Anderson v. Byrnes

California Supreme Court Oct 8, 1898 No. S. F. No. 769Published

Before: Garoutte

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Holding. The court held that the statutory provision allowing a stockholder to recover a fixed sum from corporate directors for failure to post balance sheets is penal in nature, and therefore, the repeal of the statute while the judgment was pending on appeal extinguished the plaintiff's right to recover the penalty.

Issues

Whether the statutory recovery of one thousand dollars from corporate directors for failure to post balance sheets constitutes a penalty or liquidated damages.
Whether a plaintiff has a vested right in a statutory penalty that has not yet been enforced.
Whether the amendment to the statute, which changed the remedy to actual damages, is severable from the amendment limiting the statute's scope.

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“no person has a vested right in an unenforced penalty.”

“It follows that the amendment to the statute here under consideration absolutely prevents any further prosecution of this litigation, if the statute is penal in character, and the amount recovered in the lower court is in all essentials a penalty.”

“the amendment to this act relating to the remedy of the stockholder is valid and constitutional legislation”

Synopsis

Minino Corporations—Liability of Directobs to Stockholder—Ace of 1880—Penal Statute.—The act of April 23, 1880, authorizing a stockholder of a domestic mining corporation to recover from its directors one thousand dollars as liquidated damages for their failure to comply with its provisions, is a penal statute, which prescribes a determinate penalty for neglect of the duty imposed by law upon the directors; and compensation for the actual damage done to the stockholder was not intended to be given by that act.

IP.—Amendment of 1897—Independent Provision—Actual Damage— Loss of Penalty.—The amendatory act of 1897. regardless of any question as to the constitutionality of the provision limiting the scope and effect of the act to mining corporations “whose stock is listed and offered for sale at public exchange,” is operative as to the independent provision limiting the liability of the directors to the stockholder to the actual damage sustained by him from their neglect of imposed duty, and has so entirely changed the remedy of the stockholder as to preclude the enforcement of any penalty for a previous violation of the original act.

Id.—Vested Right—Repeal of Penalty Shed for.—No person has a vested right to an unenforced penalty; and the repeal of the statute giving a right to recover a penalty, before it is enforced, destroys the right, and prevents any further prosecution of litigation pending for its enforcement.

Ld.—Unenforced Judgment—Change of Law—Pending Appeal— Reversal.—An unenforced judgment in favor of a stockholder for the recovery of the penalty of one thousand dollars from the directors of a mining corporation, under the act of 1880. from which an appeal was pending at the time of the passage of the amendatory act of 1897, must be reversed, by reason of the destruction of the right to enforce the penalty.

GAROUTTE, J. In plaintiff’s original brief he says: “This is an action qui tam by a stockholder (a common informer) to recover the statutory penalty from the directors of a domestic mining corporation for failure to make or post monthly balance sheets, et cetera, required by act approved April 23, 1880.” By that statute it is declared that a stockholder may recover the sum of one thousand dollars as liquidated damages from the directors of mining corporations for failure upon their part to comply with certain of its provisions. Subsequent to the filing of plaintiff’s original brief, and while the appeal from the judg[274]ment in his favor was pending in this court, the legislature amended the act under which this litigation was inaugurated. This amendment was most important and substantial—so important and substantial it may be said that, so far as this plaintiff’s rights are concerned, the act was repealed. Plaintiff, by supplemental argument, now claims that the act is not penal in character, that the one thousand dollars recovered by him as liquidated damages is not a penalty, and that, therefore, under the judgment recovered, he has vested rights, which a repeal of the statute cannot affect. That it is necessary to his ultimate success in the litigation in this court that his later position as to the law be correct, is clearly apparent. For, if this act of the legislature is essentially penal, if the one thousand dollars which he has recovered as a stockholder from the directors is a penalty and not damages, he has no case. This is eminently true, for the penalty had not yet been enforced, and, as has been said by judges of other courts, “no person has a vested right in an unenforced penalty.” Therefore, a repeal of the statute before the penalty, is enforced is not a deprivation of any vested right. It follows that the amendment to the statute here under consideration absolutely prevents any further prosecution of this litigation, if the statute is penal in character, and the amount recovered in the lower court is in all essentials a penalty.

Is the statute of penal character? This question seems to be easy of solution. The statute in this particular regard has not been directly before the court as a controverted question. At the same time, ever since it was enacted it has proven a prolific source of litigation, and has been viewed, weighed, measured, and tested by this court many times; and it may be said there is no case in our reports where the act has been before us, from the first to the last, from Loveland v. Garner, 71 Cal 541, to Miles v. Woodward, 115 Cal. 310, but what in some way and to some degree refers to this act of the legislature as penal, and the amount recovered as a penalty. In the earlier case it is said: “It will be perceived that this act is in its nature penal, and does not specifically declare that for each failure to comply with its requirements a penalty may be recovered. bTor does it declare that each refusal or neglect of that kind shall render the directors liable for a penalty.” In the later case it is said:

Anderson v. Byrnes

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