is not created by the fact of reducing the claims to judgment."

§ 2704. Laches and estoppel. An action by a corporation against its officers to hold them liable for losses on the ground of mismanagement may be barred by laches, or the corporation may be estopped by having consented to or acquiesced in the acts complained of. And individual stockholders may be estopped to sue by reason of participation or acquiescence 42 or by laches.43 However, laches or acquiesence is no bar to an action by a stockholder to compel a director to pay into the treasury loans made by himself in violation of a statute expressly forbidding such loans.

What constitutes laches in suing in equity is not peculiar to corporation law. Generally the court will follow the statute of limitations. unless unusual conditions or extraordinary circumstances make it inequitable to do so.5 Laches cannot be imputed where the cause of action was effectually concealed by the officers sued, although a period longer than the statute of limitations has elapsed.46

40 Swan v. Burnham, 70 N. H. 580, 49 Atl. 93.

41 Higgins v. Lansingh, 154 Ill. 301, 40 N. E. 362; Stetson v. Northern Inv. Co., 104 Iowa 393, 73 N. W. 869; Raymond v. Palmer, 41 La. Ann. 425, 17 Am. St. Rep. 398, 6 So. 692; Holmes, Booth & Haydens v. Willard, 125 Ñ. Y. 75, 11 L. R. A. 170, 25 N. E. 1083.

42 A stockholder who tacitly consents to the drawing of an unauthorized salary by an officer is estopped to sue for relief in equity. Brown v. De Young, 167 Ill. 549, 47 N. E. 863, aff'g 66 Ill. App. 212.

43 United States. Streight v. 59 Fed. 321.

Junk,

Georgia. Alexander v. Searcy, 81 Ga. 536, 12 Am. St. Rep. 337, 8 S. E. 630.

Illinois. Brown v. De Young, 167 Ill. 549, 47 N. E. 863, aff 'g 66 Ill. App. 212.

Massachusetts. Warren V. Para Rubber Shoe Co., 166 Mass. 97, 44 N. E. 112; Snow v. Boston Blank Book Mfg. Co., 158 Mass. 325, 33 N. E. 588; Dunphy v. Traveller Newspaper

Ass'n, 146 Mass. 495, 16 N. E. 426;
Peabody v. Flint, 6 Allen 54.

Michigan. Keeney v. Converse, 99
Mich. 316, 58 N. W. 325.

Minnesota. Pinkus v. Minneapolis Linen Mills, 65 Minn. 40, 67 N. W. 643.

Pennsylvania. Erny V. G. W. Schmidt Co., 197 Pa. 475, 47 Atl. 877. 44 Murray v. Smith, 166 N. Y. App. Div. 528, 152 N. Y. Supp. 102, citing Story, Equity Jurisprudence (13th Ed.), § 298, where he states that "the reason is that the public interest requires that the relief should be given, and it is given to the public through the party."

45 Cooper v. Hill, 94 Fed. 582, 590. 46 Lawrence v. Stearns, 79 Fed. 878, 884.

Where a stockholder places reliance on the management of the corporation conducted by her relatives, she being kept in ignorance of the status of the corporation, the trustees of her estate being refused access to the corporate books, an action by the trustees

§ 2705. Abatement and revival-Where action not based on a statute. This question is governed largely by the statutes in the particular state where the question arises, and these statutes vary considerably in the different states. Generally a cause of action against a corporate officer to hold him personally liable for his misconduct survives his death, at least where he is sought to be charged because of his fiduciary relation, under the liberal survival statutes now in force in most of the states; 47 but there is some authority to the contrary.48 If the action against directors is brought by or

on behalf of the corporation for damages from mismanagement, the common-law cause of action has been held to survive on the theory that it is ex contractu rather than ex delicto; 49 and this applies, it has been held, to an action by a receiver where he sues because of injury resulting to the stockholders or creditors.50

However, as to torts where the fiduciary relationship is immaterial, as where the injury is directly to the plaintiff and not to the corporation, there is some conflict. Generally, perhaps, it is held that, like other actions ex delicto, unless otherwise provided by statute, such an action does not survive the death of the owner of the cause of action, and the claim is not assignable; 51 and hence it does not survive the death of the officer.52 In New York, however, an action by a stockholder for damages for false representations inducing the purchase of stock does not abate upon the death of plaintiff.53 In Alabama, it was held that demands and liabilities for which a deceased officer could have been charged, on an accounting between him and the corporation, or for which an action of assumpsit would lie, survive; but demands "for which he would be liable only in case, or which are purely as for torts, for a neglect to perform some per

where he has permitted corporate assets to be wrongfully diverted, does not, on general principles, survive the death of such officer; that where suit is brought for such purpose in equity, seeking also to recover for the corporation moneys taken by the officer personally, or wrongfully permitted to be diverted to others, and during the pendency of the action the defendant dies, the action may be revived as against the executors of the officer for the recovery of such funds only as have accrued to the benefit of the estate of the defendant. Great Western Min. & Mfg. Co. v. Harris' Estate, 111 Fed. 38. Compare, however, Allen v. Luke, 141 Fed. 694, where the court holds that an action against a director of a national bank for the recovery of funds lost to the bank through the director's negligence survives as against his executors.

49 Bates v. Dresser, 229 Fed. 772, 798; Boyd v. Schneider, 131 Fed. 223. "If the action is based on the

breach of implied contract" to properly perform their duties as directors, the cause of action survives. Curtis v. Phelps, 208 Fed. 577.

50 Bates v. Dresser, 229 Fed. 772, 798; Curtis v. Phelps, 208 Fed. 577; Allen v. Luke, 163 Fed. 1018, 141 Fed. 694. **

A cause of action by a receiver of a corporation for the benefit of stockholders and creditors, to recover from directors for losses resulting from mismanagement, survives the death of directors because it is ex contractu rather than ex delicto. Bates V. Dresser, 229 Fed. 772, 798.

51 Lee v. Fisk, 222 Mass. 418, 109 N. E. 833.

52 See Wynn v. Tallapoosa County Bank, 168 Ala. 469, 53 So. 228.

53 Squiers v. Thompson, 73 N. Y. App. Div. 552, 76 N. Y. Supp. 734, aff'd without opinion in 172 N. Y. 652, 65 N. E. 1122; Bennett v. Wolfolk, 80 Hun (N. Y.) 390, 30 N. Y. Supp. 328.

sonal or official duty to the bank, as to which he acquired no benefit or profit, he could be held liable therefor only in an action of tort" and such cause of action did not survive.54

§ 2706. Where action based on a statute. When the statute making directors or other officers of a corporation personally liable is penal in its nature, the liability of an officer does not survive his death, and an action cannot be maintained against his personal representative.55 And the death of a director after an action has been commenced against him, but before judgment, will abate the action.5 So where the plaintiff dies during the pendency of an action against a trustee based on the making of a false report, or the failure to make a report, the action abates, where the statute is deemed a penal one. 57 A cause of action created by statute against directors for

54 Wynn

V. Tallapoosa County Bank, 168 Ala. 469, 53 So. 228.

55 Connecticut. Mitchell v. Hotchkiss, 48 Conn. 9, 40 Am. Rep. 146.

Illinois. Diversey v. Smith, 103 Пl. 378, 42 Am. Rep. 14.

New Jersey. See dicta of Justice Elmer in Derrickson v. Smith, 27 N. J. L. 166.

New York. Carr v. Rischer, 119 N. Y. 117, 23 N. E. 296; Brackett v. Griswold, 103 N. Y. 425, 9 N. E. 438; Stokes v. Stickney, 96 N. Y. 323; Boyle v. Thurber, 50 Hun 259, 2 N. Y. Supp. 789; Bank of California v. Collins, 5 Hun 209; Reynolds v. Mason, 54 How. Pr. 213.

Pennsylvania. Githers v. Clarke, 158 Pa. St. 616, 28 Atl. 232.

Rhode Island. Moies v. Sprague, 9 R. I. 541.

56

Such statutory actions are generally classed as actions ex delicto which do not survive at common law or unless otherwise provided by statute. Stokes v. Stickney, 96 N. Y. 323; Moies v. Sprague, 9 R. I. 541.

56 Brackett v. Griswold, 103 N. Y. 425, 9 N. E. 438.

But after a judgment has been recovered by a creditor against a director, the judgment becomes "property with all the attributes of a judgment in an action ex contractu," the original wrong being merged therein, and the subsequent death of the director will not affect the right of the creditor to enforce the judgment against his estate. It follows that, where the judgment is reversed and a new trial granted on the director's appeal, an appeal from the judgment of reversal may be prosecuted after the director's death. Carr v. Rischer, 119 N. Y. 117, 124, 23 N. E. 296.

57 Blake v. Griswold, 104 N. Y. 613, 11 N. E. 137; Brackett v. Griswold, 103 N. Y. 425, 9 N. E. 438. Contra, Bonnell v. Griswold, 15 Abb. N. Cas. (N. Y.) 471.

wrongfully declaring a dividend or making loans to stockholders is not an action "for wrongs done to the property rights or interests of another," within the New York abatement statute, and does not survive after the death of the director who is sued.58 In some states, however, a statute providing that actions shall not abate by death or other disability of a party, is deemed to be so broad as to include all actions, and hence to embrace an action for failure to file an annual report.59 And under the liberal statutes as to survival of actions now in force in most jurisdictions, a statutory cause of action against directors for illegal declaration of dividends survives. the death of a director, whether the cause of action be considered ex contractu or ex delicto.60 Under the New Hampshire statute making the survival of actions almost universal except "those for the recovery of penalties and forfeitures of money under penal statutes," the exception embraces an action to recover the thousanddollar penalty prescribed by statute, in favor of any person injured, for failure to call a stockholders' meeting to provide for payment of debts which have been demanded and not paid.61

On the other hand, the rule that actions under a statute to recover a penalty do not survive, does not apply, of course, if the liability, as it may be, is contractual, or remedial and quasi contractual, and not penal in its nature.62 Thus, actions against national bank directors, based on section 5239 of the United States Revised Statutes, survive against the personal representatives of a deceased director,63 since the statute is held to be a remedial and not a penal

58 Boston & M. R. R. v. Graves, 80 Fed. 588.

59 First Nat. Bank of Missoula v. Cottonwood Land Co., 51 Mont. 544, 154 Pac. 582.

60 German-American Coffee Co. v. Johnston, 168 N. Y. App. Div. 31, 153 N. Y. Supp. 866.

61 Coulombe v. Eastman, 77 N. H. 368, 92 Atl. 168.

62 United States. Stephens v. Overstolz, 43 Fed. 465.

Arkansas. Hughes v. Kelly, 95 Ark. 327, 129 S. W. 784.

Indiana. Brown v. Clow, 158 Ind. 403, 415, 62 N. E. 1006.

New York. McComb v. Kellogg, 48 Hun 621, 1 N. Y. Supp. 206.

Vermont. Farr v. Briggs' Estate,

72 Vt. 225, 82 Am. St. Rep. 930, 47 Atl. 793.

*

*

The constitutional provision in California making directors liable "for all moneys embezzled or misappropriated by the officers of such corporation during the term of office of such director or trustee' imposes a contractual rather than penal liability so that the death of a director pending a suit thereunder does not abate it. Major v. Walker, 23 Cal. App. 465, 138 Pac. 360, following Winchester v. Howard, 136 Cal. 432, 89 Am. St. Rep. 153, 69 Pac. 77, 64 Pac. 692.

63 Williams v. Brady, 232 Fed. 740, 742.