Baltes v. Armour Leather Co. , 70 Ind. App. 233 ( 1919 )

Enloe, J.

This was an action by appellee to recover of and from the appellants the amount of a certain indebtedness then owing, and theretofore contracted by the Cushion Heel Shoe Company, a corporation organized under the laws of the State of Indiana, with the appellee herein. The appellants had been directors of said corporation at the time the grievances complained of were committed.

The complaint was brought under the provisions of §5.104 Burns 1914,' §3868 R. S. 1881, and, among other things, alleged the due organization of said corporation; that its capital stock was $200,000; that at the time of the organization of said corporation more than $100,000 of its stock had been subscribed; that the defendants were the directors of said corporation; that said directors and said company wholly failed to collect the amount of said subscriptions, or the amount of the capital stock as fixed by said company, and put the same in the treasury thereof; that said defendants as directors assented to such failure to collect said subscriptions; that by reason of such failure said corporation became insolvent; that thereafter, and while so insolvent, it became indebted to the plaintiff, etc. A demurrer to the complaint was overruled.

The cause was tried by the court, which, upon request, made a special finding of the facts and stated its conclusions of law thereon, favorable to the appellee, and rendered judgment accordingly.

The errors assigned are: (1) That the court erred in overruling the demurrer to complaint; and (2) that tlie court erred in its conclusions of law upon the facts found.

1. As neither the demurrer nor the memorandum accompanying same is set out in appellant’s brief, no question is presented to us on this ruling.

Section 5089 Burns 1914, §3859 R. S. 1881, provides : “The capital stock, as fixed by such company, shall be paid into the treasury thereof, within eighteen months from the incorporation of the same, in such installments as the by-laws of the company assess and direct.”

Section 5104 Burns 1914, supra, provides: “If any company organized and established under the authority of this act, and of the act to which this is supplementary, shall violate any of the provisions thereof, and shall thereby become insolvent, the directors ordering or assenting to such violation shall jointly and severally be liable, in an action founded on said acts, for all debts' contracted after such violation as aforesaid.” *

2. The trial court found, among other things, that on February 14, 1910, the board of directors of said Cushion Heel Shoe Company, by a resolution of said board, unanimously adopted, declared that, “because of noncompliance of the terms and conditions of the obtaining subscriptions to the capital stock of said company, all subscriptions are now declared null, void and cancelled.” (Our italics.)

The court further found that the said corporation was, at the time the indebtedness herein sued for was contracted, insolvent, and that such insolvency was brought about by the failure of its board of directors to collect the subscriptions for said capital stock.

The court further found: “That from the 5th day of March, 1912, and thereafter until said corporation went into bankruptcy, it was wholly insolvent, and that upon the 5th day of March, and from then until the 3rd day of June, 1912, said corporation, with the knowledge and assent of its board of directors and of the defendants, Owen N. Heaton, Michael Baltes, Dr. W. H. Johnson, August Freese, Henry Brauning, John Schweiters, and John FI. Wort, members of its board of directors, purchased from the plaintiff herein, merchandise for which it became indebted to plaintiff in the sum of $1,484.25, upon which the sum of $296.85 has been paid,” etc.

In the case of Patterson v. Stewart (1889), 41 Minn. 84, 90, 42 N. W. 926, 928, 4 L. R. A. 745, 749, 5 L. R. A. 745, the court, speaking of a statute similar to the statute of this state in question, said: “The object is twofold — First, to enforce diligence and fidelity on the part of corporate officers; and, second, to furnish a prompt and efficient remedy to those creditors who were, or might have been, injuriously affected by the acts' of misfeasance or nonfeasance.” In the same opinion it is said concerning the “assent” of such directors (p. 94): “This assent, however, need not be express. If a director knew that a violation of law was being, or about to be, committed, and made no objection when duty required him to object,and when he had the opportunity of doing so, this would amount to ‘assent’.”

While it is true that the court found that some of the persons who had subscribed for the stock of defendant corporation were insolvent, and therefore the amount of their subscriptions were not collectable, yet, so far as is shoWn upon this record, a lg/rge part of the stock subscriptions were collectable, and' for some reason the corporation through its board of directors failed to collect the money upon them and pay it into the treasury of said company.

The conclusions of law are well sustained by the findings. Brown v. Clow (1902), 158 Ind. 403, 62 N. E. 1006; Bachman v. Cooper (1898), 20 Ind. App. 173, 50 N. E. 394.

The judgment is therefore affirmed.