Nebraska National Bank v. Walsh

• Decision Date: 17 November 1900
• Citation: 59 S.W. 952,68 Ark. 433
• Parties: NEBRASKA NATIONAL BANK v. WALSH
• Court: Arkansas Supreme Court

59 S.W. 952

68 Ark. 433

NEBRASKA NATIONAL BANK v. WALSH

Supreme Court of Arkansas

November 17, 1900

Appeal from Pulaski Circuit Court, JOSEPH W. MARTIN, Judge.

STATEMENT BY THE COURT.

This is an action by appellant against appellee for the statutory liability arising upon the following sections of Sand. & H Digest:

"Section 1337. The president and secretary of every corporation organized under the provisions of this act shall annually make a certificate showing the condition of the affairs of such corporation, as nearly as the same can be ascertained on the first day of January or July next preceding the time of making such certificate, in the following particulars viz.: The amount of capital actually paid in; the cash value of its personal estate; the cash value of its credits; the amount of its debts; the name and number of shares of each stockholder; which certificate shall be deposited on or before the 15th day of February or August with the county clerk of the county in which said corporation transacts its business, who shall record the same at length in a book to be kept by him for that purpose."

"Section 1346. The certificates required by sections 1334, 1337, 1343 and 1344, except certificates of transfers of stock, shall be made under oath or affirmation by the person subscribing the same; and if any person shall knowingly swear or affirm falsely as to any material facts, he shall be deemed guilty of perjury, and be punished accordingly."

"Section 1347. If the president or secretary of any such corporation shall neglect or refuse to comply with the provisions of section 1337, and to perform the duties required of them respectively, the persons so neglecting or refusing shall jointly and severally be liable to an action, founded on this statute, for all debts of such corporation contracted during the period of any such neglect or refusal."

The defendant pleaded the statute of limitations. The case was tried before the court, which, upon the evidence, made the following finding:

"The court finds the facts as follows: The Southern Stave & Lumber Company was a corporation organized under the laws of Arkansas, November 3, 1890. H. J. Walsh, the defendant, was president thereof till May 23, 1893. January 26, 1893, the Southern Stave & Lumber Company made its note of $ 10,000 to the Western Manufacturing Company, due May 29, 1893, which was before maturity duly transferred to plaintiff bank. March 29, 1893, Western Manufacturing Company made its note to plaintiff bank for $ 10,000 due August 1, 1893, and assigned to it as collateral security the note of Southern Stave & Lumber Company for $ 13,002.70, executed to said Western Manufacturing Company on the 4th day of March, 1893, due October 7, 1893. None of these notes have been paid, but have been renewed from time to time, and the debts then created are represented by the notes in suit. The first certificate ever filed by the president, as called for by section 1337 of Sandel & Hill's Digest, was filed March 15, 1893, in the county court house of Pulaski county, Arkansas, the domicile of the corporation, and was not supported by affidavit, but contained only the certificate of the notary that it had been acknowledged as signed by the president and secretary. This suit was filed January 13, 1896, and writ then issued more than two years after the right of action accrued. On this state of facts the defendant became liable to plaintiff for the debts sued on, which had their inception during the time of his default in filing his certificate. But the causes of action are barred by the statute of limitations of two years pleaded by the defendant, and the defendant is entitled to judgment, and it is so ordered." Judgment was entered accordingly, and this appeal duly prosecuted.

Judgment reversed.

Rose, Hemingway & Rose, for appellant.

The two-year statute of limitations on penal action (Sand. & H. Dig., § 4826) does not apply to this action. The liability fixed by that statute is not a penalty. 146 U.S. 567. Statutes creating a mere personal liability, however great, in favor of a person aggrieved, are not penal. 2 T. R. 148, 154, construing the English statute of limitation (re-enacted in this state). 31 Eliz. c. 5, § 5; 1 H. Blackst. 10; 2 W. Blackst. 1226; 9 Price, 301; 13 Pick. 94, 100, 101; 16 Pick. 128, 132; 20 Me 218; 38 Me. 107; 31 Me. 528; 18 Me. 166; 2 Story, 432; 12 Ga. 117. Debt was the proper action at common law for the enforcement of such a liability as in the case at bar. 16 Ala. 214; 1 Mason, 243; 13 Wall. 531; 15 id. 516; 1 Gall. 26; 11 Ohio 130; 8 Pick. 514; 15 Ala. 452; 7 Porter, 284; 1 Bead, 72; 18 Am. & Eng. Eric. Law, 274; Wood, Lira. § 25. Indeed, the statute under consideration is remedial, rather than penal. 2 Morawetz, Corp. § 908; 3 Thompson, Corp. § 4164; 12 Ga. 106; 18 Ga. 909; 30 Ga. 580; 1 Shower, 353-4; 4 Carth. 233; Comb. 194; 4 Mod. 129; 12 Mod. 27; 3 M. & Selw. 434; 22 Pick. 495; 6 Gray, 338; 103 Mass. 160, 162; 118 Mass. 298; 14 Cal. 265; 34 Cal. 505; 53 Vt. 632, 639, 640; 45 N.W. 922; S.C. 29 Neb. 545; 47 N.W. 208; S.C. 30 Neb. 798; 23 N.E. 1007; S.C. 132 Ill. 197; 76 F. 695; Wood, Lim. 682, 683; 118 N.Y. 365, 378; 23 N.E. 544, 547; 51 N.W. 117; 101 U.S. 188; 146 U.S. 679; 8 Oh. St. 215, 222.

Jno. M. Moore and J. A. Watkins, for appellee.

The statute on which this action is based is penal, and the action was barred by Sand. & H. Dig., § 4826. 115 U.S. 112, 122; 13 Abb. Pr. 225, 229; 233, 234; 64 N.Y. 173; 96 N.Y. 323; 101 U.S. 188; 12 Allen, 438; 3 Dutch. 166; 8 Oh. St. 215; 33 Md. 487; 23 Col. 472; 1 Robt. 383; 9 R. I. 541; Thompson, Corp. § 4164; 60 N.Y. 533; 17 N.Y. 458; 56 N.Y. 559; 11 Abb. Pr. (N. S.) 366; 10 Abb. Pr. 39; 35 N.Y. 412; 7 Robt. 391; 10 Hun, 65; 67 Barb. 9; 19 Mo. 327; 4 Biss. 327; 3 Col. 332; 12 Gray, 203; 30 N.J.Eq. 478; 7 Lans. 206; 60 N.Y. 396; 50 N.Y. 314; 27 N.J.L. 166; 103 N.Y. 242; 13 Abb. Pr. 225; 11 N.Y.S. 1049; 96 N.Y. 323; 64 N.Y. 173; 80 N.Y. 610; 83 N.Y. 156; 86 N.Y. 613; 103 N.Y. 242; 29 P. 183; 86 F. 85.

OPINION

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

The statute upon which this action was founded does not come within the scope of the statute of limitations of two years. That statute is as follows: "All actions upon penal statutes, where the penalty, or any part thereof, goes to the state, or any county or person suing for the same, shall be commenced within two years after the offense shall have been committed, or the cause of action shall have accrued." Sand. & H. Dig., § 4826.

First. The prime object of every statute strictly penal is to enforce obedience to the mandates of the law by inflicting punishment upon those who disregard them; and, in statutes primarily and properly penal, the provision for punishment never rests in uncertainty, is never based upon a contingency. The general public is supposed to be injured by the violation of every penal statute, whether any special injury results to any particular individual or class of individuals or not. The punishment is provided as a sanction to the law, and is imposed for the public good, to deter others from the commission of like offenses. It would therefore, be palpably incongruous to call a statute penal which did not contain a definite and certain provision for punishment in every case where the duties enjoined by it were ignored. Black, Law Diet. "Penal Statutes," "Penal Laws:" Bouvier, Law Dict. "Penal Statutes;" Potter's Dwarris on Star. & Con. 74. Measured by these simple but infallible tests, the statute upon which this action was based is not penal. Here the behests of the law may be ignored repeatedly by the officers failing to file the certificate required, and still no unpleasant or severe consequences would be visited upon them unless there were creditors who had debts contracted with the corporation during the period of such disobedience. And even then the officers could be made to pay only at the instance of these creditors, and not by them if the debts had already been paid by the corporation. This shows conclusively that the public in general is not one whir interested in the enforcement of the duties enjoined by this statute, and that punishment of the officers for failure to perform the duties it prescribes is not the dominant idea. The duty which the statute enjoins upon, and the liability which it creates against, the officers is in favor of creditors. The measure of the liability is the amount of the debts which the corporation has incurred. There is no arbitrary amount fixed as a pecuniary mulct against the officers for each failure to file the certificate required. The amount is fixed, for compensation and indemnity, at the actual amount due the creditors. No additional sum is allowed them against the officers. They are only required to pay to prevent a loss which would otherwise result, directly or indirectly, from their neglect or failure. "By the principles of the common law, says Judge Thompson, "all men are answerable out of their estates for the debts which they contract by themselves or their agents. Now when the legislature says that the managing officers of corporations shall not enjoy this granted immunity, provided * * * they fail to make and publish certain reports to apprise the public of its financial condition, it is no more than to say to them that these things which it requires of them are conditions precedent upon which alone they shall enjoy this granted immunity." 3 Thompson, Corp. § 4164; National New Haven Bank v. Northwestern Guaranty Loan Co., 61 Minn. 375, 63 N.W. 1079. The liabilities created, and the remedies provided, by this statute are private and civil. There is nothing in the mere wording to give it even a penal semblance, which, of itself, is persuasive. We conclude, from these...