moneyed or railroad corporations," 60 or to all corporations, joint stock companies and associations.61 The duty to make reports, imposed upon manufacturing companies, also applies and governs a real estate corporation, where the charter of such real estate company states that the corporation is subject to the statute as to manufacturing companies.62 In California the statute applies to mining companies, and it has been held applicable to all corporations conducting the business of mining,63 and to corporations formed for the purpose of conducting such business whether it is actually carried on or not.64 So a corporation engaged in the business of mining by means of a dredging boat in the bed of a navigable river is within the statute.65 This statute was later amended so as to apply to corporations "whose stock is listed and offered for sale at public exchange." 66.

When the duty to make reports is imposed by statute, it must be performed by every corporation in existence and within the statute, including corporations which have done no business and contracted no debts.67 And a corporation organized under statutes requiring reports has been held subject to the same statutory duty, although such duty was imposed by subsequent statutes dealing generally with the subject of reports.68 But the statutory duty does not exist where the corporation is not in existence, as where the evidence does not show even a de facto corporation.69 The duty also terminates where the corporation ceases to exist.70

§ 2859. Corporations doing business outside of United States. In New York, corporations doing business without the United States are excepted from the general statutes as to reports and are allowed additional time to make and file their report.71 Such a statute ap

67 Bradford v. Gulley, 10 Colo. App. 146, 50 Pac. 314.

68 Deloria v. Atkins, 158 Mich. 232, 122 N. W. 559, 16 Det. L. N. 583.

69 Thus the statute was held not applicable where the evidence did not show existence of a de facto corporation, there being no user of franchises or business transactions, but mere preparation for business. Emery v. De Peyster, 77 N. Y. App. Div. 65, 78 N. Y. Supp. 1056.

70 See § 2896, infra.

71 West v. Grosvenor, 102 N. Y. App. Div. 266, 92 N. Y. Supp. 429. See also Hoboken Beef Co. v. Hand, 104 N. Y.

plies to a corporation engaged in foreign meat and poultry business," 72 but does not apply to a corporation the product of which is manufactured in this country and which is not engaged in a foreign business, but is endeavoring to sell its stock in Europe.73

§ 2860. Foreign corporations. The usual statutes as to reports apply only to certain classes of domestic corporations.74 This has given rise to the contention that such domestic corporations were subjected to unreasonable burdens, and that foreign corporations were granted special privileges, a contention which, as has been noted, has been held untenable.75 But in some states statutes have been enacted imposing the same duties on foreign corporations.76 And in other states the statutes have been broadened by amendment so as to apply to both domestic and foreign corporations,77 an enactment which has been held to be reasonable and proper.78 There has been enacted recently a type of statute, known as "Blue Sky Laws," imposing certain requirements upon both domestic and foreign corporations as to reports, which will be considered in a subsequent chapter.79

In the absence of specific legislation on the subject, a statute as to reports will not be extended by judicial construction so as to apply to foreign corporations. Thus it has been held that a statute requir ing manufacturing corporations to make reports was not rendered applicable to foreign corporations by the provisions of another statute requiring such corporations to "conform to the laws of the state as to returns and taxation." 80 Nor could such duty be imposed by the provisions of a statute as to filing reports with the state library, the latter being intended to aid the state library in preserving printed financial reports.81 In this case, however, where it was sought to subject the foreign corporation to the terms of the statute governing

App. Div. 390, 93 N. Y. Supp. 834.

72 Hoboken Beef Co. v. Hand, 104 N. Y. App. Div. 390, 93 N. Y. Supp. 834.

73 West v. Grosvenor, 102 N. Y. App. Div. 266, 92 N. Y. Supp. 429. 74 See the preceding section. 75 See § 2858, supra.

76 Heard V. Pictorial Press, 182 Mass. 530, 65 N. E. 901.

77 Nelson v. Bank of Fergus County, 157 Fed. 161, 13 Ann. Cas. 811.

78 Since Mont. Const. art. 15, § 11, provides that no foreign corporation shall have greater rights or privileges

manufacturing corporations, the pleadings did not show that the foreign company involved was a manufacturing corporation.82

§ 2861. Excuses for failure to make and file reports. Directors or other officers cannot escape liability for corporate debts because of the failure to file a report as required by the statute, by setting up mere irregularities in the formation of the corporation,83 and persons who are elected and who act as directors cannot escape liability by showing that their election was illegal or that they were not eligible for the office.84 The fact that the corporation never existed may be shown,85 if the directors are not estopped from showing such fact.88 But ignorance of the law constitutes no exculpation,87 and it is no excuse that the directors lacked the information necessary to make and publish the required report.88 Since the corporate powers, business and property of the corporation are exercised, conducted and controlled by the directors, they know or ought to know at all times the condition of the business and property under their con

82 Pierce & Galloway v. Yeaton, McDonald & Loring, N. H., 97 Atl. 876, holding that there is no statute requiring foreign corporations not engaged in manufacturing to make any returns, and where a declaration does not show that a certain company is a manufacturing corporation, it is demurrable.

quired by statute to qualify them to be directors. Donnelly v. Pancoast, 15 N. Y. App. Div. 323, 44 N. Y. Supp. 104.

In an action against a director for failure to file annual reports (Rev. Code, 3850), the director cannot avoid liability on the ground that he was not properly chosen as director.

83 See 349 and Newcomb v. Reed, Daily v. Marshall, 47 Mont. 377, 133 12 Allen (Mass.) 362.

84 Providence Steam-Engine Co. v. Hubbard, 101 U. S. 188, 25 L. Ed. 786; Thayer v. New England Lithographic Steam Printing Co., 108 Mass. 523; Easterly v. Barber, 65 N. Y. 252; Union Nat. Bank of Troy v. Scott, 53 N. Y. App. Div. 65, 66 N. Y. Supp. 145; St. George Vineyard Co. v. Fritz, 48 N. Y. App. Div. 233, 62 N. Y. Supp. 775; Halstead v. Dodge, 19 Jones & S. (N. Y.) 169; Craw v. Easterly, 4 Lans. (N. Y.) 513, aff'd 54 N. Y. 679. See further § 1852.

Persons who act as directors and fail to file the annual report as required by law, cannot escape liability to creditors on the ground that they did not hold the number of shares re

Pac. 681.

85 De Witt v. Hastings, 69 N. Y. 518.

86 De Witt v. Hastings, 69 N. Y. 518. See also § 2874, infra.

87 Ball v. Tolman, 119 Cal. 358, 51 Pac. 546; Quimby v. Waters, 28 N. J. L. 533.

88 Schenck v. Bandmann, 81 Cal. 231, 22 Pac. 654; State v. Fenn, 60 Kan. 306, 56 Pac. 483.

An unexplained admission to the effect that the directors lacked the information necessary to enable them to make and post the account in time, seems to present simply a case of neglect or disregard of duty. Schenck v. Bandmann, 81 Cal. 231, 22 Pac. 654.

trol,89 neither can the statutory duty be evaded by the claim that the corporation has no debts 90 nor by the contention that the report is not necessary.91 Nor is the failure of a public official to furnish blanks an excuse for the failure to make reports, 92 and directors cannot relieve themselves from liability for failure to file and publish a report by making a report and intrusting it to the secretary of some other person to be filed and published. His neglect in this respect will render them liable unless the statute expressly provides that the neglect shall be intentional or wilful.93

Directors are also liable for the corporation's failure to file the required report, though the failure was due to the neglect of other directors, unless the statute limits the liability to cases of inten tional or wilful neglect.95 Under the California statute as to mining companies, while the directors have the power to direct the superintendent of the mine to make reports, in case of the failure of that officer to perform the duty intrusted to him, they are liable.96 The fact that no penalty is imposed by the statute upon the superintendent does not prevent the enforcement of the statute,97 and the statutory duty cannot be evaded by the fact that the mine is operated in a distant state or territory, so that it is difficult for the officer to comply with the statutory formalities necessary to making the report.98 The existence of other duties requiring the time of the officer does not excuse the performance of the duty imposed by the statute,99 and if there is no ambiguity in the statute with reference to the for

89 Schenck v. Bandmann, 81 Cal. 231, 22 Pac. 654. See generally, in this connection, Chap. 42, subdivisions XXVI, XXVII. Githers v. Clarke, 158 Pa. St. 616, 28 Atl. 232.

90 Under Colo. Gen. St. § 252 (Mills' Ann. St. §491), as to reports, the fact that the corporation had no debts prior to the time when the annual report was due under the provisions of statute is immaterial and cannot avail the directors as a defense in a suit to enforce their personal liability. Thatcher v. Salomon, 16 Colo. App. 150, 64 Pac. 368.

91 The fact that plaintiff had knowl edge of acts and means of knowledge of noncompliance with the statute (Act of April 23, 1880; St. 1880, p. 400), does not excuse noncompliance

with the law, since there may have been other stockholders. Ball v. Tolman, 119 Cal. 358, 51 Pac. 546. See § 2858, supra.

92 State v. Missouri Exploration & Land Co., 97 Mo. App. 226, 70 S. W. 1107. See § 2855, supra.

93 Whitney v. Cammann, 137 N. Y. 342, 33 N. E. 305.

94 Van Etten v. Eaton, 19 Mich. 187. 95 Gennert v. Ives, 102 Mich. 547, 61 N. W. 9.

96 Eyre v. Harmon, 92 Cal. 580, 28 Pac. 779.

97 Eyre v. Harmon, 92 Cal. 580, 28 Pac. 779.

98 Eyre v. Harmon, 92 Cal. 580, 28

Pac. 779.

99 Shanklin v. Gray, 111 Cal. 88, 43

Pac. 399.

malities required in making the report, an opinion of counsel to the contrary does not relieve from the penalty imposed.1

III. FORM AND REQUISITES

§ 2862. In general. In order that there may be exemption from liability, it is necessary that the report or statement which is filed or published shall comply with the requirements of the statute as to form and as to the matters or facts to be stated therein.2 Substantial compliance with the statute is usually sufficient, or, in other words, the report must give all the information that the statute intends should be given. The report may be required to conform to certain conditions, or the form to be followed may be left to the commissioner of corporations.5

Under the California act as to mining companies, the necessary information must be given by reports of the superintendents, by ac

1 Shanklin v. Gray, 111 Cal. 88, 43 Pac. 399.

2 Witaker v. Masterton, 106 N. Y. 277, 12 N. E. 604; Bonnell v. Griswold, 80 N. Y. 128; Whitney Arms Co. v. Barlow, 63 N. Y. 62, 20 Am. Rep. 504, 68 N. Y. 34; American Grocery Co. v. Pratt, 36 N. Y. App. Div. 152, 55 N. Y. Supp. 467; Glens Falls Paper Co. v. White, 18 Hun (N. Y.) 214; Pier v. George, 17 Hun (N. Y.) 207, 14 Hun 568; Lilienthal v. Yuengling, 33 N. Y. Misc. 619, 68 N. Y. Supp. 897, aff'd 61 N. Y. App. Div. 601, 70 N. Y. Supp. 920; Western Nat. Bank v. Faber, 29 N. Y. Misc. 467, 62 N. Y. Supp. 82; Wickens v. Foster, 22 Wkly. Dig. (N. Y.) 426.

3 Manhattan Co. v. Kaldenberg, 165 N. Y. 1, 58 N. E. 790, rev'g 27 N. Y. App. Div. 31, 50 N. Y. Supp. 265.

When the information required in annual reports is published in good faith and in the manner and form provided by statute, the trustees have done all in their power to avoid penalty. Wallace & Sons v. Walsh, 125 N. Y. 26, 11 L. R. A. 166, 25 N. E. 1076.

4 Dart v. Hughes, 49 Colo. 465, 109 Pac. 952.

Under N. Y. Laws 1892, p. 1832, c. 688, § 30, providing that a stock corporation shall make an annual report as to the capital stock paid in, the amount of debts and amount of assets, on the first day of January, where the report is not in the words of the statute, the sense and substance thereof must inferentially appear, if the report is to be held substantially sufficient. Winthrop Press v. Perkins, 47 N. Y. Misc. 460, 95 N. Y. Supp. 931.

Under Colo. Sess. Laws, 1911, c. 102, a purported annual report failing to contain material matter required by the plain provisions of the statute, is in law, no report. Moody v. Rhodes Ranch Egg Co., Colo. 157 Pac.

1167.

5 Steel v. Webster, 188 Mass. 478, 74 N. E. 686.

With respect to the definiteness of the annual report of a corporation under the laws of New York sufficient to protect the directors from personal liability, see Lilienthal v. Yuengling, 33 N. Y. Misc. 619, 68 N. Y. Supp. 897, aff'd 61 N. Y. App. Div. 601, 70 N. Y. Supp. 920.