Felker v. James

• Decision Date: 12 January 1914
• Citation: 162 S.W. 776,111 Ark. 37
• Parties: FELKER v. JAMES
• Court: Arkansas Supreme Court

162 S.W. 776

111 Ark. 37

FELKER v. JAMES

Supreme Court of Arkansas

January 12, 1914

Appeal from Benton Circuit Court; J. S. Maples, Judge; reversed.

STATEMENT BY THE COURT.

This action was begun in the Benton Circuit Court by the appellee against the appellants to recover the amount of a judgment and costs and interest thereon, which the appellee, James secured against the Southern Fruit Product Manufacturing Company, a corporation, in the Benton Circuit Court amounting to $ 121.20. The appellants were sued as directors and officers of the corporation against which James had obtained his judgment. It was alleged in the complaint that the corporation was organized on August 28, 1909, and that appellants were elected as its officers and directors and that they filed on the 28th of August, 1909, a certificate with the county clerk of Benton County, with, and as a part of its articles of association, which was false, in that it stated that the sum of one hundred thousand dollars of its capital stock was actually paid in, when in fact not exceeding two thousand dollars was paid in. The plaintiff recited as a second cause of action the alleged fact that on February 1, 1910, the defendants filed a second certificate which was false in that it did not show the correct amount of capital stock, nor the amount of capital actually paid in and the cash value of its real estate, and its personal estate, etc. The answer denied all the material allegations of the complaint and presented several defenses which we consider it unnecessary to discuss, because of our view of the law as applied to the facts of this case.

The cause was submitted to the court sitting as a jury, on the annual statement filed February 1, 1910, the articles of agreement and incorporation which were filed on the organization of the corporation on August 28, 1909, the record of the judgment wherein appellee was plaintiff and the corporation was defendant, and the pleadings in that case and the deposition of appellant, J. E. Felker, taken in a case wherein the Southern Fruit Product Company was plaintiff and the Southern Fruit Product Manufacturing Company was defendant, the company named as defendant having subsequently succeeded the company named as plaintiff. Appellants offered numerous objections to the above evidence, but offered no evidence themselves. The court made no special finding of fact but rendered judgment against appellants for the amount of appellee's judgment against the corporation of which appellants were the officers.

It appears that the certificate of August 28, 1909, was false in that it stated that one hundred thousand dollars of the capital stock had been paid in, when in fact only two thousand dollars had been paid. An explanation was attempted to be made by the deposition of Felker, which was offered in evidence, but the certificate filed August 28, 1909, is in conflict with the annual statement filed February 1, 1910 and the court was warranted in finding that the certificate was false. We do not understand the evidence, however, to show that the annual statement of February 1, 1910, was false.

Judgment reversed, and cause remanded.

Dick Rice, for appellant.

Section 863 of Kirby's Digest has reference to the directors of a corporation who intentionally neglect or refuse to comply with the provisions of the act, and makes them liable only for debts of the corporation contracted during the period of any such neglect or refusal. There is no evidence that the statement of February 1, 1910, is not a true statement of the condition of the affairs of the company. Unless that statement was false, there is no liability on the part of appellants. 86 S.W. 842; 123 S.W. 373; 80 N.Y. 128.

OPINION

SMITH, J., (after stating the facts).

In the case of O'Neil v. Eagle Generator Company, 92 Ark. 416, 123 S.W. 373, it was decided, to quote from the syllabus in that case, that: "Under Kirby's Digest, sections 845 and 863, requiring the president and directors of every business corporation to file with the county clerk a certificate showing the amount actually paid in on the capital stock, and making them jointly and severally liable for debts of the corporation contracted during the period of their intentional neglect or refusal to comply with such provision,...