Bank of Saginaw v. Peirson

• Citation: 112 Mich. 410,70 N.W. 901
• Court: Supreme Court of Michigan
• Decision Date: 27 April 1897
• Parties: BANK OF SAGINAW v. PEIRSON.

70 N.W. 901

112 Mich. 410

BANK OF SAGINAW v. PEIRSON.

Supreme Court of Michigan

April 27, 1897

Error to circuit court, Bay county; Robert J. Kelley, Judge.

Action by the Bank of Saginaw against Frank D. Peirson. Judgment for defendant, and plaintiff brings error. Reversed.

J. L Stoddard, for appellant.

T. F Shepard, for appellee.

MONTGOMERY, J.

The plaintiff in this action seeks to recover from the defendant a director of the Williams Milling Company, the amount due upon a promissory note given by said company on July 20, 1895, payable on the 30th day of October thereafter, to the order of Alfred Mosher & Son which note was indorsed to the plaintiff, and discounted in the usual course of business. The evidence of the plaintiff tended to show that the Williams Milling Company was organized on May 12, 1892, under Act No. 232 of the Public Acts of 1885; that the defendant had been director and secretary of the company from the date of its organization to the date of trial; that no annual report was filed, either in the office of the secretary of state or the county clerk, as required by section 12 of the act above referred to, until November 8, 1895. Upon this evidence the plaintiff contended below that the defendant was liable for the amount of the note, under the provisions of section 12 of the act above referred to, which, prior to the amendment of 1895, hereinafter referred to, required that an annual report should be made in the month of January by each corporation organized under the act in question, stating the amount of capital stock, amount actually paid in, amount invested in real estate and personal property, the amount of debts of the corporation, the amount of credits, and the name of each stockholder and number of shares held by him, which report was required to be signed by a majority of the directors, and verified by the oath of the secretary of the corporation, and filed in the office of the secretary of state. A duplicate was required to be filed in the office of the clerk of the county where the business of the corporation should be carried on, and the statute further provided that: "If any of said directors of any such corporation shall willfully neglect or refuse to make the report required by this section, they shall each be liable for all the debts of such corporation, and subject to a penalty of twenty-five dollars, and, in addition thereto, the sum of five dollars for each and every secular day after the first day of March in each year during the pendency of such neglect or refusal, which penalty shall be for the use and benefit of the general fund of the county in which such corporation is required to file its report." It has been held by us that proof of the failure to file the report required by this section raises a presumption that the neglect was intentional, and therefore willful. Gennert v. Ives, 102 Mich. 547, 61 N.W. 9. See, also, Van Etten v. Eaton, 19 Mich. 187. This view was not controverted in the court below, but the defendant contended, first, that he was not liable for the default in filing a report covering the fiscal year of 1894, for the reason that the indebtedness was not incurred during that period, and that the statute was not intended to create a liability as to indebtedness incurred after the date of the default, and before a second default, in failing to file the report for the ensuing or succeeding year. It was further contended that the statute of 1895, to which reference will be made, operates as a repeal of the law of 1885, and that, as the statute is penal in its nature, this repeal cuts off the right of plaintiff to enforce its provisions.

1. The circuit judge was of the opinion that the plaintiff could not recover, for the reason that it was not a creditor of the corporation during the fiscal year of 1894; that is, during the period covered by the default or negligence in making and depositing the report. This precise question has never been passed upon by this court, nor have we been cited to any case in which it was presented. The statutes in the different states differ materially in their provisions fixing the liability of directors for defaults in making reports. The New York statute creates a liability for "all debts of the company then existing, and for all that shall be contracted before such report shall be made." The Colorado statute creates a liability for "all debts that shall be contracted during the year next preceding the time when such report should have been made and filed, and until such report shall be made." The Wisconsin statute, on the other hand, limits the liability to one "for all debts of such corporation contracted during the period of any such neglect and refusal." In this state, a former statute (section 1821, Comp. Laws 1857) declared that directors should be liable in an action founded on the statute "for all the debts of such corporation contracted during the period of such neglect or...