Bradford v. Gulley

• Decision Date: 13 September 1897
• Citation: 50 P. 314,10 Colo.App. 146
• Parties: BRADFORD et al. v. GULLEY.
• Court: Colorado Court of Appeals

50 P. 314

10 Colo.App. 146

BRADFORD et al. v. GULLEY.

Court of Appeals of Colorado

September 13, 1897

Appeal from Mineral county court.

Action by Jesse Gulley against Silas W. Bradford and others. From a judgment for plaintiff, defendants appeal. Affirmed.

Theodore H. Thomas, for appellants.

Spurgeon & Cassidy, for appellee.

WILSON J.

This is an action upon a debt contracted by a corporation, the Kentucky Belle Mining Company, wherein it is sought to enforce the personal liability of the directors by reason of a failure to make an annual report, as required by section 252, Gen.St Defendant interposed a demurrer to the complaint, which being overruled, they elected to stand by it. Judgment was thereupon given for plaintiff, and from this defendants appeal. The errors assigned and argued to this court are that the complaint did not state facts sufficient to constitute a cause of action, and that it was insufficient to sustain the judgment.

The corporation was organized in September, 1894. The debt sued upon was contracted between January 1 and February 25, 1895 and was for goods and merchandise claimed to have been sold and delivered to the corporation between those dates. The suit was begun in August, 1895, and the defendants were alleged to have incurred personal liability by reason of the failure of the corporation to file its annual report within 60 days from January 1st preceding. The main contention of defendants is, in effect, that it not being alleged in the complaint that the corporation did any business before January 1, 1895, when the account to plaintiff commenced running, no report was due, under the statute, upon that state of facts, within 60 days from January 1, 1895; that, if no business was done prior to January 1st, no report was due from the corporation till within 60 days from January 1, 1896; and that hence, the debt to plaintiff having been incurred after January 1, 1895, the directors would not become personally liable therefor until a failure to file the report due in 1896. We cannot agree with counsel in this. The statute expressly provides that directors shall become liable, upon failure of the corporation to make the required report, "for all debts of the company that shall be contracted during the year next preceding the time when such report should by this section have been made and filed, and until such report shall be made." A corporation has the privilege of making the report on any day within 60 from January 1st, but this is not compulsory till the 60th day. It must make it within 60 days however, in order that its directors may escape personal liability. If it fails, then, according to the plain letter of the statute, the "preceding year," for the debts contracted during which the directors become personally liable, dates from the sixtieth day after January 1st. As we read the complaint, it does allege, however, that the corporation did business in 1894. In the second clause, after setting forth the organization of the corporation in September, 1894, the complaint says it "has been doing business as such in its said corporate name within the county of Mineral and state of Colorado, aforesaid, at all times hereinafter mentioned"; and in a subsequent clause it is alleged that ever since September 13, 1894, the defendants had been and were officers and directors. Under the statute, however, it was immaterial...