Court Opinion

ID: 3541409
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:52:45.976867+00
Date Added: 2024-06-11T14:06:11.506662
License: Public Domain

The amendment of section 6003, Revised Codes 1921, in 1927, had no effect upon the liability of directors for debts of the corporation incurred while the annual report was delinquent. The amendments of 1927 (Chap. 5, Laws of 1927) left the provision of the previous Act making the directors in default "jointly and severally" liable for all debts or judgments of the corporation "which may thereafter be in anywise incurred until such report shall be made and filed" undisturbed and it was carried forward into the amended statute.
The debt upon which the present suit is based was incurred by the corporation between May 9 and September 17, 1927, during the period of default, and therefore the directors were liable under section 6003 as it formerly existed, and also under the section as amended. The provisions of section 6003 which were thus carried forward into the amended Act were not repealed by the amendment, and any liability incurred thereunder continued in force and effect. This conclusion is based upon section 93, Id., as interpreted in State v. Yale Oil Corp., 88 Mont. 506,295 P. 255. (See, also, State ex rel. Jacobson v. Board ofCommrs., 47 Mont. 531, 539, 134 P. 291; State ex rel. Paige
v. District Court, 54 Mont. 332, 334, 169 P. 1180; Snidow
v. Montana Home for the Aged, 88 Mont. 337, 292 P. 722.) Applying the rule announced in the above cases to the case at bar, the amendment of 1927 had no effect upon the cause of action stated in the complaint. *Page 151 
The decisions of this court in Continental Oil Co. v.Montana Concrete Co., 63 Mont. 223, 207 P. 116, and in FirstNat. Bank v. Cosier, 66 Mont. 352, 213 P. 442, have no bearing whatever upon the question involved in this case, because in each of these cases the Act was amended in such manner that, under the provisions of the Act as amended, the directors were not in default.
In passing, however, attention is directed to the fact that in rendering its decisions in the Continental Oil Co. and CosierCases, supra, the court apparently assumed that we had no statutory provision in this state saving existing remedies against directors when a statute is amended or repealed. Apparently sections 6012 and 6013 of the Revised Codes of 1921 were overlooked. These two sections are applicable to all corporations, and by section 6013 it is expressly provided that "such amendment or repeal does not * * * take away or impair any remedy given against any such corporation, its stockholders or officers, for any liability which has been previously incurred." In view of this provision it is quite impossible to see how repeals of the character involved in the Continental Oil Co.
and Cosier Cases could properly be held to take away the remedy given against the officers of the corporation for a "liability which has been previously incurred." (Cavanaugh v. Patterson,41 Colo. 158, 91 P. 1117.)
Is a person who was not a director at the time the annual report became due, but becomes such afterwards, liable for indebtedness incurred during the period that he was a director and the corporation was delinquent in the filing of the report?
The purpose of the statute in requiring the annual report to be filed is to give creditors of the corporation advice as to its financial responsibility.
The duty thus imposed upon directors continues from the date that the report becomes due until it is eventually filed. (14 C.J. 209, 210; Cavanaugh v. Patterson, supra; Risdon Ironetc. Works v. Von Storch, 166 Fed. 936; Breitzke v. Bank ofGrand Prairie, 124 Ark. 495, 187 S.W. 660, Ann. Cas. 1918D, 792.) In the Cavanaugh Case, above, it was said: "The annual *Page 152 
report required by the statute had not been filed when the indebtedness sued upon was created, and both defendants were directors of the debtor corporation at this time. The fact that Mr. Patterson was not a director until after the expiration of the period when the annual report for 1901 should have been filed did not relieve him from the liability imposed by the statute, for indebtedness incurred thereafter under his administration while the corporation was in default. The duty devolved upon him, when he became a director, to see that the law with respect to the filing of the annual report was obeyed, and, having neglected this duty, he became liable for the penalties imposed by the statute for this neglect."
In the present action the complaint shows that the indebtedness was incurred between May 9 and September 27, 1927, and that the defendants have been directors at all times since May 1, 1927. The case is therefore squarely within the rule above announced.
The liability of the directors is joint and several, direct and primary, and it is not that of sureties or guarantors. (First Nat. Bank v. Cottonwood Land Co., 51 Mont. 544,154 P. 582; Williams v. Hilger, 77 Mont. 399, 251 P. 524.)
It is well recognized by the authorities that the plaintiff's cause of action here is not dependent upon a contractual obligation, but rests entirely upon the statute imposing a penalty for failure to file the annual report, and that the only reason why a creditor of a corporation has any cause of action against its directors is for failure to obey the mandate of the law. This court has held that the statute is penal in character. (National Supply Co.-Midwest v. Abell, 87 Mont. 555,289 P. 577; Continental Supply Co. v. Abell, 87 Mont. 560,289 P. 579; Butler v. Peters, 62 Mont. 381, 205 P. 247, 26 A.L.R. 560; First Nat. Bank v. Cottonwood Land Co., 51 Mont. 544,154 P. 582.) *Page 153 
The alleged default which is claimed as the basis of the cause of action purported to be set out in the complaint is one arising under section 6003 of the Revised Codes of Montana of 1921 as it existed prior to the amendment of 1927. The only basis for the liability sought to be enforced by this action is for the failure to file the report showing the condition of the company as of December 31, 1926.
The basis of liability is a balance due on a judgment obtained against the Abell Oil Company in January, 1929. But there is no allegation showing that these defendants were directors of the company at the time said judgment was obtained nor showing any failure of duty on the part of these defendants with reference to said judgment. (Bovee v. Boyle, 25 Colo. App. 165,136 P. 467.)
This court has held that the duty to file the statement is an annual one, and that the default on the part of the directors of a corporation in failing to file it is a separate and distinct default each succeeding year and the basis of a new cause of action, and that succeeding defaults do not renew any previous cause of action. (First Nat. Bank v. Barto, 72 Mont. 437,233 P. 963; Williams v. Hilger, 77 Mont. 399, 251 P. 524;State Sav. Bank v. Johnson, 18 Mont. 440, 45 P. 662, 56 Am. St. Rep. 591, 34 L.R.A. 315.)
We submit that the 1927 amendment substantially changed the basis of liability of directors of a corporation from that imposed by section 6003 by limiting the liability of such directors in the event of a default "to all debts or judgments of the corporation which may thereafter be in anywise incurred until such report shall be made and filed." The enacting clause of the 1927 amendment provides "that section 6003 be and the same is hereby amended to read as follows." At the end of the 1927 enactment we find the provision "all Acts and parts of Acts in conflict herewith are hereby repealed." The repeal of the law then existing without any saving clause or reservation took away all of the existing remedies under the repealed Act and defeated all rights of action then existing, as well as any actions pending under it at the time of such *Page 154 
repeal, particularly where the statute repealed, as in this case, is one creating a cause of action and providing a remedy not known to the common law. (First Nat. Bank of Brockton v.Cosier, 66 Mont. 352, 213 P. 442; Continental Oil Co. v.Montana Concrete Co., 63 Mont. 223, 207 P. 116; State exrel. Paige v. District Court, 54 Mont. 332, 169 P. 1180;First Nat. Bank of Plains v. Barto, 72 Mont. 437,233 P. 963.)
Section 93, Revised Codes 1921, is not applicable, and while the authorities cited by appellant in its brief construe that statute, none of the cases cited involve a penal liability or forfeiture. That section was obviously not intended to modify the universal rule above referred to, that the repeal of a statute prescribing a penalty or forfeiture without an express saving clause in the statute destroys any existing rights under such statute except as to proceedings past and closed.
In giving effect to this statute and construing its meaning, it must be borne in mind that the rule is universally recognized that statutes imposing a penalty or a forfeiture must be strictly construed and that there is no presumption in favor of the plaintiff. (Continental Oil Co. v. Montana Concrete Co.,63 Mont. 223, 207 P. 116; Wethey v. Kemper, 17 Mont. 491, 492,43 P. 716; Daily v. Marshall, 47 Mont. 377, 390,133 P. 681; Nesbitt v. Clark, 272 Pa. 161, 116 A. 404, 25 A.L.R. 1406; 36 Cyc. 1235 (V).)
Appellant contends that section 6013, Revised Codes 1921, constitutes a general saving clause and cites in support of its position the Colorado case of Cavanaugh v. Patterson,41 Colo. 158, 91 P. 1117. A glance at the decision in theCavanaugh Case is sufficient to convince one that it is no authority in support of appellant's contention. In fact, the Colorado court in that decision recognized the general rule that where a penal statute is repealed without a saving clause all unenforced rights thereunder fall with its repeal. The basis of the decision in the Cavanaugh Case was a special statute which by express terms provided that the repeal of the statute should not extinguish "any penalty, forfeiture or liability, either civil or *Page 155 
criminal, which shall have been incurred under such statute, unless the repealing, revising, amending or consolidating Act shall so expressly provide." The amendment under consideration in the Cavanaugh Case contained no saving clause, and further, contained no provision expressly destroying any accrued penalty, forfeiture or liability, and consequently in view of the statute above quoted, the court held that any penalty accrued under the statute, prior to its repeal, could be enforced even subsequent to the repeal. Certainly, it cannot be seriously contended that section 6013 can be construed to mean the same as the saving clause statute in the Cavanaugh Case.
Section 6013 has been in our Codes since 1895, and it is unreasonable to assume that this court has overlooked the statute when one considers the various cases of this kind which it has had before it. The question was squarely before it in First Nat.Bank v. Cosier, 66 Mont. 352, 213 P. 442, and there it said: "We have no saving clause applicable to statutes generally which reserves to plaintiffs a right of action under the statute after its repeal."
In view of the fact that appellant relies on the Colorado authority for its position as to the effect of section 6013, we desire to point out that the supreme court of Colorado in the case of Gregory v. German Bank of Denver, 3 Colo. 332, 25 Am.Rep. 760, even from the beginning recognized the rule of strict construction as applicable to such cases and found that an unenforced penalty would not survive upon the repeal of the Act imposing the penalty in the absence of an express saving clause to that effect. In the case just cited, no judgment had been obtained on the penalty sought to be enforced prior to the time of the repeal of the Act imposing the penalty. The repealing Act not containing an express saving clause, the court held that the directors were released from liability for the penalty imposed by reason of their default. (See, also, Bovee v. Boyle,25 Colo. App. 165, 136 P. 467.)
In the case of Miller v. Chicago Ry. Co., 133 Wis. 183,113 N.W. 384, in considering a similar statute, the supreme court *Page 156 
of Wisconsin also recognized the general rule that a penal statute destroyed an unenforced right in the absence of an express saving clause, but again in that case we find the right held to have been preserved by reason of a special saving statute very similar to the one considered by the Colorado supreme court in the Cavanaugh Case, and it is again significant to note that the legislature of Wisconsin, in enacting such a saving clause, took pains to use express language as to penalties, forfeitures and other liabilities, rather than merely using the word "liability," as we find it in section 6013 relied upon by appellants. (To the same effect, see Commonwealth v.Louisville  N.R. Co., 186 Ky. 1, 215 S.W. 938, and Belger v.Zawadzki, 252 Mich. 14, 232 N.W. 746.)
Appeal by the plaintiff, the Continental Supply Company, a corporation, from a judgment of dismissal entered on its refusal to further plead after the demurrer of the defendants W.G. Dewey and Henry Good to the complaint had been sustained.
The facts alleged in the complaint are substantially as follows: The Abell Oil Company was incorporated August 31, 1926, and has since "operated for profit"; it has a capital stock. During the year 1927 the defendants named were directors of the corporation and were charged with the duty to file with the county clerk of Flathead county, on or before March 1, 1927, a report of the financial condition of the corporation as it existed on December 31, 1926, under the mandate of section 6003 of the Revised Codes of 1921 "and the laws amendatory thereof and supplemental thereto." This duty the defendants failed to perform, either before the specified time or at all.
Between May and September, 1927, during which period the defendants were directors of the Abell Oil Company, the *Page 157 
plaintiff sold and delivered to the corporation, at its special instance and request, merchandise consisting of oil-well drilling supplies and equipment of the value of $6,162.32, for which the corporation agreed to pay, but only $1,227.75 was paid thereon. In September, 1928, plaintiff brought action against the Abell Oil Company for the balance of $4,934.57, with interest, costs and attorneys' fees, for the foreclosure of a lien declared on certain oil and gas leaseholds, and secured judgment for a total of $5,808.86, and decree of foreclosure and sale. The sale was had and the net proceeds credited upon the judgment, and a deficiency judgment was entered against the Abell Oil Company for $5,711.11. No part of this judgment was paid, and on June 3, 1929, the plaintiff instituted this action against the directors.
The question presented is as to whether the defendant directors are liable under the law for the amount of the deficiency judgment based on a debt incurred in 1927, while the corporation and the directors were in default in failing to file the 1927 report.
1. Section 6003, Revised Codes of 1921, before amendment required such a corporation as the Abell Oil Company to file its annual account "by March 1, of each year hereafter," and that, if the report was not filed, "the directors * * * shall jointly and severally be liable for all debts or judgments of the corporation then existing, or which may thereafter be in anywise incurred until such report shall be made and filed."
This statute was amended in 1927 by omitting the words "then existing or." (Chap. 5, Laws 1927.) The Act of 1927 provides that the required report shall be filed "by March 1 of each year hereafter." It was approved February 2, 1927, but, as it does not prescribe a different time, it did not take effect until July 1, 1927 (sec. 90, Rev. Codes 1921), and has no retroactive effect. Section 6003, above, was therefore controlling with reference to the default of 1927.
Although the company had been in existence but a few months,[1]  it was nevertheless required to make a report on the first due date after the thirty-first day of December of *Page 158 
the year in which it was organized. (Garrison v. Howe,17 N.Y. 458.)
2. The defendants contend that, as our statute imposes[2, 3]  liability upon the directors on default for "all debts or judgments" of the corporation, the reduction of the debt to judgment, which became final prior to the commencement of the action, fixed the time the liability would attach, and that the complaint is insufficient in that it fails to allege a default for the year 1928, or that the defendants were directors in 1929, when the judgment became due and payable by the corporation.
Under similar Acts imposing liability upon the directors for "all debts incurred," but omitting judgments, it is correctly held that the liability is for the "debt" voluntarily contracted, and that no action could be maintained on a judgment; that as to the directors the judgment does not exist and could not be used as even prima facie evidence of the existence of the debt. (Chase v. Curtis, 113 U.S. 452, 5 Sup. Ct. 554,28 L. Ed. 1038, and cases cited therein.) But does the fact that our statute imposes liability for "all debts or judgments" render this rule inapplicable and require suit on the judgment whenever a debt has been reduced to judgment? We think not.
The purpose to be served in requiring the filing of a report showing the assets and liabilities of a corporation is to enable those contemplating dealing with the corporation to ascertain whether or not it is a good risk. On discovering that the corporation has not filed its report, a prospective creditor may still feel safe in extending credit by virtue of the directors' liability.
It seems that Montana is the only state imposing liability for "judgments." Up to 1907 the liability was for all "debts" then existing or thereafter incurred (sec. 451, Civ. Code 1895, amended by Chapter 63, Laws 1907). If defendants' construction of the Act correctly interprets the intention of the legislature, no additional liability was imposed by the Act of 1907, for all directors would be liable, under the old Act, for *Page 159 
debts existing and which might be reduced to judgment. The reduction of a debt to judgment is analogous to the taking of a note for the amount of the debt; in either case the debt is merged in the new form of indebtedness, but is not paid or destroyed.
Where a corporation gave its note for a debt, the action on the directors' liability is held to be on the "debt," rather than the note, and the time the debt was incurred is controlling. (Williams v. Hilger, 77 Mont. 399, 251 P. 524; First Nat.Bank v. Cottonwood Land Co., 51 Mont. 544, 154 P. 582; see, also, Garrison v. Howe, supra.)
While a judgment constitutes a "debt" (14A C.J. 204), it is not a "debt incurred" at the time of its entry, within the meaning of the statute, but rather the evidence of that debt (Tabor v. Commercial Nat. Bank, 62 Fed. 383, 10 C.C.A. 429); consequently, while an action may be maintained on the basis of the directors' liability for a debt which has been reduced to judgment, the complaint must allege facts showing that the debt itself was incurred at a time fixing the liability during the period of default relied upon (Sherman v. J.S. BrownMercantile Co., 78 Colo. 335, 241 P. 724; Weber v. Draper,170 Mich. 550, 136 N.W. 596, Ann. Cas. 1914B, 149).
We must, therefore, look further for the reason for the amendment adding liability for "judgments" of the corporation. The reason is to be found in the discussion of Judge Davis, of the federal district of New Jersey, who declares that Montana is the only state imposing the liability for "judgments," and that a judgment does not change the character of the obligation which is simply merged in the judgment and, therefore, under a statute imposing liability only for debts incurred, the action is on the debt ex contractu, based upon a "voluntary transaction," citingChase v. Curtis, supra; consequently, although a judgment is a "debt," a person securing a judgment in a tort action could not enforce liability therefor. (See, also, In re Putnam, (D.C.) 193 Fed. 464.) *Page 160 
When, therefore, the legislature of Montana added "judgments" to "debts," it intended to impose a liability other than that for judgments obtained in actions for debt, and, as a judgment in a tort action would not support enforcement of directors' liability, we have a class of judgments which, by the amendment, constitutes an added liability and explains the action of the legislature. Thus analyzing the statute, Judge Davis sums up: "It was perfectly clear, before the addition of the word `Judgments' to the statute, that directors were liable for the debts of the corporation * * * and for judgments based upon its debts. It must have been intended to increase the liability of directors by adding judgments, including torts, to the liability already existing. * * * The plain interpretation of the language forces this conclusion." (Northern P. R. Co. v. Crowell, (D.C.) 245 Fed. 668, 678.) Thus we have, under the statute, liability for the "debts" of the corporation, whether reduced to judgment or not, and liability for "judgments" based on causes of action other than upon debts incurred. The present asserted liability falls within the first class, and the plaintiff was required to show that liability, not at the time the judgment was secured, but rather at the time the debt was incurred; this it did by setting up the manner and time of its incurrence, in 1927.
3. The question then arises as to the effect of the amendment of 1927, upon plaintiff's right to enforce the liability in the year 1929.
The directors' liability statute has been amended several[4-6]  times. Section 6003, Revised Codes 1921, is the Act as it appears in Chapter 189, Laws of 1919, amending Chapter 140, Laws of 1909; the effect of this amendment has been twice passed upon by this court. Chapter 140, Laws of 1909, required the filing of the corporate report "annually, within twenty days from and after the thirty-first day of December." Chapter 189, Laws of 1919, declares that the existing law shall "be amended so as to read as follows"; and provides that the report must be filed "by March first of each year hereafter"; that "all Acts and Parts of Acts in conflict herewith are *Page 161 
hereby repealed," and that it shall become effective on approval; it was approved on March 10, 1919.
In 1919 the First National Bank of Brockton brought action against the directors of the Lohmiller Mortgage Company on a note given by the corporation in 1918 and due April 20, 1919, alleging failure to file a report for 1919, either under the old or the new law. The trial court overruled the demurrer to the complaint, but was reversed on the authority of Continental Oil Co. v.Montana Concrete Co., 63 Mont. 223, 207 P. 116, 118, which this court held to be "identical in principle," though it dealt with the amendment of a different Code provision. (First Nat.Bank v. Cosier, 66 Mont. 352, 213 P. 442.)
In First Nat. Bank v. Barto, 72 Mont. 437, 233 P. 963,964, this court declared that "Chapter 140, Laws of 1909, was repealed by Chapter 189, * * * Laws of 1919, [which] * * * deprived a creditor of any right he might have had to enforce a director's liability under the prior statute."
The basis for these decisions is found in the general rules prevailing in all jurisdictions, in the absence of statutory mandate to the contrary, and declared by this court in prior opinions, to the following effect:
(a) Statutes imposing liability upon directors for the failure to obey the mandate of the law are penal in character (Butler
v. Peters, 62 Mont. 381, 205 P. 247, 26 A.L.R. 560), or they are "penal" in their nature because they were not known to the common law (Gans v. Switzer, 9 Mont. 408, 24 P. 18), and, therefore, must be strictly construed (Wethey v. Kemper,17 Mont. 491, 43 P. 716; Daily v. Marshall, 47 Mont. 377,133 P. 681; First Nat. Bank v. Cottonwood Land Co., 51 Mont. 544,154 P. 582).
(b) Under the rule of strict construction, when a statute is amended by an Act introduced by the declaration that it shall be "amended so as to read as follows," and closing with the provision that "all Acts and Parts of Acts in conflict herewith are hereby repealed," the legislature evinces "an *Page 162 
intention to make the new Act a substitute for the old one and that so much only of the original Act as is repeated in the new one is continued in force, and all portions omitted from the new Act are repealed." (Continental Oil Co. v. Montana ConcreteCo., supra; City of Helena v. Rogan, 27 Mont. 135,69 P. 709; State ex rel. Jacobson v. Board of County Commrs.,47 Mont. 531, 134 P. 291; State ex rel. Paige v. DistrictCourt, 54 Mont. 332, 169 P. 1180.)
(c) The liability imposed by the statute is "penal in character; the plaintiff had no vested right therein; and it was competent for the legislature to repeal it and thereby deprive the plaintiff of a right which it had theretofore enjoyed under it. (Continental Oil Co. v. Montana Concrete Co., 63 Mont. 223,207 P. 116)." (First Nat. Bank v. Barto, supra.)
(d) When a statute "of this character" is repealed (in the manner indicated above) without incorporating therein a saving clause as to the right to enforce liability incurred prior to the repeal, "it must be considered, except as to proceedings past and closed, as if it had never existed." (First Nat. Bank v.Barto, supra.)
Consequently, when the "new Act," effective March 10, 1919, declared that "every corporation * * * shall by March first of each year hereafter, file * * * a report," rights acquired by virtue of the failure to file such report "within twenty days from and after the thirty-first day of December," 1918, were blotted out as though the law theretofore existing "had never been."
Undoubtedly the decisions announcing the foregoing rules of statutory construction are in harmony with the authorities generally (see 2 Thompson on Corporations, 3d ed., 999), but the legislature of this state has seen fit to impose upon the courts certain rules of construction which they, being without power to legislate, cannot ignore, repeal or nullify by their decisions.
The task before us, then, is to determine the soundness of the rules set out above, by comparison with the statutory provisions on the subjects discussed and in the light of the *Page 163 
fact that the amendment of 1927 did not alter the wording of section 6003, in respect to the time when the report shall be filed — each reads "by March 1st of each year hereafter" — or the imposition of liability for all debts or judgments "which may thereafter be in anywise incurred."
Thus comparing the declarations of this court with mandatory provisions of our Codes, we find, first, that rule (a) above, running through and forming the basis of all of the decisions cited, from Wethey v. Kemper, supra, down to First Nat.Bank v. Barto, supra, is founded upon the declaration found inGans v. Switzer, supra, decided before our laws were codified, and ignores and violates both the letter and spirit of section 4 of the Revised Codes of 1921, which has been in existence, with but slight modification, since the adoption of the Codes of 1895 (sec. 4, Pol. Code 1895), and which reads as follows: "The rule of the common law that statutes in derogation thereof are to be strictly construed has no application to the Codes or other statutes of the state of Montana. The Codes establish the law of this state respecting the subjects to which they relate and their provisions and all proceedings under them are to be liberally construed with a view to effect their objects and to promote justice."
Not even the declaration that the statute is "penal" in its character, in that it imposes a penalty for failure to obey the mandate of the law, justifies a strict construction in this state, for the "Penal Code" also declares: "The rule of the common law, that penal statutes are to be strictly construed, has no application to this Code. All its provisions are to be construed according to the fair import of their terms, with a view to effect its object and to promote justice." (Sec. 10710, Rev. Codes 1921; sec. 4, Pen. Code 1895.)
In Continental Oil Co. v. Montana Concrete Co., supra, the application of the rule of strict construction is declared to be compelled by the fact that we "borrowed" the liability statute from California and that such construction was placed upon it in that state prior to such borrowing, citing Irvine v. McKeon,23 Cal. 472, and it is said "the language quoted *Page 164 
above from Irvine v. McKeon was approved and adopted" inMoore v. Lent, 81 Cal. 502, 22 P. 875, 876. An examination of the cited cases discloses that the first thereof was decided before California adopted its Code provision requiring a liberal construction of all statutes, and in the second the court prefaced its quotation from the Irvine Case with: "It may be admitted that the true construction of the phrase under consideration [that `the directors of corporations must not * * * create debts beyond the subscribed capital stock'] is not very clear or satisfactory," and thereafter merely said: "Although the rule of strict construction does not apply under the Code, as we feel bound to construe the statute, to render the defendants individually liable, the corporation must have been indebted in an amount in excess of $10,000,000" (the subscribed capital stock of the corporation under consideration). The decision does not, therefore, support the rule of strict construction stated in the syllabus found in 81 Cal. 502, which, evidently, misled our court into the position taken; it will be noted that this syllabus does not appear in 22 P. 875.
Not only is rule (b) inapplicable because we are commanded to give the statute imposing the directors' liability a liberal, instead of a strict, construction, but the interpretation of the amendment as a "repeal" of the former law violates the express mandate of section 93, Revised Codes 1921, also in effect since 1895 (sec. 292, Pol. Code 1895), which declares that, "where a section or a part of a statute is amended, it is not to be considered as having been repealed and re-enacted in the amended form, but the portions which are not altered are to be considered as having been the law from the time when they were enacted, and the new provisions are to be considered as having been enacted at the time of the amendment." This is the general rule recognized by the authorities at the time of the adoption of our Codes in 1895, with reference to provisions not penal in character (Stateex rel. Jacobson v. Board of County Commrs., 47 Mont. 531,134 P. 291), and has been applied in all cases arising under amendments to *Page 165 
such provisions (see State ex rel. Hay v. Hindson, 40 Mont. 353,106 P. 362; Edwards v. Lewis  Clark County, 53 Mont. 359,165 P. 297; State ex rel. Esgar v. District Court,56 Mont. 464, 185 P. 157; State v. Yale Oil Corp., 88 Mont. 506,295 P. 255; Snidow v. Montana Home, 88 Mont. 337,292 P. 722).
Under the mandate of the Codes requiring a liberal construction of all statutes alike, the rule must be applied to the amendment of statutes providing penalties, as well.
Under the plain mandate of section 93, above, therefore, the unaltered provisions of section 6003, that the report shall be filed "by March first of each year hereafter," and that, on failure to file the report, the directors shall be liable for all debts or judgments "which may thereafter be in anywise incurred," must be considered as having been the law since the amendment of 1919 and in spite of the amendment of 1927, and the only part of the statute which was repealed is that imposing liability for debts or judgments "then existing." Under this interpretation, liability incurred at the time of the amendment of the Act was not affected, and it was unnecessary to incorporate a "saving clause" in the amended Act.
Our conclusion in this regard is fortified by the provisions of section 6013, Revised Codes 1921, which declares that the amendment or repeal of any part of the Code regulation of corporations does not "take away or impair any remedy given against any such corporation, its stockholders or officers, for any liability which has been previously incurred."
While the liability discussed is of a penal nature and is not based upon contract (National Supply Co.-Midwest v. Abell,87 Mont. 555, 289 P. 577), these statutes are not penal within the strict meaning of the word, but are remedial, in that creditors are permitted to resort to the liability as a remedy or means of collecting a debt. (3 Thompson on Corporations, 3d ed., 486;Huntington v. Attrill, 146 U.S. 657, 13 Sup. Ct. 224,36 L. Ed. 1123.) Mr. Thompson declares that "a sound view" of this liability is that the legislature grants to the *Page 166 
members of a corporation an immunity from a personal liability for the debts created in their behalf, on condition that they will create a sufficient joint stock or joint fund to stand in the place of their personal liability, and that they will keep the public advised by stated reports of the condition of the fund; and the legislature simply withholds the immunity from the managing members unless this latter condition is complied with. It does not take away any right conferred upon them, either by the common law or statute law, but simply withholds from them a franchise or privilege which is contrary to common right — the privilege of not being personally answerable for their own debts — unless they will comply with a condition subsequent which is easy of compliance. It is simply a case where the grant of a franchise is with a qualification, and where the qualification reads itself into the grant. (Thompson, supra, 486.)
Colorado has a statute (C.L., sec. 6519) similar to our section 6013, but which goes a step further by declaring that the amendment or repeal shall not affect liabilities already incurred "unless the * * * Act shall so expressly provide." This addition does not render the statute different in effect from our own, for, as section 6013 is merely a declaration of the legislature, that body is in nowise restrained from expressly providing in an amendment for the relief from liabilities already incurred, if it sees fit to do so. Here it did not see fit to do so. Recognizing the general rule, rule (d) above, the supreme court of Colorado has declared that their statute abrogates that rule. (Cavanaugh
v. Patterson, 41 Colo. 158, 91 P. 1117.)
Section 6013, above, read in connection with section 93, clearly abrogates the rules announced heretofore by this court; these sections were evidently not brought to the attention of the court and were wholly overlooked by both court and counsel inContinental Oil Co. v. Montana Concrete Co., First Nat. Bank
v. Cosier, and First Nat. Bank v. Barto, supra, and, on the authority of the statutes, each of those opinions is expressly overruled. *Page 167 
The amendment of 1927 did not change the wording of the amended Act with reference to the time of filing the annual reports or the necessity therefor, nor as to the liability of directors on such failure, for the debts or judgments of the corporation thereafter incurred, and these provisions must be construed as having been in existence from the time of their first enactment. The complaint herein, therefore, is not vulnerable to the attack made upon it.
The judgment is reversed and the cause remanded to the district court of Flathead county, with direction to overrule the demurrer.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES ANGSTMAN, STEWART and ANDERSON concur.