The repealing act, of course, may expressly save the rights of creditors to hold directors liable for debts contracted prior to the repeal.24 And in some states a general statute providing that the repeal of a statute shall not affect any penalty or liability incurred thereunder, unless the repealing act shall so provide, has been applied to the repeal of a statute making directors personally liable.25 Such a statute, like other statutes, may be repealed by implication.26 An amendment of the New York statute imposing liability for failure to file annual reports, by providing that written notice must be served within three years, has been held not applicable to actions to enforce such liability, where commenced before the statute was enacted.27 § 2608. Corporations which are within the statutes. Frequently, if not generally, the statutes imposing personal liability upon officers for corporate debts apply in terms to a particular class of corporations, and there is no liability unless the corporation comes strictly within the terms of the statute.28 For instance, a statute making the directors of manufacturing companies liable does not apply to mining companies.29 But a chamber of commerce whose articles of incorporation declare that it "is formed not for profit" is within a statute making the trustees of such a corporation personally liable for its debts, although its articles provide for corpo 24 See Thayer v. New England Lithographic Steam Printing Co., 108 Mass. 523; Knox v. Baldwin, 80 N. Y. 610. 25 Cavanaugh v. Patterson, 41 Colo. 158, 91 Pac. 1117. See also Charles E. Brown & Co. v. Ware, 87 Vt. 121, 88 Atl. 507, where statute provided that repeal of an act shall not affect a right accrued before the repeal takes effect. 26 See Kipp v. Lichtenstein, 79 Ill. 358; Bank of Metropolis v. Faber, 1 N. Y. App. Div. 341, 37 N. Y. Supp. 423, 38 N. Y. App. Div. 159, 56 N. Y. Supp. 542, 150 N. Y. 200, 44 N. E. 779. Compare Bank of Saginaw v. Pierson, 112 Mich. 410, 70 N. W. 901. 27 Shepard v. Fulton, 55 N. Y. App. Div. 329, 66 N. Y. Supp. 861; Gund lach-Bundschu Wine Co. v. Fritz, 49 N. Y. App. Div. 647, 63 N. Y. Supp. 198; Loeb v. Bien, 49 N. Y. App. Div. 638, 63 N. Y. Supp. 202; St. George Vineyard Co. v. Fritz, 48 N. Y. App. Div. 233, 62 N. Y. Supp. 775, 30 N. Y. Civ. Proc. 253. 28 See McKee v. City Garbage Co., 140 Mich. 497, 103 N. W. 906, 12 Det. L. N. 227; E. E. Rice & Co. v. Kennedy, 76 Vt. 380, 57 Atl. 971. In New Hampshire, foreign corporations not manufacturing corporations are not within a statute requiring returns by foreign manufacturing corporations. Pierce & Galloway v. Yeaton, McDonald & Loring, N. H. -, 97 Atl. 876. 29 Byers v. Franklin Coal Co., 106 Mass. 131. rate stock, and declare that the corporation is intended to promcte the prosperity of the city in which it is located.30 The classification of corporations, and the question as to what corporations fall within particular classes, has been elsewhere fully considered.31 § 2609. Liability as joint or several. The statutes often expressly provide that the liability of directors or other officers thereby created shall be joint and several.32 The nature of the liability where not expressly declared by statute is elsewhere considered.33 § 2610. Who may enforce the liability-General rule. In determining who may enforce the liability for corporate debts imposed by statute upon the directors or other officers, regard must be had, of course, to the terms of the particular statute. Most of the statutes expressly refer to "creditors of the corporation" as the persons who may sue, and in whose favor liability is created, in which case, of course, no action by the corporation or by stockholders is authorized thereunder. And a statute making corporate officers liable "for all the debts of the corporation," without referring further to who may enforce the liability, creates, of course, a liability in favor of creditors only. A few statutes expressly authorize an action by the corporation or by creditors, by creating liability to the corporation and to the creditors thereof.34 Still other statutes create a liability in favor of any "creditor or stockholder of the corporation" injured by the act.35 Stafutes sometimes give the remedy for payment of unlawful dividends to stockholders personally and not to the corporation, so that the corporation cannot sue the directors for losses sustained from the payment of such dividends.36 Other statutes create a liability not only in favor of creditors of the corporation, but also expressly create liability in favor of the corporation or stockholders or representatives of the corporation on its insolvency, or of the 30 Snyder v. Chamber of Commerce, 53 Ohio St. 1, 41 N. E. 33. 31 Supra, §§ 57-102, vol. 1. 32 See Williams v. Brewster, 117 Wis. 370, 93 N. W. 479. 33 See § 2416, supra. 34 See, for instance, section 28 of the Stock Corporation Law of New York, relating to liability of directors for unauthorized dividends. 35 See, for instance, section 35 of the Stock Corporation Law of New York creating liability for false reports, notices or certificates. 36 Fleisher v. West Jersey Securities Co., 84 N. J. Eq. 55, 92 Atl. 575, under amendment of 1904. state.37 One conspiring or co-operating with the officer who has acted wrongfully cannot recover.38 § 2611. Creditors in general. The statutory liability, where enforceable by creditors of the corporation, may be enforced by any creditor whose debt is within the terms of the statute, and by no others.3 39 Thus, one not a creditor at the time of a diversion of corporate funds cannot recover under a statute giving a cause of action therefor. 40 A creditor who sues the directors under such a statute must prove that there is a valid subsisting debt due from the corporation to him.41 If only a creditor can sue, one must show that he is a bona fide creditor of the corporation, and it is not sufficient for him to show that he is a creditor under certain conditions and contingencies, without further proving the existence of the conditions. on which his right depends.42 A surviving partner may enforce a debt which belonged to the firm.43 Stockholders who are not creditors cannot ordinarily enforce the statutory liability for failure to file an annual report.44 A depositor in a bank who becomes such after a misappropriation may sue the directors under a statute making them liable for 37 See § 2621, infra. 38 Zimmerman v. Western & S. Fire Ins. Co., 121 Ark. 408, Ann. Cas. 1917 D 513, 181 S. W. 283. 39 As to what debts are within the statutes, see §§ 2648-2660, infra. Under the Massachusetts statute making officers liable for corporate debts if they shall make a false certificate required by law, or fail to file a report, etc., and providing that, to render an officer liable, judgment must be recovered against the corporation and an execution returned unsatisfied, after which any creditor may file a bill in equity for himself and all other creditors against all the officers liable for the debts of the corporation-in such a proceeding, the judgment creditor, as well as other creditors, may prove any claims due on simple contract. Thacher v. King, 156 Mass. 490, 31 N. E. 648. 40 Benge v. Eppard, 110 Iowa 86, 81 N. W. 183; Hill v. Frazier, 22 Pa. St. 320, applying rule to illegal dividend. 41 National Park Bank of New York v. Remsen, 43 Fed. 226; Jones v. Barlow, 62 N. Y. 202; Adams v. Mills, 60 N. Y. 533; Miller v. White, 50 N. Y. 137; Sherman v. Slayback, 58 Hun (N. Y.) 255, 12 N. Y. Supp. 291; Hill V. Frazier, 22 Pa. St. 320. Where only creditors may sue to enforce the statutory liability the person suing must be a bona fide creditor. State Bank of Rock Island v. Pope, 179 Ill. App. 282. 42 State Bank of Rock Island v. Pope, 179 Ill. App. 282, 288. 43 Ferguson v. Gill, 64 Hun (N. Y.) 284, 19 N. Y. Supp. 149. 44 Steele v. Hughes, 104 Ark. 517, 149 S. W. 336. misappropriations by other persons, since new depositors become such on the faith of the presumed assets.45 The right of a receiver to sue to enforce a statute imposing personal liability on corporate officers is stated in a subsequent chapter.46 § 2612. Creditor who is also stockholder or officer of corporation. The fact that a creditor is also a stockholder, or even an officer, does not prevent him from enforcing the liability of the directors or other officers, if he is in no way responsible for or connected with the misconduct or neglect of which he complains,47 unless it appears from the terms of the statute, or its purpose, that it was not intended for the benefit of creditors who might also be stockholders or officers.48 But a director or other officer who is also a creditor cannot hold the other directors or officers liable for his debt because of acts or omissions of which he is equally guilty, and for which he would be liable, equally with them, to other creditors; for he cannot thus take advantage of his own neglect or misconduct.49 45 Winchester v. Howard, 136 Cal. 432, 89 Am. St. Rep. 153, 69 Pac. 77, 64 Pac. 692. 46 Infra, chapter on Receivers. 47 Anderson v. Blattau, 43 Mo. 42; Sanborn v. Lefferts, 58 N. Y. 179. See also Slater v. Taylor, 241 Ill. 102, 89 N. E. 271, aff'g 146 Ill. App. 97; Weber v. Fickey, 52 Md. 500; Janney v. Minneapolis Industrial Exposition, 79 Minn. 488, 50 L. R. A. 273, 82 N. W. 984. Rule applied to action by director against co-director for failure to file annual report. Ginsburg v. Von Seggern, 59 N. Y. App. Div. 595, 69 N. Y. Supp. 758, aff'd without opinion 172 N. Y. 662, 65 N. E. 1116. 48 Thacher v. King, 156 Mass. 490, 31 N. E. 648; McDowall v. Sheehan, 129 N. Y. 200, 29 N. E. 299; Easterly v. Barber, 65 N. Y. 252. Under the Massachusetts statute providing that the officers of a corporation shall be jointly and severally liable, when the debts of the corporation exceed the capital stock, to the extent of such excess existing when suit is commenced against the corporation, it has been held that a director who is a creditor, or a member of a firm which is a creditor, is not entitled to share with the other creditors in the fund raised from the directors in enforcing their liability, as the statute is not intended for the benefit of directors who are creditors. Thacher v. King, 156 Mass. 490, 31 N. E. 648. 49 Knox v. Baldwin, 80 N. Y. 610; Easterly v. Barber, 65 N. Y. 252; Bronson v. Dimock, 4 Hun (N. Y.) 614; Wait v. Ferguson, 14 Abb. Pr. (N. Y.) 379; Briggs v. Easterly, 62 Barb. (N. Y.) 51; Roach v. Duckworth, 65 How. Pr. (N. Y.) 303, 61 How. Pr. 128; Estes v. Burns, 5 Jones & S. (N. Y.) 1. Contra, under the Massachusetts statute making officers liable for making any false certificate required by law. George Woods Co. v. Storer, 144 Mass. 399, 11 N..E. 662. And this estoppel extends also to his assignee,50 unless the assignment of the debt was absolute and for value, and was made before the default.51 The fact that the director seeking to hold the others liable was illegally elected is immaterial, if he acted as a director.52 § 2613. Assignee. The right to enforce a judgment or other debt against the officers of a corporation passes to the assignee thereof,53 or to a receiver appointed for the creditor in supplementary proceedings against him.54 - § 2614. Assignee for benefit of creditors. The personal liability imposed upon directors and other officers for corporate debts is generally imposed for the benefit of creditors, and the liability does not constitute any part of the assets of the corporation.55 In such a case, it follows that the right to enforce the liability does not pass to an assignee of the corporation for the benefit of creditors.56 § 2615. Person suffering no injury or loss. A creditor is not precluded from enforcing his claim against an officer for the filing of a false report because he knew the report was false, where the statute does not require that he shall have relied on the report.57 In this respect, many of the statutes create a liability different from any liability which exists at common law. And a creditor is not precluded from holding the officers liable for failure to file a re 50 Knox v. Baldwin, 80 N. Y. 610; Bronson v. Dimock, 4 Hun (N. Y.) 614; Briggs v. Easterly, 62 Barb. (N. Y.) 51; Roach v. Duckworth, 65 How. Pr. (N. Y.) 303, 61 How. Pr. 128. 51 Cornell v. Roach, 101 N. Y. 373, 5 N. E. 52. See also Chemical Nat. Bank v. Colwell, 14 Daly (N. Y.) 361, 132 N. Y. 250, 30 N. E. 644. The fact that a director of a corporation, who held its bonds, was in default in filing a report, does not affect the right of one to whom he has sold and assigned the bonds to sue the directors to enforce their personal liability. Morgan v. Hedstrom, 164 N. Y. 224, 58 N. E. 26. 52 Easterly v. Barber, 65 N. Y. 252. 53 Davis v. Mills, 99 Fed. 39; Fitzgerald v. Weidenbeck, 76 Fed. 695; Winchester v. Howard, 136 Cal. 432, 89 Am. St. Rep. 153, 69 Pac. 77, 64 54 Boynton v. Sprague, 100 N. Y. App. Div. 443, 91 N. Y. Supp. 839, aff'd without opinion 183 N. Y. 505, 76 N. E. 1089. 55 First Nat. Bank v. Hingham Mfg. Co., 127 Mass. 563. 56 First Nat. Bank v. Hingham Mfg. Co., 127 Mass. 563. 57 Ferguson v. Gill, 64 Hun (N. Y.) 284, 19 N. Y. Supp. 149. |