solution of the question will depend upon the character of the act enjoined or prohibited by the particular statute. If the wrong committed is a mere negligence, an inadvertent omission, there may be contribution and there ought to be; if it involves the element of evil intent, there can be no contribution, and there ought not to be. So where several directors have been held liable for the wrongful acts of another, of which they are innocent, they are entitled to contribution. from him; and so if one director be made to pay the whole loss arising from a wrongful act of which he was innocent, he is entitled to contribution from the others. In the case of contracts the matter is plain. When the directors of a corporation become liable upon a contract entered into by the corporation, and any of them are required to assume more than their proper proportion of the liability, they are entitled to contribution from the others.3 § 266. Liability of officers other than directors.-The cases illustrating the liability of cashiers, treasurers and other like officers of corporations rest on no different principles from those which govern the liability of persons doing business for themselves, or as the agents of natural persons. But salaried officers and agents may be held to a higher degree of diligence in the performance of their duties than are directors, for they are supposed to devote a greater portion of their time to the service of the corporation. Where the president of an omnibus company directed its drivers to exclude all colored persons, it was held that he was individually liable for the ejection and personal injury of such persons, although an action might have been maintained against the company. So the general 1S. D. Thompson in 6 So. L. Rev. 413. 2 Power v. O'Connor, 19 Week. Rep. 923; Power v. Hoey, 19 Week. Rep. 916; Lewin on Trusts, 6th ed., 744. 3 Slaymaker Serg. & R. 75. Bank v. Ten Eyck, 48 N. Y. 305; Austin v. Daniels, 4 Denio, 299; East New York &c. R. Co. v. Elmore, 5 Hun, 214; First National Bank v. Reed, 36 Mich. 263; Concord R. Co. v. Clough, 49 N. H. 257; Taylor on v. Gundacker, 10 Corporations, § 618. Cf. Taylor v. Taylor, 74 Me. 582. 4 Thompson on the Liability of Officers and Agents, 487. 5 Pangborn v. Citizens' Building Assoc., 35 N. J. Eq. 341; Commercial 6 Peck v. Cooper, (1885) 112 III. 192; s. c. 54 Am. Rep. 231. An affidavit reciting that judgment had been entered and served on defendant, manager of a corporation is properly prosecuted if the corporation violates an ordinance by doing business without having paid its license tax. Where the treasurer of a savings bank, who was also one of its managers, assigned to it a bond and mortgage owned by him on lands not worth double the mortgage, as required by the bank's charter, and without submitting the investment to the finance committee for approval, as required by its by-laws, it was held that he was liable for a loss sustained on such bond and mortgage.2 If the secretary of a corporation, whose duty it is to receive moneys due the corporation, and to pay them over to the treasurer, fails to pay over promptly, and the moneys are stolen from him, he and the sureties, on a bond given by him for the faithful performance of his duties, are liable. When a local agent of an insurance company receives instructions to cancel a policy and fails to do it, he is responsible for the loss. But an officer the president of a corporation, requiring him, on receipt of certain certificates of corporate stock and powers of attorney, to issue new certificates, and enter the transfer on the corporation books, and that he had refused to obey the same, is sufficient to support an order punishing for contempt. King v. Barnes, (1888) 109 N. Y. 267. would pay the amount due from the treasurer on account of such improper loan, which was refused, and a receipt was given by plaintiff, reserving its rights against the treasurer and his sureties, it was held, that the bringing of such suit did not amount to a ratification of the treasurer's act in making the loan, and that he was still liable for the 1 Wyandotte v. Corrigan, (1885) 35 balance after deducting such perKan. 21. 2 And that the fact that the managers did not object to or repudiate the transaction for six years, was no defense, whether his breach of duty was known or not known by the other managers. Williams v. Riley, (1881) 34 N. J. Eq. 398. And where the treasurer of a corporation improperly loaned its funds to another corporation, of which he was also treasurer, and the former sued the latter for the amount, and in good faith effected a settlement for a percentage, after notifying the treasurer and his sureties of their intention so to do, and offering to assign the claim to them provided they centage. Goodyear Dental Vulcanite Co. v. Caduc, (1887) 144 Mass. 85. 3 Odd Fellows' Mut. Aid Assoc. v. James, (1883) 63 Cal. 598; s. c. 49 Am. Rep. 107. 4 Phoenix Ins. Co. v. Pratt, (1887) 36 Minn. 409. But where an insurance company, through a misconception by its agent of his duty, while acting in good faith, was drawn into the insurance of a building at a rate fixed for insurance if occupied for a hotel, for which purpose it had not in fact been occupied, but was expected to be soon, and the actual risk was not greater than it was represented to be, and the premium received was greater than of a private corporation is not responsible for corporate funds and papers intrusted to his care, and lost without negligence on his part.1 § 267. Liability of officers on contracts. The liability of the agent or officer upon written contracts is determined exclusively by the legal construction to be put upon the language used in the contract in each case. In other cases the question of the personal liability of the officer making the contract is determined by the principles of the law of agency. Officers are not liable generally upon any contract lawfully entered into on behalf of the corporation by them in their official capacity, without circumstances indicated that they intended to assume personal liability. But where the president of a corporation procured credit for the corporation upon false representations as to its solvency, he may be held liable personally, and the case warranting, an order of arrest against him may issue. Where goods are purchased by a corporation, would have been charged for an unoccupied hotel building, and it was burned before occupancy, and the company paid the loss, and sued the agent to recover the amount so paid, it being shown that the risk assumed was within the company's business, and that it was only a question of rates, the company could not recover, without showing that it was damaged in rates, more than nominal damages. State Ins. Co. v. Richmond, (1887) 71 Iowa, 519. Cf. Holt v. Winfield Bank, 25 Fed. 4 Phillips v. Wortendyke, (1883) 31 Hun, 192. Where a corporation purchases goods, and the vendor receives the personal acceptance of the president of the company in payment, and, upon the falling due of the acceptance, takes the company's sixty-day draft in payment; and it appears that the president represented that the company could not pay the amount at once, but would 1 Mowbray v. Antrin, (1890) 23 N. be able to in sixty days; and that E. Rep. 858. 2 Roberts v. Button, 14 Vt. 195; Rochester v. Barnes, 26 Barb. 657; Beattie v. Ebury, L. R. 7 H. L. 102; Lindus v. Melrose, 3 Hurl. & N. 177. Cf. Knomer v. Haines, 31 Fed. Rep. 513. 3 Serrell v. Derbyshire &c. Ry. Co., 19 L. J. C. P. (N. S.) 371; s. c. 9 C. B. 811; Healy v. Story, 3 Ex. 3; Burrell v. Jones, 3 Barn. & Ald. 47; Tyrrell v. Woolley, 1 Man. & G. 809. the vendor made inquiries of other parties, and examined the company's business, and came to the same conclusion; and there being no evidence but that the president had good reason for stating what he did, or that the company was not solvent at the time, or that the draft was ever presented to the company for payment, it was held that there was no evidence of such representations by the president of the solvency of and the president thereof gives his personal acceptance for the purchase price, which is received by the vendor in payment, he is relieved from personal liability, if, when such acceptance falls due, the vendor accepts the corporation's draft for the amount without the president's indorsement, and surrenders the president's acceptance. Where a trading corporation, which has been in the habit of assisting persons with whom it does business, allows its general manager to transact all its business, and he indorses in the corporate name the note of one with whom the corporation is dealing, causes the note to be discounted, and pays the proceeds to the maker, he is not liable to the corporation, though it be obliged to pay the note.2 Agents of a corporation who, as such, receive money from persons with whom they contract, may be compelled to an accounting at the instance of shareholders, where the corporation has refused to sue. An agent of a company who B. the company, or that it would pay but 192 belonged to B.'s bonds. The remainder had been paid when presented at the company's office, but they had passed into B.'s hands without the knowledge or consent of the former holders. G. took up the notes for $15,000 as they fell due, and the company then paid him the difference between their value and that of the coupons in consideration of their surrender, it being agreed that the coupons should thereafter belong to G. absolutely. It was held that as against the other bondholders secured by the mortgage, the coupons had been paid, and that G., who had sold them with a warranty that they were a lien under that mortgage, was liable in damages to the purchaser for a breach thereof. South Covington & C. S. Ry. Co. v. Gest, (1888) 34 Fed. Rep. 628. 1 Riverside Iron-Works v. Hall, (1887) 64 Mich. 165. 2 Holmes v. Willard, (1889) 5 N. Y. Supl. 610. 3 Sheridan v. Sheridan Electric Light Co., 38 Hun, (N. Y.) 396. undertakes to bind his principal by simple contract, but without authority, binds himself.1 $268. Provisions of the New York Penal Code. A director of a stock corporation, who concurs in any vote or act of the directors of that corporation, or any of them, by which it is intended (1) to make a dividend, except from the surplus profits arising from the business of the corporation, and in the cases and manner allowed by law; (2) to divide, withdraw, or in any manner pay to the stockholders, or any of them, any part of the capital stock of the corporation; or to reduce the capital stock without the consent of the legislature; (3) to discount or receive any note or other evidence of debt in payment of an installment of capital stock actually called in, and required to be paid, or with intent to provide the means of making the payment; (4) to receive or discount any note or 1 Roberts v. Button, (1842) 14 Vt. 195; Owen v. Van Uster, 10 Com. B. 318. But in Holt v. Winfield Bank, (1885) 25 Fed. Rep. 814, Brewer, J. said, "I had occasion when I was on the supreme bench, in the case of Abeles v. Cochran, 22 Kan. 405, to examine with great care the circumstances under which an agent is responsible when the principal is not bound. There was in this case no misrepresentations of fact or of law made by the president. He simply told the parties he would subscribe (towards starting a creamery) if a majority of the directors assented. He saw a majority of the directors, and they assented; he then came back and subscribed in the bank's name. There were no false representations of facts, no representations of law. Every person who deals with corporations is chargeable with notice of the general scope of their powers. If he deals with an insurance company he knows that it is insurance business that that company is authorized to transact. So if he deals with a bank he knows that it is banking business that that bank is authorized to transact and none other. He has the same general knowledge that the officers of the bank have. Of course, where there is a concealment of a fact within the special knowledge of the party making the representation or making the signature, he may be bound. If, for instance, the bank had power to make such a contract as this, provided the directors assented, and the defendant had represented to the plaintiffs that the directors had assented when in fact they had not, then unquestionably a failure to hold the bank liable would cast a liability upon him; but when a man deals with an officer of a corporation, and no representations are made by that officer, and that officer simply proposes to bind the corporation, and as a matter of fact the corporation is not bound, and is not bound simply because the contract is ultra vires of that corporation, the individual making the subscription is also not bound." |