(Don’t you wish we had a better Constitution so voters wouldn’t be faced with all these incomprehensible amendments every election????? – promoted by mooncat)
A quick note to everyone about Amendment 9 on tomorrow's ballot.
This Amendment, along with Amendment 10, purport to be “constitutional reform” amendments, modernizing and cleaning up the constitutional language governing corporations. Like the education land mine in Amendment 4, our Republican Legislature has slipped something else in. Surprising, huh?
Buried in § 3 of the Act proposing the Amendment is the following language which would be added to § 240 of the Constitution:
“Dues from private corporations shall be secured by such means as may be prescribed by law; but in no case shall any stockholder be individually liable otherwise than for the unpaid stock owned by him or her.”
This may not sound like anything dangerous, but the consequences to consumers, personal injury victims, or even small businesses could be serious. This language would effectively abolish the law of “piercing the corporate veil” in Alabama. Under this rule, if the owner(s) of a corporation manipulate it so that it doesn't have sufficient funds or assets to pay its obligations from fraud, personal injury, or even basic contracts and accounts, a court will “pierce the corporate veil,” and hold the owners personally liable. If this sounds jargony, let me give an example:
Joe owns Joe's Used Cars, Inc. I buy a car from the business. The judgement-proof salesman tells me the car has no mechanical faults, which he knows to be false. Or that fault is that the brakes are bad, and someone gets injured when I can't stop it. Unknown to me, Joe always deposits the checks from his customers in his personal bank account, and keeps the inventory in his personal name, so if I get a judgment against Joe's Used Cars, Inc., there's nothing in the corporation to satisfy it. Joe could just start a new corporation, Joe's Previously Owned Cars, Inc., and laugh at me. (If Joe's salesman, rather than Joe, made the fraudulent representation, Joe would not otherwise be personally liable.) Under current law, I could get past the corporate shell Joe has created, and hold him personally liable. I could collect from his personal or real property, or garnish his personal bank account. Under at least one reading of Amendment 9, that would be forever prohibited – and the Legislature could not pass a statute to overturn a provision of the Constitution.
I admit this is “one reading” of the provision, but I have run it past three or four lawyers, one of whom anyone in the Tennessee Valley would know by name. They agree with me that it would have this effect, and that even if it's vague, the Republican Supreme Court would interpret it in the most corporate-friendly way possible.
I think we should be safe and vote NO on Amendment 9.
Now, back to otherwise annoying Republicans and working to make Nate Silver look good.