Court Opinion

ID: 7812936
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:14:54.048932+00
Date Added: 2024-06-11T16:30:31.431697
License: Public Domain

Hart, J., (after stating the facts). The first assignment of error is that the court erred in amending and giving as amended the following instructions: “Under the laws of the State of Arkansas, it is the duty of the president and secretary of an Arkansas corporation to file in the office of the county clerk of the county in which the corporation is domiciled and carrying on business, an annual report, not later than February 15 or August 15 of each year, showing the condition of affairs of the corporation of which they are officers. And the law further provides that, should the president and secretary neglect or fail, whether intentionally or not, to file the said report, then by such failure the said president and secretary become jointly and severally liable for all debts contracted by the corporation after the date of the failure to file such annual report. And if you find in this case, from the preponderance or greater weight of the evidence, that the Farmers ’ Mercantile Company was an Arkansas corporation, domiciled and carrying on business in Hempstead County, Arkansas, and that E. D. Velvin and R. L. Byers were the president and secretary of the corporation, and failed to file the report required by law, and that, after the date of the failure to file such report, the account sued on herein was contracted, then your verdict herein should be for the plaintiff, and against the defendants and each of them, for whatever amount of accounts, if any, you find were contracted by the Farmers ’ Mercantile Company with the plaintiff herein after the failure to file the report required by law, less whatever sum', if any, you may find from a preponderance of the evidence the Farmers’ Mercantile Company paid to the plaintiff during 1921.” The amendment consisted in adding the words, “less whatever sum, if any, you may find from a preponderance of the evidence the Farmers’’ Mercantile Company paid to the plaintiff during the year 1921. ’ ’ In the first place, it may be stated that this suit is based upon the liability of the president and secretary of a corporation for its contract debts, under the provisions of § 1726 of Crawford & Moses’ Digest, for failing to comply with the provisions of § 1715 of the Digest. The debt sued on was a debt by contract, and the uncontradicted evidence showed that the officers of the corporation' failed to file the annual report required of them by statute. Hence their personal liability for the debt of the corporation contracted during the period of default was established. Taylor v. Dexter, 126 Ark. 122, and Galloway v. Stallings, 154 Ark. 16. No annual report, as required by § 1715 of the Digest, was filed by appellees as president and secretary of the corporation during the year 1921. Merchandise to the amount of $493.40 was furnished to said corporation by appellant during that year. Under the instructions of the court-the payments for the year 1921 were allowed to be credited on the items purchased during that year. This was wrong. There was no application by the debtor of these'payments to the goods purchased by the Farmers’ Mercantile Company during the year 1921, and nothing to show that the credits were intended to be applied on these items, within the rule announced in Terry v. Klein, 133 Ark. 366. Hence the appellant had the right to apply the payments made in 1921 to the earlier items of the account. Briggs v. Steele, 91 Ark. 458, and cases cited, and Snow v. Wood, 163 Ark. 280. It follows that the court erred in amending and giving as amended the instruction set out above. For that error the judgment must be reversed, and the cause will be remanded for a new trial.