69 Iowa 278 | Iowa | 1886
The first count in the petition is based on this statute, and it states that dividends were declared by the corporation, and paid to the defendant, when the funds of the corporation were insufficient to meet the liabilities. It will be conceded that plaintiff is entitled to recover if such dividends were of the character stated. The coi-poration was organized, and the dividends were declared, in 1875 and 1876; and one material question is as to the meaning of the word “ funds,” used in the foregoing statute. Counsel for the appellant contend that it means “ cash on hand,” and it is said that when one is in funds to meet all obligations, it would not be understood that such funds consisted of notes and accounts and real estate; and Bouvier’s Law Dictionary- and Webster are referred to. That such is the restricted meaning of the word, and that it should be so construed in some cases, will be conceded. But it is quite clear that it has a broader meaning, and, in some cases, should be construed to include property of every kind, when such property is specially contemplated is something to be used or applied in the payment of debts. The word “funds” occurs twice in the foregoing statute, and as first used it undoubtedly means that if the property of the corporation be diverted, and any one is thereby injured, the person causing such diversion will be liable to the penalties provided in the statute.' As thus used, the word means and includes something more than cash on hand. It evidently includes all the resources of the corporation,.and no sufficient reason has been given why it' does not mean the same thing when it is used the second time in the same section of tlie Code. “ Diversion of funds” and “ insufficient funds,” in so far as the meaning of the word “ funds ” is concerned, must, it seems to us, be construed to mean precisely
Deducting the dividends paid in 1875, the remaining-assets of the corporation were of the value of $146,218.65; the debts amounted to $56,065.23; surplus, after paying all liabilities, $90,153.42. That the corporation was solvent— that is, abundantly able to pay all its creditors — must be true. It had sufficient funds to pay all its liabilities, and if it had then ceased to do business, and gone into liquidation, the plaintiff and all other creditors would have been paid. Now, it makes no difference what afterwards occurred, but the question is, was the dividend lawful at the time it was paid? We think it was. The facts as to the dividends of 1875 and 1876 are substantially the same. Therefore the ruling of the court as to the right to recover under the first count is correct.
Whether the plaintiff is entitled to recover, in the absence of fraud, we shall not stop to inquire, for the reason that we are satisfied that there was no evidence introduced tending to show that there was an unlawful diversion of the funds of the corporation. The corporation made an assignment in 1879, and its insolvency at that time will be conceded, but the conversion of funds complained of took place more than three years prior to that time. It will be conceded that if no dividends had been paid the ability of the corporation to pay its debts would have been greater. It may be that, but for the payment of the dividends, insolvency would not have occurred; but this is immaterial, if the corporation had sufficient assets to pay all its deb.ts at the time the dividends were paid; and the evidence clearly, in our opinion, shows that it had; and if the jury had found otherwise the finding should have been promptly set aside. The evidence shows this much more conclusively than the facts agreed upon in the stipulation, which only applied to the first count. We deem it unnecessary to set out the evidence, deeming it sufficient to say that when the dividends were declared the corporation had personal property more than sufficient to pay its debts and the dividend, besides real estate and machinery which cost, and was honestly estimated to be worth, upwards of $75,000.
It will be observed that the statute provides that a diversion of the funds to objects other than those mentioned in the articles of incorporation, and in notices required to be published, is deemed a fraud. The articles contemplate and provide that dividends may be declared, and there is nothing in the notice provided for in section 1063 of the Code that conflicts therewith. Therefore there was no unlawful diversion of the funds of the corporation, in any possible view that may be taken of the transaction, in the payment of dividends.
. , The ground of recovery above stated is based on section 1071 of the Code, which provides that “ intentional fraud in complying substantially with the articles of incorporation, or in deceiving i;he public or individuals in relation to their means and liabilities, shall subject those guilty thereof to fine and imprisonment; * * * and any person who has sustained injury from such fraud may also recover damages therefor against those guilty of participating in such fraud.” The fraud relied on is in deceiving the public and individuals. It will be observed that it is not stated that the defendant did anything with the fraudulent intent of deceiving any one. All he did was to participate in the acts done with the intent-of deceiving the public and the plaintiff. Under the statute, the defendant must have done something
Aeeirmed.