64 So. 929 | Miss. | 1914
delivered the opinion of the court.
The Smith Mercantile Company, a trading corporation, under the laws of this state, was doing business at its domicile in Indianola. The manager of the company bought a bill of merchandise from the traveling salesman of appellant. When this purchase was made, appellee, A. B. Smith, was present and assented to the purchase. Mr. Smith was, at this time, one of the directors of the Smith Mercantile Company. The merchandise so purchased was delivered to the Smith Mercantile Company.
Subsequently the Smith Mercantile Company was declared a bankrupt, and its estate was administered
Mr. Smith was a director of the mercantile company, and was present when the debt was contracted, and inferentially, at least, assented to the contract of purchase. For present purposes it is conceded that the company was then insolvent, and the debt then made was in excess of the capital stock of the debtor company.
The first clause of section 924 of the Code, the section under consideration, limits the indebtedness trading
It must be admitted that Mr. Smith could not make a contract binding on the corporation merely because he happened to be a director. It seems clear also that debts-prohibited by the statute must be valid claims against the corporation, enforceable in the courts, and capable of being made a charge on the assets of the company. The manager of the company had authority to buy and sell,, but there is nothing in the record to suggest that individual directors possessed the same power.
Again, directors act together, and usually express-their acts in the minutes of the board; but, whether so-expressed or not, it must be shown that the director sought to be charged with liability assented to, or contracted, the debt officially as a director, acting concurrently with a majority of the board. Tradesman Pub. Co. v. Knoxville Car Company, 95 Tenn. 634, 32 S. W. 1097, 31 L. R. A. 593, 49 Am. St. Rep. 943. This case is-the only case brought to our notice deciding the exact point involved in this case, and the rule therein announced meets with the approval of the text-writers. So-far as we have been able to ascertain, the soundness of the decision has not been questioned. See Shackelford v. R. R. Co., 37 Miss. 202. It may be, and is, suggested that, this rule will make it extremely difficult to fix liability upon directors of trading corporations. It is not the function of the courts to supplement legislation, or to give a construction to statutes not warranted by the-terms thereof. Appeal to the lawmakers, and not to the courts, is the only remedy, if the statutes have not gone’ far enough to remedy existing evils.
Chapter 104, Acts of 1910, fixing the terms of court in. Sunflower county, provides that the first twelve days of
Affirmed.
ON SUGGESTION OE ERROR.
It is suggested that, to maintain the original opinion In this cause, it will be necessary to overrule two former decisions of this court, viz., Avery & Sons v. McClure, 94 Miss. 172, 47 So. 901, 22 L. R. A. (N. S.) 256, 19 Ann. Cas. 134, and Kimbrough v. Davies, 61 So. 697. When the original opinion was written, it was not conceived that the cases cited were applicable to the present case, and upon a re-examination of same no reason appears why this conception should be revised.
The present case is based on section 924, Code 1906, making directors of corporations individually liable for debts of the corporation contracted by them in excess of the paid-in capital stock of the corporation. Avery é Sons v. McClure, supra, was an action in the chancery court of Lowndes county, based upon a decree of the circuit court of the United States awarding Avery & Sons a judgment for damages against a corporation for the infringement of a patent right owned by Avery & Sons. This bill sought to hold the stockholders and directors of the corporation liable for the amount of this decree, “the contention being that the stockholders were
In Avery & Sons v. McClure, the court held that the directors were not liable, for the reason that damages awarded for the infringement of a patent did not fall within the meaning of our statutes making stockholders and directors liable under certain circumstances for the debts of corporations. This was the “single question” presented to the court, and nothing more was decided. It was held that the cause of action sued on was not a debt in the sense of the statutes. The question here pre-sentéd and decided was not then before the court.
In Kimbrough v. Davies, 61 So. 697, this court merely held that a stockholder of a corporation cannot withdraw the capital stock of the company until all of the debts then owing by the corporation have been paid. This was. the question before the court, and this is all the court passed on. The “single question” presented by the record of the present case is: Did the director contract the debt? This question was answered in the negative, and in doing so it was not necessary to overrule, criticise, or explain Avery v. McClure or Kimbrough v. Davies, because it seemed obvious that these cases do not in anywise conflict with the conclusion reached in the present case.
Suggestion of error overruled.