Clow v. Brown
| Decision Date | 25 April 1893 |
| Docket Number | 15,809 |
| Citation | 33 N.E. 1126,134 Ind. 287 |
| Parties | Clow et al. v. Brown et al |
| Court | Indiana Supreme Court |
From the Montgomery Circuit Court.
The judgment is reversed, with directions to sustain the appellants' motion for a new trial.
P. S Kennedy and S. C. Kennedy, for appellants.
B Crane, A. B. Anderson and C. Martindale, for appellees.
The appellants sued the appellees as directors of the Crawfordsville Water-Works Company, a corporation organized for the purpose of constructing, owning, and operating a system of water-works.
The complaint is in two paragraphs, in the first of which it is averred, that said company was organized in the year 1885 for the purpose of constructing, owning, and operating a system of water-works at said city; that the capital stock was originally stated at $ 100,000, but was thereafter increased to $ 200,000, as stated in the articles of association; that the appellees were elected directors, and proceeded to transact the business of the company; that after constructing the system, the company became indebted to the appellants, and said indebtedness was reduced to a judgment against said company in the sum of $ 4,019.
It is further alleged that the company violated the law in these respects: That it did not, within eighteen months after its organization, proceed to collect, and has never collected, any part of the capital stock thereof; that the defendants, though directors of said company when appellants' debt was contracted, and from the organization of the company to this time, "have failed, refused and neglected to collect any part of said capital stock, and to put the same in the treasury;" that, by reason of the failure to collect said capital stock, the company has become insolvent, and appellants' debt can not be made from said company.
The second paragraph is like the first, except that it alleges the execution, by the defendants, of a false and fraudulent mortgage on the property of the company.
The issue was joined by a general denial by all of the appellees.
The action is for the recovery by the appellants from the appellees of the amount of said indebtedness as a penalty for the violation of the duty alleged to have been violated in failing and refusing to collect the subscribed stock of the company.
Section 3859, R. S. 1881, provides that "The capital-stock, as fixed by such company, shall be paid into the treasury thereof, within eighteen months from the incorporation of the same."
Section 3868 is as follows: "If any company organized and established under the authority of this act, and of the act to which this is supplementary, shall violate any of the provisions thereof, and shall thereby become insolvent, the directors ordering or assenting to such violation shall jointly and severally be liable, in an action founded on said acts, for all debts contracted after such violation as aforesaid."
Section 3866 is in these words: "When any of the officers of such corporation shall be liable, by the provisions of this act, to pay the debt of such company, any person to whom they shall be so liable may have an action against such officer; and the declaration or statement, in such action, shall specify the claim against the company, and the ground upon which the plaintiff charges the defendant personally; and such action may be brought although suit be pending against the company for the same claim or demand, and both be prosecuted until the plaintiff shall have recovered his debt with costs and charges."
The appellees urge us to disregard the error assigned, the overruling of the motion for a new trial, because of the insufficiency of the complaint.
Cross-error is not assigned by the appellees, but we will not inquire whether the question is properly raised, feeling that the complaint is probably sufficient, and that the merits of the case and the substantial interests of the parties should receive our consideration.
The first point made against the complaint is, that it does not allege that the company was organized under the manufacturing and mining associations act--R. S. 1881, section 3851, et seq.; that the penalty sought is provided by that act and as there is another act under which the company might have organized (R. S. 1881, section 4200, et seq.), it does not appear that the appellees are subject to...
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