Lovegrove v. Hunt , 58 Me. 9 ( 1870 )

Appleton, C. J.

The Portland Shovel Manufacturing Company was incorporated by an act, c. 236, approved Feb. 28, 1863, “ with all the powers, privileges, and subject to all the duties and liabilities contained in the laws of the State relating to manufacturing corporations.”

The general rights, duties, obligations, and liabilities of corporations are prescribed and defined by R. S., 1857, c. 46. But there are various kinds of corporations and for different purposes and objects, as for banking, manufacturing, insuring, etc. In the statutes relating to the corporations, created for special purposes, are found special prohibitions and limitations applicable to each different kind of corporation. The provisions applicable to all corporations, and those to the different corporations for special purposes, are to be construed together. The general provisions apply to all corporations, except when modified by prohibitions and limitations specially applicable to some of the different varieties of corporations. It is obvious that there was no conflict intended between the general and the special legislation. While the general law, as enacted in c. 46, is to be deemed binding as long as it remains without modification, its applicability must obviously cease, when there are other and variant provisions enacted for the different kinds of corporations. In other words, the special laws for a particular species of corporations, when variant from the general law, must be regarded as paramount and withdrawing the kind of corporation to which it applies from the operation of the general law, which would control were it not for this modification.

The statutes as revised in 1857 must be held as being then the true expression of the legislative will. The individual liability of corporators for the debts of the corporation had been the subject of fluctuating and contradictory legislation; but the final and conclusive will of the legislature is to be found in the revision of 1857, unless where the provisions therein contained have been since modified or repealed.

By R. S., c. 48, relating to manufacturing corporations, § 9: “ These corporations are prohibited to contract debts, exceeding at any one time the amount of their capital invested within the State in real estate and fixtures thereon, including machinery, and from becoming indebted to an amount exceeding one-half their capital paid in and remaining undivided, and of their other property and assets. When they comply with these prohibitions and limitations, their stockholders are relieved from all individual liability for their debts. When either of these limitations are violated, their stockholders become individually liable for debts of the corporation in the manner provided in chapter forty-six.”

The object of this provision is apparent. It was to protect the public by making the corporators personally liable for the illegal acts of the officers of the corporation. It was to enforce prudent management under a penalty. It was to compel corporators to look after the doings of the officers of the corporation, and see that they neither neglect their duties, mismanage its funds, nor violate the law. The legislature deemed it more just that the loss resulting from official mismanagement should fall upon those who intrusted the affairs of the corporation to the hands of incompetent, negligent, or dishonest officials, than upon individuals who had nothing to do with their appointment, and who could not enforce their removal, upon those who would not have been benefited by their speculations if prosperous, and should not be injured by them if unprosperous. The influx of foreign capital is desirable, but it is equally desirable that it should look after its own interests. It is not desirable that our own citizens should suffer the penalty which may arise from a violation of law by the foreign capitalist or his agent. Those by whom or by whose agents the law is violated should suffer for such violation rather than those who are free from fault or blame. Such seems to be the will of the legislature, as indicated by this section, in relation to members of manufacturing corporations.

Nor is this to be regarded as changed by the reference to chapter forty-six. The last sentence of § 9 is “when either of these limitations are violated, these stockholders become individually liable for debts of the corporation, in the manner provided in chapter forty-six.” The maimer relates only to the mode of enforcement. The liability is individual. It is the consequence of and the penalty for violated law. The forty-sixth chapter prescribes the manner of proceeding in the cases within § 24. It is in this manner that the liability arising under § 9 is to be made available to the creditors of the corporation. Adopting this view, there is no conflict between the two statutes.

But by the terms of c. 46, § 24, the liability of stockholders of corporations is defined, “ excepting banking corporations, unless it is otherwise specified in their charter, or by any general law of the State.” Now by the general law of the State relating to manufacturing corporations it is “otherwise specified,” so that the liability of corporators when “ otherwise specified” is specially recognized as different from that provided for in § 24.

The intention of the legislature is to be deduced from a comparison of the two statutes under consideration. The special provision of § 9 is a limitation of the general law. It is a modification of the preceding general law so far as it differs from it. The ninth section of c. 48 was enacted for some purpose. It is unnecessary, unless for the purpose of creating a different liability for manufacturing corporations from that of corporations generally. It means nothing unless it means what it purports, — that is, the imposition of personal liability on corporators, when its prohibitions and limitations are violated. The writ sets forth a violation of the “prohibitions and limitations ” of § 9. The demurrer thereto is general. The only specific objection made is that it does not allege any demand to disclose to the officer attachable property. If so, the amendment could be easily made and would be allowed on motion. The return, however, on the execution is made part of the -writ, and we think the \ wi’it taken as a whole does show a demand upon the defendant to disclose attachable property to the officer haviixg the execution.

Exceptions sustained.

Kent, Walton, Barrows, Danforth, and Tapley, JJ., concurred.

Note. — The same question was very fully examined by Judge Eox, of the United States District Court of Maine, and the same conclusion arrived at in a very able opinion published in the Eastern Argus of March 29,1871.