Page:The Green Bag (1889–1914), Volume 18.pdf/704

 CONTROL OF CORPORATIONS stockholders, but of the public at large. It is obvious that the enforced suspension of the functions of a public carrier, or in fact of any public service corporation, would involve an incalculable amount of public inconvenience and pecuniary damage and distress. This may be illustrated by the individual suffering and the paralysis of business when the operations of a street car company or other public service corpora tion are stopped by a strike. The same con sideration applies, though in a lesser degree, to the case of any great corporation en gaged in the business of production or dis tribution. As corporations are presumably only organized for the furtherance of the public good in any form of business activ ity, it follows that the enforced interrup tion of corporate business would involve inconvenience and loss to the general public. The reasoning of the author seems to be based upon the consideration that the mere enactment of these penalties would be suffi cient, and that they would effectively deter corporations from violating the laws. In other words, they would stand in terrorem over the corporations. This view, however, ignores the recognized fact based upon human experience, that the enactment of penalties which are practically unenforce able do not deter from crime and afford no protection to the public. Thus when Blackstone published his Commentaries, one hun dred and sixty crimes had been declared by acts of Parliament to be felonies without benefit of clergy, or in other words, worthy of instant death; and he remarked that such a dreadful list of penalties, instead of dimin ishing, increased the number of offenders. Parliament was at length brought to realize this truth, and greatly diminished this list, and our modern statutory criminal law is based upon the recognition of this principle. It is safe to say that any system of forfeit ing or suspending the exercise of corporate functions as a punishment for the delin quencies of corporate officials which would involve inconvenience and damage to the

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public, would become practically unen forceable and therefore no protection to the public. This necessity for protecting the interests of innocent parties in the exposure and pun ishment of corporate abuses was illustrated in the recent insurance exposures. Insur ance companies do business in the several states through comity, though the business is essentially national, in that citizens of the different states are interested in the administration of the funds for their mutual benefit. The insurance commissioner of Missouri made a demand upon the president of one of the companies that unless he restored within thirty days certain cam paign contributions made from the com pany's funds in certain political campaigns, that he, the commissioner, would forfeit or rather suspend the license of the company to do business in the state. This threat ened action of the commissioner was re strained by the United States court as not authorized by the statutes of the state. Irrespective of that question, however, which is not related to this discussion, the forfeiture or suspension of the company's right to do business in Missouri would have been very disastrous to the interests of the Missouri policy holders, and they would have suffered this damage and pecuniary loss as a punishment for an offense of corporate officials, over whose actions they had no control and for whom they were in no wise responsible. These considerations of the impolicy, im practicability, and essential injustice of pun ishing the delinquencies of corporate officials by the forfeiture or suspension of the com pany's right to do business, apply measur ably to the case of any business corporation. Notwithstanding the laxity of the corporate laws of many of the states, corporate fran chises are granted, in theory, for the promo tion of the public good. It may be that this principle has been lost sight of in the loose provisions of our general corporation laws, and that reform is here necessary.