CONSTITUTION OF CALIFORNIA
passed in 1879
ARTICLE XII.
CORPORATIONS.
Section 1. Corporations may be formed under general laws, but
shall not be created by special Act. All laws now in force in this
State concerning corporations, and all laws that may be hereafter
passed pursuant to this section, may be altered from time to time
or repealed.
Sec. 2. Dues from corporations shall be secured by such individual
liability of the corporators and other means as may be prescribed
by law.
Sec. 3. Each stockholder of a corporation. or joint stock
association, shall be individually and personally liable for such
proportion of all its debts and liabilities contracted or
incurred, during the time he was a stockholder, as the amount of
stock or shares owned by him bears to the whole of the subscribed
capital stock, or shares of the corporation or association. The
directors or trustees of corporations and joint-stock associations
shall be jointly and severally liable to the creditors and
stockholders for all moneys embezzled or misappropriated by the
officers of such corporation or joint stock association during the
term of office of such director or trustee.
Sec. 4. The term corporations, as used in this article, shall be
construed to include all associations and joint stock companies
having any of the powers or privileges of corporations not
possessed by individuals or partnerships, and all corporations
shall have the right to sue and shall be subject to be sued, in
all Courts, in like cases as natural persons.
Sec. 5. The Legislature shall have no power to pass any Act
granting any charter for banking purposes, but corporations or
associations may be formed for such purposes under general laws.
No corporation, association, or individual shall issue or put in
circulation, as money, anything but the lawful money of the United
States.
Sec. 6. All existing charters, grants, franchises, special or
exclusive privileges, under which an actual and bona fide
organization shall not have taken place, and business been
commenced in good faith, at the time of the adoption of this
Constitution, shall thereafter have no validity.
Sec. 7. The Legislature shall not extend any franchise or charter,
nor remit the forfeiture of any franchise or charter of any
corporation now existing, or which shall hereafter exist under the
laws of this State.
Sec 8. The exercise of the right of eminent domain shall never be
so abridged or construed as to prevent the Legislature from taking
the property and franchises of incorporated companies and
subjecting them to public use the same as the property of
individuals, and the exercise of the police power of the State
shall never be so abridged or construed as to permit corporations
to conduct their business in such manner as to infringe the rights
of individuals or the general well-being of the State.
Sec. 9. No corporation shall engage in any business other than
that expressly authorized in its charter, or the law under which
it may have been or may hereafter be organized; nor shall it hold
for a longer period than five years any real estate except such as
may be necessary for carrying on its business.
Sec. 10. The Legislature shall not pass any laws permitting the
leasing or alienation of any franchise, so as to relieve the
franchise or property held thereunder from the liabilities of the
lessor or grantor, lessee or grantee, contracted or incurred in
the operation, use, or enjoyment of such franchise, or any of its
privileges.
Sec. 11. No corporation shall issue stock or bonds, except for
money paid, 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 law, nor without the
consent of the persons holding the larger amount in value of the
stock, at a meeting called for that purpose, giving sixty days'
public notice, as may be provided by law.
Sec. 12. In all elections for directors or managers of
corporations, every stockholder shall have the right to vote, in
person or by proxy, the number of shares of stock owned by him,
for as many persons as there are directors or managers to be
elected, or to cumulate said shares and give one candidate as many
votes as the number of directors multiplied by the number of his
shares of stock shall equal, or to distribute them, on the same
principle, among as many candidates as he shall think fit; and
such directors or managers shall not be elected in any other
manner, except that members of cooperative societies formed for
agricultural, mercantile, and manufacturing purposes, may vote on
all questions affecting such societies in manner prescribed by
law.
Sec. 13. The State shall not in any manner loan its credit, nor
shall it subscribe to, or be interested in the stock of any
company, association, or corporation.
Sec. 14. Every corporation other than religious, educational, or
benevolent, organized or doing business in this State, shall have
and maintain an office or place in this State for the transaction
of its business, where transfers of stock shall be made, and in
which shall be kept, for inspection by every person having an
interest therein, and legislative committees, books in which shall
be recorded the amount of capital stock subscribed, and by whom;
the names of the owners of its stock, and the amounts owned by
them respectively, the amount of stock paid in the transfers of
stock paid in and by whom; the transfers of stock; the amount of
its assets and liabilities, and the names and places of residence
of its officers.
Sec. 15. No corporation organized outside the limits of this State
shall be allowed to transact business within this State on more
favorable conditions than are prescribed by law to similar
corporations organized under the laws of this State.
Sec. 16. A corporation or association may be sued in the county
where the contract is made or is to be performed, or where the
obligatory or liability arises, or the breach occurs; or in the
county where the principle place of business of such corporation
is situated, subject to the power of the Court to change the place
of trial as in other cases.
Sec. 17. All railroad, canal, and other transportation companies
are declared to be common carriers, and subject to legislative
control. Any association or corporation, organized for the
purpose, under the laws of this State, shall have the right to
connect at the State line with railroads of other States. Every
railroad company shall have the right with its road to intersect,
connect with or cross any other railroad, and shall receive and
transport each the other's passengers, tonnage, and cars, without
delay or discrimination.
Sec. 18. No president, director, officer, agent, or employé of any
railroad or canal company shall be interested, directly or
indirectly, in the furnishing of material or supplies to such
company, not in the business of transportation as a common carrier
of freight or passengers over the works owned, leased, controlled,
or worked by such company, except such interest in the business of
transportation as lawfully flows from the ownership of stock
therein.
Sec. 19. No railroad or other transportation company shall grant
free passes, or passes or tickets at a discount, to any person
holding any office of honor, trust, or profit in this State; and
the acceptance of any such pass or ticket by a member of the
Legislature or any public officer, other than railroad
Commissioner, shall work a forfeiture of his office.
Sec 20. No railroad company or other common carrier shall combine
or make any contract with the owners of any vessel that leaves
port or makes port in this State, or with any common carrier, by
which combination or contract the earnings of one doing the
carrying are to be shared by the other not doing the carrying. And
whenever a railroad corporation shall, for the purpose of
competing with any other common carrier, lower its rates for
transportation of passengers or freight from one point to another,
such reduced rates shall not be again raised or increased from
such standard without the consent of the governmental authority in
which shall be vested the power to regulate fares and freights.
Sec. 21. No discrimination in charges or facilities for
transportation shall be made by any railroad or other
transportation company between places or persons, or in the
facilities for the transportation of the same classes of freight
or passengers within this State, or coming from or going to any
other State. Persons and property transported over any railroad,
or by any other transportation company or individual, shall be
delivered at any station, landing, or port, at charges not
exceeding the charges for the transportation of persons and
property of the same class, in the same direction, to any more
distant station, port, or landing. Excursion and commutation
tickets may be issued at special rates.
Sec. 22. The State shall be divided into three districts as nearly
equal in population as practicable, in each of which one Railroad
Commissioner shall be elected by the qualified electors thereof at
the regular gubernatorial elections, whose salary shall be fixed
by law, and whose term of office shall be four years, commencing
on the first Monday after the first day of January next succeeding
their election. Said Commissioners shall be qualified electors of
this State and of the district from which they are elected, and
shall not be interested in any railroad corporation, or other
transportation company, as stockholder, creditor, agent, attorney,
or employé; and the act of a majority of said Commissioners shall
be deemed the act of said Commission. Said Commissioners shall
have the power, and it shall be their duty, to establish rates of
charges for the transportation of passengers and freight by
railroad or other transportation companies, and publish the same
from time to time, with such changes as they may make; to examine
the books, records, and papers of all railroad and other
transportation companies, and for this purpose they shall have
power to issue subpoenas and all other necessary process; to hear
and determine complaints against railroad and other transportation
companies, to send for persons and papers, to administer oaths,
take testimony, and punish for contempt of their orders and
processes, in the same manner and to the same extent as Courts of
record, and enforce their decisions and correct abuses through the
medium of the Courts: Said Commissioners shall prescribe a uniform
system of accounts to be kept by all such corporations and
companies. Any railroad corporation or transportation company
which shall fail or refuse to conform to such rates as shall be
established by such Commissioners, or shall charge rates in excess
thereof, or shall fail to keep their accounts in accordance with
the system prescribed by the Commission, shall be fined not
exceeding twenty thousand dollars for each offense, and every
officer, agent, or employé of any such corporation or company, who
shall demand or receive rates in excess thereof, or who shall in
any manner violate the provisions of this section, shall be fined
not exceeding five thousand dollars, or be imprisoned in the
county jail not exceeding one year. In all controversies, civil or
criminal, the rates of fares and freights established by said
Commission shall be deemed conclusively just and reasonable, and
in any action against such corporation or company for damages
sustained by charging excessive rates, the plaintiff, in addition
to the actual damage, may in the discretion of the Judge or jury;
recover exemplary damages. Said Commission shall report to the
Governor, annually, their proceedings, and such other facts as may
be deemed important. Nothing in this section shall prevent
individuals from maintaining actions against any of such
companies. The Legislature may, in addition to any penalties
herein prescribed, enforce this article by forfeiture of charter
or otherwise, and may confer such further powers on the
Commissioners as shall be necessary to enable them to perform the
duties enjoined on them in this and the foregoing section. The
Legislature shall have power, by a two thirds vote of all the
members elected to each House, to remove any one or more of said
Commissioners from office, for dereliction of duty, or corruption,
or incompetency; and whenever, from any cause, a vacancy in office
shall occur in said Commission, the Governor shall fill the same
by the appointment of a qualified person thereto, who shall hold
office for the residue of the unexpired term, and until his
successor shall have been elected and qualified.
Sec. 23. Until the Legislature shall district the State, the
following shall be the railroad districts: The First District
shall be composed of the Counties of Alpine, Amador, Butte,
Calaveras, Colusa, Del Norte, El Dorado, Humboldt, Lake, Lassen,
Mendocino, Modoc, Napa, Nevada, Placer, Plumas, Sacramento,
Shasta, Sierra, Siskiyou, Solano, Sonoma, Sutter, Tehama, Trinity,
Yolo, and Yuba, from which one Railroad Commissioner shall be
elected. The Second District shall be composed of the Counties of
Marin, San Francisco, and San Mateo, from which one Railroad
Commissioner shall be elected. The Third District shall be
composed of the Counties of Alameda, Contra Costa, Fresno, Inyo,
Kern, Los Angeles, Mariposa, Merced, Mono, Monterey, San Benito,
San Bernardino, San Diego, San Joaquin, San Luis Obispo, Santa
Barbara, Santa Clara, Santa Cruz, Stanislaus, Tulare, Tuolumne,
and Ventura, from which one Railroad Commissioner shall be
elected.
Sec. 24. The Legislature shall pass all laws necessary for the
enforcement of the provisions of this article.
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