under the operation of these rules a colored child can not attend the school in the district where such child resides, on account of its color, but is compelled to travel perhaps several miles to a distant part of the city to a colored school. This is a direct violation of the statute, which says the board is prohibited from excluding, directly or indirectly, any such child from such school on account of color. Under the rules, no reason is assigned which prohibits a colored child from attending the school in the district where it resides, except on account of its color.

In Chase v. Stephenson, 71 Ill. 383, where a similar question arose, the court said: “While the directors very properly have large and discretionary powers in regard to the management and control of schools, in order to increase their usefulness, they have no power to make class distinctions, neither can they • discriminate between scholars on account of them color, race or social position. The free schools of the State are public institutions, and in their management and control the law contemplates that they shall be so managed that all children within the district between the ages of six and twenty-one years, regardless of race or color, shall have equal and the same rights to participate in the benefits to be derived therefrom. ”

What was said in the case cited must be regarded as authority here.

Much of the argument on behalf of defendants in error has been directed to the point that the fourteenth amendment to the constitution of the United States has no application to the questions presented by this record. Whether the fourteenth amendment would prohibit school directors or boards of education from excluding colored children from the public schools by the adoption and enforcement of such rules as have been adopted in this case, is a question, which we do not deem it necessary to determine here. We base our decision on the constitution and laws of the State. The people of the State have the right to make such a constitution, and enact such laws under it, as they deem for the best interests of the public, and so long as our laws do not conflict with the constitution of the United States they must be held valid and binding upon the people of the State. Under our law, aside from the fourteenth amendment, directors of schools and boards of education, like defendants in error, have no discretion to deny a pupil of the proper age admission to the public schools on account of nationality, color or religion.

A like view of the same question was taken in Clark v. Board of Directors, 24 Iowa, 266, where it is said: “All the youth are equal before the law, and there is no discretion vested in the board of directors, or elsewhere, to interfere with or disturb that equality. The board of directors may exercise a uniform discretion, equally operative upon all, as to the residence, or qualifications, or freedom'from contagious disease, or the like, of children, to entitle them to admission to each particular school; but the board can not, in their discretion or otherwise, deny a youth admission to* any particular school because of his or her nationality, religion, color, clothing, or the like.”

The case of State v. McCann, 21 Ohio St. 198, cited and relied upon, can have no bearing here, for the reason that boards of education in that State were authorized by statute to establish separate schools for colored children. Roberts v. City of Boston, 5 Cush. 198, relied upon by defendants in error, is distinguishable from this case. In Massachusetts, when the ease was decided, there was no statute in the State prohibiting the school authorities from establishing colored schools and excluding colored pupils from the other schools. It is there said: “In the absence of special legislation on this subject, the law has vested the power in the committee to regulate the system of distribution and classification, and when this power is reasonably exercised, without being abused or perverted by colorable pretences, the decision of the committee must be deemed conclusive. ”

Ward v. Flood, 48 Cal. 36, and Carey v. Carter, 48 Ind. 327, were both cases where the statute of the respective States provided for the education of white and colored children in separate schools.

In Hall v. DeCuir, 5 Otto, 506, the question here presented was not before the court, and what was said by Mr. Justice Clifford in a separate opinion, in relation to the bearing of the fourteenth amendment of the constitution on the questions here involved, can not be regarded as authority here.

Whether our constitution, and the acts of the legislature passed in pursuance of it which place all children, regardless of color, upon a perfect equality so far as admission into the public schools is concerned, are to be regarded as wise or unwise legislation, is a matter with which courts have no concern. We are bound to declare the law as we find it written, and if it is not satisfactory to any section of the State, the remedy is in the legislative department of the government, and there alone.

In conclusion, we are of opinion that the board of education of the city of Quincy had no authority to adopt and enforce the rules set out in the information, and the judgment will be reversed and the cause remanded.

Judgment reversed.

Mr. Justice Walker,

dissenting:

I am unable to hold that the writ of quo wcurranto can be maintained on the facts disclosed by this record. The constitutionality of the law under which' the board of education is acting, the election or qualification of its members, their power to divide the city into school districts, and to use all of the powers conferred by the law under which they are acting to maintain schools, or that they are performing that duty, are not questioned. But the complaint is, that the board has provided a school house, and by a rule of the board require all of the colored children of school age in the city to attend that school, thereby excluding them from the other city schools. There is no complaint that this building is not as commodious, as well furnished, and supplied with as competent teachers, as either of the other city schools.

It is urged that the rule which requires these children to attend this particular school is a usurpation of franchises and powers not granted by the charter, and for that reason the writ will lie, and is the proper remedy. It can not be successfully contended that this board do not have the •power to separate the school children to some extent, or for some purposes. That the board may separate the sexes, if not prohibited by law, or may provide school houses for children of particular ages or a certain advancement in education, or divide the same school into different grades, and require each to occupy separate rooms, I presume none will question. This is clearly a power the board possesses, and they usurp no power in its exercise. Possessing the power to separate to some extent and for some purposes, a mere mistake in its exercise, or a misapplication of the powers, surely can not be held a usurpation that must work a forfeiture of the charter and a dissolution of the corporation. And on a conviction, can any one suggest any other judgment sanctioned by the law that can be rendered ? I am aware of no other, nor has any been suggested.

To carry out one of the great and most cherished objects of our government,—the education of the youth of the State,— the general school system has been adopted, and the General Assembly, to further the same object, has granted this and a large number of other special charters. They, and the directors under the general law, are the instruments employed by the government to carry into effect this great purpose. This being true, can it be possible that districts under the general law, and under special charters, may be abolished by this writ because the directors or board of education may, as they all doubtless do, mistake their duties and powers ? Is it possible that by this writ the whole system may be abolished, or greatly embarrassed, and its efficiency destroyed ? Surely not. And yet, if the writ will lie in this case, I can perceive no reason why it will not lie in every case where the board of directors, or of education, mistake their duty. The purposes and the policy of the State can not be thus defeated, nor can we make arbitrary distinctions to prevent such results.

I hold that municipal bodies can not be dissolved by this writ, nor can corporations like this and other school districts be thus dissolved. They are -the creatures of the government, and are under legislative control, and when they abuse their powers, or usurp authority, the General Assembly will afford the correction by a repeal or amendment of their charters, if deemed necessary. The courts will, by mandamus and injunction, compel an observance of duty, but should not, nor can they rightfully, dissolve such organizations. If it were held that this writ would lie for such a purpose, then, under our statute, counties, cities, villages and townships could be dissolved by adjudging a forfeiture of their franchises, and townships and counties left without local government, which is indispensable under our institutions. To my mind it is clear that" no public corporation is amenable to this writ.

For what imaginable reason could the General Assembly have intended to confer power on the courts to dissolve a municipal body? Such organizations are created to serve the public, and are absolutely under the control of the General Assembly. If they or their officers abuse their power, the General Assembly may repeal their charter and terminate their existence, or impose penalties without a forfeiture being found and declared. Not so with private corporations, as they are not under legislative control, and their existence can only be terminated by surrender, or a forfeiture judicially declared. I therefore hold that the statute was not intended to, nor does it, confer such jurisdiction on the courts; but if it was, the creation, continuance and termination of municipal bodies is purely a legislative function. I can imagine nothing farther removed from judicial power than the creation or termination of a municipal corporation.' The exercise of such a power by the court would be to encroach upon the legislative power of the government. The power is so purely legislative that its exercise can not, even by express enactment, be conferred on the judicial department without a violation of article 3 of the constitution, which distributes the powers of the government. Even if the statute can be construed as conferring power to declare a forfeiture of this charter, it would violate that article, as that power is vested in the legislature, and can not be delegated to either of the other branches.

The purpose of this writ is to correct public, and not private, wrongs. It is an extraordinary remedy, that can be employed only by consent of the court on application for the purpose, and is not a writ of right. It is used to oust usurpers into public offices, and to dissolve private corporate bodies which are usurping power that belongs to the government until legally granted to the body. It is a quasi criminal offence for a person to intrude into a public office to which he has not been legally elected or appointed, and so of indivicluals who usurp privileges and franchises which can only be rightfully exercised by virtue of a grant from government. Hence the government has a right to inquire and be informed by what right an individual is exercising governmental functions, or of persons exercising franchises, the source from which they are derived, and by what authority they are exercising them; and on conviction they are punished for exercising governmental powers by usurpation and- wrong. If we hold the writ lies for every mistake by an officer or corporate body, for every official act of the one, or corporate act of the other, and it can thus be brought before the courts, and every mistake visited with a forfeiture, I think we would violate the statute, as this could not have been intended by the General Assembly.

If the officers of the board acted maliciously, and the children have been deprived of any right, the officers of the board are individually liable in case for the damages sustained. If they acted in good faith, in the belief that they were acting within the scope of their power, but were mistaken, and have deprived the children of any legal right, mandamus will correct the wrong and restore the right. For these reasons the writ does not lie. It only lies where there is no other remedy given by the law, but here there are two other remedies.

As I hold the writ does not lie, I refrain from expressing any opinion on other questions presented and urged in argument. I think the judgment of the court below should be affirmed.


author: Mr. Justice Dickey

text:
    Benjamin Berman v. The People of the State of Illinois.

      Filed at Springfield January 16, 1882.

    1. Appeal—when it will lie. Where, on the trial of a complaint to bind One over to keep the peace, the defendant is discharged, and the justice of .the peace renders judgment against the prosecutor for costs, on the ground that the complaint was malicious, the latter has the right to appeal to the circuit court from such judgment against him for the costs, he being a defendant as to that judgment.
    2. Same—of the questions arising on such appeal. In such case the defendant in the original proceeding can not be again tried. The appeal only presents the rightfulness of the judgment against the prosecutor for the costs of the original prosecution.
    Writ of Error to the Appellate Court for the Third District ;—heard in that court on appeal from the Circuit Court of Ford county.
    Benjamin Berman made complaint before a justice of the peace against Benjamin F. Payne, charging him with threats against the person of the complainant. Payne was accordingly arrested upon a warrant in the name of The People, etc., brought before the justice, and tried, whereupon the justice found that the “case was commenced maliciously, and without probable cause,” and entered judgment that Berman “pay the costs of the prosecution, and that plaintiffs have and recover judgment against him, for the said costs, taxed at $43.80.” From this judgment Berman appealed to the circuit court. That court, on motion, dismissed the appeal from the judgment of the justice of the peace, upon the ground that Berman had no right of appeal from such a judgment given by statute, and entered judgment against Berman, and in favor of Payne, for the costs incurred by Payne in the proceeding in the circuit court. From this judgment Berman appealed, and on hearing, the judgment of the circuit court was affirmed in the Appellate Court for the Third District. To reverse this judgment of the Appellate Court, Berman brings the record here upon writ of error.
    Messrs. Tipton & Ryan, for the plaintiff in error,
    in support of the right to bring in review the judgment against him for costs, cited Kimball v. Riter, 25 Ill. 276; Holliday v. Sugart, 56 id. 44; Reiman v. Ater et al. 88 id. 300.
    It could make no difference that the proceeding was in the o name of the People against another, person. Huskins v. The People, 82 Ill. 195; Webster v. The People, 14 id. 366.
    Mr. James McCartney, Attorney General, for the People,
    insisted there was no such right in the plaintiff in error. One who is not a party to a suit can not appeal. Rorke v. Goldstein, 86 Ill. 568. Sec. 329, chap. 38, Rev. Stat. excludes the plaintiff in error from the right of appeal.
   Mr. Justice Dickey

delivered the opinion of the Court:

This case presents the question whether an appeal to the circuit court will lie from the judgment of a justice of the peace for- costs, rendered against the prosecuting witness, upon the trial of a cause instituted under div. 5 of our Criminal Code, to prevent a breach of the peace, upon the finding by such justice, under sec. 323, “that the prosecution was commenced maliciously, without probable cause. ”

The right of appeal is a statutory right, and can not be sustained unless provided by statute. The proceeding in question is authorized by div. 5 of chap. 38, Rev. Stat. 1874, wherein the jurisdiction to render such judgment is conferred upon justices of the peace. Jurisdiction in certain other criminal matters is conferred upon justices of the peace by div. 9, of the same chapter, and in sec. 389 (found in the latter division) it is provided, that “the defendant may appeal from the judgment of the justice of the peace in criminal cases, to the circuit court. ” If this judgment be held to be in a criminal case, and if the party appealing be a “defendant,” the right to appeal is expressly given by this section.

The proceeding in question is of a dual character. The primary proceeding is against the person charged with threatening a breach of the pbáee. In this the People of the State of Illinois are plaintiffs, and the party so accused is the defendant; If he be" discharged by the justice of the peace,^ another and secondary proceeding is authorized by this statute, in which the accuser in the primary proceeding becomes the accused in the secondary proceeding, charged with the offence of having instituted the primary proceeding “maliciously, without probable cause, ” and if found guilty of that offence is to be punished by a judgment against him for the amount of the costs in the whole proceeding. In this secondary proceeding/ whatever may be the form of the entries, it is plain the People of the State of Illinois properly occupy the position of plaintiffs, and the prosecuting witness in the primary proceeding is the real defendant. The judgment rendered by the justice in this ease is “that the complainant” in the primary proceeding, “Ben Berman, pay the costs of the prosecution, and that the plaintiffs” (the People) “have and recover judgment against him for the said costs, taxed at $43.80.” Berman is clearly the defendant in this judgment, and if execution issued thereon, its appropriate form would be to collect a sum adjudged against him in a proceeding in which the People, etc., were plaintiffs, and the said Berman defendant. It is, in this regard, not unlike proceedings' for contempt in chancery causes to enforce for a party some order of the court. Whatever the relation of the party charged with contempt may be to the chancery cause, he takes in the proceeding for contempt the position of defendant, against the- People as plaintiffs.

In view of the real nature of this judgment, and in view of the general policy of our statutes as to appeals from final judgments rendered by justices of the peace, we can not doubt that the case comes within the terms of the statute, when properly construed. The circuit court, therefore, was in error in refusing to entertain the appeal. The question is asked, what is to be tried at the hearing in the circuit court ? Certainly Payne is not to be tried again, for he was discharged by the justice, and no appeal lies to that judgment. The only question for the circuit court is, was the prosecution of Payne commenced by Berman “maliciously, without probable cause;” and the case ought to be entitled, “The People, etc. v. Berman, accused of malicious prosecution without probable cause. ”

The judgment of the Appellate Court is therefore reversed, and the cause remanded for further proceedings in accord with the views here expressed.

Judgment reversed.

Mr. Justice Walker : I am unable to concur in this case.