In this March post, I wrote about the problem of indeterminacy created by the legislature’s use of the word “includes” in defining terms in the General Corporation Law. “Includes” is usually interpreted in statutes and rules as a term of enlargement, not limitation. Hassan v. Mercy American River Hospital, 31 Cal. 4th 709, 717 (2003). Thus, one never really knows the full extent of what may be covered by a definition that uses “includes” or “including”.
One such statute is California Corporations Code Section 191(d) which sets forth a non-exclusive list of activities in which a “foreign lending institution” may engage without being deemed solely by reason of engaging in those activities as transacting intrastate business. On such activity, for example, is the ownership of lans and the enforcement of loans by a trustee’s sale, judicial process or deed in lieu of foreclosure. This doesn’t mean that foreign lending institutions are free to do as the please, however.
For example, Section 191(d) provides that engaging in the listed activities does not permit a foreign banking corporation or other foreign lending institution to maintain an office in California except as otherwise provided by the laws of California. Perhaps more importantly, a foreign lending institution that is not qualified to transact intrastate business and that engages in the activities listed in Section 191(d) is considered to have appointed the Secretary of State as agent for service of process. Cal. Corp. Code § 2104. Moreover, these foreign lending institutions are required to file on or before June 30 of each year this statement with the Secretary of State. I understand that the Secretary of State receives very few of these statements. This suggests that the requirement must either apply to very few foreign lending institutions or there is widespread ignorance of the filing requirement.
Frustratingly, the legislature chose not to say what exactly constitutes a foreign lending institution. It did, however, provide the following non-exclusive list: foreign banking corporation, any foreign corporation all of the capital stock of which is owned by one or more foreign banking corporations, any foreign savings and loan association, any foreign insurance company or any foreign corporation or association authorized by its charter to invest in loans secured by real and personal property, whether organized under the laws of the U.S. or any other state, district or territory of the U.S. In reading this list, note that “foreign association” and ”foreign corporation” are defined in Sections 170 and 171 and that for purposes of Chapter 21 (of which Section 2104 is a part) a “foreign corporation” does not include a corporation or association chartered under the laws of the U.S. Of course, the fact that this is a non-exclusive list leaves everyone guessing as to what else might constitute a foreign lending institution.
The Adversarial Process and Finding Truth
A few years back, I had the great pleasure of reading Thomas Babington Macaulay’s The History of England from the Accession of James the Second. Someday I hope to reread it. Lord Macaulay not only wrote history; he wrote about history and historians. In his essay on the subject, he had this to say about finding truth by means of the adversarial process:
The practice of distorting narrative into a conformity with theory is a vice not so unfavorable as at first sight in may appear to the interests of political science. We have compared the writers who indulge in it to advocates [i.e., lawyers]; and we may add, that their conflicting fallacies, like those of advocates, correct each other. It has always been held, in the most enlightened nations, that a tribunal will decide a judicial question most fairly when it has heard two able men argue, as unfairly as possible, on the two opposite sides of it; and we are include to think that this opinion is just. Sometimes, it is true, superior eloquence and dexterity will make the worse appear the better reason; but it is at least certain that the judge will be compelled to contemplate the case under two different aspects. It is certain that no important consideration will altogether escape notice.
History (1828) (emphasis added). Perhaps Diogenes shouldn’t have been looking for one honest man, but two lawyers.