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(Wigmore v. Buell, 122 Cal. 144, 54 Pac. 600; People v. Twelfth District Court, 17 Cal. 547; Ex parte Burke, 59 Cal. 6, 43 Am. Rep. 231; Nevada School Dist. v. Shoecraft, 88 Cal. 372, 26 Pac. 211.)
The provisions of this section are prospective only, and do not affect statutes passed before its adoption. (Nevada School Dist. 1. Shoecraft, 88 Cal. 372, 26 Pac. 211; Ex parte Burke, 59 Cal. 6, 43 Am. Rep. 231; Rollins v. Wright, 93 Cal. 395, 29 Pac. 58; Smrith v. MeDermott, 93 Cal. 421, 29 Pac. 34; Meade v. Watson, 67 Cal. 591, 8 Pac. 311; Ex parte Chin Yan, 60 Pac. 78.)
The legislature cannot make a special act general by a legislative declaration that it shall be considered a general act. (San Francisco v. Spring Valley W. W., 48 Cal. 493.)
A law which on its face is general and may be applied to all cities cannot be assailed on the ground that it was in fact passed to effect an improvement in one city only. (Davies v. Los Angeles, 86 Cal. 37, 24 Pac. 771.)
A special law is one relating to a selected class, as well as a particular object. (Smith v. McDermott, 93 Cal. 421, 29 Pac. 34.)
As to what is a general and what a special law, see Ex parte Burke, 59 Cal. 6, 43 Am. Rep. 231, per Morrison, C. J.
A general law must be as broad as the subject matter to which it relates. (Desmond v. Dunn, 55 Cal. 242.)
An act applying uniformly upon the whole of any single class of individuals or objects, when the classification is founded upon some natural, intrinsic, or constitutional distinction, is a general law. (Abeel v. Clark, 84 Cal. 226, 24 Pac. 383; Cody v. Murphey, 89 Cal. 522, 26 Pac. 1081; Foster v. Police Commrs., 102 Cal. 483, 41 Am. St. Rep. 184, 37 Pac. 763; Rode v. Siebe, 119 Cal. 518, 51 Pac. 869; Ex parte Koser, 60 Cal. 177; Vail v. San Diego, 126 Cal. 35, 58 Pac. 392; People v. Central Pac. R. R. Co., 105 Cal, 576, 38 Pac. 905; Murphy v. Pacific Bank, 119 Cal. 334, 51 Pac. 317; Murphy v. Pacific Bank, 130 Cal. 542, 62 Pac. 1059.)
In order to make the law general, the classification must not be arbitrary, but must be founded upon some natural, intrinsic, or constitutional distinction, and some reason must appear why the act is not made to apply generally to all classes. (Rauer v. Williams, 118 Cal. 401, 56 Pac. 691; Darcy v. Mayor, 104 Cal. 642, 38 Pac. 500.)
Although a law is general when it applies equally to all individuals of a class founded upon a natural, intrinsic, or constitutional vistinction, it is not general if it confers particular privileges or imposes peculiar disabilities or burdensome conditions, in the exercie of a common right, upon a class arbitrarily selected from the gencral body of those who stand in precisely the same relation to the subject of the law. (Pasadena v. Stimson, 91 Cal. 238, 27 Pac, 604; Bloss v. Lewis, 109 Cal. 493, 41 Pac. 1081.)
A law which applies only to a part of a class—which relates not to any genus, but only to species—is a special law. (People v. Central Pac. R. R. Co., 83 Cal. 393, 23 Pac. 303.)
Acts Held to be General.—The following acts have been held to be general within the meaning of this section: An act relating to elections to elect boards of freeholders, and to adopt and amend charters (Fragley v. Phelan, 126 Cal. 383, 58 Pac. 923); an act provided for police courts in all cities of a designated population, and providing that it shall go into effect upon the expiration of the term of office of the present police judge of such cities (People v. Henshaw, 76 Cal. 436, 18 Pac. 413; Ex parte Halsted, 89 Cal. 471, 26 Pac. 961; In re Mitchell, 120 Cal. 384, 52 Pac. 799); an act applying to all elections in towns and cities (Vernon School Dist. v. Board of Education, 125 Cal. 593, 58 Pac. 175); an act providing for an action by a reclamation district to determine the validity of an assessment (Lower Kings River Reclamation Dist. No. 531 v. McCullah, 124 Cal. 175, 56 Pac. 887); the insanity law of 1897 (People v. King, 127 Cal. 570, 60 Pac. 35); section 1203 of the Code of Civil Procedure (Carpenter v. Furrey, 128 Cal. 665, 61 Pac. 369); an act providing a special method for levying a tax for high schools, differing from that provided for other school districts (People v. Lodi High School Dist., 124 Cal. 694, 57 Pac. 660); an act providing for the refunding of indebtedness of municipal corporations other than cities of the first class (Los Angeles v. Teed, 112 Cal. 319, 44 Pac. 580); an act providing for the assessment of taxes upon railroads operating in more than one county (People v. Central Pac. R. R. Co., 105 Cal. 576, 38 Pac. 905); a law making it a felony to sell intoxicating liquors to Indians (People v. Bray, 105 Cal. 344, 38 Pac. 731); an act providing for vaccination of all children attending public schools (Abeel v. Clark, .84 Cal. 226, 24 Fac. 383); an act relating to the compensation of the auditor and his clerk in all counties of the twentieth class (Farnum v. Warner, 104 Cal. 677, 38 Pac. 421); an act forbidding the erection of parti. tion walls in cities and towns of a greater height than ten feet, without the consent of the adjoining owner, except around public gardens, etc. (Western etc. Co. v. Knickerbocker, 103 Cal. 111, 37 Pac. 192); the provisions of section 1001 of the Civil Code, provid. ing for the aequisition of private property through the exercise of the right of eminent domain (Santa Cruz v. Enright, 95 Cal. 105, 30 Pac. 197); a county ordinance providing a smaller license tax for the sale of spirituous liquors at wayside inns and rural watering places, outside of any city, than when sold in a city (Amador Co. v. Kennedy, 70 Cal. 458, 11 Pac. 757); an ordinance making it unlawful to conduct a laundry between 10 P. M. and 6 A. M., or on Sundays (Ex parte Moynier, 65 Cal. 33); the provision of the Code of Civil Procedure giving certain laborers preferred claims as against other attaching creditors (Mohle v. Tschirch, 63 Cal. 381).
See, also, cases cited below under the particular subdivisions of this section.
Acts Held to be Special.—On the other hand, the following acts have been held to be special within the meaning of this section: An act providing for boards of election commissioners in cities and counties having one hundred and fifty thousand or more inhabitants, that being an arbitrary classification without reference to the existing classification by general law (Denman v. Broderick, 111 Cal. 96, 43 Pac. 516); the “McClure Charter,” because it only applied to consolidated city and county governnrents of a designated population (Desmond v. Dunn, 55 Cal. 242); a provision of the county government act providing for salaries in addition to fees of constables in townships numbered 1 to 10 in counties of one particular class (Lougher v. Soto, 129 Cal. 610, 62 Pac. 184); an act giving laborers employed by corporations by the week or month a lien for wages (Slocum v. Bear Valley Irr. Co., 122 Cal. 555, 68 Am. St. Rep. 68, 55 Pac. 403); a law depriving certain persons arbitrarily of the right to participate in an election (Spier v. Baker, 120 Cal. 370, 52 Pac. 659); an act directed at and applicable to one particular named municipal corporation, and taking away a large part of its territory (People v. Common Council, 85 Cal. 369, 24 Pac. 727; Fisher v. Police Court, 86 Cal. 158, 24 Pac. 1000); an act to remedy the failure on the part of the tax collector to publish the names of the owners, etc. (Moore v. Patch, 12 Cal. 265.)
See, also, cases cited below under particular subdivisions of this section.
Subdivision 19: The act of March 30, 1878, and amendments (Stats. 1887, p. 90), known as “Bank Commissioners' Act," is not in contravention of the subdivision. (People v. Superior Court, 100 Cal. 105, 34 Pac. 492.)
Subdivision 25: Section 2853 of the Political Code, prohibiting ferries or toll bridges within a mile of established toll bridges or ferries, is not in conflict with this section of the Constitution. (Fortani v. Smith, 114 Cal. 494, 46 Pac. 381.)
SALE OF STOCK ON MARGINS.
Sec. 26, Art. IV. The legislature shall have no power to authorize lotteries or gift enterprises for any purpose, and shall pass laws to prohibit the sale in this state of lottery or gift enterprise tickets, or tickets in any scheme in the nature of a lottery. The legislature shall pass laws to regulate or prohibit the buying and selling of the shares of the capital stock of corporations in any stock board, stock exchange, or stock market under the control of any association. All contracts for the sale of
shares of the capital stock of any corporation or association, on margin or to be delivered at a further day, shall be void, and any money paid on such contracts may be recovered by the party paying it by suit in any court of competent jurisdiction.
Section 27 of article IV of the old Constitution prohibited lot. teries but contained no prohibition against or regulation of the sell. ing of stock on margins or for future delivery. In Cashman v. Root, 89 Cal. 382, 23 Am. St. Rep. 482, 26 Pac. 888, Mr. Justice Temple says that the court will take judicial notice that the constitutional provision was adopted just after a period of remarkable stock speculation and that its intent was to prohibit such practice.
Kutz v. Fleisher, 67 Cal. 93, 7 Pac. 195; Cashman v. Root, 89 Cal. 372, 23 Am. St. Rep. 482, 26 Pac. 883; Kullman v. Simmens, 104 Cal. 599, 38 Pac. 362; Rued v. Cooper, 109 Cal. 692, 34 Pac. 98, and 119 Cal. 465, 51 Pac. 704; Maurer v. King, 127 Cal. 118, 59 Pac. 290; Parker v. Otis, 130 Cal. 326, 92 Am. St. Rep. 56, 62 Pac. 571.
Sale of Stock on Margin.- This provision is remedial, not penal. (Parker v. Otis, 130 Cal. 322, 92 Am. St. Rep. 56, 62 Pac. 571.)
This provision is self-executing and renders of itself void contracts of the class prohibited. (Sheehy v. Shinn, 103 Cal. 325, 37 Pac. 393.)
It is not in conflict with the federal constitution. (Parker F. Otis, 130 Cal. 322, 92 Am. St. Rep. 56, 62 Pac. 571.)
Whether or not a particular transaction is in violation of this provision is a question of fact. (Baldwin v. Zadig, 104 Cal. 594, 38 Pac. 363.)
This provision will not be extended so as to forbid the delivery of stock as a conditional payment for the purchase of land, with a guaranty of cash value, and an agreement to take it back at the end of two years, upon request, and to make the payments in cash, (Maurer v. King, 127 Cal. 114, 59 Pac. 290.)
A contract between brokers, whereby one agrees to purchase and sell stocks for the account of the other, to advance money for the purpose and pay assessments on the stocks purchased is not obnoxious to section 26, article IV of the Constitution. (Kutz v. Fleisher, 67 Cal. 93, 7 Pac. 195.)
An agreement by which the broker is to purchase stock, charging the customer with commissions and the interest on the money advanced, and holding the stocks as security until their sale, the customer simply receiving and paying the difference between the buying and selling values of the stock, is in violation of this section. (Cashman v. Root, 89 Cal. 373, 23 Am. St. Rep. 482, 26 Pac. 883; Wetmore v. Barret, 103 Cal. 246, 37 Pac. 140; Sheehy v. Shinn, 103 Cal. 325, 37 Pac. 393; Kullman v. Simmens, 104 Cal. 600, 38 Pac. 362.)
The payment of a mere margin of the cost price of stock to brokers, under an agreement that the brokers were to make advances for the purchaser, and hold the stocks purchased as security for their advances, with power to sell to protect their interest, without delivery to the purchaser of any particular shares of stock purchased, but with readiness of the brokers at any time on demand to deliver a like number of shares upon payment of all balance due, is within the prohibition of this section. (Parker v. Otis, 130 Cal. 322, 92 Am. St. Rep. 56, 62 Pac. 571.)
One who sues to recover money voluntarily paid for the purchase of stocks on marging or to be delivered at a future day, in violation of this provision, is not entitled to recover interest thereon. (Baldwin v. Zadig, 104 Cal. 594, 38 Pac. 363.)
An undisclosed principal may recover money paid by his agent upon a contract in violation of this section. (Parker v. Otis, 130 Cal. 322, 92 Am. St. Rep. 56, 62 Pac. 571.)
This provision is not to be confined to the particular person handing over the money. (Parker v. Otis, 130 Cal. 322, 92 Am. St. Rep. 56, 62 Pac. 571.)
The prohibition of the Constitution cannot be avoided by interposing a broker between the buyer and seller. If by agreement the customer is enabled to purchase stock on margin, the agreement is within the prohibition of the Constitution, and the fact that broker did not himself sell, but was only the instrument through which the illegal end was accomplished, makes no difference. (Cashman v. Root, 89 Cal. 373, 23 Am. St. Rep. 482, 26 Pac. 883.)
This provision will not be so construed as to permit an evasion of it. (Parker v. Otis, 130 Cal. 322, 92 Am. St. Rep. 56 62 Pac. 571; Sheehy v. Shinn, 103 Cal. 325, 37 Pac. 393.)
The construction of the provision is a matter of law for the courts and does not depend upon evidence as to what the terms “on margin," or "to be delivered at a future day,' mean according to the usage of brokers during the years preceding the adoption of the Constitution. (Sheehy v. Shinn, 103 Cal. 325, 37 Pac. 393.)
The word "margin" as most frequently employed in this state at the time of, and many years prior to, the adoption of the Constitution, meant a sum deposited by the purchaser of stock with the broker, paying a certain percentage of the purchase price, the broker agreeing to advance the balance of the purchase price upon condition that he should hold the stock as security for his advance with the right to sell it in case of depreciation in value and failure of the purchaser to keep the margin good; and this is the sense in which the word was used by the framers of the new Constitution. (Sheehy v. Shinn, 103 Cal. 325, 37 Pac. 393.)