Colorado Fuel & Iron Co. v. Lenhart
| Decision Date | 09 September 1895 |
| Parties | COLORADO FUEL & IRON CO. v. LENHART et al. |
| Court | Colorado Court of Appeals |
Error to district court, Arapahoe county.
Action by the Colorado Fuel & Iron Company against Michael Lenhart and others, as directors of the Trinidad Rolling-Mills & Iron Company, a corporation, to recover an indebtedness owing to it by the corporation. From a judgment for defendants plaintiff appeals. Affirmed.
D.C. Beaman, for plaintiff in error.
R.D Thompson and Ben B. Lindsey, for defendants in error.
On the 21st day of June, 1889, the Trinidad Rolling-Mills & Iron Company became indebted to the Colorado Fuel & Iron Company for coal sold and delivered, in the sum of $623.75. The latter company brought this suit to recover the amount against the defendants in error, alleging that they were directors of the rolling-mills company from the 20th day of May, 1889, to the 1st day of May, 1890; that the capital stock of the company had not been fully paid in, and that it did not within 60 days from the 1st day of January, 1890, or at any time since the 20th day of May, 1889, make, and file in the office of the recorder of the county where the business of the company was carried on, any report, as required by section 252 of the General Statutes of Colorado; and that by reason of its failure in that respect the defendants became liable jointly and severally to the plaintiff for the amount of the indebtedness to it of the rolling-mills company. The complaint was filed August 7 1890. The defendants answered, averring that they were directors of the rolling-mills company from the 1st day of April, 1888, to the 1st day of May, 1890; that the company filed no report within 60 days from the 1st day of January, 1889, as required by section 252; and that this action was not brought within one year after June 21, 1889. The replication denied that the defendants were directors prior to May 20, 1889, and denied that the required report was not filed within 60 days from January 1, 1889. The evidence was that the defendants were directors from April 10, 1888, to May 1, 1890. The plaintiff offered in evidence the following paper, filed on the 23d day of February, 1889, as being the report of the company for that year, which, upon objection by the defendants, the court excluded:
"Annual statement of the Trinidad Rolling-Mills and Iron Company, January 1, 1889:
Amount paid in on stock ..............
$64,841 00
Donations ..............................
5,000 00
Indebtedness .............
The following is section 252 of the General Statutes: This section is mandatory. A corporation must file its reports, executed and verified as required, and the liability of the directors for the company's debts is in the nature of a penalty for a neglect to comply with the law. The liability covers all debts contracted by the company during the year preceding the time when the report should be made, and all debts contracted afterwards, until the making of the proper report. Suit for the recovery of a penalty must be commenced within one year after the cause of action accrues. Section 2170, Gen.St.; Larsen v. James, 1 Colo.App. 313, 29 P. 183. If the report due within 60 days from January 1, 1889, was not made when this debt was contracted, the liability of the directors attached at the instant it was contracted, and the statute then commenced to run. The document which was filed as a report did not comply with the law. The lack of verification invalidated it, and it was not a report.
It is contended, however, that because of the failure of the directors in office during the first 60 days of 1890 to make the statutory report, a cause of action then arose against them for the debt, it having been contracted during the year preceding the time when that report should have been made and that, therefore, this action, having been commenced within one year from that time, was not barred. If this reasoning is sound, the logical conclusion is that it is at the option of a creditor...
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