Court Opinion

ID: 8270244
Source: CourtListenerOpinion
Date Created: 2022-10-16 19:30:56.213264+00
Date Added: 2024-06-11T16:43:29.258595
License: Public Domain

Ogdeh, J.
The action was not commenced for the recovery of a debt dne from the defendants below to the plaintiffs on promises, either express or implied, bnt it is founded upon the provisions of an act of the legislature authorizing the establishment and prescribing the duties of companies for manufacturing and other purposes, approved March 2d, 1849. A number of persons in the city of Newark, on the 15th of July, 1853, associated themselves together into a company under that statute for the manufacturing and sale of firearms, assuming the business name of “the Perry Patent Arm Company.” The plaintiffs below became the holders of two bills of exchange, dated the 17ti of February, 1854, accepted by the company.
The paper was dishonored at maturity, and on the 16th of September, 1854, the plaintiffs prosecuted the company upon their acceptances in the Circuit Court of the county of Essex. On the 27th of April, 1855, they recovered judgment for the sum of $3009.16 damages, and $47.49 costs, which judgment remained unsatisfied when the present suit was commenced in the Supreme Court in the term of November, 1856.
The plaintiffs insist that the defendants have become personally liable to pay to them this debt of the company, because, as stockholders in and officers of the company, they violated the law under which they had organized, and by its provisions thereby became subject to an action for the recovery of the debt.
The question before the court is, whether the declaration, on its face, sets out a gopd cause of action against the defendants below. It states the passage of the act— the organization of the company under it—the recording of the original certificates, whereby they made known *535the total amount of the capital stock and also the amount of capital stock on which they would commence business —the fact that the defendants were stockholders in and officers of the company when the acceptances were made, and the prosecution of the original suit against the company to judgment. It then states that Quimby, as president and director of the company, Ilartshorne, as secre tary and treasurer thereof, and Meeker, Price, Perry, and Gibney, a majority of the directors thereof, on the 9th of January, 1855, within thirty days after the payment of the last instalment of the capital stock fixed upon as the amount of capital stock of the said company, with which they w'ould commence business, did make a certificate, and did sign and swear to the same, and within the said thirty days did record the certificate in the clerk’s office of the county, and did also publish the same, as required by the act of the legislature, by which certificate they did make known, under oatii, that the whole amount fixed upon by the company in their original certificate of incorporation as the capital on which they would commence business, the same being $288,000, had been paid into the treasury of the company in cash, the last payment thereof having been made on the 29th of December, 1854.
It is then averred in the declaration, that the capital stock of $288,000, so fixed upon as stated in the certificate, was not paid into the treasury of the company in cash, as in the certificate and publication thereof is made known, and as is required by the act under which the company was incorporated, and that the certificate and notice were false and untrue in the said material representation ; and it is then averred that, by means thereof, the said persons, as stockholders and officers of the company, became liable to pay to the plaintiff's the said debt of the company, and that thereby an action had accrued to the plaintiffs to have the said money of the defendants, according to the form, force, and effect of the act. .
*536Whether the judgment shall be arrested or not must depend upon the fact, whether there is any section in the act referred to which can make the defendants liable for the general debts of the company, on the ground that the certificate and publication signed and made by them, set out in the declaration, were false in any material representation.
Two matters must be kept in mind as- we pursue this inquiry.
First. Whether, according to the scope and obvious design of the act, a certificate and notice of the nature and purport of that stated in the declaration is required to be made.
Second. Whether, if they be false, that fact crea As a personal responsibility upon the parties thereto.
It is provided in terms, by the 19th section Of the act, that the president and directors, with the secretary and treasurer of each company, shall within thirty days after the payment of the last instalment of the capital stock so fixed and limited by the company, make a certificate stating the amount of the capital so fixed and paid in cash, which certificate shall be signed and verified by • the president, secretary and treasurer, and a majority of the directors ; and it further directs that the same, within the said thirty days, shall be recorded in a book provided for fin the section, and also shall be published by them for three weeks in a newspaper.
The 20th section requires, in case of an' increase of- ;he capital as provided in the act, that the same officers, within thirty days of the payment of the last instalment of such additional stock, shall make, sign, and swear to a certificate of the amount so added and paid in in cash, and shall' cause the same to be recorded and published in the manner provided in the 19th section.
* By comparing the certificate set out in the declaration with the requirements of the 19th section, it is apparent that the defendants, in making their certificate, designed *537literally to comply with that section; and it cannot he gravely insisted that such certificate and notice were voluntary acts of supererogation and were not made in pursuance of the statute. What motive could have induced the defendants to take that trouble, if they were not seeking to fulfil the conditions upon which their company was authorized to commence and continue their business ?
It was suggested, on the argument, that the certificate was made under a misapprehension of liability and of duty ; that by the act of 1846, the stockholders of such companies were held personally liable for all contracts and debts of the company to which they belonged, until the amount of the capital, from time to time limited and fixed, should he paid in, and a certificate thereof should.be made, recorded, and published in the manner already stated ; and it was alleged that this cexfificate was made by the officers under a supposition that the law of 1846 had not been altered in that particular, although in point of fact no such obligation then rested on the officers.
In regard even to penal laws, it is strictly true that ignorance is no excuse for the violation of a statute containing peremptory woi’ds and imposing a penalty. If the prohibited act be done, or the act directed be omitted, the penalty must he paid.
The offence against the statute consists in the wilful violation of its provisions, as a refusal or omission to peiform the duty required by it, and not ixx the intent and motive by which the party is actuated.
It is true that, in the act of 1849, which superseded and renealed the act of 1846, the section is omitted which continue the personal liability of the stockholders xxntil the amount of the capital stock, from time to time fixed and limited by the company in the manner provided in the act, should be paid in, and a cexfificate thereof be made and recorded and published; yet, nevertheless, the 19th section of the present aet requires that, within thirty days after the payment of the last instalment of the capital stock so fixed *538and limited by the company, a certificate shall be made, under oath, stating the amount of the capital so fixed and paid in in cash, and that the same shall be recorded and published.
But it was further objected against the alleged liability of the defendants, that the time for making the certificate had not arrived, because only $288,000 of the capital appeared by the certificate to have been paid in, whereas the total amount of the capital is $300,000. This objection is satisfactorily met and answered by examining the 14th and 20th sections.
My interpretation of the whole statute is this, that the legislature made three distinct descriptions of capital stock.
First, the amount of capital stock with which the companies should certify that they would commence business ; second, the amount of capital stock between that sum and the limit named in their original certificate; and, tlii/rd, the amount of capital stock which might be added by a supplemental certificate. It is provided in the 14th section ■—first, that a company (meaning the stockholders), at a meeting called for that purpose, may increase its capital stock, and the number of shares therein, until it shall reach the amount named in the original certificate ; and second, in case more capital is necessary, that an additional certificate, under the hands of at least two-thirds of the stockholders, shall be filed stating the amount of such additional capital required.
The 20th section requires that if additional stock be made, the officers mentioned in the 19th section shall file a sworn certificate within thirty days after the payment of the last instalment of such additional stock. It is clear to my mind that, by the 19th section, certificates are required to be made from time to time, after the payments of the last instalment of the stock fixed as that oil which business would be commenced, and of also the last instalment of the increase thereof between that amount and the *539limit of the original certificate ; and that a certificate is required, by the 20th section, to be made after the payment of the last instalment of the additional stock beyond the limit of the original certificate. This view is in accordance with the scope and object of the act, and will provide, from time to time, to the dealers with companies such information as is necessary and proper for their security. The spirit of the statute is, that enterprising men should be able to conduct a business by their congregated capital without incurring risks beyond the loss of the amounts which they respectively invest, and that the public who deal with them may be protected against losses by the formation of companies without the investment of real cash capital.
In my opinion the certificate and notice which underlie this case, made and given by the defendants, cannot be held to have been voluntary acts not made in pursuance of the provisions of the statute; but they should be adjudged to have resulted from the requirements of the 19th section, and to have -been recorded and published as being a literal performance of the impositions of that section when the last instalment of the $288,000 purported to have been paid in.
As the declaration avers that the certificate and public notice are false and untrue in a material representation, and the jury have so found the fact to be, the only remaining inquiry is, whether the statute has made the defendants personally liable for the debt due from the company to the plaintiffs. The 21 st section of the act under examination enacts, that if any of the officers named in the two preceding sections shall neglect or refuse to perform the duties required of them in those sections, or the certificate made by them shall be untrue, they shall be liable for all debts of the company contracted after the expiration of the said thirty days, and before the certificate shall be recorded as required.
The defendants have urged that they can be liable for *540default to and falsities touching the matters set out in the 19th and 20th sections only through the provisions of the 21st section; and as that section creates no -personal liability for debts of the company, excepting for such as ■might be contracted after the expiration of the thirty days, and before the certificate should have been actually recorded, therefore that no such liability has been fastened upon them by the pleading. They undoubtedly are right if their liability to this action arises from the provisions of this 21st section. That particular section is not referred to in- the declaration, and hence we are not thereby confined to'it in this inquiry. .
The plaintiffs do not pretend to hold the defendants personally on that section. They admit that it does not reach their case, but they insist that their action is maintainable upon the liability created in the 30th section of the act.That-section is in the following words : “ If any certificate made, or any public notice given by the officers of any company in pursuance of the provisions of this act shall be false in any material representation, .all the officers who shall have signed the same shall be jointly and severally liable for all the debts of the company contracted while they were stockholders or officers thereof.”
Assuming that the 19 th section provides for making a public certificate of such facts as purport to be made known to the community by the certificate of the defendants, there-could be no semblance of doubt upon the applicability of the 30th section to the 19th section, if the 21st section was not in the present act. The subject matter of the certificate is the same as is contemplated in the 20th section, and the words-of the section are-broad enough to embrace the case.
"What efficacy shall be given to the 21st section ? Should we hold it as withdrawing from the liabilities created by the general language of the 30th section failures in fulfill ing the requirements of the 19th and 20th sections, or *541would we construe it as only giving a cumulative additional remedy to the extent that its language imports ?
If we determine that it wholly appropriates the 19th and 20th sections to itself, and creates an immunity against all wilful violations of the requirements of those sections, except a liability to pay such debts as may be contracted within the period thereby limited, the most valuable purpose originally intended to be effected by the 30th section will be defeated, and its protective and salutary restraints will necessarily be applicable to a very few and comparatively minor violations of required duty. Under such a construction of the statute, a failure by the president and majority of the directors to make, under oath, an annual statement of the affairs of the company under'the provisions of the 24th section will leave them, personally liable for the payment of all debts then existing, while the same persons, for making under oath a false statement of the payment in of their capital, will only be personally answerable for such debts as may be created within a limited period, which may not extend beyond two or three days.
The insistment that this certificate, and the publication thereof, formed no part of the basis of the credit on which the acceptances were negotiated loses its apparent force upon a careful reference to dates. The papers were protested in July and August, 1854. The original certificate of incorporation, made under the hands and seals of the corporators, who are among the most wealthy and respectable citizens of Newark, had been filed within seven months of the date of the drafts, which certificate showed the amount of their whole capital stock and the amount of capital stock on which they would commence then-business.
The action was commenced against the company in September; the certificate of the final payment of $288, 000 in cash was filed in December following, and the suit was continued until the 27th of September, 1855. How can we assume that the record of a certificate, veri*542lied by :such gentleman as these defendants are well known to be in that community, had no influence upon the plaintiffs while prosecuting their action to judgment, and that it did not prevent an advantageous composition of their debt ? What information could have given them better assurance that they would be able, eventually to realize their debt than a 'certificate, thus verified, that $288,000 had been paid in in dash within the pei-iod of eighteen months ?
The argument upon the hardness of this suit which was thus incidentally made, is without foundation.
By extending the liability created in the 30th section to violations of the 19th section, we do not override any settled principle and rules for the construction of statutes, nor do we necessarily encourage two concurrent actions for the Same default.
The books are full of cases showing that statutory and common law remedies exist for the same unlawful acts, yet it does not follow that two recoveries may be had for the same cause of action.
In the case of Churchill v. Crease, in 5 Bingham, 180, which was cited by the counsel for the defendants with great confidence, the case was stated by Ch. Just. Best to be, that where a general intention is expressed, and the act expresses also a particular intention incompatible with the general intention, the particular intention is to be considered in -the nature of an exception. There is no incompatibility between the -intention expressed in the '21st section of this statute and that expressed in the 30th section. The -purpose of each is the prevention of fraud ■and provision for a true certificate. Also, in Sedgwick 423, where general words follow particular words, the rule is to construe the former as applicable to the things ■ or persons particularly mentioned. For this is cited Sandiman v. Breach, 7 Barn. & Cres. 100.
Dwarris 658. If words are found in a particular clause of a statute not so large or extensive as those used in *543oilier parts of the act, it is the duty of courts to give effect t > the larger expressions.
I am of opinion that the judgment of the Supreme Court should be appraised with costs. .By so doing we shall observe that leading rule of construction, that a statute ought, upon the whole, be so construed that, if it can be prevented, no clause, sentence, or word should be superfluous, void, or insignificant. 1 Showers 108.