Dart v. Hughes

• Decision Date: 06 June 1910
• Citation: 49 Colo. 465,109 P. 952
• Parties: DART v. HUGHES et al.
• Court: Colorado Supreme Court

109 P. 952

49 Colo. 465

DART v. HUGHES et al.

Supreme Court of Colorado

June 6, 1910

Rehearing Denied July 5, 1910.

Error to District Court, City and County of Denver; Samuel L Carpenter, Judge.

Action by A. C. Dart, Jr., against Charles J. Hughes and others. The court below ordered judgment on one cause of action and refused judgment on another, and plaintiff brings error. Reversed and remanded, with directions to dismiss the suit.

Royal R. Graham and Stevick & Bannister, for plaintiff in error.

John Q Dier, for defendants in error.

BAILEY J.

Plaintiff in error was plaintiff below, and defendants in error defendants below. It is sought to charge the defendants, personally, as officers and directors of a corporation, with certain corporate debts, because of the failure to file, or cause to be filed, annual reports, as required by statute.

Suit was begun September 28, 1904. The complaint counts upon seven separate causes of action. The first is plaintiff's own, for work done and services rendered, between the second day of November, 1903, and March 31st next following. The other six causes of action are assigned ones, and are for work done and supplies furnished between November 1, 1902, and April 1, 1904. It is averred that for neither of the years 1903 and 1904 had the statutory annual report been filed by, or on behalf of, the Comstock Leasing & Mining Company, of which, during the times mentioned in the complaint, the defendants were its officers and directors, hence, personally liable for the payment of the indebtedness sued on. Practically the entire debt claimed was contracted between November 1, 1903, and April 1st next thereafter.

On March 1, 1904, the company, as matter of fact, did file an annual report, but plaintiff says such report, being without the company's official seal, was and is a nullity, and that the officers and directors of the company are therefore individually liable under the statute. The defendants plead specially the bar of the statute against the suit, so far as the failure to file the 1903 report is counted on; also that the 1904 report covers all indebtedness for the preceding year, and relieves the officers and directors of liability for that period, and, as well, for any indebtedness contracted after March 1, 1904, when a report was filed. There is also a plea to the effect that the claims covered by the six causes of action, from two to seven inclusive, were not assignable; and there were also general denials of the averments in the several causes of action. The defendants preserved exceptions and objections to the judgment allowed against them for $177.75, on the ground that the action was barred, and assigned cross-error for this reason.

In the first cause of action there are two items of indebtedness, one for $177.75, which accrued between November 1, 1903, and the last day of February, 1904; the other of $42.75, which accrued between the 1st day of March and the 1st day of April, 1904. The court below awarded judgment on the first cause of action for $177.75 and disallowed the claim for $42.75. On the ground that the claims covered by the six causes of action, from two to seven inclusive, were nonassignable, so as to permit an assignee to sue thereon, and thus visit a penalty on the defendants, as officers and directors of the company, the court declined to allow proof thereof and dismissed them. The $42.75 item was disallowed on the ground that it was contracted after the filing of the March, 1904, report. The liability of the officers and directors as to the $177.75 item was adjudged because of no annual report for the year 1903. For alleged error in dismissing the causes of action based on assigned claims, plaintiff brings the judgment here for review.

The case may be disposed of by a determination of these two questions:

First. Was the report filed on March 1, 1904, in compliance with the statute in that behalf? and,

Second. Does the statute of limitation bar the right of action against the officers and directors of the company for the failure of the latter to file, or cause to be filed, its annual report for the year 1903?

The testimonium clause of the report filed March 1, 1904, is as follows:

'In witness whereof, the president of the said corporation has hereunto set his hand and caused the corporate seal to be affixed this 1st day of March, A. D. 1904.

"Seal.'

Charles J. Hughes, Jr.,

'President.

'Attest: Clyde Turnbull, Secretary.'

The report was formally subscribed, sworn to and attested, showing that Hughes and Turnbull were, respectively, the president and secretary of the Comstock Leasing & Mining Company, and that the facts set forth therein are true, full and complete.

There is nothing in the proofs to show what the company's official seal in fact is, or that one was ever adopted. In the absence of proof to the contrary, it must be presumed that the seal which appears attached to the report, being the word 'seal' within quotation marks, purporting to be its seal, is the true seal of the company, so that in the present state of the record the report was and is properly authenticated, by and under the official company seal, and is then a good and valid report, as matter of law; no other objection being urged against it. Bliss v. Harris, 38 Colo. 72, 87 P. 1076; Railway Company v. Hooper, 160 U.S. 514, 16 S.Ct. 379, 40 L.Ed. 515; In re Hacker's Appeal, 121 Pa. 192, 15 A. 500, 1 L.R.A. 861; Thayer v. Mill Company, 31 Or. 437, 51 P. 202; and District of Columbia v. Camden Iron Works, 181 U.S. 453, 21 S.Ct. 680, 45 L.Ed. 948, and cases cited.

Even had the report been without the seal, or purported seal, of the company, we are of opinion that it still would be in substantial compliance with the statute and thus sufficient. It was signed and sworn to by the president and secretary of the company; was full, complete and detailed. It gave to the public all and the precise information which the statute intended such companies should furnish. The mere failure in such case to attach the corporate seal to the report is not of substance, but of form merely. The seal could have added nothing to the value and effect of the report which was definitely authenticated by the signatures of those officers whose duty it is under the statute to authenticate and verify such instruments. To hold this report insufficient would be to subordinate substance to shadow; to recognize and enforce the veriest technicality, at the expense and sacrifice of valuable rights. To so rule would be contrary to both law and equity.

The statute of limitations applicable to this action is section 2907 of 2 Mills' Ann. St. which reads as follows:

'All actions and suits, for any penalty or forfeiture of any penal statute brought by this state, or any person to whom the penalty or forfeiture is given, in whole or in part, shall be commenced within one year next after the offense is committed and not after that time.'

See Clough v. Rocky Mountain Oil Co., 25 Colo. 520, 55 P. 809; Hazelton v. Porter, 17 Colo.App. 1, 67 P. 170.

The statute under which this suit was instituted, making the officers and directors liable for the debts of the corporation for failure to file annual reports, is found in the Session Laws of 1901, beginning at page 121, section 11:

'Every corporation, joint stock company or association, incorporated by or under any general or special law of this state, or by any general or special law of any foreign state or kingdom, or of any state or territory of the United States, beyond the limits of this state, shall, within sixty days next after the first day of January in each year, commencing with the year 1902, make and file an annual report in the office of the Secretary of State, showing, etc. * * *'

'And if any such corporation, joint stock company or association, shall fail, refuse or omit to file the annual report aforesaid, and to pay the fee prescribed therefor, within the time above prescribed, all the officers and directors of said corporation shall be jointly and severally and individually liable for all debts of such corporation, joint stock company or association that shall be contracted during the year next preceding the time when such report should be this section have been made and filed, and until such report shall be made and filed.'

The offense for which recovery of a penalty is sought in the first cause of action occurred immediately after March 1 1903, when the Comstock Leasing...