Chase v. Curtis

• Decision Date: 02 March 1885
• Citation: 5 S.Ct. 554,28 L.Ed. 1038,113 U.S. 452
• Parties: CHASE v. CURTIS and another
• Court: U.S. Supreme Court

113 U.S. 452

5 S.Ct. 554

28 L.Ed. 1038

CHASE v. CURTIS and another.

March 2, 1885.

The complaint in this action, after alleging that the plaintiff, who is plaintiff in error, was a citizen of Pennsylvania, and the defendants citizens of New York, proceeds as follows:

'Second. That at the times hereinafter mentioned the defendants were trustees of the Union Petroleum Company of New York.

'Third. That the said company is, and at the times hereinafter mentioned was, a corporation organized pursuant to an act of the legislature of the state of New York, entitled 'An act to authorize the formation of corporations for manufacturing, mining, mechanical, or chemical purposes,' passed on the seventeenth day of February, 1848, and the amendments thereto, its principal place of business being in the city of New York.

'Fourth. That the said plaintiffs brought their plea of trespass on the case against the said Union Petroleum Company of New York in the court of common pleas for the county of Venango, in the state of Pennsylvania, in which the said Union Petroleum Company duly appeared, and that the said action was thereafter, and on or about the ninth day of September, 1873, on the petition of the said Union Petroleum Company, verified by the affidavit of Abijah Curtis, one of the defendants above named, removed to the United States circuit court for the Western district of Pennsylvania. And that on the thirtieth day of July, 1874, and before the time for filing the annual report hereinafter mentioned, the above-named plaintiffs duly recovered a judgment in the said action against the said Union Petroleum Company of New York in the circuit court of the United States in and for the Western district of Pennsylvania, by the judgment and consideration of said court having jurisdiction therein, and of the said Union Petroleum Company of New York, for forty thousand five hundred dollars ($40,500.00) damages, and three hundred and twenty-eight dollars and ninety-seven cents ($328.97) costs, which judgment was duly given, and still remains in full force and effect, not satisfied or annulled, and no art thereof has been paid.

'Fifth. That the said Union Petroleum Company of New York did not within twenty (20) days from the first day of January, 1875, make and publish a report as required by law in such case made and provided, signed by its president and a majority of its trustees, and verified by the oaths of the president or secretary thereof, and did not file the same in the office of the clerk of the county where the business of the company was carried on, to-wit, the county of New York; nor have they made, published, signed, verified, or filed any such report whatsoever as by law required, but have wholly failed so to do.

'Wherefore, the plaintiffs demand judgment against the above-named defendants in the sum of $40,828.97, with interest on $40,500.00 from the thirtieth day of July, 1874, and on $328.97 from the third day of October, 1874, besides the costs and disbursements of this action.'

To this complaint the defendants severally demurred, on the ground that it did not state facts sufficient to constitute a cause of action. The demurrer was sustained, and judgment rendered in favor of the defendants, dismissing the complaint, to reverse which this writ of error is prosecuted.

The statute on which the action is founded is as follows, (Laws N. Y. 1875, c. 510, passed June 7, 1875:)

'Section 1. The twelfth section of the 'Act to authorize the formation of corporations for manufacturing, mining, mechanical, or chemical purposes,' passed February 17, 1848, as said section was amended by chapter 657 of the Laws of 1871, is hereby further amended, so that section 12 shall read as follows:

'Sec. 12. Every such company shall, within twenty days from the first day of January, if a year from the time of the filing of the certificate of incorporation shall then have expired, and if so long a time shall not have expired, then within twenty days from the first day of January in each year after the expiration of a year from the time of filing such certificate, make a report, which shall be published in some newspaper published published in said town, city, or village, then in some newspaper published nearest the place where the business of the company is carried on,—which shall state the amount of capital, and of the proportion actually paid in, and the amount of its existing debts; which report shall be signed by the president and a majority of the trustees, and shall be verified by the oath of the president or secretary of said company, and filed in the office of the clerk of the county where the business of the company shall be carried on; and if any of said companies shall fail so to do, all the trustees of the company shall be jointly and severally liable for all the debts of the company then existing, and for all that shall be contracted before such report shall be made. But whenever, under this section, a judgment shall be recovered against a trustee severally, all the trustees of the company shall contribute a ratable share of the amount paid by such trustee on such judgment, and such trustee shall have a right of action against his co-trustees, jointly or severally, to recover from them their proportion of the amount so paid on such judgment: provided, that nothing in this act contained shall affect any action now pending.'

H. J. Scudder and G. A. Black, for plaintiff in error.

[Argument of Counsel from pages 455-457 intentionally omitted] G. P. Lowrey, for defendants in error.

MATTHEWS, J.

It is the well-settled rule of decision, established by the court of appeals of New York in numerous cases, that this section of the statute, to enforce which the present action was brought, is penal in its character, and must be construed with strictness as against those sought to be subjected to its liabilities. Merchants Bank v. Bliss, 35 N. Y. 412; Wiles v. Suydam, 64 N. Y. 173; Easterly v. Barber, 65 N. Y. 252; Knox v. Baldwin, 80 N. Y. 610; Veeder v. Baker, 83 N. Y. 156; Pier v. George, 86 N. Y. 613; Stokes v. Stickney, 96 N. Y. 323. In the case last cited the action authorized by it was held to be ex delicto, and that it did not survive as against the personal representative of a trustee sought to be charged. In Bruce v. Platt, 80 N. Y. 379, it was said: 'It is settled, by repeated decisions applicable to this case, that the statute in question (Laws 1848, c. 40, § 12) is penal, and not to be extended by construction; that in an action to enforce a liability thereby created, nothing can be presumed against the defendants, but that every fact necessary to establish their liability must be affirmatively proved;' citing Garrison v. Howe, 17 N. Y. 458; Miller v. White, 50 N. Y. 137; Whitney Arms Co. v. Barlow, 63 N. Y. 62. The rule of construction in reference to this and similar statutory provisions has been heretofore adopted and applied by this court. Steam-engine Co. v. Hubbard, 101 U. S. 188; Flash v. Conn, 109 U. S. 371; S. C. 3 SUP. CT. REP. 263.

In the case last mentioned this court, following the court of appeals of New York in the case of Wiles v. Suydam, 64 N. Y. 173, showed the distiction between the liability of stockholders for the debts of the corporation, under a section of the same act, making them severally individually liable for the debts and contracts of the company to an amount equal to the amount of stock held by them, respectively, until the whole amount of the capital stock fixed and limited by the company has been in, and the liability imposed upon the trustees by the section now under discussion. It was held that the former was a liability ex contractu, enforceable beyond the jurisdiction of the state, and that the statute should be construed liberally in furtherance of the remedy; that the latter was for the enforcement of a penalty, and subject to all the rules applicable to actions upon statutes of that description. The distinction is illustrated and enforced in Hastings v. Drew, 76 N. Y. 9, and Stephens v. Fox, 83 N. Y. 313.

The precise question involved here was decided by the court of appeals of New York in the case of Miller v. White, 50 N. Y. 137. In that case the complaint set forth the recovery of a judgment against the company, but not the original cause of action against it, on which the judgment was founded. The defendant moved for a dismissal on this ground, which was refused, and judgment was rendered in favor of the plaintiff on the production in evidence of the judgment roll. This was held to be erroneous on the ground that the judgment was not competent as evidence of any debt due from the corporation, and that no action could be maintained thereon against the trustees under this section of the act. Judge PECKHAM, delivering the unanimous opinion of the court, said: 'It will be perceived that this is a highly penal act, extremely rigorous in its provisions. It is absolute that the trustees shall be liable for all the debts of the company, if the report be not made, no matter by whose default. If one of the trustees did all in his power to have it made, yet if the president, or a sufficient number of his co-trustees to constitute a majority, declined to sign it, or if the president and secretary declined to verify it by oath, the faithful trustee seems to be absolutely liable as well as those who refuse to do their duty.' It was accordingly held, 'that, as against these defendants, the judgment did not legally exist, as they were neither parties nor privies to it. * * * It is not a judgment as to these defendants; no action could be maintained thereon against them. * * * Nor is the judgment prima facie evidence of the debt as against these defendants.'

This doctrine was repeated and reaffirmed by the same court in Whitney Arms Co. v. Barlow, 63 N. Y. 62-72. In that case the court said: 'The debt must be proved by evidence competent against the defendants. The facts upon...