§ 2913. Sufficiency of complaint. Whatever is necessarily implied or reasonably to be inferred from an allegation is to be taken as directly averred,59 and an allegation that a company was organized and operated for profit necessarily implies that it is of a class which must have capital stock in order to have legal existence.60 Where the statute provides for reports by all corporations other than moneyed or railroad corporations, a complaint alleging that the company is a business corporation is sufficient.61 A complaint which is defective in failing to show the place where the corporation does business may be held sufficient, where the answer admits the violation of the statute and such admission is aided by proof showing where the corporation did business, there being no demurrer. In such a case the statement of the cause of action may be held sufficient, at least to prevent a nonsuit.62

§ 2914. Amended complaints. A new cause of action is not set up by an amended complaint which states more fully the same cause of action as stated in the original complaint.6

63

§ 2915. Complaints as to false reports. Complaints for the making of false certificates must show that the defendant was an officer of the corporation, and usually the complaint must show not only that the certificate or report involved was false in some material misrepresentation, but also that the officer knew that it was false.65

A complaint seeking recovery for the neglect to file or publish reports is insufficient when it proceeds on the theory that the report that was made was false and therefore constituted no report, especially where another statute provides a penalty for the making of false reports.66 Allegations in a complaint that a specified published report was false within the knowledge of the directors, and that it was intended to deceive and did deceive plaintiff so that credit was extended by plaintiff to the corporation to the damage of plaintiff, are sufficient, at least to require an answer, there having been neither a

59 Daily v. Marshall, 47 Mont. 377, 133 Pac. 681.

60 Daily v. Marshall, 47 Mont. 377, 133 Pac. 681.

61 Union Bank of Buffalo v. Keim, 52 N. Y. App. Div. 135, 64 N. Y. Supp. 1070, aff'd 169 N. Y. 587, 62 N. E. 1101.

62 Fairbanks, Morse & Co. v. Mac

leod, 8 Colo. App. 190, 45 Pac. 282.

63 Clough v. Rocky Mountain Oil Co., 25 Colo. 520, 55 Pac. 809.

64 Thompson-Houston Elec. Co. v. Murray, 60 N. J. L. 20, 37 Atl. 443.

65 Matthews v. Patterson, 16 Colo. 215, 26 Pac. 812.

66 Matthews v. Patterson, 16 Colo. 215, 26 Pac. 812.

demurrer to the complaint nor a motion to make its averments more certain.67

§ 2916. Indictments for making false reports. When a defendant is indicted for making or publishing a false report and he cannot identify the particular report involved, the matter should be reached by a demand for a bill of particulars.68

§ 2917. Answer; defenses. Directors who rely upon the existence of facts excusing compliance with the statute should set forth and prove such facts,69 and the effect of a denial of the violation of the statute is not waived by the setting up of affirmative matter in another defense.70 Usually the defendant may plead any or all defenses which are available,71 and he may use as an offset any claim which the corporation might have used as a defense to the suit.72 Admissions in an answer in support of the plaintiff's allegations necessarily tend to expose the director to the penalty,73 but when an original answer has been superseded by an amended pleading, the admission in evidence of portions of such original answer containing admissions is error.74

con

§ 2918. Variance. Where the complaint alleges breach of tract of the corporation, it is error to allow recovery upon the theory and proof of rescission of a contract.75

67 United States v. Lake, 129 Fed. 499; American Credit-Indemnity Co. v. Ellis, 156 Ind. 212, 59 N. E. 679.

68 State v. O'Neil, 24 Idaho 582, 135 Pac. 60.

69 Schenck v. Bandmann, 81 Cal. 231, 22 Pac. 654.

Where debt involved was part of trust fund, and plaintiff was trustee of such fund, an interlocutory judgment against such plaintiff granting an accounting, in the results of which the director was to share proportionately, would not affect such director's liability and could not be set up as a defense. Ginsburg v. Von Seggern, 59 N. Y. App. Div. 595, 69 N. Y. Supp. 758, aff'd 172 N. Y. 662, 65 N. E. 1116.

In an action against a director to enforce personal liability for debts because of the failure to file reports, the defense showing that plaintiff did not

§ 2919. Presumptions. Under some statutes a presumption arises that the failure to file reports is wilful,76 but such a presumption is overcome where the director testifies that there was no purpose in keeping back the report, that he was not aware that the report was required to be filed and that during the period of default he had not in mind that he was a director, even though such testimony is disputed." A prima facie case of violation of the statute is raised where it appears that no report was filed and the secretary testifies that he did not verify such a report.78 Evidence of a public official, who has examined the indexes of his office, to the effect that a report has not been filed, has been held sufficient, prima facie, to put the defendants to the proof that the papers were filed.79

§ 2920. Burden of proof. The burden of proof to establish the liability of the defendants under the statutes as to reports or as to false reports, rests on the plaintiff.80 Thus, the burden to establish the existence of a valid debt of the corporation, and that it was contracted during the time when a default existed as to making reports, rests on the plaintiff.81 The burden of showing waiver of the liability imposed by the statutes is on the defendant.82

82921. Admissibility of evidence. Parol evidence is admissible to show the history of an indebtedness resulting in the giving of notes,83 and a debt may be proved by any of the methods by which a debt may be proved against either a corporation or an individual.84 The fact that a defendant was the director of a company may be proved by parol evidence,85 and documents tending to show that a corporation engaged in business as such and that the defendants acted as directors are also admissible.86

Statements in a pleading are evidence for the purposes of trial,$7

76 M. I. Wilcox Cordage & Supply Co. v. Mosher, 114 Mich. 64, 72 N. W. 117; Gennert v. Ives, 102 Mich. 547, 61 N. W. 9.

77 Gennert v. Ives, 102 Mich. 547, 61 N. W. 9.

78 Deloria v. Van Winkle, 162 Mich. 660, 127 N. W. 782.

79 Jenet v. Nims, 7 Colo. App. 88, 43 Pac. 147.

80 Jackson v. Clifford, 5 App. Cas. (D. C.) 312.

81 Thatcher v. Salomon, 16 Colo. App. 150, 64 Pac. 368.

82 Shepard v. Fulton, 171 N. Y. 184, 63 N. E. 966.

83 Witherow v. Slayback, 158 N. Y. 649, 70 Am. St. Rep. 507, 53 N. E. 681, rev'g 11 N. Y. Misc. 526, 32 N. Y. Supp. 746.

84 Thatcher v. Salomon, 16 Colo. App. 150, 64 Pac. 368.

85 Deloria v. Van Winkle, 162 Mich. 660, 127 N. W. 782.

86 Daily v. Marshall, 47 Mont. 377, 133 Pac. 681.

87 Union Bank of Buffalo v. Keim, 52 N. Y. App. Div. 135, 64 N. Y. Supp.

and an answer showing that a director attended meetings as such is sufficient prima facie to show that he served as director after his election, although such answer also states that the director was induced to attend the meetings by false representations and that he refused further to act as a director.88

To permit a witness to testify as to whether or not he would have loaned money to a corporation if he had known of its financial condition is improper, since this is in effect, to permit testimony of an undisclosed intent of the witness or the secret operations of his mind."

Papers appearing to be reports which were made are not admissible when they are not shown to be the reports required by the statute and which were made and posted.90

Evidence to show that the proceeding was instituted for revenge is properly excluded where there is no offer to impeach witnesses.91

As has already been noted, the judgment recovered against the corporation is not competent evidence to show the debt in an action against directors.92

Under a general allegation of the liability of trustees for the making of a false report, proof of indebtedness incurred subsequent to the making of such report is admissible.93 In an action for deceit for the giving of false reports by an insurance company, where the statement was required to show the financial condition of the company before a certain date, testimony as to transactions after such date was immaterial.94 To show the crime of making and issuing false reports, evidence of other false reports is proper on the issue of knowledge,95 and where the defendants are officers of a corporation engaged in banking, books of another bank are admissible to show the concealment of indebtedness.96

1070, aff'd 169 N. Y. 587, 62 N. E. 1101.

88 Union Bank of Buffalo v. Keim, 52 N. Y. App. Div. 135, 64 N. Y. Supp. 1070, aff'd 169 N. Y. 587, 62 N. E. 1101.

89 Stafford v. St. John, 164 Ind. 277, 73 N. E. 596.

90 Miles v. Woodward, 115 Cal. 308, 46 Pac. 1076.

91 Ball v. Tolman, 119 Cal. 358, 51 Pac. 546.

92 Chase v. Curtis, 113 U. S. 452, 28 L. Ed. 1038.

See § 2898, supra.

93 Bagley & Sewall Co. v. Lennig,

61 N. Y. App. Div. 26, 70 N. Y. Supp.

242.

94 Warfield v. Clark, 118 Iowa 69, 91 N. W. 833.

95 State v. O'Neil, 24 Idaho 582, 135 Pac. 60.

Evidence of other false statements and reports is admissible to prove crime under Idaho Rev. Codes, § 7128, since such reports were made to conceal money withdrawn, and also to illustrate the character of act. State v. O'Neil, 24 Idaho 582, 135 Pac. 60. 96 State v. O'Neil, 24 Idaho 582, 135 Pac. 60.

Where a corporation sues to recover a debt due it, the defendant cannot show the failure to file reports and that as a consequence the corporation forfeited its charter, since such a question must be raised by the state.97.

§ 2922. Questions of law and fact. The question whether a person was an officer of the corporation at the time of default and at the time of maturity of the debt has been held a question of fact, when an action is brought to enforce the liability of such person under the statutes as to reports.98 And the question whether there was a failure to file the report may be one of fact.99

§ 2923. Contribution.

When the liability imposed upon the directors or other officers of a corporation is penal in its nature, an officer who has been sued and compelled to pay a debt cannot sue the other officers for contribution. But it is otherwise if the liability is not penal, but quasi contractual in its nature.3

97 Spreyne v. Garfield Lodge No. 1 United Slavonian Benev. Society, 117 Ill. App. 253.

98 First Nat. Bank v. Lamon, 130 N. Y. 366, 29 N. E. 321, rev'g 55 Hun (N. Y.) 414, 8 N. Y. Supp. 444.

Where one who had recovered a judgment against a corporation for personal injuries sought to fix personal liability on one as president of the corporation because of the failure to file reports as required by Kirby's Ark. Dig. § 848, the question whether such person was president of the corporation when the injury occurred and judgment was obtained was for the

2 Gregory v. German Bank, 3 Colo. 332, 25 Am. Rep. 760; Andrews v. Murray, 33 Barb. (N. Y.) 354; Hill v. Frazier, 22 Pa. St. 320.

3 Woolverton v. Taylor, 132 Ill. 197, 22 Am. St. Rep. 521, 23 N. E. 1007, rev'g 30 Ill. App. 70; Nickerson v. Wheeler, 118 Mass. 295; National Bank of Auburn v. Dillingham, 147 N. Y. 603, 49 Am. St. Rep. 692, 42 N. E. 338.

IV Priv. Corp.-54