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Stop a Republican Sleeper - Vote NO on Amendment 9

by: PubliusIX

Mon Nov 05, 2012 at 17:04:05 PM CST

(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:


PubliusIX :: Stop a Republican Sleeper - Vote NO on Amendment 9

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.

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vote (4.00 / 2)

I am voting NO on everything except the Forever Wild one.

Hate to admit it, but I'm contemplating the same action (4.00 / 2)
Which is a shame, because constitution reform is near and dear to my heart.  Unfortunately, the ACCR folks may possibly be a tiny bit politically naive on what the GOP supermajority has handed them. Any reform, not just good reform.

Work harder and work smarter!

[ Parent ]
I'm voting no (4.00 / 2)
on all but Forever Wild & the Prichard Water Department merger: that one seems like a good deal for a small town & I have friends in the area who say it's really good for both Prichard & Mobile.

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."  - John Kenneth Galbraith

Listen - this is bunk. Vote yes on amendment 9 or Constitutional Reform is dead for a generation. (4.00 / 3)

First, the claims made here are bunk. Amendment Nine is not going to have any effect on piercing the corporate veil. That is largely going to be governed by the type of corporation the partner elects to form and the state's corporation laws (which are in line with the rest of the country) rather than this article.

The individual who wrote Amendment Nine is a committed progressive and perhaps the single most respected individual in the state of Alabama regarding corporate law. The article was run through with a fine toothed comb. There is no trojan horse here. This amendment merely streamlines our language regarding this area to bring it in line with peer states. It's a modest goal, but it's one that will be out of reach should Amendment nine and/or ten fail to pass.

The Constitutional Revision Commission is an imperfect body, but it is literally the only body capable of delivering substantial change regarding Alabama's constitution at the moment. Much as I would love to see a Constitutional Convention, it is simply not going to happen in the short or medium term. If the Commission submits something that represents a bad piece of legislation and/or turns the clock back further, let's reject it en masse. But these two Amendments do not do that. And I know for a fact that ALFA is very quietly working to prevent their passage in order to stop even the modest reforms possible via the Revision Commission. If either 9 or 10 fails, the Commission is not going to go back to work; it is going to go nowhere. Please vote yes on those two amendments if nothing else.

Who wrote amd. 9? (4.00 / 1)

Are you speaking of a legislator or someone behind the scenes in the CR movement?

i'd like to vote yes on 9 & 10.  Heck, I'd like to vote yes on 4, but the level of trust is just not there. 

Work harder and work smarter!

[ Parent ]
I have to agree (4.00 / 3)

but I'm not happy about it.

Stuff I've seen about this is all about how the constitutional reform folks are for it.... but I've not had an adequate description of what exactly what it does and why.

Is it poorly written or is this a deliberate distortion?  My feeling with the GOP supermajority is "when in doubt... don't."

But with more info, I could certainly change my mind.

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."  - John Kenneth Galbraith

[ Parent ]
My understanding is that... (4.00 / 3)

the amendments (9 and 10) were drafted by Cumberland professor Howard Walthall at the request of the Revision Commission.

Great guy and exceedingly respected law professor. The folks I've spoken to on the progressive side of the legal community are unanimously in favor of these two amendments. Unamimously. As I said, most believe there is no realistic opportunity (nor any groundswell of popular suppor) for a convention in the short or medium term and that, if these fail, the Revision Commission will be put out to pasture as well.

[ Parent ]
Here's an act of faith, bluebearcat (4.00 / 3)

Based on your opinion -- and my own opinion that the current corporate judges on the AL Supreme Court will resist "piercing the corporate veil" no matter what the law says -- I will vote yes on Amendment 9.  Also 10, because I firmly believe Alabama can never see real progress until we make strides toward a new constitution.

I am basing this decision mostly on your opinion -- you've been posting here for a very long time, I respect your judgment and I respect and acknowledge the fact that you do not play political games or pursue hidden agendas.  Thanks for jumping into this conversation.

Work harder and work smarter!

[ Parent ]
I should also mention .... (4.00 / 1)
This comment on Amendments 9 and 10 by csduke, a longtime participant here who follows constitutional reform issues very closely.

Work harder and work smarter!

[ Parent ]
Thank you! (4.00 / 2)

We can only hope that 9 and 10 will pass and that passage will lead to REAL REFORM on some of the constitutional amendment's more controversial and regressive articles.

[ Parent ]
pols (4.00 / 1)

I do like it (0.00 / 0)
But it's not real until the voters get to vote, tomorrow!

Work harder and work smarter!

[ Parent ]
Polls? Who needs polls? (4.00 / 1)

Now we have actual election results.  Polls have opened -- and closed in Hart's Location, NH.

Work harder and work smarter!

[ Parent ]
I was out of the country last week so didn't get to respond on this (0.00 / 0)
However, the concern you raise is not a concern about this Amendment that was just passed as the Alabama Constitution had that exact language in it previously.  In Article XII, Section 236, the language you quoted was already stated.  Amendment 9 sought to consolidate this language, so it was moved into this section.  Look at this document for more on this.



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