Cook v. J.I. Case Plow Works Company

96 So. 292, 85 Fla. 421

• Court: Supreme Court of Florida
• Decided: April 27, 1923
• Status: Published

Opinions

West, J.

This is an action by the payee to recover the amount of certain- notes given by individual defendants as officers of a corporation. The defendants are sued as individuals and as partners. The theory of the action, is that the notes sued on having been given before the corporation had filed with the Secretary of State and with the clerk of the circuit court of the county in which its principal place of business is located duplicate affidavits by its treasurer that ten per cent, of its capital stock had been subscribed and paid, the stockholders were personally liable as partners. The statute imposing this liability is section 4054, Revised General Statutes. For convenient reference it is reproduced here.

.“Corporation not to transact business until certain requisites complied with: — No corporation shall transact any business until it has had the letters patent with a certified copy of the charter recorded in the office of the .clerk of the circuit court of the county wherein the principal place of business is located, and has also filed with the Secretary of State and with the said clerk (except in the case of building and loan associations) duplicate affidavits by its treasurer that ten per cent, of its capital stock has been subscribed and paid. If any corporation shall transact any business before complying with these require-: ments, or if any corporation chartered by a special act of the legislature shall transact any business before filing said duplicate affidavits and paying the charter fees required by law to the Secretary of State for the State treasury, its stockholders, or in the latter case its incorporators and stockholders, shall be personally liable for all the corporation debts as if they were members of a general partnership and not stockholders of a corporation.” §4054, Rev. Gen. Stats.

Subsequently, by Chapter. 8460, Acts 1921, this statute was amended so that liability as partners for failure to comply with the statute in this respect was imposed upon the officers- and directors only and not upon stockholders of the.corporation.

Default judgments were entered against all the defendants except one, who contested the action. This defendant was not one of the original incorporators but became a stockholder prior to the date upon which the notes sued-on were made. The notes were made on October 29, 1920. This defendant disposed of his stock and it was transferred on the books of the corporation December 15, 1920. The suit was filed in the circuit court of Polk County April 9, 1921. The judgment was for plaintiff, to review which writ of error was taken from this court.

In the brief on behalf of plaintiff in error it is said that “the sole question to be determined is whether the liability of stockholders in domestic corporations is, under the statute-referred to, penal in its nature.” That it is not penal but contractual is so firmly established in this jurisdiction as that a review of the authorities would seem to be unnecessary. It is made so by statute. The liability is the same as it would be “if they were members of a general partnership.” Flash v. Conn, 109 U. S. 371; Flash, Lewis & Co. v. Conn, 16 Fla. 428; Heinberg Bros. v. Thompson, 47 Fla. 163, 37 South. Rep. 71; Winfield Packing Co. v. Truitt, 71 Fla. 38, 70 South. Rep. 775.

In Winfield Packing Co. v. Truitt, supra, the court said: “Now the statute forbids a corporation to transact any business until the conditions named therein are complied with, and although the failure to .comply with the conditions, which are precedent to the corporation’s lawful right to transact any business, does not destroy the corporate existence, the liability of the incorporators and stockholders is that of a general partnership f.or all- the corporation’s debts. The statute is neither remedial nor penal, but simply continues the contractual obligations df persons who, acting through their agents, the officers of a corporation not yet authorized to transact business, were liable on their contracts as if they had not intended to do business under the Charter.”

In Heinberg Bros. v. Thompson, supra, on this point the court .said: ■ “The statute- does not prescribe a penalty or forfeiture for failure to perform duties, .but imposes or continues a contract obligation -upon stockholders (Flash v. Conn, 16 Fla. 429; Flash v. Conn, 109 U. S. 371, 3 Sup. Ct. Rep. 263), which may be enforced, by creditors of the corporation against the stockholders where the letters patent or affidavits are not filed as required.”

From the first to the last of the cases this court has consistently held the obligation of stockholders under this statute to be contractual. There is sufficient basis in the issues presented in the cases for the holding, and expressions in the various opinions to that effect cannot be said to be obiter diohm and not binding authority. The point, therefore, may be regarded as settled in this jurisdiction, and the modification of the statute subsequent to the transaction involved in this litigation and after the obligation had been incurred had no effect upon the liability of the defendants thereon.

By a plea which was held bad on demurrer it- was averred that an affidavit of the treasurer of the corporation that ten per cent, of the capital stock had been subscribed and paid in, required to be filed in the office of the clerk of the circuit court and of the Secretary of State was made and a copy of it mailed by the attorney, for the corporation to the Secretary of State prior to the time when the notes were made. It is contended that this is a substantial compliance with the provisions of the statute and sufficient to relieve incorporators and stockholders-of liability under it. This contention overlooks the statutory requirement that the affidavit shall be “filed” with the Secretary of State and the clerk of the circuit court. In United States v. Lombardo, 228 Fed. 980, the court, in considering a similar statutory requirement, where a like defense was made, said: “This contention cannot be-reconciled with the language employed in the act.- -The word ‘file’ was not - defined by Congress. No definition having been given, the etymology of the word, must be considered, and ordinary meaning applied. The word ‘file’ is derived from the Latin word ‘filum,’ and relates to the ancient practice of placing papers on á thread or wire for safe-keeping'and ready reference. Filing, it must be observed, is not complete until the document is delivered and received. ‘Shall file’ means to deliver to the office, and not send through the United States mail. Gates v. State, 128 N. Y. 221, 28 N. E. 373. A paper is filed when it is delivered to the proper official, and by him received and filed. Bouvier, Law Dictionary; Hoyt v. Stark, 134 Cal. 178, 66 Pac. 223, 86 Am. St. Rep. 246; Westcott v. Eccles, 3 Utah 258, 2 Pac. 525; In re. Von Borcke (D. C.) 94 Fed. 352; Mutual Life Ins. Co. v. Phinney, 76 Fed. 618, 22 C. C. A. 425. Anything short of delivery would leave the filing a disputable fact, and that would not be consistent with the spirit of the act.” On review in the supreme court this language was approved and the judgment affirmed on this point. United States v. Lombardo, 241 U. S. 73. See also Com’rs Franklin Co. v. State ex rel. Patton, 24 Fla. 55, 3 South. Rep. 471. So this position is untenable.

The judgment is affirmed.

Taylor, C. J., and Whitfield, Ellis and Browne, J. J.;. concur.