#### The Merchants’ Bank of New Haven *vs.*Bliss.

1. An action brought to charge the defendants as trustees of a corporation organized under *Laws of*1848, *oh.*40, authorizing the formation of corporations for manufacturing, mining, mechanical, or chemical purposes, with a debt of the company, on account of a failure of the company to file the annual report required by section 12 of that act to be filed within twenty days from January 1st in each year, is an action upon a statute for a penalty or forfeiture given to the party aggrieved, within the meaning of subdivision 2 of section 92 of the Code, and must be commenced within three years.

2. Where, in an action to charge the defendants, trustees of a corporation organized under the general law authorizing the formation of corporations for manufacturing and other purposes, with personal liability for a debt of the company, the defendants answered that at the time the debt matured, and for a long time afterwards, the corporation was solvent, audits stockholders severally and individually liable for all its debts, by. reason of the non-payment of its capital stock; that the plaintiff neglected to institute suit for two years, and that by such neglect the plaintiff released and discharged the stockholders from personal liability; that no notice was ever given to the defendants of the plaintiff’s claim, nor had the defendants any opportunity of being subrogated to the rights and remedies of the plaintiff against the corporation while solvent, nor against the stockholders before they were released as above stated; on demurrer to the answer, *liM*that these facts constituted no defense to the action.

3. To determine whether a liability to which a person is subjected, is by way Of penalty or forfeiture, it is not necessary that the statute in the language imposing it should denominate it a penalty or forfeiture. When the statute subjects an officer of a company, as such officer,- to a liability to pay money *392either for omitting to perform a duty enjoined, or for doing an act prohibited, and does this in a case where but for such omission of duty or wrongful act he would b.e under no liability, he is thereby subjected to a forfeiture of the sum which he is made liable to pay, and so far as he is concerned, the imposition of liability is ,by way of punishment.

(Before Bosworth, Ch. J. Hoffman, Moncrief, Robertson and White, JJ.)

Decided August, 1863.

Appeal from an order sustaining a demurrer. This action was brought to charge the defendants, as trustees’ of the Empire Stone' Dressing Company, a corporation organized under the general manufacturing law of this state, with personal liability for an acceptance of such company, bearing date, April 4th, 1854, and payable sixty days from date; on the grounds :

I. That the annual report required by the twelfth section of the general manufacturing act, was not filed by said company within twenty days from the first day of January, 1854, nor until after said draft was accepted.

II. That the annual report of such company, filed on the twentieth day of January, 1853, was untrue, and contained material false .representations. ■

III. That during the year 1853, the trustees of such company declared and paid, dividends tending to render the company insolvent.

The defendants answered, denying most of the allegations in the complaint, and set up affirmative defenses in the following words : *“ Ninth.*And these defendants further answering, aver that this action is upon a statute for a penalty where the action is given to the party aggrieved, and that the same was not commenced within fhree, years after the cause of action alleged in the complaint accrued.

*Tenth.*And for a further and separate defense to said action, these defendants say that at the time of the maturity of said bill of exchange, and for a. long time afterwards, the Empire Stone. Dressing Company was solvent and able to pay all its debts; that its stockholders were severally and individually liable, to an amount equal to the amount of stock held by them respectively, for all the debts of said company, by reason of the non-payment of the capital stock fixed and *393limited by said company in compliance with the provisions of the act under which it was incorporated. That many of said stockholders held stock in said company to an amount greater than the plaintiff’s claim, and were at the time of the maturity of said bill, and ever since have been, and still continue to be, entirely solvent and responsible That the said bill matured on or about the 6th day of June, 1854, but that the plaintiff neglected to institute suit thereon for the collection thereof!, against said company, until on or about the 19th day of March, 1857, more than two years after the said alleged indebtedness of said company to said plaintiff had become due, and that by such neglect the said plaintiffs released, exonerated, and forever discharged the stockholders of said company from all personal liability for the payment of said debt. That no claim or demand was ever made by the plaintiffs on these defendants, nor was any notice of any claim or demand, whether against said company or these defendants, ever given to these defendants *;*nor had these defendants any opportunity of being subrogated to the rights and remedies of the plaintiff against said company while solvent, nor against said stockholders before they were, so as aforesaid, released and discharged from their said liability.”

To these defenses the plaintiff demurred. Before Mr. Justice Moncbiee, at special term, the demurrer was sustained, and the defendants appealed to the general term.

*Charles F. Sandford,*for the appellants.

I. The case is within the purview of the three years statute of limitations, applicable to penal actions, and the statute is a bar to the plaintiff’s claim. *(Code,*§ 92, 2.) 1. It is an action upon the statute. But for the express provisions of the statute no such action would lie. If any liability exist at common law, it arises from and is limited by the damages actually sustained, and is not a liability for “debts.” No damage is alleged in the complaint. The action is brought to recover a debt, for which the defendants are alleged to have become liable, by reason of their violation of the provisions of the *394statute. 2. It is an action upon the statute for a penalty. As regards the liability .consequent. upon the mere omission to file a report, it has been- said by the highest authority, that *“*the provisions of the statute are highly penal.” *(Garrison*v. *Howe,*17 *N. Y. Rep.*458.) Principle and authority concur in pronouncing the provisions of the statute highly penal, and the courts construe them strictly as against the creditor, and with as much liberality towards the trustee as is consistent with the object of the provision, regardless of its literal import. *(Garrison*v. *Howe,*17 *N. Y. Rep.*458. *Boughton*v. *Otis,*29 *Barb.*196. *S. C.*21 *N. Y. Rep.*261.) But the legislature has seen fit to impose a penalty upon trustees of manufacturing corporations, in order to deter them from violating the statute, and has given the benefit of it, in case of such violation, to the party aggrieved thereby—to the creditor to whose benefit the violated provisions of the statute were designed to enure. 3. It may be claimed that the liability in question is that “ liability created by statute, other than a penalty of forfeiture,” to which reference is made in sections 91 and 92 of the Code, the statutory limitation whereof is the period of six years. If, however, the action be penal, it is expressly excluded from the operation of this provision. 4. The provisions of the statute of limitations, as regards penalties, &c. are by express enactment declared to be inapplicable to actions against directors of moneyed corporations and banks. (Code, § 109.) It is a fair inference from this express exception, that the legislature designed that they should be availed of by directors of ordinary manufacturing companies. 5. As- the claim and limitation are both statutory, and as at common law no liability exists, in case of ambiguity or doubt, that construction should be adopted which will best protect the rights of the defendants as they exist, independently of the statute, thus restricting the plaintiff to his common law remedy, if he have one.

II. The other defense to which the demurrer applies may be thus stated : 1. The liability of the defendants, if it, exists at all, is the liability of a "surety or guarantor for the debt of *395another. As between the plaintiffs and defendants, the implied contract which the law creates is simply that of responsibility, by way of guaranty,, for the amount due the plaintiff from the company. The trustees, if charged, will have recourse against the company and its stockholders for their indemnity, that is to say, will be subrogated to all the remedies and securities which the creditor had, as against his principal debtors, and the release or discharge of the principal debtors, the extention of time of payment to them, or the surrender of adequate securities held as collateral to their debt, will operate in discharge of the surety. 2. It is not claimed that the mere omission to sue the company, in the case of an ordinary surety, would operate as a discharge, even though the insolvency of the company should subsequently occur, unless the surety should have requested such suit to be brought. The better authorities, however, agree that where the surety has sustained injury by the failure of the creditor to prosecute after request, he is exonerated *pro tanto.*(1 *Pars. on Cont.*510, *and cases cited. Herrick*v. *Borst, 4 Hill,*650.) 3. It is however contended, that in the case of a trustee made penally liable for the debts in general of a corporation, which may well be contracted without his knowledge or assent, a different rule would prevail, and that.demand should be made upon, and notice given to such trustee, in time to enable him to avail of his right of subrogation. (1 *Pars. on Cont.*514, *and cases cited.) 4.*The omission to sue, in the present case, operates as an absolute exoneration and discharge of the stockholders, who are principal debtors. The statute expressly provides (§ 24,) that no stockholder shall be personally liable for the payment of any debt, contracted by any company formed under this act, unless a suit for the collection of such debt ■ shall be brought against such company, within one year after the debt shall become due. It is insisted that this is as much a voluntary release and discharge of the stockholders, from their liability to pay their debt, as if a release had been executed and delivered by the creditor in writing and under seal, and as such it operates equally in discharge of the liabil*396ity of the surety, viz. the trustee. ■ 5. If the stockholders are not principal debtors, their liability is certainly a collateral security for payment of the debt. But the surrender of securities held as collateral will operate to discharge the surety equally with the release of the principal debtor, and the omission to sue the company within the year is tantamount to a voluntary surrender of such security. *(Pitts*v. Congdon, 2 *Comst.*352.)

*William Bliss,*for the respondent.

I. This is not an action upon a penalty where the action is given to the party aggrieved, but ah “action upon a liability created by statute,” or “an obligation or liability,” not of record or under seal, and “ other than a penalty or forfeiture.” *(Code,*§ 91, *subd.*1, 2. 2 *R. S.*296, § 18. *Id.*298, § 31. *Code,*§ 92. See commissioners’ note to the last section, subd. 2, where the subject is discussed. First report of commissioners *of Code, 99,*subd. 2 of § 91, originally 71.) 1. The construction of the section of the Revised Statutes, corresponding with the 2d subdivision of section 92 of the Code, has been settled, *(Van Hook*v. *Whitlock, Ct. of Errors,*26 *Wend.*105 ; *Corning*v. *McCullough,*1 *N. Y. Rep.*47, *overruling Freeland*v. *McCullough,*1 *Denio,*414 ; *S. C. [Court of*Appeals,] 4 *How. Pr. 183;*and judgment of Supreme Court there reversed,) in conformity with this distinction, and the Code may be considered as declaratory of the pre-existing law, except that by the substitution of the word “penalty” for “cause” it is clearly confined to penalties strictly so called. 2. By the third section of the 8 th article of the constitution it is provided : “ Dues from corporations shall be secured by such individual liability of the corporators, and other means, as may be prescribed by law.” In obedience to such 8th article, the manufacturing act *(ch.*40 *Laws of*1848,) was passed. So far as this action is founded upon a liability created by statute, it is founded upon such act of 1848, and upon provisions of it, by which the debts of the corporation are so secured. *(Laws of*1848, *ch.*40, §§ 12, 13. See act of March 22, 1811, ch. 67, revived January 26,1821, for the law in force when the act of *3971848 was enacted.) 3. The suit is for the debt, for which, under certain circumstances defined by the statute, the trustees become “jointly and severally liable.” The action is primarily on the contract, against persons made *quasi*parties to it. *(Peckham*v. *Smith,*9 *How. Pr.*437, 438 ; *affirmed at general term.)*“Whatever was a debt of the company, is now by force of the statute a debt against them.” *(Slee*v. *Bloom,*20 *John.*684, *per Spencer,*J.) 4. It is not an action for a penalty. The liability is not so denominated in the statute, but a liability for debts, a joint and several liability. It is not in the form of a penalty. It is not a fixed pecuniary sum, mentioned in the statute, nor any fixed sum whatever. The debts are shifting, accumulating, diminishing, reduced by-payments and otherwise, enlarged by interest due or undue, and until due, incapable of being enforced either against the company, or its stockholders, or trustees. According to *Thomas*v. *Weed,*(14 *John.*255,) interest is not recoverable in actions of debt for a penalty ; nor in England, according to *Woodgate*v. *Knatchbull,*(2 *Term R.*155,) costs in a penal action. The object of the statute is security for the dues of the corporation ; the effect upon the trustees personally is incidental. The present action is not based merely upon the statute, and acts in contravention of it, like actions for penalties, but partly upon the statute only, as in case of suits against executors and administrators, or indorsers of promissory notes, or against makers and indorsers jointly. *(See Van Hook*v. *Whitlock,*26 *Wend.*105, *Nelson,*J.) ' 5. The plaintiff is not “ the party aggrieved” in the sense of the statute of limitations. The creditor is not so denominated in the statute or by any equivalent word. The joint and several liability of the trustees is irrespective of any injury to the plaintiffs or creditors, by the act or omission of the particular trustees so liable. *(See*2 *R. S.*480, § 1. *Corning*v. *McCullough, 1 N. Y. Rep.*69.) 6. Penalties are imposed by law for offenses. (2 *R. S.*481, § 4. *Code,*§§ 96,124. *Id.*297, §§ 29, 30. *Webster on word Penalty.)*Actions for them are local, (2 *R. S.*481, §§ 4, 8, 9 ; *Code,*§ 124,) and of a *quasi*criminal nature. A trustee may, *398under the statute, be liable, and yet have been guilty of no offense. 7. In section 12 of the act of 1828, the duty of tnalcing the report is devolved upon the company. If the company fail to make the report, all the trustees are liable, whether they have signed the report, or are in default or not. Section 13 imposes a joint and several liability in a certain contingency. They are liabilities “voluntarily assumed” by stockholders, when they subscribe for or take stock, and by trustees, when they accept and retain office. *(Matter of the Empire City Bank,*18 *N. Y. Rep.*210. *Corning*v. *McCullough,*1 *Comst.*55, 59.) So far from suits against stockholders, on their liability created by statute, being actions for penalties, they may be brought in equity. *(Ct. of Errors, Slee*v. *Bloom,*20 *John.*669. *S. C.*19. *Id.*456. *Briggs*v. *Penniman,*8 *Cowen,*387. *Laws of*1855, *ch.*390, 736, *in pari materia.*1849, *ch.*26.) 8. In a loose general sense, it may be said that all these provisions are penal in their character ; that is, though the sole object of them is the security of the creditor, and to give him a remedy for his debt, the liability may operate upon the party made liable by the statute with severity. So exemplary damages are called vindictive, punitive ; and in an action for slander the court will not grant a new trial for excess of damages because the action is penal in its character, at least, except in special and rare cases. *(Hurtin*v. *Hopkins,*9 *John.*36. *Ex parte Bailey,*2 *Cowen,*483. *Hunt*v. *Bennett,*19 *N. Y. Rep.*175. *Fry*v. *Bennett,*1 *Abb. Pr.*289, *and see*308, 309. *Clayton*v. *Wardell,*4 *N. Y. Rep.*240.) In *Woodgate*v. *Knatchbull,*(2 *Term R.*154,) it was said by Ashubst, J. that it had been held in many instances, that where a statute gives accumulated damages to the party grieved, it is not a penal action. So that such mere general expressions, used with a different intent, render no aid in solving the present question. 9. The first article of title 6 of part 3d of the Revised Statutes, *(still in force, Code,*§ 471,) entitled “ Of actions for penalties and forfeitures,” prescribing the proceedings in such actions, is entirely inapplicable to actions like the present. *(See*§§ 1,10) 11, 13, original Nos. *399*Peckham*v. Smith, 9 *How. Pr.*437, an action against a trustee.) 10. In section ■ 109 of the Code of Procedure, suits against directors or stockholders of a moneyed corporation or banking association, *u*to enforce a liability created by law," are expressly recognized, and distinguished from actions to recover a penalty or forfeiture imposed. The present action is against the directors of a corporation, though not a moneyed one, to enforce a similar liability. In section 92, an action against a sheriff, coroner, or constable, upon a liability incurred by the doing of an act in his official capacity, and in virtue of his office, or by the omission of an official duty, including the non-payment of money on an execution, is carefully distinguished from an action upon the statute,' for a penalty or forfeiture. 11. The liability in this case is in truth and in terms a liability created by statute. It is for the defendant to take it out of the general rule, and show that it comes within the exception, and' the short bar of three years. The construction of the defendants -would make the exception the rule, and sweep within it almost every statutory liability, for a liability is in its very nature burdensome and painful. 12. The trustees are the managing shareholders of the corporation. If the company were unincorporated, they would be liable for its debts. The statute exempts them from that liability (except to the amount of their shares as mere shareholders) on certain terms and conditions, but if those conditions be unfulfilled, leaves them to their full liability. It is in that respect like the' case of a special partner under the statute as to limited partnerships. (2 *R. S.*766, §§ 16,17,22, *See Corning*v. *McCullough,*1 *N. Y. Rep.*47 ; and *Boughton*v. *Otis,*21 *N Y. Rep.*261.)

II. The last alleged defense rests upon the plainly untenable proposition, that it is a condition precedent to a suit against the trustees, that the creditor should have suéd the corporation within two years after the maturity of his debt, and that he should have made a demand on the .trustees, or given notice to them of his claim against them, or of his claim against the corporation, while the corporation was solvent, or during the two years. No such condition precedent is prescribed by *400statute or by law. . The statute says, that if the report be not filed, or if the improper dividend be' made, the trustees shall be liable. Assuming for the moment that the trustees are sureties both for the corporation and stockholders, the plea is fatally defective. There is no allegation that suit was not commenced against the corporation while it was solvent. Mere delay of the creditor to call on the principal debtor, will not discharge the surety. *(King*v. *Baldwin,*2 *John. Ch.*554, 558, *and cases cited. Fulton*v. *Mathews,*15 *John.*433. *Hunt*v. *U. S.*1 *Gallison,*32. *Wright*v. *Simpson,*6 Ves. 734. *Trent Navigation Co.*v. *Harley,*10 *East,*34. *Pain*v. *Packard,*13 *John.*174.) No request to sue either the corporation or the stockholders is alleged. Eot any agreement with either, by the terms of which the contract has been varied. But the trustees are not sureties for the stockholders. Both, in certain events, are liable for the debts of the corporation. The trustees are not, it seems, even-sureties for the corporation. *(Moss*v. *McCullough,*7 *Barb.*279. *Peckham*v. Smith, 9 *How. Pr.*438, *affirmed at general term.)*If the stockholders are not, *a fortiori,*the trustees are not. If the defendants were entitled to be subrogated to the plaintiff, they might have been so on payment. Subrogation is only on payment. *(Chester*v. *Bank of Kingston,*16 *N. Y. Rep.*340. *King*v. *Baldwin,*2 *John. Ch.*260.)

By the Court, Robertson, J.

Either this action is founded upon a statute, and brought for a penalty or forfeiture by the aggrieved party, within the meaning of the second subdivision of section 92 of the Code, or the subject of it is a liability created' by statute other than a penalty or forfeiture, or a contract obligation or liability expressed or implied, under section 91 of the Code. ' If it be the first, it could only have been brought within three years after the cause of action accrued.

If the liability of the defendants were of common law origin, and only aided or modified, not created by statute, it would come within subdivision 1 of section 91 ; for the liability of stockholders of manufacturing corporations, which was of com*401mon law origin, was held to he governed by a corresponding provision in the Revised Statutes. *(Corning*v. *McCullough,*1 *Comst.*62.)

The liability of the defendants might also, if created by statute, be included in subdivision 2 of section 91 of the Code, unless it were a penalty or forfeiture ; for that section might be construed to embrace some intermediate kinds of liability between that at common law (modified or aided by statute,) and a penalty or forfeiture, upon the principle that it was intended to include classes of liabilities not embraced either in subdivision 1 of section 81, or subdivision 2 of section 92 ; but the object of subdivision 2 of section 91 was to legalize a distinction, supposed to be sustained by authority, between a liability in the nature of a contract created by statute, and a penalty or forfeiture; at least so the framers of the Code have informed us in a note to such subdivision in their first report (p. 99,) and they refer to the decisions of *Freeland*v. *McCullough,*(1 *Denio,*414,) and *Van Hook*v. *Whitlock,*(3 *Paige,*409,) as containing an exposition of such distinction; it would seem, however, also, that they had heard of the decision in *Corning*v. *McCullough,*in the Court of' Appeals, which overruled the cases to which they referred, and without waiting to ascertain the extent of that decision, they propose to regulate anew by statute the time for bringing suits upon liabilities, such as that of the stockholders of companies : although the commissioners refer to the views of Judge Nelson, in the case of *Van Hook*v. *Whitlock,*I apprehend they did not intend, nor are they to be understood as intending, to incorporate in a statute all the illustrating cases suggested by that eminent jurist; the utmost they strove to attain was to separate actions for a penalty for a prejudicial act, from those for compensation for a breach of contract. Subdivision 1 of section 91 is amply sufficient to include the latter, and, therefore, for such purpose, the new provision was superfluous, although such cases as the liability of an heir for the simple contract debts of his ancestor and the like, which are founded *402on contract, although not that of' the party liable, might be included in subdivision 2.

The language, however, of the provision last referred to, (subdivision 2, section 91,) might be considered broad enough to include the liability of the defendants in this case, were it not for the words “ other than a penalty or forfeiture.” By subdivision 2, section 92, the time is prescribed for bringing actions upon a penalty or forfeiture by the aggrieved party ; and the two were evidently intended to comprehend all cases of liability • created by statute; indeed, section 109 of the Code recognizes this, by restricting the actions against directors and stockholders of certain corporations, the time for bringing which is thereby limited, to those for penalties and forfeitures, or for liabilities created by statute ; subdivision 2, section 91, should be read, therefore,.as though the words “by the party aggrieved ” were added at the end, If, therefore, the liability of the defendants be such as is included in subdivision 2, section 92, it would not be in subdivision 2, section 91 ; and it must, therefore, be first determined what the former embraces.

The provision of the Revised Statutes for which subdivision 2, section 92, of the Code, is a substitute, (2 *R. S.*29, § 31,) was in substance the same; the only change of language is merely substituting “ penalty for “ cause,” and “ action is given ” for “ benefit and suit is limited,” and striking out the time of “ committing the offense” as the beginning of the period within which the action is to be brought: these changes do not disturb the purport and object of the statute; the wor<j.“ cause” under the previous provision was held to embrace liabilities which, although not technically penalties, were yet substantially penal, and operated to affect the party exposed to them in the same or a similar manner, *(Corning*v. *MaCullough,*1 *Comst.*64, *opinion of Jones,*J.;) and there is no evidence, unless it be afforded by the introduction of subdivision 2, section 92, of any intention to change such enactment; and that introduction is for an entirely different class of cases from penal remedies. Under both the former and present statutory provision, the action is required to be both remedial and penal, for it is to *403"be brought only by the party aggrieved, in which case the legislature could not take away the right of action, as it could for penalties for offenses in which the public might be interested, for bringing which a shorter period of limitation is provided. *(Code,*§ 93, *subd.*2.) The omission of the words “ offense committed ” from the present provision, is not less significant; for, as the action is to be by a party aggrieved, and the sum to be recovered is intended as indemnity for his private loss by the act complained of, the term “ offense ” is not appropriate to it, although it might be in actions for penalties given to the state or any one who would sue for it. Upon the whole, therefore, the provision in its, new form is not to be considered as manifesting any intent to change the substance of the statute in a mere revision of it, such as this part of the Code is. *(In re*Brown, 21 *Wend.*316. *Theriat*v. *Hart,*2 *Hill,*380.) The present, therefore, must be held to embrace the same kind of penal actions as the former enactment.

Without refenence, however, to the prior existence of the same enactment in a different form, the present, statute extends to all actions for a penalty or forfeiture by an aggrieved party; and the only question under it is, what is a penalty or forfeiture for which an aggrieved party can sue *?*Of course the expression is elliptical, for the act or mode is not stated by which the party is to be aggrieved. With the ellipsis supplied, it would read, “penalty or forfeiture for an act, other ' than the non-fulfillment of a contract, by which any person may be aggrieved *■”*for in *Corning*v. *McCullough,*(1 *Comst.*69,) the term “party aggrievedis held to he inappropriate to those who sue on contracts or liabilities for debts or damages ;, penalty or forfeiture does not necessarily imply a fixed sum, but any thing imposed as a punishment, whether specific or measured by the value of the interest affected by the act complained of; Penalty is defined in Burrill’s Dictionary as “ a pecuniary punishment or sum of money imposed by stat- , ute to be paid as _ a punishment for the commission of a certain offense; and a similar definition of it is given in Bouvier : Forfeiture is defined by Blackstone (2 *Comm.*420) to be a loss *404of goods as a compensation for an offense and injury to -the person to whom they are forfeited, as well as a punishment for a misdemeanor ; and penalties whose benefit is given to a party aggrieved, include equally with forfeitures the idea of both such compensation and punishment. The fact of such gift ,to the injured party does not make a penalty less one; nor would its extension to the whole value of the interest affected, instead of being limited to a fixed sum. On the other hand, it would cease to be a penalty if it were limited to the actual loss of the party. In fact, they are only created in cases where the proof of such loss is difficult, if not impossible, and where, by the probable excess of the penalty beyond the loss to the party injured, or gain to the offender, the latter may be deterred from the offense. It is merely because such penalties may. surpass indemnity for loss,- and are not measured by it, that they are so termed, because, as was laid down by this court in *Fry*v. Bennett, (1 *Alb. Pr.*308,) every excess merely of even vindictive damages beyond indemnity is a penalty.

The liability of the defendants does not arise from any act connected with the creation of the debt to the plaintiff. That debt is the interest affected by the failure to file a proper report, or payment of improper dividends, complained of. The grievance of the plaintiff consists of the effect upon his efforts in the collection of such debt, and not of any fraud or other influence, in contracting it. The extent of that grievance could not easily be proved. It may not have equalled the whole amount of the debt, for the company may have been innocently insolvent before the time of filing the report required, or the dividends not sufficient to have paid the debts. The infliction upon the trustees of the payment of the whole debt is therefore a penalty, for which an action is given to an aggrieved party.

Moreover, the application of the term “penalty or forfeiture ” to such liability as that of the defendants has been fully recognized by the legislature. Actions for penalties and forfeitures against the directors and stockholders of moneyed corporations and banking associations are provided for in sec*405tion 109 of the Code ; but it will be found, on an examination of the statutes in relation to such corporations and associations, that there is no instance of the infliction of a penalty of a fixed sum upon either directors or stockholders, *eo nomine;*all those which are imposed are to indemnify an injured party either fully or to the extent of the stock owned by the stockholders. (2 *R. S. 5th ed.*591, § 10. *Id.*592, §§ 15, 16, 17. *Id.*602, § 3.) It is therefore plain that such liabilities as that of the defendants was intended to be embraced by section 92.

Besides these considerations, the period of limitations is made to run from the time the cause of action accrued, not from the time the debt was incurred; the defendants are made liable as trustees long after their liability as stockholders has ceased, and for the full amount of the debts, not merely to the extent of their stock or the injury to the creditor; and they have no right of contribution from the other stockholders. It is difficult to imagine a liability more wanting in all the features of a contract, or more fully possessing those of a penalty.

The demurrer, therefore, to the ninth paragraph of the answer must be overruled.

The tenth paragraph of the answer sets up as a defense, laches on the part of the plaintiffs in suing the company, and notifying the defendants, so as to enable them to proceed against the other stockholders, who are alleged to be solvent. This defense proceeds upon the principle that the other stockholders are involved in the liability of the defendants as trustees, either as joint contractors or sureties. If that were so, it would take away the character of the defendant’s liability as a penalty, which has been already disposed of. The demurrer to this part of the answer is well taken, and should be sustained.

The judgment in this case must therefore be,, that the order made at special term be reversed, as to the demurrer to the defense, contained in the ninth paragraph of the answer, and affirmed as to that to the defense in the tenth, without costs *406on the appeal; with liberty to both parties to withdraw or amend their defective pleadings in twenty days, on payment of costs.

Bosworth, Ch. J.

The demurer to the defense set up under the ninth head of the answer, presents the question whether the liability imposed by the twelfth and thirteenth sections of the Manufacturing Companies’ Act, upon the trustees of a company, is a penalty or forfeiture within the meaning of subdivision 2, section 92, of the Code ?

The trustees of a company, incorporated, under that act, are not, as trustees, liable for any debt of the company. Heither are its stockholders liable for any of its debts—except those owing to “their laborers, servants and apprentices, for services performed for such corporation,” (§ 18 ;) *after*the whole amount of capital fixed by such company has been paid in, and a certificate thereof made and recorded in compliance with section 10 of that act.

But although the trustees being stockholders, and liable under section 10, may have been charged as stockholders, and satisfied the whole liability imposed by that section, yet if the company subsequently omits to perform the duty enjoined by section 12, the trustees will become liable for all the debts of the company.

This liability is imposed upon them as a punishment, and if the duty enjoined by section 12 is not performed, they severally and jointly forfeit a sum to be measured- by the amount of the company’s then existing debts, and such as it may contract before that duty shall be performed.

To determine whether a liability to which a person is subjected is by way of penalty or forfeiture, it is not necessary that the statute, in the language imposing it, should denominate it a penalty or forfeiture ; when the statute subjects an officer of a company, as such officer, to a liability to pay money, either for omitting to perform_ a duty enjoined or' for doing an act prohibited, and does this in a case where, but for such omission of duty of wrongful'act, he would be under rno *407liability,- he is thereby subjected to a forfeiture of the sum which he is made liable to pay, and, so far as he is concerned, the imposition of liability is by way of punishment. Subjecting the trustee to such liability is none the less a punishment as to him, although the creditors may recover more than a full indemnity against the consequences of this misconduct by obtaining satisfaction of their debts.

Each creditor of the company is, under this act, the aggrieved party to whom the action is given, within the meaning of subdivision 2, section 92, of the Code.

Section 12 of the act makes it the duty of the company to file the report therein mentioned; and for the failure of the company to perform the duty, punishes its trustees, by whom alone that duty can be performed. It treats the creditors of the company as the parties aggrieved by this neglect of duty, and for this neglect of duty gives to each an action against the trustees jointly and severally for the whole amount of his debt against the company.

The trustees, on being compelled as such to pay to the extent of the liabilities thus imposed upon' them, have no claim against the company for reimbursement.

In nó case are the consequences prescribed by statute, for an omission or violation of duty, more emphatically penal than in the present.

So, too, the liability imposed by section 13 treats the creditors of the company as the parties aggrieved by the misconduct which that section prohibits, and gives them an action to enforce against the trustees the liability imposed upon them by that section for doing the act which it forbids.

The act prohibited by that section is treated as one by which each stockholder receives his true aliquot share of the sum divided, and the creditors, not the company, are regarded as the aggrieved parties.

In this view, the demurrer to the defense now under consideration is not well taken, and should have been overruled; and as to that, the order appealed from should be reversed, with liberty to the plaintiffs to withdraw their demurrer and *408reply to this part of the answer, on payment of the costs of the. demurrer.

. The demurrer to the defense, pleaded under head, tenth of the' answer, is well taken ; and as to that, the order appealed from should be affirmed. :

Judginent reversed in respect to the demurrers to the ninth paragraph of the answer, and- affirmed as to the residue.