Cowling v. Zenith Iron Company

• Decision Date: 24 June 1896
• Docket Number: 9910--(225)
• Citation: 68 N.W. 48,65 Minn. 263
• Parties: JOHN COWLING v. ZENITH IRON COMPANY and Others
• Court: Minnesota Supreme Court

68 N.W. 48

65 Minn. 263

JOHN COWLING v. ZENITH IRON COMPANY and Others

Nos. 9910--(225)

Supreme Court of Minnesota

June 24, 1896

Action in the district court for St. Louis county. The complaint alleged, among other things, that defendant was, and since March, 1892, had been, a corporation organized and existing under and by virtue of the provisions of Laws 1876, c. 28 and the acts amendatory thereof and supplemental thereto (G S. 1894, §§ 2827-2837). From an order, Ensign and Moer, JJ., overruling a demurrer to the complaint, defendant Carpenter appealed. Reversed.

This disposes of the case, and the order appealed from is reversed.

Towne & Davis and Billson, Congdon & Dickinson, for appellant.

In construing Const. art. 10, § 3, we must recur to the condition of the constitution before it was amended, and consider the occasion, necessity, and object of the amendment. Minnesota & P. R. Co. v. Sibley, 2 Minn 1 (13). See Cooley, Const. Lim. 65. The object was to encourage manufacturing. State v. Minnesota T. Mnfg Co., 40 Minn. 213, 222, 41 N.W. 1020. Remedial laws are to be liberally construed. Martin v. Wakefield, 42 Minn. 176, 43 N.W. 966; White v. The Mary Ann, 6 Cal. 462; Sutherland, St. Const. § 207; Smith, St. & Const. Constr. § 491; Cooley, Const. Lim. 79. To give effect to the legislative intention, the ordinary meaning of the words "manufacturing corporations" may be enlarged or restricted. People v. Horn Silver Min. Co., 105 N.Y. 76, 11 N.E. 155; Commonwealth v. Northern E. L. & P. Co., 145 Pa. 105; 38 Amer. & Eng. Corp. Cases, 651, 657, 22 A. 839; Attorney General v. Lorman, 59 Mich. 157, 26 N.W. 311; People v. Wemple, 129 N.Y. 543, 29 N.E. 808. The provision of the constitution imposing upon stockholders a liability for the debts of the corporation is in derogation of common right, and to be extended no further than strict construction carries it; and the exception must be liberally construed. If the language leaves a reasonable doubt whether such a liability was intended to be imposed, the doubt must be resolved against the liability. Sutherland, St. Const. §§ 366, 371, 400; Gray v. Coffin, 9 Cush. 192, 199; Dane v. Dane Mnfg. Co., 14 Gray, 488; Chase v. Lord, 77 N.Y. 1; Danvers v. Boston, 10 Pick. 513; Moyer v. Pennsylvania Slate Co., 71 Pa. 293; Detroit v. Chaffee, 70 Mich. 80, 37 N.W. 882; Detroit v. Putnam, 45 Mich. 263, 7 N.W. 815; Wakefield v. Fargo, 90 N.Y. 213; Coffin v. Rich, 45 Me. 507; Cook, Stock & Stockh. § 214. See Sutherland, St. Const. § 348. With reference to the words "manufacturing or mechanical business," the rule is to be observed which requires laws to be so construed, if possible, that effect shall be given to the whole of the language employed. State v. City of St. Paul, 36 Minn. 529, 32 N.W. 781; Brown v. Balfour, 46 Minn. 68, 48 N.W. 604; Roberts v. Chicago, St. P., M. & O. Ry. Co., 48 Minn. 521, 530, 51 N.W. 478; Harrington v. Smith, 28 Wis. 43, 67. This rule is applicable with special force to written constitutions. Cooley, Const. Lim. 58. It forbids construing "mechanical" as having the same meaning as "manufacturing." The language of the constitution is necessarily couched in broader and more general phrases than legislative acts. Houseman v. Commonwealth, 100 Pa. 222, 232; Endlich, Interp. St. 506. Words not having a fixed legal meaning should be construed in their broadest sense. County of Hennepin v. Grace, 27 Minn. 503, 8 N.W. 761; County of Hennepin v. Bell, 43 Minn. 344, 45 N.W. 615; County of Ramsey v. Church of Good Shepherd, 45 Minn. 229, 47 N.W. 783. If necessary, the meaning should be construed so broadly as to apply to conditions or means not then contemplated. Henshaw v. Foster, 9 Pick. 312, 317; Sutherland, Const. § 430. See Finnegan v. Noerenberg, 52 Minn. 239, 245, 53 N.W. 1150; Thompson, Corp. § 148.

The construction given by the legislature in Laws 1876, c. 28, is in accordance with the construction contended for. This enactment involved a construction of the constitution as having such meaning and effect as to justify the legislature incorporating in the law, then enacted for the organization of mining companies, the provision and inducement that such corporations should be exempt from stockholders' liability. To thus construe the constitution was a proper exercise of legislative power. Cooley, Const. Lim. 182, et seq. Such determination, when carried into effect by legislative enactment founded thereon, is to be respected by the judiciary. City of Faribault v. Misener, 20 Minn. 347 (396); Ames v. Lake Superior & M. R. R. Co., 21 Minn. 241, 288, 289; Cooley, Const. Lim. 67-70, 183; Sedgwick, Constr. Stat. (Pomeroy's Ed.) 412; Endlich, Interp. St. 527; Sutherland, St. Const. § 229; Edwards v. Darby, 12 Wheat. 206-210; United States v. Union Pacific Ry. Co., 148 U.S. 562, 13 S.Ct. 724; Union Ins. Co. v. Hoge, 21 How. 35, 66; Harrington v. Smith, 28 Wis. 43; State v. Timme, 54 Wis. 318, 340, 11 N.W. 785. And see Carson v. Smith, 5 Minn. 58 (78); State v. Cronkhite, 28 Minn. 197, 201, 9 N.W. 681; State v. Lee, 29 Minn. 458, 13 N.W. 913; Lovell v. Seeback, 45 Minn. 465, 48 N.W. 23; Bruce v. Schuyler, 4 Gilm. (Ill.) 221.

Pealer, Titus & Lemmon, for respondent.

To come within the exception, a corporation must be organized for carrying on an exclusively manufacturing or mechanical business or a business strictly incidental to or properly connected therewith. See State v. Minnesota T. Mnfg. Co., 40 Minn. 213, 223, 41 N.W. 1020; Mohr v. Minnesota E. Co., 40 Minn. 343, 346, 41 N.W. 1074; Arthur v. Willius, 44 Minn. 414, 416, 46 N.W. 851; Densmore v. Shepard, 46 Minn. 54, 60, 48 N.W. 528, 681; First Nat. Bank v. Winona Plow Co., 58 Minn. 167, 173, 59 N.W. 997; Oswald v. St. Paul Globe Pub. Co., 60 Minn. 82, 61 N.W. 903. To ascertain the "purpose" for which the corporation is "organized," we must look (1) to its articles of incorporation; (2) to the business it actually engaged in; (3) to the statutes under which its articles were made. Defendant was organized in 1892 under Laws 1876, c. 28, and the acts amendatory or supplemental thereto. By Laws 1876, c. 28, § 8, as amended by Laws 1881, c. 27, § 4, any corporation organized under this act may take, acquire, and hold stock in any other corporation, if the majority in amount of stockholders so elect. This section is as much a part of the powers of the company as if the same had been incorporated in its articles. See Cook, Stock & Stockh. § 3, note 1; 4 Am. & Eng. Enc. Law, 207; 1 Beach, Priv. Corp. § 26; 1 Morawetz, Priv. Corp. § 316. A mining corporation is not a manufacturing corporation. See Dudley v. Jamaica P. A. Co., 100 Mass. 183; Appeal of Commonwealth, 25 Am. & Eng. Corp. Cas. 324. See 14 Am. & Eng. Enc. Law, 256, 257, and note, 264, 269, and note 1; State v. Minnesota Thr. Mnfg. Co., 40 Minn. 213, 41 N.W. 1020. Both "manufacturing" and "mechanical" are used in reference to the business of making, creating, or constructing something. Finnegan v. Noerenberg, 52 Minn. 239, 53 N.W. 1150. The encouragement of manufacturing was the purpose of this amendment. State v. Minnesota T. Mnfg. Co., supra. The general policy of the state, as expressed in the constitution, being that stockholders of corporations should be individually liable to the amount of their stock, the exception should be strictly construed. Arthur v. Willius, 44 Minn. 414, 46 N.W. 851. Sutherland, St. Const. § 328. "Manufacturing," "mechanical," and "mining" have a distinct sense. See Laws 1870, c. 26. Words may be expanded or limited in accordance with the intent, even should it be contrary to the letter of the statute or the constitution. Sutherland, St. Const. §§ 218, 237, 241, 246, 272, 273; 3 Am. & Eng. Enc. Law, 678; Barker v. Kelderhouse, 8 Minn. 178 (207); Grimes v. Bryne, 2 Minn. 72 (89). This court has invariably referred to this amendment as exempting "manufacturing" corporations alone. State v. Minnesota T. Mnfg. Co., supra; Mohr v. Minnesota El. Co., 40 Minn. 343, 41 N.W. 1074; Arthur v. Willius, supra; Willis v. Mabon, 48 Minn. 140, 50 N.W. 1110; Oswald v. St. Paul Globe Pub. Co., supra. Laws 1876, c. 28, is an attempted construction of the constitution by the legislature, which is for the judiciary. Rice v. Austin, 19 Minn. 74 (103). In the Matter of the Application of the Senate, 10 Minn. 56 (78); Cooley, Const. Lim. 57-59; Sutherland, St. Const. § 41; 3 Am. & Eng. Enc. Law, 673, 681; Bingham v. Supervisors of Winona Co., 8 Minn. 390 (441); Greenough v. Greenough, 11 Pa. 489; De Chastellux v. Fairchild, 15 Pa. 18; Cooley, Const. Lim. 109; Sutherland, St. Const. § 402.

Draper, Davis & Hollister, for Marshall-Wells Hardware Company, intervenor.

That portion of Laws 1876, c. 28, § 3, declaring that corporations organized thereunder should be deemed to be manufacturing and mechanical corporations, is unconstitutional. It has no binding force upon the courts nor should it influence their decision. Cooley, Const. Lim. 78, 87, 94; Ervine's Appeal, 16 Pa. 266; People v. Judge Twelfth District, 17 Cal. 548, 559; Meyer v. Berlandi, 39 Minn. 438, 40 N.W. 513; Norton v. Shelby County, 118 U.S. 425, 6 S.Ct. 1121; Poindexter v. Greenhow, 114 U.S. 270, 5 S.Ct. 903, 962. As a question of judicial construction, independently of the provisions of Laws 1876, c. 28, defendant company is not a corporation organized for the purpose of carrying on a manufacturing or mechanical business within the meaning of the exception. State v. Minnesota T. Mnfg. Co., 40 Minn. 213, 41 N.W. 1020; Mohr v. Minnesota E. Co., 40 Minn. 343, 41 N.W. 1074; Arthur v. Willius, 44 Minn. 409, 46 N.W. 851; Densmore v. Shepard, 46 Minn. 54, 48 N.W. 528, 681; First Nat. Bank v. Winona Plow Co., 58 Minn. 167, 59 N.W. 997. The power conferred upon defendant company to hold stock in any other...