The Brattleboro daily reformer. (Brattleboro, Vt.) 1913-1955, 1915-03-23
Dewitt Co. and Others Lose
Suit Against Four
Directors
DEFENDANTS ALLOWED
TO RECOVER COSTS

Case May Go to Supreme Court-Chan-
cellor Fish Finds that Directors Did
Not Assent to Indebtedness Created
by Manager.
\ decision by Chancellor Frank J.. Fish |
in the Grange Store case, one Of the most |
prominent Of the local cases in recent |
years, is an important victory for the de
PENDANTS, Oscar 7. Ware, Walter F. Cod /
dard, Carl 5. Hopkins and Joseph Her !
man JOY, who We're among the directors of |
the now defnnct organization, and practi- !
caly winds up the case, although there Is
a possibility of its going to the supreme
court on exceptions. The decision Of the
chancellor was received this forenoon.
The orators are the Dewitt Grocery
Co. OF this town, whose claim IS for about
81 400, the Henry J. Perkins Co. of
Springfield, Mass, who claim over $500.
and Charles +. Brown 4 Co. of Spring
field. who seek to recover about $500
There were other directors III the Grange
store. those living being John c. Dewitt.
+. l.. Hildreth and H. W. Sargent. but
they We're not made defendants in the
suit
The suits We're brought in 1911 in the
law court. The store iquidated in the
fall of 1910, and the orators proceeded to
undertake to collect their claims of the
directors named under the statute which
/ provides that directors Of a corporation
/ knowingly asserting to the contraction of
| debts in excess Of two-thirds OF the capi-
| tai stock paid in shall be personally
| liable for such excess.
| In his finding Of facts the chancellor
J y
/ the time these bills were contracted the
/ Grange store was owing debts To an
amount IN excess Of two-thirds Of the
capital stock Of said corporation actually
paid in. in an amount exceeding the total
amount of the orators claims" He then
goes on 10 show that the manager, who
was treasurer, generally carried ON the
! business in his own way and that the
directors did not inquire Of him as to
who he was purchasing merchandise of
and did not examine the accounts to IA
mIlIarlze themselves with the names of
the creditors.
For several years the manager made a
monthly statement to the directors, but
, for several years preceding the winding
mp Of the affairs of the store he did not
do so. but made annual statements. These
statements disclosed an Indebtedness in
, such an amount. the findings say, that the
directors would become personally liable
ior several thousand dollars if the debts
were created by their assent but the
names of the creditors did not appear in
: the statements and the defendants did
not know who the creditors We're until
the year the corporation was hquidated.
Shortly before the affairs were wound VI
= the Dewitt company threatened to bring
t suit and close the store but later approved
i of plan to sell the store and distribute
5 the avails pro rata, and aided in securing
2 a purchaser. Nothing was said at thai
+ time as to the liability of the directors
i An the creditors received a 30 per cen
dividend and later all received Il pc
G cent dividend except the Dewitt Co. anC
@ the Perkins Co, who refused it.
| When the affairs of the store wert
= wound up it appeared that there was al
y Indebtedness of $1,000 IN excess of TIL
y amount appearing in the yearly state
+ ments. Until then the directors had sup
- posed that the corporation was solvent
: but il was found to be insolvent and abl
to pay only 10 per cent.
- 1t was claimed by the defendants tina
~ there was an agreement whereby the ora
II tors were to take such pro rata sum a
. could be obtained from the sale of tn
N property in full satisfaction of thei
le claims. but the chancellor does not 5
"a find He does find that the defendant
believed the assets on distribution woul
p operate as a full discharge of all claims.
IN Having found several debts estabishe
to the question for decision Is whether I'll
y. defendants We're liable by reason of ha,
IL ing assented to them. This decision d
to pends ON whether the acts OF the manage
Sc are binding on the defendants in the seni
rt that his assent makes them liable. If
at act does not bind the defendants their Ii
biIity depends on their knowledge of Il
fy Dewitt claim, called to the attention
ad Ware, Goddard and Hopkins in Februar
III 1910, but not to JOY.
nail In view Of all the facts the chancell
.1s orders the orators bill dismissed al
Ia costs taxed against them.
Previous to the hearing before Cha
~, cellor Fish the defendants filed demt
-, rer on the ground that the other directo
~ were not made parties to the action. III
:" demurrer Is oycrruled, but the rights
~ ~ the defendants were saved for final hei
= ing, in case the matter goes to the
preme court.
rs. This case was in the law courts frC
my 1911 to 1913, when it was decided I'll
au- the orators should sue in chancery. Cha
OF & Chase and Gibson & Daley are coun
a for the orators and III. G. y L. +. Bari
af- !are counsel for the defendants