Court Opinion

ID: 3504160
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:14:05.164053+00
Date Added: 2024-06-11T14:05:24.293543
License: Public Domain

The defendants' motion for a reargument was granted and was submitted on briefs. The only question is whether an action under G. S. 1923 (2 Mason, 1927) § 10407, is barred by the three-year statute of limitations fixed by G. S. 1923 (2 Mason, 1927) § 9192 (2) as follows:
"The following actions shall be commenced within three years:
* * * * *
"2. Upon a statute for a penalty or forfeiture to the party aggrieved."
The nature of the action under § 10407 is discussed in paragraph one of the opinion. The statute does not assume to give a cause of action. It defines a crime. The creditors do not recover a penalty. They recover damages for loss sustained. The officers pay damages — not a penalty. A cause of action has come about by the construction of courts because of the violation of a criminal statute. There was no such action at common law; that is, there was no such liability. If there had been a liability there would have been a common law remedy. If there is liability now because of a violation of the statute there is a common law remedy without specific creation. In various actions involving this or similar statutes we find expressions used in connection with the particular facts before the court to the effect that the imposition of liability *Page 633 
is by way of penalty though the statute gave none. Such expressions may have been helpful in the particular case then considered. They were not used with reference to the statute of limitations in a case like the one before us. That the recovery is painful to the one who has incurred liability by a violation of the statute does not make the statute penal within the limitation act. The statute defines a crime for which punishment is provided. The civil action, raised by the courts, brings neither punishment nor penalty.
We have no trouble in reaching the conclusion that under our decisions § 9192 (2) is without application. Reference is made in the briefs to Merchants Nat. Bank v. N.W. Mfg.  Car Co.48 Minn. 349, 51 N.W. 117. This case was an action against the directors under G. S. 1878, c. 34, § 142, providing as follows:
"If any corporation organized and established under the authority of this act shall violate any of its provisions, and shall thereby become insolvent, the directors ordering or assenting to such violation shall be jointly and severally liable, in an action founded on this statute, for all debts contracted after such violation as aforesaid."
This statute created a direct liability. Actions upon it were held to be "upon a statute for a penalty or forfeiture, where the action is given to the party aggrieved. * * *" G. S. 1878, c. 66, title 2, § 7.
In Flowers v. Bartlett, 66 Minn. 213, 68 N.W. 976, an action brought by creditors under G. S. 1894, § 2600 (3) making the property of stockholders liable for corporate debts when as officers or directors they have been "guilty of fraud, unfaithfulness, or dishonesty in the discharge of their official duties," it was held that such an action was not an action for the recovery of a penalty or forfeiture within the meaning of G. S. 1894, § 5184, providing that such a cause of action should be tried in the county where the cause of action arose. The case of Merchants Nat. Bank v. N.W. Mfg.  Car Co.48 Minn. 361, 51 N.W. 119, was overruled. The court said [66 Minn. 216]: *Page 634 
"It was held in Merchants' Nat. Bank v. Northwestern Mnfg. 
C. Co. 48 Minn. 349, 51 N.W. 117, that such an action is an action to recover a penalty, and, under the second subdivision of section 5137, the statute of limitations runs upon the cause of action in three years. That case was necessarily overruled by the opinion in National New Haven Bank v. Northwestern Guaranty Loan Co. 61 Minn. 375, 63 N.W. 1079. See pages 386, 387, 61 Minn., and page 1082, 63 N.W. Our attention was not called to the former case on the argument of the latter case, and the writer, who wrote the opinion in the latter case, was not then aware of the former case; but some of our justices say they had it in mind when deciding the latter case. We are still of the opinion that the liability provided for by the third subdivision of section 2600 is not in any proper sense a penalty."
We might proceed to an indefinite length and add numberless cases bearing upon the origin of actions under § 10407 and other statutes which bring damages, not penalties, to those suffering from their violation. The parties desire the question settled. We have examined their briefs. And it is now definitely held that the three-year limitation prescribed by G. S. 1923 (2 Mason, 1927) § 9192 (2) does not apply to an action founded upon G. S. 1923 (2 Mason, 1927) § 10407.
Order affirmed. *Page 635