Stark Bros.' Nurseries & Orchards Co. v. Little

U.S. Court of Appeals for the Seventh Circuit January 7, 1919

Stark Bros.' Nurseries & Orchards Co. v. Little, 257 F. 421 (7th Cir. 1919)

168 C.C.A. 461; 1919 U.S. App. LEXIS 2223

Opinion of the Court

MACK, Circuit Judge.

Pursuant to the provisions of section 3850 of the Revised Code of Montana, the material portions of which are copied in the margin,1 action was brought by plaintiff corporation against the directors of a South Dakota corporation doing business in Montana, to subject them to a Montana judgment recovered by plaintiff against the corporation. To the declaration, which alleged the failure of the corporation to file the required report within the statutory period and of defendants to file the required affidavit, a demurrer was sustained.

[1] 1. Under the decisions of Helena Power-Transmission Co. v. Spratt, 35 Mont. 108, 88 Pac. 773, 8 L. R. A. (N. S.) 567, 10 Ann. Cas. 1055, and Daily v. Marshall, 47 Mont. 377, 133 Pac. 681, and *423notwithstanding Nelson v. Bank, 157 Fed. 161, 84 C. C. A. 609, 13 Ann. Cas. 811, we are satisfied that this statute was not intended to and does not apply to foreign corporations.

[2, 3] 2. At the oral argument, counsel properly conceded that, if the statute applied to foreign corporations, “the debt or judgment” specified in the statute must be limited to a debt incurred in Montana or a judgment based thereon; otherwise, the act would'be clearly unconstitutional, as Montana is without power to make Illinois directors of a South Dakota corporation liable upon a debt incurred in Missouri to a Missouri corporation.' That the judgment was rendered in Montana raises no presumption that the debt was there incurred. Proof of this fact would be essential; the fact itself must therefore be alleged in the declaration. Bartlett v. Crozier, 17 Johns. (N. Y.) 439, 8 Am. Dec. 428.

Judgment affirmed.

“Sec. 3850. Every corporation, having a capital stock, except banks, trust companies and building and loan associations, shall annually, within twenty days from and after the thirty-first day of December, file, in the oifice of the clerk of the county in which the principal place of business of such corporation is situated, a report which shall state the amount of the capital stock, the proportion thereof actually paid in and the amount thereof actually paid in cash and the amount issued, if any, in payment of property purchased and the amount of existing debts and also tbe names and addresses of tbe directors or trustees and of the president, vice-president, general manager and secretary of the corporation. Such report shall be signed by the president and a majority of directors. * * s\ If any such corporation shall fail to file such report, directors of the corporation shall be, jointly and severally, liable for all debts or judgments of the corporation then existing, or which may thereafter he in any wise incurred until such report shall he made and filed; provided, however, that if within ten days after such failure a director, or directors, shall make and file, as aforesaid, an affidavit or affidavits, stating that the failure was due to no fault or neglect of his or theirs, and stating, also, that, within the said twenty days he or they requested the president or sufficient number of tbe other directors, whose residence was known to the affiants, to join them in making report, such director, or directors, shall not be liable under this section. * * * ”

Reference

Full Case Name: STARK BROS.' NURSERIES & ORCHARDS CO. v. LITTLE
Status: Published