289 Mass. 348 | Mass. | 1935
This suit in equity, brought under the provisions of G. L. c. 156, §§ 36, 38, by creditors of P. T. Jackson Company (a Massachusetts corporation that was adjudicated a bankrupt on August 19, 1930), is to enforce the individual liability of certain of its directors who signed a certificate of condition, alleged by the plaintiffs to be false in a material representation, and which the defendants knew, or upon reasonable examination could have known, to be false.
The bill alleges that the P. T. Jackson Company is indebted to the plaintiff in the sum of $5,782.01, with interest thereon, according to an account which is annexed to the bill of complaint and marked Exhibit “A”; that on a day in October, 1929, the individual defendants named in the bill signed and swore to a certificate of condition and caused said certificate to be filed in the office of the Secretary of the Commonwealth on January 13, 1930, G. L. c. 156, § 47;
The defendant O’Donnell filed a demurrer and assigned as causes (1) “That the bill of complaint as amended sets forth no cause of action”; (2) “That the bill of complaint as amended sets forth no ground for equitable relief”; and (3) “That the allegations of the bill of complaint as amended are so vague and general as not to define the cause of action relied upon with the certainty and clarity required by the rules and practice of this court.” The defendants Jackson and Fisher filed a demurrer and assigned as causes (1) “That the plaintiffs have not stated in their bill of complaint, as amended, such a cause as entitles them to the relief prayed for in said amended bill”; (2) “That the plaintiffs have not stated in their bill of complaint, as amended, such a cause as entitles them to any relief against these defendants or either of them”; (3) “That the bill of complaint, as amended, sets forth no cause of action against these defendants or either of them”; (4) “That the allegations of the bill of
The defendants direct attention to the fact, shown by the record, that the latest item in the statement of the plaintiffs’ account against the P. T. Jackson Company is dated July 23, 1930, to the fact that the plaintiffs assert a right of recovery under G. L. c. 156, §§36 and 38,
The plaintiffs contend, in effect, that a true statement of the assets and liabilities of the P. T. Jackson Company should at least have identified so much of the cotton comprising the item “Cotton held for Mills” as was pledged on July 31, 1929, and that the failure of the defendants to do so was in itself a false representation that it held assets under that descriptive item in the amount of $991,385.56. The plaintiffs further contend, in effect, that the “Cotton” in truth was not really an asset which could be realized upon in full by creditors who had extended credit to the Jackson Company in reliance upon the statement of its condition and believed that the word “assets” was used in its generally accepted and ordinary terminology. The plaintiffs do not contend that the Jackson Company did not own cotton of the value put upon it in the item “Cotton held for Mills,” subject to the prior rights of the pledgees in such of it as was pledged, or that the items “Notes payable . . $1,016,680.09” and “Accounts payable . . $236,112.08” did not include the debts which such pledges secured; nor do they allege that the value of any item or the total of all items on the assets side of the statement of condition was overstated or that any item of liability on the liability side of the statement, or the total liability, was understated, or that any item or either total was untrue.
The statement of condition was not false in not listing
Decree affirmed with costs.
“Section 36. The . . . directors of every corporation shall be jointly and severally liable for all the debts and contracts of the corporation contracted or entered into while they are officers thereof ... if any statement or report required by this chapter is made by them which is false in any material representation and which they know, or on reasonable examination could have known, to be false; . . . and only the officers signing such statement or report shall be so liable.”
“Section 38. A . . . director of any such corporation, shall be held so liable under section thirty-six or thirty-seven, if the corporation has been duly adjudicated bankrupt. . . .
“ . . . After an adjudication of bankruptcy . . . any creditor may file a bill in equity in the supreme judicial or superior court in behalf of himself