Gregory v. German Bank of Denver

• Decision Date: 01 April 1877
• Citation: 3 Colo. 332
• Parties: GREGORY v. GERMAN BANK OF DENVER.
• Court: Colorado Supreme Court

3 Colo. 332

GREGORY v. GERMAN BANK OF DENVER.

Supreme Court of Colorado

April, 1877

Appeal from District Court of Arapahoe County.

THE appellee had judgment in the court below, for $2,899.25, from which an appeal is prayed to this court. The case is sufficiently stated in the opinion.

Messrs HUNT & MARKHAM, and BROWNE & PUTNAM, for appellant.

Messrs SYMES & DECKER, for appellee.

THATCHER C. J.

This is an action in assumpsit, brought by the German Bank of Denver against Jacob Gregory, one of the trustees of the Colorado Brewing Company, a corporation organized under the laws of Colorado. It is founded upon an alleged infraction of section fifteen of chapter XVIII, entitled corporations (page 121, R. S. 1868), which enacts as follows: 'Every such company shall annually, within twenty days from the 1st day of January, make a report which shall be published in some newspaper published in the town, city or village, or if there be no newspaper published in said town, city or village, then in some newspaper published nearest the place where the business of said company is carried on, which shall state the amount of capital, and of the proportion actually paid in, and the amount of existing debts, which report shall be signed by the president and a majority of the trustees, and shall be verified by the oath of the president or secretary of said company, and filed in the office of the clerk of the county where the business of the company shall be carried on; and if any of said companies shall fail so to do, all the trustees of the company shall be jointly and severally liable for all the debts of the company then existing, and for all that shall be contracted before such report shall be made.'

This section is identical with section twelve, page 57, Laws of New York, 1848, which is still in force.

This statute is, we may say, self interpreting. Its language is unambiguous. The liability of the trustees arising from a failure to publish an annual report is in no way related to the loss that creditors of the company may sustain by reason of such violation of the statute. The joint and several liability attaches to the trustees, not because creditors of the company contracted with them, not because the corporation is insolvent, but because they neglected to perform a duty enjoined by law. It cannot be said that creditors of the company contracted with reference to any indemnity afforded by this section

Until the 20th day of January of each year, contracts are entered into with the corporation without regard to the possible failure of the trustees to publish their annual reports, and their consequent liability for the debts of the company. This statute is in its nature penal. It prescribes a determinate penalty for neglect of a duty, imposed by law, upon the trustees of companies organized under our general incorporation act. The amount of the forfeiture is measured by the aggregate debt contracted by the company. The liability is not founded upon contract, but arises from misconduct in office. As the trustees who make default in publishing the report are wrong-doers, if the penalty, or any part thereof, should be recovered from any one of them, he could not, without a special statute, compel the others to contribute. Andrews v. Murray, 33 Barg. 354; Hill v. Frazer, 22 Penn. 320.

In New York, the section under discussion is held to be a statute for a penalty or forfeiture. Wiles et al. v. Suydam, 64 N.Y. 177; Miller v. White et al., 50 id. 137; Merchants' Bank v. Bliss, 35 id. 412; Garrison v. Howe, 17 id. 466.

The supreme court of New Jersey, in the case of Derrickson v. Smith, 27 N. J. 176, in which an action was brought against a trustee of a New York corporation, founded upon the statute in question, says: 'It is not claimed that the defendant, by the act of incorporation, is individually liable as a corporator, for the debts of the body corporate, or that his liability attached as a necessary result of the contract made by the company. His liability results from the failure of the trustees to comply with the requirements of the statute. It is in fact a penalty inflicted upon the trustees for the failure to perform a duty enjoined by the statute. It is immaterial whether the penalty be a specified sum, or the payment of the debts of the corporation. In either case, it is a penalty imposed by statute. * * * This being a suit to enforce a penalty inflicted by a statute of the State of New York, it is clear that it cannot be enforced in this State. Penal laws are strictly local, and affect nothing more than they can reach.' See, also, First National Bank of Plymouth v. Price, 33 Md. 487; Halsey v. McLean, 12 Allen, 438; Harrisburg Bank v. Commonwealth, 26 Penn. 451.

Upon reason and authority we are constrained to the conclusion that the statute is in its nature penal.

The general...