THOMAS
J.
The
bill sought to enjoin respondents from filing a certified
copy of amendment to corporate charter of Winona Coal
Company, and from doing corporate acts thereunder.
The
alleged amendment purports to have been adopted after due
notice by the holders of two-thirds in value of outstanding
stock in said corporation, who will (1) authorize the
issuance of stock, common or preferred, without nominal or
par value; (2) "change the par value of the shares of
stock from one hundred dollars per share to common stock
without nominal or par value"; and (3) increase the
capital stock of the corporation from 100 shares of common
stock of the par value of $100 per share, to 11,000 shares of
stock without nominal or par value, of which 10,000 shares
would be common stock, and 1,000 shares preferred stock.
The
original articles of incorporation recited as to its
capitalization that--
"The amount of the total authorized capital stock of the
said *** corporation is ten thousand dollars, of the par
value of one hundred dollars per share; and that the amount
of capital stock with which said proposed corporation will
begin business is three thousand dollars. *** That the names
and post office addresses of the incorporators, and the
number of shares of stock subscribed for," were as
stated and paid in as so subscribed by the complainants
Dimmick and Aldridge.
The
equity of the bill is grounded on the assumption that
sections 2 and 3 of the "Non Par Act," by Mr.
Acker, approved September 26, 1919 (Gen.Acts, p. 698), are in
violation of sections 234 and 237 of the Constitution of
1901. It is averred that--
"*** The said officers, complying with such certificate,
will issue certificates of stock of said corporation without
nominal or par value in lieu of and in exchange for existing
certificates of the shares of stock of said corporation now
outstanding, claiming authority so to do under section 3 of
the act of the Legislature of Alabama approved September 26,
1919, entitled 'an act to prescribe the various classes
of stock that may be issued by corporations, to declare the
rights, powers and limitations of the holders of the same,
and to prescribe the methods of authorizing the issue
thereof, and to provide a remedy against any unauthorized or
illegal issue thereof heretofore or hereafter made, and a
statute of limitations barring that or any other remedy
against the same;' *** that said officers and directors
have contracted to sell and will issue preferred stock of
said corporation without nominal or par value in pursuance of
the authority conferred by sections 2 and 3 of said act of
September 26, 1919 (Acts 1919, p. 698), which said preferred
stock will have the preferences and rights set forth
in the *** purported amendment of said charter; *** that said
new shares of stock, both common and preferred, will be sold
at a price less than $100 per share, regardless of the fact
that orator heretofore paid $100, the full par value of the
shares of stock so owned by him, and regardless of the fact
that the value of complainant's shares will be seriously
diminished thereby; *** that the act of said corporation in
exchanging such shares of stock without nominal or par value
for shares of stock of said corporation now outstanding, and
the proposed issue and sale of common stock without nominal
or par value, is without authority of law. ***"
The
duty of this court in passing upon the constitutionality of
legislative acts has often been defined. Lovejoy v. City
of Montgomery, 180 Ala. 473, 61 So. 597; Fairhope
S.T. Corp. v. Melville, 193 Ala. 289, 306, 69 So. 466;
McDavid v. Bank, 193 Ala. 341, 350, 69 So. 452;
State ex rel. Mobile v. Commissioners, 180 Ala. 489,
61 So. 368; Ex parte Bozeman, 183 Ala. 91, 63 So. 201. It is
elemental that one assailing a statute on the ground that it
is unconstitutional assumes the burden of vindicating his
position, and that the constitutional provisions designed for
the security of the elementary rights of life, liberty, and
property should be construed liberally in favor of the
citizen. State ex rel. Meyer v. Greene, 154 Ala.
249, 254, 46 So. 268, and authorities collected in
Williams v. Schwarz, 197 Ala. 40, 46, 47, 72 So.
330, Ann.Cas.1918D, 869; Denson v. Ala. F. & I. Co.,
198 Ala. 383, 393, 73 So. 525.
Of
pertinent constitutional provisions is the general authority
of the Legislature to enact laws for the formation and
government of domestic corporations, derived from section
229, as follows:
"The Legislature shall pass no special act conferring
corporate powers, but it shall pass general laws under which
corporations may be organized and corporate powers obtained,
subject, nevertheless, to repeal at the will of the
Legislature; and shall pass general laws under which charters
may be altered or amended. The Legislature shall, by general
law, provide for the payment to the state of Alabama of a
franchise tax by corporations organized under the laws of
this state, which shall be in proportion to the amount of
capital stock; but strictly benevolent, educational or
religious corporations shall not be required to pay such a
tax. The charter of any corporation shall be subject to
amendment, alteration or repeal under general laws."
This
power is subject to the inhibitions of the Constitution, of
which are section 234:
"No corporation shall issue stocks or bonds except for
money, labor done, or property actually received; and all
fictitious increase of stock or indebtedness shall be void.
The stock and bonded indebtedness of corporations shall not
be increased except in pursuance of general laws, nor without
the consent of the persons holding the larger amount in value
of stock, first obtained at a meeting to be held after thirty
days' notice, given in pursuance of law."
The
further provisions are that "no corporation shall issue
preferred stock without the consent of the owners of
two-thirds of the stock of said corporation" (section
237); and that--
"The Legislature shall have the power to alter, amend or
revoke any charter of incorporation now existing and
revocable at the ratification of this Constitution, or any
that may be hereafter created, whenever, in its opinion, such
charter may be injurious to the citizens of this state, in
such manner, however, that no injustice shall be done to the
stockholders." Section 238.
The
fact that within the last few years 21 states of the American
Union--Alabama, Acts 1919, p. 698; California, Laws 1917, c
215, 701; Colorado, Sess.Laws 1919, pp. 347, 350, § 3;
Delaware, Laws 1917, c. 113, § 4a; Gen. Corp.Law 1920, p. 15,
§ 4a; Idaho, Laws 1921, S.B.193, p. 413; Illinois, Laws 1919,
H.B.664, p. 312; Kansas, Laws 1921, H.B.261, p. 234; Maine,
Laws 1917, c. 144; Maryland, Business Corp. Law (1920), as
amended by chapter 545; Massachusetts, Laws 1920, c. 349, p.
361; New Hampshire, Laws 1919, c. 92; New Jersey, Laws 1920,
c. 168; New York, Stock Corp. Law (Consol.Laws, c. 59) §§
19-24; North Carolina, Laws 1921, c. 116; Ohio, Laws 1919,
S.B.210, p. 1287, as amended by Laws, 1920, subs. 1, S.B.67,
p. 273; Pennsylvania, Laws 1919, c. 363 (Pa. St.1920, §§
5656-5667); Rhode Island, Laws 1920, c.1925; Utah, Laws 1921,
c. 22; Virginia, Laws 1919, c. 48; West Virginia, Laws, 1st
Extra Sess.1920, c. 3; Wisconsin, Laws 1919, c. 681, p.
1230--have enacted laws providing for the organization of
corporations with "non-par" capital stock, having
no par or face value or for the amendment of existing
charters to authorize the issue of such capital stock, is an
unimportant consideration in a decision of the question of
the constitutionality of the Alabama statute containing the
provision that--
"Sec. 3. Any corporation heretofore or hereafter
organized under the laws of the state of Alabama, other than
building and loan associations, insurance companies, banks
and trust companies, may if so provided in its certificate of
incorporation or any amendment thereof or joint agreement of
merger or consolidation duly adopted as provided by the laws
of Alabama, issue shares of stock, either common or
preferred, without any nominal or par value. Every share of
such stock without nominal or par value shall be equal to
every other share of such stock, except that the certificate
of incorporation or any amendment thereof or joint agreement
of merger or consolidation may provide that such stock shall
be divided into different classes with such preferences,
designations and voting powers or
restrictions or qualifications thereof as shall be stated
therein, but all common stock issued shall be subordinate to
the preferences given to preferred stock, if any. Unless
otherwise provided in the certificate of incorporation or any
amendment thereof or joint agreement of merger or
consolidation, stockholders shall be entitled to one vote for
each share of such stock owned by them and may vote either in
person or by proxy. Stock without any nominal or par value
may be issued by the board of directors of the corporation
from time to time for such consideration as may be fixed form
time to time by the board of directors thereof, pursuant to
authority conferred in the certificate of incorporation or
any amendment thereof or joint agreement of merger or
consolidation, or if
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