Vernon v. Palmer

— For the purposes of this motion it is conceded that the defendant’s term of office expired on the 6th day of August, 1878. The goods were sold before that time on a credit that did not expire until some time after the fifth of August.

The statute, to which I have been referred, says that the trustees of a corporation which fails to make and file its annual report, shall be jointly and severally liable for all the debts of the company existing at the time of the failure to make and file such report, and for all the debts that shall be contracted before the report shall be made.

The reason of the statute is, to require corporations to make such public showing of their affairs that those dealing with them may be able to determine whether they can safely give them credit.

*428If the question before me was an original one, I should hold that the defendant was liable because the credit was given, the debt was contracted before the report was made, and at a time when the defendant was trustee. But the question is not an original one. A long line of decisions in this state and elsewhere hold that the statute is a penal one and is to be strictly construed. In this case, while the goods were sold at a time when the defendant was a trustee, they were sold on a credit which did not expire until after the defendant ceased to, be a trustee. In order to charge a trustee under this statute, three things must concur in point of time, the trusteeship, the default to publish the report, and the contracting of the debt. But the courts of . this state hold that a debt within this statute is not contracted until there is an obligation giving a present right of action against the corporation. If, said judge Allen-, there be no such obligation, nor debt or duty, which may be presently demanded from the corporation, there is no debt or duty which can be demanded under the statute as a penalty against the trustee.

There is no debt-within the meaning of the statute. If the day of payment has not arrived, the'penalty is’incurred by the default, but the liability to any individual creditor, does not become absolute until it shall exist within the meaning of the statute; and a default in payment was here made by the coiporation, but there can be no default in payment until the day of payment shall have arrived, and, on this case, when that day of payment arrived the defendant was not a trustee, and one member of the trinity‘above mentioned was wanting, the complaint is dismissed.