Van Etten v. Eaton

• Decision Date: 12 October 1869
• Citation: 19 Mich. 187
• Court: Michigan Supreme Court
• Parties: George H. Van Etten v. William Eaton

19 Mich. 187

George H. Van Etten v. William Eaton

Supreme Court of Michigan

October 12, 1869

Heard October 6, 1869

Error to Bay Circuit.

Eaton the plaintiff below, recovered a judgment against the Chicago and Milwaukee Salt Company, a corporation organized under the laws of Michigan (Comp. Laws, Chap. 63), on which execution was issued and returned unsatisfied. He then brought this action against Van Etten, the defendant below, alleging tat Van Etten was, and ever had been since its organization, a director of the corporation; that the directors of the said corporation had intentionally neglected to make the reports required by sections five and nineteen of the act, under which the corporation was organized; and that thereby the defendant (Van Etten) had become liable to him for the amount of his judgment and costs against the corporation.

From the articles of the corporation it appeared that the purpose for which it was formed was "for the manufacture of salt in the State of Michigan." Article six specifying the place where its business should be carried on, is in these words:--"The place in this state where the office for the transaction of business is located, is the City of East Saginaw, and their business is to be carried on in the Counties of Saginaw and Bay, and the adjoining counties, if necessary." Copies of the articles of association were duly filed in the office of the Auditor General and in the office of the Clerks of Saginaw and Bay Counties.

On the trial evidence was offered that the Company kept its office in Bay City in Bay County; and that upon search in said office no report as required by section five, of Chapter sixty-three of the Compiled Laws could be found. The Clerk of Bay County testified that he had made diligent search in his office, and had found no report as required by sections five eighteen, and nineteen of Chapter sixty-three of the Compiled Laws. No evidence was offered to show whether there was, or was not, any such reports filed in the office of the Auditor General or of the Clerk of Saginaw County.

The Circuit Judge charged the jury that the neglect to file any of the reports required by the statute, must be presumed to be intentional, and that, if any of the reports required were not filed, the defendant would be liable in this action. The jury found for the plaintiff, and the judgment rendered on the verdict is brought into this Court by writ of error.

Judgment affirmed with costs.

Theo. C. Grier, for plaintiff in error.

H. H. Hatch and S. M. Green, for defendant in error.

OPINION

Graves, J.

Eaton brought assumpsit against Van Etten to recover a demand against a manufacturing corporation organized under the act of February 5, 1853, and of which Van Etten was a stockholder and director. The action was supposed to be authorized by that portion of section 23 of the act, which provides that if the directors of any such company shall intentionally neglect or refuse to comply with the provisions, and to perform the duties required of them by sections three, five, eighteen and nineteen of the act, they shall be jointly and severally liable in an action founded on such statute for all the debts of such corporation contracted during the period of such neglect or refusal. And the liability of Van Etten was claimed to have arisen, by reason of the failure of the directors of the company to report upon the condition of the company, as required by sections five and nineteen of the statute in question.

The assignments of error are quite numerous, but all of them which are now relied on, depend upon the construction to be given to the statutes, and do not require therefore to be separately noticed.

It appeared upon the trial that on the 21st of March, 1862, the plaintiff in error and two other persons, adopted articles of association and formed a corporation for the manufacture of salt, and that the articles stated that the place in this State where the office of the company for the transaction of business was located, was in the city of East Saginaw, and that their business was to be carried on in the counties of Saginaw and Bay, and the adjoining counties if necessary.

Evidence was also given to show that from the winter of 1864, the company had carried on business in Bay County, and had kept an office there, and that neither of the reports required by §§ 5 and 19 could be found in the office of the clerk of Bay County, or in the office of the company in that County.

On the part of the defendant evidence was given tending to show, that he was not aware that any law of the State required the making and filing of any reports of the kind mentioned, and was ignorant of any such law; and did not know whether or not the reports had been filed; and had not intentionally neglected or refused to conform to the requirements of the statute, and indeed had no knowledge of such requirements and thought nothing about them.

Whether the reports in question had been filed in the office of the Auditor General or in that of the clerk of Saginaw County did not appear; nor was it shown whether the company carried on business in the latter County, unless the statement in the articles of association that at their date the office of the company was there situated, should be considered as evidence of that fact.

First. The plaintiff in error maintained that the requirement in section 19 that the reports should be filed in the office of the clerk of the County in which the business of the corporation should be carried on, had reference only to the County in which was situated the office of the company mentioned in the articles of association, pursuant to the provisions of section four, and therefore as this office of the company was fixed by the articles of association in the County of Saginaw the omission by the directors to file the report in question in the office of the clerk of Bay County was of no legal consequence whatever.

This construction is thought to be supported by the difference in phraseology, discovered in sections 3, 4 and 19.

By section 3, before the corporation can commence business, the articles of the association are required to be filed with the "County Clerk of the county or counties," in which the corporation shall "conduct" its business; and by § 4 the corporation are required to state in the articles, the "place in this State where their office for the transaction of business is located, and the county or counties, in which their business is to be carried on;" but § 19 requires the report therein specified, to be filed in the "office of the clerk of the county, in which the business of any such corporation is carried on."

The plaintiff in error contends that this variation in phraseology, marks the purpose of the Legislature, and shows that where an act was required to...