Senate Bill 851 (Benson – 1917)
Chapter 216, Statutes of 1917 - SB 851
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Former Civil Code section 400 was amended, and former Civil Code sections 405, 406, 408, 409, and 410 were repealed, following legislative passage of Senate Bill 851 of 1917. (See Exhibits #1a through #1c) Senator Frank Benson introduced this measure pertaining to the dissolution of corporations, on January 26, 1917. (See Exhibit #1a) At this time, Senator Benson served as chair of the Senate Committee on Revenue and Taxation. (See Exhibit #5)
Senate Bill 851 was assigned to the Senate Committee on Revenue and Taxation and the Assembly Committee on Revenue and Taxation where policy issues raised by the bill were considered. (See Exhibit #2) One amendment was made to Senate Bill 851. (See Exhibits #1b and #2) Subsequent to legislative approval, Governor William Stephens signed Senate Bill 851 on May 11, 1917, and it was recorded by the Secretary of State on July 27th as Chapter 216 of the Statutes of 1917. (See Exhibit #1c)
Neither the legislative committees hearing this bill nor its author have left documentation surviving on its consideration. Our review of press releases by Governor William Stevens was equally fruitless. Under these circumstances, we researched related treatises, publications, studies, and reports. In addition we searched for periodicals from 1916 through 1919 that may have discussed Senate Bill 851 of 1917 or the particular business climate that spawned this legislation but were unsuccessful. Not surprisingly, many of the periodicals we reviewed discussed topics related to World War I. You may find helpful a copy of the Second Biennial Report of the State Corporation Department, which described the business climate in California from September 1, 1916 through September 1, 1918. (See Exhibit #4)
In this Report, the State Corporation Department commented on legislation it sponsored in 1917, stating that it “has taken the initiative to aid corporate business wherever possible, by suggesting legislation to meet changing conditions and to keep the state in line with modern practice.” (See Exhibit #4, page 8) However, it also attempted to explain its increasing regulation of corporations and efforts to protect stockholders, emphasizing that “A recital of the various frauds uncovered and suppressed by the department would fill volumes.” (See Exhibit #4, page 9) The Report provided some examples of these fraudulent corporations. (Id.)