§ 2602. What is meant by "penal" statutes. If there was some precise definition of penal statutes, the question as to whether the statutes now under consideration are or are not penal would be much easier to decide. Much of the difference of opinion in regard to these statutes is predicated on the difference of opinion as to what is a penal statute. Perhaps the best and clearest statement of what are penal statutes is found in a leading case decided by the Supreme Court of the United States in 1892 in which Justice Gray, in an elaborate and well-considered opinion, stated the views of the court as follows: "In the municipal law of England and America, the words 'penal' and 'penalty' have been used in various senses. Strictly and primarily, they denote punishment, whether corporal or pecuniary, imposed and enforced by the State, for a crime or offense against its laws [citing cases]. But they are also commonly used as including any extraordinary liability to which the law subjects a wrongdoer in favor of the person wronged, not limited to the damages suffered. They are so elastic in meaning as even to be familiarly applied to cases of private contracts, wholly independent of statutes, as when we speak of the 'penal sum' or 'penalty' of a bond. Penal laws, strictly and properly, are those imposing punishment for an offense committed against the State, and which, by the English and American constitutions, the executive of the State has the power to pardon. Statutes giving a private action against the wrongdoer are sometimes spoken of as penal in their nature, but in such cases it has been pointed out that neither the liability imposed nor the remedy given is strictly penal." 87 Continuing, it was said that "the test whether a law is penal, in the strict and primary sense, is whether mitted against the state, and which, by the English and American Constitutions, the executive of the state has the power to pardon. Statutes giving a private action against the wrongdoer are sometimes spoken of as penal in their nature, but in such cases it has been pointed out that neither the liability imposed nor the remedy given is strictly penal. As the statute imposes a burdensome liability on the officers for their wrongful act, it may well be considered penal, in the sense that it should be strictly construed. But as it gives a civil remedy, at the private suit of the creditor only, meas ured by the amount of his debt, it is 87 Huntington v. Attrill, 146 U. S. 657, 666, 36 L. Ed. 1123. the wrong sought to be redressed is a wrong to the public, or a wrong to the individual." 88 However, in this case the only question actually decided was that the statute involved was not a penal one within the international rule which forbids such laws to be enforced in any other country.89 In an early case in Georgia it was held that a bank charter creating liability of directors for debts, where the debt limit is exceeded, was not a penal statute but a remedial one, for the reason that the statute gave a right of action therefor to individuals rather than the state.9 90 This question is considered at length in a recent decision of the Supreme Court of Illinois, which, because of the thorough and able consideration and discussion of the question, is set forth at length in the note below.91 88 Same case on page 668 of 146 U. S. 89 See $2718, infra. 90 Neal v. Moultrie, 12 Ga. 104. 91"The main question involved in the Appellate Court and in this appeal is whether or not the suit is an action to recover a statutory penalty, and barred by section 14 of the limitation act because not brought within two years from the time the cause of action accrued. Appellee contends that this is a suit to recover a statutory penalty, while appellant insists that the suit is on an implied contract or statutory liability, and that the fiveyear statute of limitations, or section 15 of the limitation act, is applicable in this case. Section 18 of the general incorporation act provides: any person or persons being, or pretending to be, an officer or agent, or board of directors, of any stock corporation, or pretended stock corporation, shall assume to exercise corporate powers, or use the name of any such corporation, or pretended corporation, without complying with the provisions of this act, before all stock named in the articles of incorporation shall be subscribed in good faith, then they shall be jointly and severally liable for all debts and liabilities made 'If * * by them, and contracted in the name of such corporation, or pretended corporation.' Hurd's Stat. 1916, p. 640. This court expressly decided in Loverin v. McLaughlin, 161 Ill. 417, 44 N. E. 99, that liability under said section 18 is incurred if such officers or agents therein named contract for work or materials in the name of the corporation or pretended corporation before the filing of the certificate of incorporation or before all stock named in the articles of incorporation shall be subscribed in good faith. It was further held in that case that the object of the statute is to inflict a punishment for its violation, and that therefore it is penal in its character. In the case of Diversey v. Smith, 103 Ill. 378, 42 Am. Rep. 14, this court adopted the definition in Potter's Dwarris on Statutes that a penal statute is one which imposes a forfeiture or a penalty for transgressing its provisions or for doing a thing prohibited, and then said: 'It is the effect, not the form, of the statute that is to be considered, and when its object is clearly to inflict a punishment on a party for violating it-i. e., doing what is prohibited, or failing to do what is commanded to be done it is penal in its character, "Remedial statutes," says Mr. Sutherland in his well-known work on Statutory Construction, "are such as the name implies, embracing a great variety in detail; those enacted to afford a remedy, or to improve and facilitate remedies existing for the enforcement of rights and the redress of injuries; and also those intended. for the correction of defects, mistakes and omissions in the civil institutions and administrative policy of the state." Continuing, he states that penal statutes "are often treated as contradistinguished from remedial statutes. They are not, however, in full and direct contrast. Penal statutes are those by which punishments are imposed for transgressions of the law. They are construed strictly and more or less so according to the severity of the penalty. The gen and the circumstance that in punishing, remedy is likewise afforded to those having an interest in the observance of the statute, is unimportant.' This court accordingly held in that case, and also in the case of Gridley v. Barnes, 103 Ill. 211, that section 16 of the insurance statute (one very similar in character to the one now under consideration) is a penal statute and that a right of action thereunder is barred by section 14 of the limitation act. Said section 16 provides that the trustees and corporators 'shall be severally liable for all debts or responsibilities of such company, to the amount by him or them subscribed, until the whole amount of the capital of such company shall have been paid in, and a certificate thereof recorded as hereinbefore provided.' Hurd's Stat. 1916, p. 1484. The doctrine was also announced and approved in the case of Diversey v. Smith, supra, that an affirmative statute introductive of a new law which directs a thing to be done in a certain manner means that such thing shall not be done in any other manner, even though there be no negative words prohibiting it. That rule is equally applicable in this case, and said section 4, which provides that the certificate of complete organization shall be filed for record in the county where the principal office of the corporation is located before the corporators shall commence business, is equivalent to an express prohibition against the authority to do so unless that certificate shall be first filed for record. A 'remedial statute' is one which not only remedies defects in the common law but defects in our civil jurisprudence generally, embracing not only the common law but the statutory law. 2 Lewis' Sutherland on Stat. Const. § 583. We find nothing in said section 18 to bring it within the class of remedial statutes. It cannot be said that the Legislature intended thereby to grant to creditors a remedy for the recovery of their claims which the common law does not give them. They had a right of action against the corporators as partners. Bigelow v. Gregory, 73 Ill. 197. That remedy has been in no way changed or taken away by the enactment of said section 18. Loverin v. McLaughlin, supra; Richardson Fueling Co. v. Seymour, 235 Ill. 319, 85 N. E. 496. The reading of said section indicates a legislative intent to create a liability against the officers and agents of a corporation, jointly and severally, for the general protection of the public. The words, 'shall be jointly and severally liable for all debts and liabilities made by them,' eral purpose or aim of a statute may be remedial; as where they provide punitive compensation to the injured party. But the provisions that enforce the wrong for which a penalty is provided, and those which define the punishment, are penal in their character and are construed accordingly. A statute may be remedial in one part and penal in another. And the same statute may be remedial for certain purposes, and liberally construed therefor, and at the same time be of such a nature, and operate with such harshness upon a class of offenders subject to it, that they are entitled to invoke the rule of strict construction." 92 In Wisconsin, in discussing this proposition as to whether the were not intended as the basis for establishing a contractual relation between the officers and the creditors, but were used for the purpose of holding each set of officers and directors responsible only for the wrongs and omissions occurring while they are in control and imposing a like responsibility and liability on their successors in office. The liability thus created is imposed upon the officers, directors, and agents because they permit business to be commenced and liabilities to be incurred in violation of their duty. The suit may be commenced at once to enforce this liability upon their failure or neglect to act according to said section 4, without regard to the question of whether the corporation is solvent or insolvent and notwithstanding the fact that the creditors have a right of action against the stockholders as partners. The conclusion is irresistible that said section 18 is a penal statute and that the right of action thereunder may be barred by the two-year statute of limitations. This holding should not have a tendency to work a hardship upon creditors. If they fail to bring their action within time, they still have their remedy in an appropriate action against the stockholders as partners, in which case the fiveyear statute of limitations applies. It is argued that section 18 should be construed the same as section 16 of the same act, and it is pointed out that this court in the case of Woolverton v. Taylor, 132 Ill. 197, 23 N. E. 1007, 22 Am. St. Rep. 521, held that said section 16 is not a penal statute. Said section 16 reads: 'If the indebtedness of any stock corporation shall exceed the amount of its capital stock, the directors and officers of such corporation, assenting thereto, shall be personally and individually liable for such excess, to the creditors of such corporation.' In deciding that case, one of the main points upon which the decision turned was that there was no provision, express or implied, against officers and direc tors incurring for the corporation liabilities in excess of the capital stock, and no liability resulted unless the creditor suffered a loss by reason of the inability of the corporation to pay its obligation. It was also announced in that decision that said section in express words gave the remedy direct to the creditors, and that the effect of the statute was to create a liability against the officers in the character of a suretyship. That decision is in no way contrary to the views herein expressed." M. H. Vestal Co. v. Robertson, 277 Ill. 425, 115 N. E. 629. 92 2 Lewis' Sutherland Statutory Construction (2nd Ed.), §§ 336, 337. fact that the punishment inures to the benefit of a particular class of individuals instead of to the state, makes the statute remedial rather than penal, Justice Marshall said: "What is the primary purpose of the statute? That is the question. If that is public, the liability of a person for violating it to be mulcted in a sum having no reference whatever to the loss caused to creditors thereby, cannot, it would seem, be reasonably said to be other than a penalty, merely because the beneficiaries of the liability are private persons. We recognize the fact that there is high authority against this rule, but it is in accordance with what we deem to be the weight of authority and the better reasoning." 93 § 2603. Effect of whether liability is for debts of corporation or merely for injury sustained by person suing. The most satisfactory division is to hold that if a statute authorizes a recovery without regard to the actual damage sustained or to whether any damage has been sustained, it is penal; while if it merely authorizes a recovery of the actual damage sustained it is remedial and not penal; and in some cases the distinction between statutes of this class which are deemed penal and those which are deemed remedial seems to be that in the one case a cause of action not existing at common law is created and the creditor is not required to show any injury or damage, while in the latter case the injury must be expressly proved and the recovery is limited to the amount of the damages sustained.94 Thus, it was said in an Indiana case that the action provided for by a statute relating to false reports was "one which might have been maintained at common law" under certain conditions, and the action, even under the statute, was for deceit and called for indemnity only and not punishment, and therefore was a remedial statute. "An action upon it," said the court, "is not an action to recover a 'penalty' given by statute, but a suit to recover damages for a fraud. The mere violation of the statute gives no right of action. The violation must produce injury, and the person aggrieved is entitled to compensation only to the extent of the damages sustained." 95 93 Killen v. Barnes, 106 Wis. 546, 571, 82 N. W. 536. 94 Brown v. Clow, 158 Ind. 403, 62 N. E. 1006; Cæsar v. Bernard, 156 N. Y. App. Div. 724, 141 N. Y. Supp. 659. If a statute merely authorizes a recovery by persons injured of all IV Priv. Corp.-31 "damages resulting from" such act or omission, the statute should be held remedial and not penal, even in so far as the statute of limitations is concerned. 95 American Credit-Indemnity Co. v. Ellis, 156 Ind. 212, 59 N. E. 679, fol |