In Re Edwards , 45 Idaho 676 ( 1928 )

Such a lengthy dissent would be unjustified here except for three considerations: (1) The majority opinion contents itself with a mere conclusion of the constitutionality of the acts, which cannot be supported by precedent, authority, or reason. (2) Having been originally assigned the task of writing the decision of the court, and already written for such purpose what I here set forth, it involves little additional loss of time or labor. (3) A simple dissent, without citation of precedent or authority, would be no more justifiable, under the circumstances, than a bare declaration of the constitutionality of the act, without it. Lengthy discussion of the unconstitutionality of the act by a minority opinion, is not without precedent. (Jackson v. Gallet, 39 Idaho 382,228 P. 1068.) Nor is the discussion therein met by the majority opinion here.

It is contended that the acts involved violate sec. 19, art. 3, and sec. 3, art. 11, of the constitution. Sec. 2, art. 11, provides:

"No charter of incorporation shall be granted, extended, changed or amended by special law, except for such municipal, charitable, educational, penal or reformatory corporations as are or may be, under the control of the state; but the legislature shall provide by general law for the organization of corporations hereafter to be created. . . . ."

Sec. 19, art. 3, prohibits the passing of local or special laws "creating any corporation."

Sec. 16, art. 11, provides:

"The term 'corporation' as used in this article, shall be held and construed to include all associations and joint stock companies having or exercising any of the powers or privileges of corporations not possessed by individuals or partnerships."

An "association" is defined:

"An organized union of persons for a common purpose; a body of persons acting together for the promotion of some object of mutual interest or advantage." (Cent. Dict.)

"Any combination of persons whether the same be known by a distinctive name or not. Stroud, Jud. Diet." (1 Bouvier's Law Dictionary, 8th ed., p. 269.)

"An associating, or state of being associated; union; connection, whether of persons or things. . . . .

"Union of persons in a company or society for some particular purpose. . . . ." (Webster's New International Dictionary (1926), p. 140.)

"The court will 'look behind the name to the thing named. Its character, its relations, and its functions determine its position, and not the mere title under which it passes.' " Fletcher's Cyc. of Corporations, sec. 231.)

"Where the powers given are in such language as to make a corporation in effect, it will be so declared, although not actually expressed to be so by the Legislature. Whether an aggregate of individuals is a corporation is to be determined by the faculties and powers conferred on it, rather than by the name or description given to it. . . . . Express words are not necessary to create a corporation; the principle obtains that a corporation may be created by implication." (1 Thompson on Corporations, 3d ed., secs. 172, 173.)

"It is, indeed, a principle of law which has been often acted on, that where rights, privileges, and powers are granted by law to an association of persons, by a collective name, and there is no mode by which such rights can be enjoyed, or such powers exercised, without acting in a corporate capacity, such associations are, by implication, a corporation so far as to enable them to exercise the rights and powers granted." (Angell Ames on Corporations, 9th ed., sec. 78.)

The proceedings and debates of the Constitutional Convention show that sec. 16, art. 11, of the constitution was adopted in face of an objection that "we all know what a corporation is." (2 Const. Conv., p. 1106.) There then were certain well-known and recognized powers and privileges distinctive of corporations, not possessed or enjoyed by individuals or partnerships, then a part of Revised Statutes, sec. 2633, continued in force by the constitution. Many states had adopted similar provisions. (2 Hough on American Constitutions, pp. 645, 811.) And many courts had interpreted them.

Decisions which might appear to support the constitutionality of these acts will be found, upon analysis, to have arrived at their result either under different constitutional provisions, such as not applicable to public corporations, or applicable only to private corporations, or that the corporation was not of the kind prohibited, and thus not in the contemplation of the constitution, or a quasi corporation, and thus not a corporation at all.

The courts of New Jersey, Mississippi, California and Texas have held that their constitutional prohibitions are directed against creation of private corporations. (Pell v. Newark, 40 N.J.L. (11 Vroom) 550; Van Cleve v. Passaic Valley SewerageCommrs., 71 N.J.L. 183, 58 A. 571; Feemster v. City ofTupelo, 121 Miss. 733, 83 So. 804; Middleton v. Texas Power Light Co., 108 Tex. 96, 185 S.W. 556.) The California courts, for a long time, both before and after some of the decisions cited in Reclamation District v. Sherman, 11 Cal. App. 399,105 P. 277, had held similar districts to be corporations, referring to them in various terms; but that case, citingPeople v. Reclamation District, 117 Cal. 114, 48 P. 1016, as its original basis, and Reclamation District v. SacramentoCounty, 134 Cal. 477, 66 P. 668, reached the conclusion that such corporations are not private or municipal, are of an entirely different kind not contemplated by, or prohibited by, the constitution. People v. Reclamation District, 117 Cal. 114,48 P. 1016, stated that such corporations have "no attribute or quality whatever of a corporation of any kind"; yet after that, seemed to find it necessary to support its conclusion by a recital that even if the district were a corporation, it was not municipal or private, and thus not within the constitutional inhibition. Beach v. Leahy, 11 Kan. 23, holds that a school district is but a quasi corporation, and not contemplated by the constitution as among public corporations, and that only corporations proper are included in the intent of the constitution. To the same effect, are Carson v. St. FrancisLevee Dist., 59 Ark. 513, 27 S.W. 590, and St. Louis, I. M. S. Ry. Co. v. Board of Directors, 103 Ark. 127, 145 S.W. 892, and Reelfoot Lake L. Dist. v. Dawson, 97 Tenn. 151,36 S.W. 1041, 34 L.R.A. 725, as to levee districts.

Duffy v. City of New Orleans, 49 La. Ann. 114, 21 So. 179, often cited, has been wholly repudiated. State v. Flower, 49 La. Ann. 1199, 22 So. 623, specifically declares that the body there under consideration was a corporation. (See, also, Statev. Kohnke, 109 La. 838, 33 So. 793.)

State v. Stewart, 74 Wis. 620, 43 N.W. 947, 6 L.R.A. 394, holds that a commission of a drainage district is not a, corporation, without much reasoning in its support. This case has been construed by Judge Sanborn, one time one of the ablest of counsel in Wisconsin, in Globe Elevator Co. v. Andrew (C. C.), 144 Fed. 871, wherein he holds that a grain and warehouse commission is a corporation within the letter of the Wisconsin constitution, but that as the state court of Wisconsin had held in the Stewart case that such corporations were not within the spirit of the constitution, he would follow the state court in that matter.

Brattleboro Savings Bank v. Board of Trustees (C. C.), 98 Fed. 524, holds that a township is not a corporation within the meaning of the constitution of Ohio; that the prohibition against "conferring corporate powers" has no application to a township. But the Ohio cases as to state institutions seem to have arrived at their conclusion upon the ground that the legislature had power under another section of the constitution to establish benevolent and other state institutions, and that "conferring corporate powers" thereon was not the creation of a corporation. (See Neil v. Ohio Agricultural MechanicalCollege, 31 Ohio St. 15 (21), and Thomas v. Ohio StateUniversity Trustees, 195 U.S. 207, 25 Sup. Ct. 24,49 L. ed. 160.) Turner v. City of Hattiesburg, 98 Miss. 337, 53 So. 681, reaches the same conclusion as to a state normal college upon the same reasoning.

Many of the adjudications seem to bear the imprint of expediency, perhaps best indicated by 1 Fletcher on Corporations, sec. 230, which says:

"In determining the construction to be placed on the constitutional prohibition, the absence of a constitutional requirement that legislation be uniform, legislative exposition of the prohibitory provision, the situation of the state's corporation law as regards the existence of bad and vicious special charters, and expediency, would seem to be factors to be considered."

Expediency has no weight or place here. (State v. Arregui,44 Idaho 43, 254 P. 788.) City of Tyler v. Texas Employers' Ins.Assn. (Tex.Com.App.), 294 S.W. 195), although considering another phase of constitutionality, used this language:

"Public policy cannot be contrary to the express provisions of the Constitution. When that instrument speaks, the matter is indelibly settled, and its wisdom cannot be questioned."

Those cases which rest upon distinctions that the entity under consideration is not the kind of corporation prohibited, in contemplation of the constitution, or quasi corporations, and thus not prohibited as corporations at all, can be of little force here, for our constitution makes no distinction under which any corporation, public or private, except "such municipal, charitable, educational, penal or reformatory corporations as are or may be under the control of the state," can escape the inhibition; nor can such entity be a quasi corporation and escape. While corporations in Idaho may bequasi public, quasi municipal or quasi private, depending upon their similarity to such or either of such corporations, thequasi character or resemblance of an association must stop short of the grant or exercise of powers or privileges possessed or exercised by corporations, and not possessed by individuals or partnerships, or it will be a corporation. Under our constitution, the term "quasi corporation" is inapplicable to an association having such powers. It is a corporation, though it may still be quasi public, quasi private or quasi municipal, or the like, as the term is sometimes defined, depending upon its similarity to such, or either of such, corporations. But, possessing such powers or privileges, it cannot be denied to be a corporation by the application of any such qualifications as "quasi." Of this term, the court inSchool District No. 56 v. St. Joseph Fire M. Ins. Co., 13 Otto (U.S.), 707, 26 L. ed. 601, says:

"In response to this it is said that a school district is only a quasi corporation, and does not come within the constitutional provision. What is meant by the words quasi corporation, as used in the authorities, is not always very clear. It is a phrase generally applied to a body which exercises certain functions of a corporate character, but which has not been created a corporation by any statute, general or special."

It is argued that the Idaho State Bar and the Bar Commission are but governmental agencies. To argue that an entity is a governmental agency does not negative its being a corporation. (Gross v. Kentucky Board of Managers, 105 Ky. 840, 49 S.W. 458, 43 L.R.A. 703.) By sec. 2, art. 11, of the constitution, corporations as government agencies are recognized, and the naming of municipal, charitable, educational, penal or reformatory corporations, excludes others, whether under the control of the state or not, from being created by a special act.

Nearly if not quite all the cases calling the body in question a governmental agency may be distinguished in that they were considering mere boards and creatures not in their nature associations. The acts were not similar to this, welding into one body an aggregate of members, here some six hundred attorneys, plainly an "association," which lexicology would not recognize as anything else, which, by giving it corporate powers and privileges, makes of it a corporation.

"Any body of persons capable of acting as an entity and in a single name fixed by law, and having succession, is in some sense a corporation. And as a general rule an association of individuals becomes a corporation when, by authority of law, it acquires a name by which its legal identity can be preserved through all the changes of membership, business, and sphere of action which it may undergo." (7 Rawle C. L., p. 28, sec. 6.)

Blackstone credits the Romans with the invention of corporations, to subdivide the Sabine and Roman factions into many smaller ones, making separate societies of every manual trade and profession. (1 Jones' Blackstone, sec. 633.)

A provision as to the right of a corporation to sue and be sued was stricken from the proposed draft of sec. 16, art. 11, of our constitution, on argument that "that is fundamental; it is a particular right of every corporation" (2 Const. Conv., pp. 1106, 1107), thus, an implied power. Blackstone sets forth at least five powers which corporations acquire after formed and named, which are tacitly annexed as incidents of their creation as of course: (1) To have perpetual succession; (2) to sue and be sued; (3) to purchase and hold lands; (4) to have a common seal; (5) to make by-laws. (1 Jones' Blackstone, sec. 645.) Other and later authorities have most often limited to a lesser number those characteristics, privileges or powers, the presence of which will constitute a corporation. (Magill v.Brown, 16 Fed. Cas. No. 8952, 408 (423).) Thomas v. Dakin, 22 Wend. (N.Y.) 9, constitutes an exhaustive review of authorities and principles which support the text of Thompson (sec. 173), and quite properly reaches the conclusion that a legislature cannot evade the constitution, even by a declaration that the entity they are there creating shall not be considered a corporation; also, that while there are a number of recognized powers and privileges which, if present, will constitute an association a corporation, not all of such declared by Blackstone to distinguish a corporation need be present; that, in fact, a number of the recognized characteristics are really nonessential; but declares that the two powers, of succession and of making by-laws, are recognized as distinctively corporate powers, not possessed or enjoyed by individuals. The court quotes with approval from Blackstone that there are only two kinds of persons, natural and artificial; that a partnership is but an aggregate of natural persons, each one retaining his characteristics of an individual natural person; that an artificial person is a body corporate; and declares that when the law creates a body corporate, endowing it with powers or privileges not enjoyed or possessed by individuals, it has thus created a corporation. Chief Justice Nelson says further:

"Anyone comprehending the scope and purpose of them, at this day, will not fail to perceive that some of the powers above specified are of trifling importance, while others are wholly unessential. . . . . The distinguishing feature, far above all others, is the capacity conferred, by which a perpetualsuccession of different persons shall be regarded in the law asone and the same body, and may at all times act in fulfilmentof the objects of the association as a single individual. In this way, a legal existence, a body corporate, an artificial being, is constituted; the creation of which enables any number of persons to be concerned in accomplishing a particular object, as one man." (Pages 70, 71.)

Justice Cowen, in the same case, considered certain things "peculiar to every aggregate corporation," saying:

"These are, in short, the receiving of peculiar laws and the making of by-laws for itself; perpetual succession, both as to its privileges and property; the having one will, as collected from the power of the majority to make by-laws; and the being but one person in law, a person that dies not, but continues the same individual, though its parts may change. . . . .

"The question is, can the various attributes conferred by the statute exist in any other than a body politic and corporate? Such a body, whatever it may be called in common parlance or otherwise, can be known in legal classification by its attributes alone. It is agreed by all the books, that no particular words are necessary to create a corporation." (Pages 91, 93, 94.)

After citing authorities, he says:

"The principle of these and the like cases is, that words of the king granting that a body of men shall have the power to hold property or enjoy the privileges, amount by the force of the phrase, by operation or implication of law, to the creation of a corporation. . . . ." (Pages 94, 95.)

In re Carthage Lodge No. 365, I. O. O. F. (D.C.), 230 Fed. 694, is an excellent review of authorities, reaching the conclusion that an association with corporate powers not otherwise obtainable, granted by law, is a corporation. (See, also, Rosencranz v. City of Evansville, 194 Ind. 499,143 N.E. 593.)

Liverpool London L. F. Ins. Co. v. Oliver, 10 Wall. (U.S.) 566, 19 L. ed. 1029, holds that an insurance company organized in England is a corporation as understood under the laws of this country, although specifically declared by acts of Parliament not to be such. (See 1 Cook on Corporations, 8th ed., sec. 1.)

The title of Sess. Laws 1923, chap. 211, recites it as an act "providing for the necessary and proper organization and discipline of attorneys at law; . . . . providing for the organization and government of the Idaho State Bar. . . . ." The act makes every attorney admitted a member on payment of the license fee. He has a right to vote in his district for selection of a member of the Bar Commission. This Bar Commission has the powers of a board of directors. It was, under the law of 1923, granted perpetual succession, use of a common seal, and authorized to receive gifts and bequests, designed to promote the objects for which it is created, and the betterment of conditions surrounding the practice of the law.

It is argued that the amendments of 1925 left out these provisions. The acts of 1925 did not create anything; they simply amended the act of 1923. The test is, what did the law of 1923 create? In any event, the provisions of both elsewhere provide the capacity of indefinite succession of the Idaho State Bar and the Commission, defined as:

"A capacity, as contradistinguished from partnerships and other voluntary associations, to continue in existence indefinitely . . . . in spite of the withdrawal or death of any of its members." (3 Words Phrases (2d series), p. 978.)

The power of succession still distinctly remains, both in the Idaho State Bar and the Commission, by the provisions of the act. The use of a common seal is little material as a power of a corporation. Even if deprived of the power to hold property, the Idaho State Bar and the Commission have the power to "enjoy privileges," in themselves a species of property, of itself a characteristic power of a corporation. (Thomas v. Dakin,supra.)

The board fixes the time for holding annual elections, and has power to prescribe rules and regulations (by-laws) in regard thereto, not in conflict with the act. They elect a president, vice-president, and secretary of the Idaho State Bar and its Board of Commissioners, and may select "such other assistants as the Board may require." The act further provides:

"The board of commissioners shall also have power to make rules and by-laws not in conflict with any of the terms of this act concerning the selection and tenure of its officers and committees and their powers and duties, and generally for the control and regulation of the business of the board and of the Idaho state bar.

"The board of commissioners shall also have power to provide for the discipline of its officers and the members of its committees in the event of refusal, neglect, failure or corrupt or wrongful performance of their respective duties."

An annual meeting is provided for, to be presided over by the president, "for the discussion of the affairs of the bar and the administration of justice." Special meetings of the bar may be held at such times and places as the board may designate. The term "Bar Association" has, by the amendments, been changed to "Idaho State Bar."

What is to be "business of the board and of the Idaho State Bar," and what are the "affairs of the bar" which are to be transacted under "rules and by-laws not in conflict with any of the terms of this act"? These clauses plainly contemplate that the board and the Idaho State Bar may have "business" "affairs" not inconsistent with the act, and other than the specific business provided by the act, thus, in its nature, having business of its own not specifically subject to the act, and easily contemplated to be of such kind or character as to be a privilege and power not within contemplation of the power of the legislature in exercise of the police power, but for private interest, and may have or transact business other than those functions of a state agency. There is no apparent inhibition against its making of itself, in addition, a social or fraternal organization, anything it pleases, in addition to its required duties.

What beacon light of rule, or requirement of duty, is there enforced, other than the opinion, whim or fancy of the board for the common good? The fact that some or many of its rules or regulations must be approved by the supreme court is not controlling. Rules of public utilities similarly require the approval of the Utilities Commission.

Although an act conferring corporate powers may incidentally enhance the general prosperity of the whole community, the body created is none the less a private corporation, when it appears that it was also created to advance the private interests of the members. "The interest, therefore, which the public may have in a corporation, unless it has all the interest, does not necessarily make it a public incorporation." (Board ofDirectors v. Houston, 71 Ill. 318.) It would thus seem that, by the same token, to call that a public agency in which the private members have a private interest, would be to distort the law. Private conceptions of activities of a nature beneficial to the members of the bar, or the bar as a whole, which the legislature either might not have the power to prescribe or the desire to require under its police power, do not become public functions merely by their adoption as a part of a plan conceived by the board or bar, nor can they acquire the sanctity of law, or the character of police regulations, by voluntary adoption, nor by a legislative requirement, except they be authorized under the police power. The constitution in unmistakable language declares that an association having or exercising, not all, but any of the recognized powers or privileges of corporations not possessed by individuals or partnerships, shall be "held and construed" to be a corporation. No approved definition of a corporation and its characteristic powers can be found anywhere which will not include some of the distinctively characteristic powers and privileges which are granted to the Idaho State Bar, and the Commission, its executive board.

State v. City of Cincinnati, 20 Ohio St. 18, construing a like provision, says:

"No one who has read the proceedings and debates of the convention which presented to the people of Ohio the framework of the constitution which the latter by their votes established and adopted, or is old enough to remember the apprehensions of evil consequences with which the conferring of corporate powers by special acts were regarded, can fail to see that it was one of the ends and aims of the constitutional convention, and of the people who adopted the framework of a constitution which that convention presented for their adoption or rejection, to cut up by the roots, at once and forever, all capacity of the general assembly to confer by special act any powers whatsoever upon any corporate body whatsoever."

In the language of Thomas v. Dakin, supra, "If the powers of the body politic and corporate can yet be denied of an institution such as we have been contemplating, the definitions of learned writers would seem from the earliest day, to be a mere series of mistakes." (Page 98.)

If further support were needed for my position, it is abundant. (See Edgeworth v. Wood, 58 N.J. Law, 463,33 A. 940; Waterbury v. Merchants' Union Exp. Co., 50 Barb. (N.Y.) 157; Fargo v. McVicker, 55 Barb. (N. Y.) 437; Denton v.Jackson, 2 Johns. Ch. (N.Y.) 320; Westcott v. Fargo, 61 N.Y. 542, 19 Am. Rep. 300; Dunn v. University of Oregon, 9 Or. 357;Terry v. King County, 43 Wash. 61, 9 Ann. Cas. 1170, 86 P. 210; Mahoney v. Bank of the State, 4 Ark. 620;Commonwealth v. West Chester R. Co., 3 Grant's Cas. (Pa.) 200;Case of Sutton's Hospital, 10 Co. Rep. 23a, 77 Eng. Reprint, 960.)

To support this act is to say that whenever the legislature shall determine that public benefit will be subserved thereby, an association may be created by special act, and granted corporate powers and privileges, although in character neither "municipal, educational, charitable, penal or reformatory"; and the inhibitions of the constitution will be as a dead letter.

As said in Jackson v. Gallet, supra, and still true:

"If this law can be sustained upon the theory that it is not unconstitutional for the various reasons herein suggested, then no reason exists why like legislation cannot be enacted for the benefit of bricklayers, agriculturists, bankers or any other profession or calling, and all members of such classes, by legislative enactment, may be compelled to accept membership in such corporations in order to practice their profession or follow the calling of their choice.

". . . . But such purpose, however praiseworthy, cannot be accomplished by an act in direct violation of the plain provisions of the Constitution."

That this organization is peculiarly "an arm of the court," or other endearing form of entity, while such other named possible corporations would not be, is a specious argument; likewise, that the amendments of 1925 have breathed the breath of life into the corpse of 1923.

The acts are void. While this proceeding should be dismissed, it appearing from the record that the petitioner has perhaps been guilty of unprofessional conduct, sufficient to call for discipline, the court should order proceedings had under C. S., sec. 6580.