Louisiana Oil Refining Company v. Rainwater , 183 Ark. 482 ( 1931 )

I cannot agree with the opinion of the majority for two reasons. The plain provision in 1715, Crawford Moses' Digest is that "The president and secretary of every corporation organized under the provisions of this act shall annually make a certificate showing the condition of the affairs of such corporation," etc. "This act" refers of necessity to the act of April 12, 1869, of which 1715, Crawford Moses' Digest is 12 and 1726, Crawford Moses' Digest is 21. In 1927 the General Assembly passed act 250, p. 854 Acts 1927, entitled, "An act to provide for the formation of corporations, the regulation of corporations and for other purposes." This act establishes a wholly different system for the formation and regulation of corporations from that established by the act of April 12, 1869. The Rainwater-McCarthy Company, of which appellee was president, was organized under the act of 1927, it being the only act under which a corporation of this kind could be organized, as by 57 all laws in conflict are repealed, and the act of 1869 was in conflict. The act of 1927 is not amendatory of the act of 1869, but is in substitution thereof, providing a new and wholly different system, which does not include or embody 1715 and 1726 of the Digest. Therefore, when 1715 provides that "the president and secretary of every corporation organized under the provisions of this act shall file the report, it necessarily excludes corporations organized under the provisions of any other act not making a similar requirement. The corporation of which appellee was president, not having been organized under the provisions of "this act," — act of 1869 — but under the act of 1927, is not affected by the provisions of 1715 and 1726 of Crawford Moses' Digest, and its officers were not required to file the report therein required, nor were they subject to the penalty provided for a failure so to do.

I am furthermore of the opinion that those sections of the Digest have been repealed by implication or substitution by the act of 1927. It takes up the whole subject-matter of the formation and regulation of corporations anew, and provides a wholly different system, both as to formation and regulation. As we said in Cordell v. Kent, 174 Ark. 503, 295 S.W. 404, cited with approval in State ex rel. Atty. Gen. v. Standard Oil Co. of La., 179 Ark. 280, 16 S.W.2d 581: "Where the Legislature takes up a whole subject-matter anew, covering the whole ground, revising the whole subject-matter of a former statute, and evidently intending to enact a substitute, the old statute is repealed, although the new statute contains no express words to that effect." See also cases cited in State ex rel. v. Standard Oil Co., supra. I am of the opinion that that is exactly what the Legislature did in enacting the 1927 statute, and that 1715 and 1726 are repealed by substitution.

Those sections never served but one purpose, to entrap the unwary president and secretary who, unthoughtedly or ignorantly, failed to file such report, which enabled some creditor who never extended any credit on the strength of such a report or refused credit for the lack of same, to recover a debt due by the corporation from them.

I think the judgment should he affirmed. Mr. Justice BUTLER joins in the dissent.

Opinion on rehearing delivered March 30, 1931.

McHANEY, J. After a careful consideration of the briefs of counsel on the petition for a rehearing, and of the original briefs, a majority of the court has reached the conclusion that a rehearing should be granted. We, of course, recognize the general rule, of statutory construction, as stated in the original opinion, that repeals by implication are not favored. But, as there also stated: "A statute may, however, be repealed by the express provisions of a subsequent statute, or by implication when the provisions of the earlier and later statutes are repugnant to each other, or when the subsequent statute covers the whole subject-matter of the former, and is manifestly intended as a substitute for it." See cases there cited. As stated by Mr. Justice Field in United States v. Tynen, 11 Wall. (U.S.) p. 88, and quoted with approval on rehearing in Mays v. Phillips County,168 Ark. 829-833, 279 S.W. 366: "When there are two acts on the same subject, the rule is to give effect to both if possible; but if the two are repugnant in any of their provisions, the later act, without any repealing clause, operates, to the extent of the repugnancy, as a repeal of the first, and, even where two acts are not in express terms repugnant, yet if the later act covers the whole subject of the first, and embraces new provisions, plainly showing that it was intended as a substitute for the first act, it will operate as a repeal of that act." And this is true, even though the old act contains "provisions not embraced in the new." Wilson v. Massie, 70 Ark. 25,65 S.W. 942; Chicago, R. I. P. Ry. Co. v. McElroy,92 Ark. 600, 123 S.W. 771; Eubanks v. Futrell, 112 Ark. 437,166 S.W. 172; Babb v. El Dorado, 170 Ark. 10,278 S.W. 649; State v. White, 170 Ark. 880, 281 S.W. 678. The difficulty is not in stating the rule, as it appears to be one of universal application, but in applying it to a given case.

The Rainwater-McCarthy Motor Company was organized as an Arkansas corporation on October 13, 1928, and was dissolved December 14, 1929. It was therefore in existence little more than a year. Appellant sold it certain merchandise between October 8 and December 11, 1929, for which judgment is sought in this case. Other facts are stated in the original opinion.

The act under which the Rainwater-McCarthy Motor Company was organized is No. 250 of the Acts of 1927, p. 854. It is entitled "An act to provide for the formation of corporations, the regulation of corporations and for other purposes." The prior corporation act, the one under which a corporation of this kind would have been organized, but for the act of 1927 or some similar enactment, is the act of April 12, 1869, entitled, "An act to provide for the creation and regulation of incorporated companies." It will be noticed that the titles of the two acts are substantially the same, the one for the "formation" and "regulation" and the other for the "creation and regulation" of corporations. The purpose of both acts as stated in their titles is the same. They refer to the same identical subject-matter. Any person reading the two titles would know from a glance at the titles alone that the Legislature was dealing with the same subject-matter and was providing a new and different system for the "formation" or "creation" and "regulation" of corporations in the later act, from that in the Act of 1869. As above stated, the corporation in question was organized under the act of 1927. Indeed it was the only act under which such a corporation could have been organized, as the act of 1869 had been repealed by 57 of the act of 1927 which provides that: "All acts and parts of acts in conflict with any of the provisions hereof be and they are hereby repealed," etc. The corporation act of 1869 is plainly in conflict with the act of 1927 as the latter, dealing with the same general subject-matter, provides a new and different scheme or system for the organization and regulation of corporations. This fact is further conclusively demonstrated by the provisions of 54 and 55 of the latter act. Section 54 provides that: "Any corporation organized and existing under the laws of this State on the date on which this act becomes effective may re-incorporate under this act either under the same or a different name" by following the procedure therein described. It is then provided that, when it has so done, it "shall be deemed to be incorporated hereunder and shall be subject to all duties and liabilities of this act and be entitled to and be possessed of all the privileges, franchises and powers as if originally incorporated under this act," etc. Section 55 provides: "Any existing corporation of this State, failing to avail itself of the provision of 54 hereof prior to January 1, 1928, shall be deemed as a corporation created under the provisions of this act and subject to all its provisions as fully as if it had complied with the terms and provisions of this act." Therefore, it necessarily follows that the act of 1927 was the only act in existence at the time of the incorporation of the Rainwater-McCarthy Motor Company under which it could have been incorporated, and that all other similar corporations organized either before or after the effective date of the act of 1927 are now deemed to be corporations thereunder and "subject to all duties and liabilities of this act" and to none other. This action was brought against appellee to recover a corporate debt under 1715 and 1726, Crawford Moses' Digest. These were 12 and 21 respectively of the act of 1869. There are no like provisions in the act of 1927, but it imposes other and different duties and liabilities. For instance 49 provides: "A director, officer, agent, or employee of any corporation who knowingly and with intent to defraud concurs in making or publishing any written report, exhibit or statement of its affairs or pecuniary condition containing any material statement which is false shall be liable for all damages caused thereby." Evidently the Legislature intended to substitute the liability imposed by the above section for that provided in the act of 1869. The old act imposed the liability on the president and secretary alone for an unintentional neglect. The new act imposes it upon any officer, director, agent or employee "who, knowingly, and with intent to defraud, concurs" in publishing any false, written financial statement. It would seem to serve a better purpose, for any person before becoming a creditor may require such a financial statement.

As above stated, the act of 1927 provides a new scheme or system for the organization and regulation of corporations. It takes up the whole subject-matter anew and sets up a new plan. It is in no sense amendatory to the old act, but it is a new enactment covering the same subject-matter. It runs through 40 pages of the printed acts, with 57 sections. As we said in Cordell v. Kent, 174 Ark. 503, 205 S.W. 404, cited with approval in State ex rel. Atty. General v. Standard Oil Co.,179 Ark. 280, 16 S.W.2d 581: "Where the Legislature takes up a whole subject anew, covering the whole ground, revising the whole subject-matter of a former statute, and evidently intending to enact a substitute, the old statute is repealed, although the new statute contains no express words to that effect," and further, even though the old statute contains provisions not covered in the new. This is exactly what the Legislature did in enacting act 250 of 1927.

We deem it unnecessary to take up and compare the different provisions of the two acts to show further the applicability of the rules of law herein announced, as a reading of the two will demonstrate the correctness of the views here expressed. We have reached the conclusion that the act of 1869 has been repealed by the act of 1927, and that there is no longer any basis for the action sought to be maintained by appellant. The chancery court, therefore, correctly overruled appellant's demurrer to appellee's answer and correctly dismissed its complaint for want of equity when it declined to plead further.

Affirmed.

HART, C.J., and MEHAFFY, J., dissent.