State Savings Bank v. Johnson

| Mont. | Jul 13, 1896

De Witt, J.

There are only two points to be decided in this case : (1) Is this an action for a penalty ? If it is, the cause of action accrued as to some items on September 20, 1891, and in 1892 as to others, when the trustees failed to make their reports, and more than one year elapsed from then to the commencement of this action. This would be sufficient to dispose of the case, except that it is contended further (2) that, even if the year’s limitation has run since September 20, 1891 or 1892, still it appears by the complaint that the trustees again defaulted on September 20, 1893, and therefore again started the cause of action running. These two questions will be examined.

1. Is the action one for a penalty ? We have no doubt that this action is one for a penalty, as far as the application of the statute of limitations is concerned. (Halsey v. McLean, 12 Allen, 438; Bank v. Bliss, 35 N.Y. 412" court="NY" date_filed="1866-09-05" href="https://app.midpage.ai/document/merchants-bank-of-new-haven-v-bliss-3589644?utm_source=webapp" opinion_id="3589644">35 N. Y. 412; Kerr, Bus. Corp.; Larson v. James, (Colo. App.) 29 Pac. 183; Irvine v. McKeon, 23 Cal. 472" court="Cal." date_filed="1863-07-01" href="https://app.midpage.ai/document/irvine-v-mckeon-5435373?utm_source=webapp" opinion_id="5435373">23 Cal. 472; Chase v. Curtis, 113 U.S. 452" court="SCOTUS" date_filed="1885-03-02" href="https://app.midpage.ai/document/chase-v-curtis-91304?utm_source=webapp" opinion_id="91304">113 U. S. 452, 5 Sup. Ct. 554; Engine Co. v. Hubbard, 101 U.S. 188" court="SCOTUS" date_filed="1879-11-24" href="https://app.midpage.ai/document/steam-engine-co-v-hubbard-90111?utm_source=webapp" opinion_id="90111">101 U. S. 188; 2 Mor. Priv. Corp. § 907; 3 Thomp. Corp. §§ 4144, 4166; 1 Cook Stock, Stockh. & Corp. Law, § 223.)

A statute of this nature is not universally held to be penal. (Thompson on Corporations, § 4165; Morawetz on Private Corporations, § 907, et seq.) But we are of opinion that, in applying the appropriate section of the statute of limitations, the action is classified as penal. (Gans v. Switzer, 9 Mont. 413; Elkhorn Trading Co. v. Tacoma Min. Co. 16 Mont. 322" court="Mont." date_filed="1895-06-17" href="https://app.midpage.ai/document/elkhorn-trading-co-v-tacoma-mining-co-6638729?utm_source=webapp" opinion_id="6638729">16 Mont. 322; Whethey v. Kemper, 17 Mont. 491" court="Mont." date_filed="1896-02-10" href="https://app.midpage.ai/document/wethey-v-kemper-6638907?utm_source=webapp" opinion_id="6638907">17 Mont. 491.)

Therefore, the action being for a penalty, the cause of action is barred in one year from the accruing thereof. (Code Civil Procedure, 1887, §45.) The accounts against the corporation matured at different times during the years 1891 and 1892. The trustees defaulted in making their report, required by law, both in 1891 and 1892, and, indeed, during every year. As to some of the accounts, the cause of action arose against the trustees upon their default in 1891, and upon others in 1892. This action was commenced in 1894. Therefore as to all of the accounts more than one year had run since the accruing of the liability by the trustees by reason of their default in filing the papers required by law.

2. These views would be sufficient for the decision of the case were it not that the appellant makes another contention. It is this : That while the liability which a trustee had incurred by reason of his default on September 20, 1892, was barred in one year, — that is to say on September 20, 1893,— still he defaulted again on September 20, 1893, and another period of one year’s liability commenced to run. But this view is not sustained by the decided cases. The case of Gams v. Switzer is not, in its facts in point upon this proposition. We have not been able to find that any of the text writers sustain the position of the appellant, except that Mr. Kerr, in his work on Business Corporations, at page 183, makes the following remarks:

“A trustee in office at the time the corporation fails to make its annual report is liable for all the existing debts of the company, and such as may thereafter be contracted until the report is filed; and such liability attaches upon each default of toe company as long as the trustee remains in office, so that, although there have been similar successive defaults of the company, and the first of which was more than three years before suit brought, but the last within three years, the action is maintainable upon the last default, and the statute of limitations is not a bar. A new and original liability is created on each default, and, if any of the defaults are within three years, such default may be made the foundation of the action. The creditor is not bound to confine himself to the first default.”

The authority of the writer for this statement is in the case of Nimmons v. Tappan, 2 Sweeney 652. This case was decided in the superior court of the city of New York in 1870. Mr. Kerr’s book was written in 1890, and it seems that he takes his law from a decision of a nisi prius court, when it was the fact that at that time the court óf appeals of New York had held precisely the contrary. (Losee v. Bullard, 79 N.Y. 404" court="NY" date_filed="1880-01-13" href="https://app.midpage.ai/document/losee-v--bullard-3595990?utm_source=webapp" opinion_id="3595990">79 N. Y. 404; Rector, etc., of Trinity Church v. Vanderbilt, 98 N.Y. 170" court="NY" date_filed="1885-02-10" href="https://app.midpage.ai/document/rector-church-wardens-of-trinity-church-v-vanderbilt-3611386?utm_source=webapp" opinion_id="3611386">98 N. Y. 170.) In the former case, in the court of appeals, Rapallo, J., said :

• ‘ The appellants claim that the failure to file the certificate in each year after 1868 created a new liability on the part of the defendant; and that consequently the default in 1873 and the subsequent years can be resorted to for the purpose of maintaining this action and avoiding the effect of the statute of limitations. We think this position untenable for two reasons. In the first place the statute requires that the action be brought within three years from the time the cause of action accrued.

This action was for a 'statutory penalty. This penalty, if it ever was incurred, was completely incurred in 1868, and the testator of the plaintiffs could then have brought his action therefor. We do not think that the continuance of the default in successive years had the effect of renewing the liability of the respondent, as would a new promise or a payment on account in the case of a liability founded on a contract.” (Losee v. Bullard, 79 N. Y. 406.) No authority for appellant’s position is presented, other than this discredited case of Nimmons v. Tappan, 2 Sweeney 652.

We are of opinion that the demurrer to the complaint was properly sustained, and the judgment will therefore be affirmed.

Affirmed.

HüNt, J., concurs. PembertoN, C. J., not sittiug.