First Nat. Bank of Missoula v. Cottonwood Land Co.

• Decision Date: 14 January 1916
• Docket Number: 3581.
• Citation: 154 P. 582,51 Mont. 544
• Parties: FIRST NAT. BANK OF MISSOULA v. COTTONWOOD LAND CO. ET AL.
• Court: Montana Supreme Court

154 P. 582

51 Mont. 544

FIRST NAT. BANK OF MISSOULA v. COTTONWOOD LAND CO. ET AL.

No. 3581.

Supreme Court of Montana

January 14, 1916

Appeal from District Court, Powell County; G. B. Winston, Judge.

Action by the First National Bank of Missoula against the Cottonwood Land Company, W. R. Glasscock, and the Union Bank & Trust Company, as executor of the estate of James T. Manning deceased. From a judgment sustaining the demurrer of the executor, plaintiff appeals. Reversed and remanded.

Harry Parsons, of Missoula, for appellant.

Scharnikom & Jordan, of Deer Lodge, for respondents.

HOLLOWAY J.

During all of 1911, and 1912 until December 20th, James T. Manning was a director of the Cottonwood Land Company, a domestic trading corporation. The directors, including Manning, failed and neglected to make any report of the financial affairs of the company for either 1911 or 1912. On November 22, 1912 the company became indebted to the First National Bank of Missoula in the sum of $7,050, evidenced by a promissory note due in four months with interest at 8 per cent. per annum and signed "Cottonwood Land Company, by W. R. Glasscock Pres., W. R. Glasscock." On December 20, 1912, Manning died, and the Union Bank & Trust Company was appointed executor of his last will. In July, 1913, a renewal note for $7,000 due in 30 days, with interest at 10 per cent. per annum, executed in the manner and form as the original notewas delivered to the bank and with it 490 shares of the capital stock of the company as collateral security for the payment of the debt. A claim against Manning's estate was duly presented, but payment was refused, and this action was instituted. The complaint recites the history of the transactions in great detail. It is alleged that the stock pledged as security is worthless, that the corporation is insolvent, and that demand for payment, made upon the other directors, has met with refusal. To the complaint the Union Bank & Trust Company, as executor, interposed a demurrer upon the following grounds: (1) That the executor is improperly made a party, for the reason that the complaint fails to disclose any liability on the part of Manning during his lifetime; (2) that the complaint fails to state facts sufficient to constitute a cause of action; (3) that the complaint is uncertain, in that it cannot be determined whether relief is sought upon the express contract or upon a liability created by statute. This demurrer was sustained, and the plaintiff, electing to stand upon its complaint, suffered judgment of dismissal to be entered and appealed.

1. Section 3850, Revised Codes, as amended by an act approved March 11, 1909 (Laws 1909, p. 217, § 1), requires the directors of a domestic trading corporation, within 20 days after December 31st of every year, to prepare and file a report which shall exhibit the financial affairs of the corporation. The statute provides further:

"If any such corporation shall fail to file such report, directors of the corporation shall be, jointly and severally, liable for all debts or judgments of the corporation then existing, or which may thereafter be in anywise incurred until such report shall be made and filed."

Counsel for the respective parties indulge in much discussion as to the character of this statute--whether penal or remedial in its nature. If the survival of plaintiff's cause of action was made to depend upon the application of principles of the common law, the discussion would be pertinent as well as interesting; but, since the matter is determined by statute, the labors of counsel are largely in vain. That the statute creates a right of action in favor of the creditor and against the delinquent director must be conceded by every one. Such an action was unknown to the common law. That the right of action thus created survives the death of the delinquent director and may be prosecuted against his estate is not an open question in this jurisdiction. In Melzner, Adm'r, v. Northern P. Ry. Co., 46 Mont. 162, 127 P. 146, we had under consideration the following from section 6494, Revised Codes:

"An action, or cause of action, or defense, shall not abate by death, or other disability of a party, or by the transfer of any interest therein."

The history of our legislation upon the subject of abatement and revival was reviewed, and the conclusion was reached that in adopting the section in the language quoted above it was the intention to establish in this state a general survival statute. The remaining portion of section 6494 is adjective law. We are satisfied with that conclusion and that the cause of action survives the death of the party in the wrong as well as the death of the one whose rights are infringed.

The complaint contains all the allegations necessary to state a cause of action in favor of the bank and against Manning's estate; and that the cause of action relied upon is one created by statute, and not for the breach of an express contract, is too obvious to admit of discussion. Indeed, since Manning did not sign the note, it would be impossible to state a cause of action against him or his...