Norfolk v. American Steam Gas Co. , 108 Mass. 404 ( 1871 )

Morton, J.

At the former hearing in this case, it was decided that the officers are liable for the debts of the corporation, contracted prior to May 25, 1861. 103 Mass. 160. If the record in the case had shown that the debt upon which judgment was obtained against the corporation was thus contracted, the plaintiffs would have then been entitled to a decree against the officers for the amount of such debt. But Norfolk brought his suit to recover for commissions, and for services, extending over two years commencing May 11,1861. It was therefore necessary to remit the case for a further hearing, in order to ascertain how much of the debt, which by the award and judgment thereon was adjudicated to be due from the corporation, was contracted prior to May 25,1861.

• At such hearing, the presiding judge, against the objection of the defendants, admitted the testimony of the referees to show that the whole amount awarded to Norfolk was for commissions earned and services rendered prior to said May 25; in other words, that the debt upon which the award was based was contracted while the officers were individually liable. We are of opinion that this testimony was admissible.

When a creditor brings a suit against a corporation under the St. of 1862, c. 218, and recovers judgment, such judgment is evidence, in a suit in equity against the officers or stockholders, not only that it has been rendered, but also that the debt sued was a debt of the corporation. Otherwise the creditor would be compelled, in every such suit, to litigate anew the question of the liability of the corporation upon the debt which he seeks to enforce against delinquent officers or stockholders. And if the record shows that the debt sued on is a debt contracted while the officers were in default, they are liable without further proof. Hawes v. Anglo Saxon Petroleum Co. 101 Mass. 385. But if the record does not show what precise debt was the foundation of the judgment, it is competent to prove this fact by evidence aliunde. This does not contradict or impeach the record. It is often necessary to resort to paroi proof to ascertain what facts are set* tied by a verdict and judgment. If this does not appear by the record, but the verdict may have been based upon one of several grounds, it is competent to show by paroi what facts were passed upon by the jury. Burlen v. Shannon, 14 Gray, 433, and cases cited. Same v. Same, 99 Mass. 200. Merritt v. Morse, ante, 270.

The same principle applies to this case. The award was the foundation of the judgment against the corporation, and took the place of a verdict of a jury. The record does not show what debt was adjudged to be due to Norfolk. We think it was competent to show by paroi that the award was based wholly upon á debt contracted during the default of the officers.

The other question presented by this report is as to the amount for which the defendants are liable. In ordinary cases, where a creditor brings a bill in equity to enforce against the officers a judgment which he has recovered against the corporation, and where the judgment is founded upon and includes only the debt for which the officers are individually liable, we have no doubt that the measure of their liability is the amount of the judgment, including costs and interest thereon after its rendition. The third section of c. 218 of the acts of 1862 provides that no stockholder or officer of a corporation shall be liable for its debts, unless a judgment is recovered against it and the corporation neglects for thirty days “ to pay the amount due, with the officer’s fees.” This without doubt includes the costs. The fourth section provides that the judgment creditor may bring- a bill in equity against the corporation and the officers liable, “ for the recovery of the sums due from said corporation to himself.” The sums due him include the costs as well as the principal debt. It was clearly the intention of the legislature, in the section we are considering, to make the officers liable for the whole amount of the judgment, including costs. And there is reason and justice in the provision. The corporation can act only through its officers, and it is solely by reason of their default that costs have been incurred. It may have some bearing, as showing the policy of our legislation upon this subject, to observe that by the provisions of the Genera] Statutes, of which this act takes the place, delinquent officers and stockholders are clearly liable for costs in curred by the creditor. Gen. Sts. e. 60, §§ 31, 32.

The case at bar is peculiar, but we think it follows, upon these principles, that the defendants are liable for the debt or damages recovered against the corporation in the two scire facias suits, and for the costs in the suit of Norfolk. These costs are an incident of the original debt and a part of “ the sums due from said corporation to him.” But the costs in the scire facias suits stand upon different ground. It has been held that the recovery of these judgments was a sufficient compliance with the statute, to enable the plaintiffs to maintain this suit. But it does not follow that the officers are liable for the costs. Such costs are not due from the corporation to Norfolk. They have been incurred, principally, on account of the neglect or inability of Norfolk to pay his creditors, and not solely through the default of the defendants. We think they do not come within the letter or the reason of the statute, and that the officers are not liable for them in this suit.

The result is, that the plaintiffs are entitled to recover the amount of the damages in the scire facias judgments, and of the costs in the suit by Norfolk against the corporation, with interest on both from the date of the judgments. They are also entitled, as the prevailing party, to the costs of this suit.

Decree accordingly.