Robert C. (Robert Cushing) Cumming.

The annotated corporation laws of all the states, generally applicable to stock corporations ... in three volumes online

. (page 62 of 92)
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Mont, 55 Pac. Rep. 110 (1898).

Comp. Stat., 1887, div. 5, §§ 492-494, pro-
viding tliat the officers of a mining corpora-
tion shall have no power to sell ♦ ♦ ♦ or
-otherwise dispose of, " the whole or part of
mining grounds," etc., without such trans-
fer being first approved by the holders of
two-thirds of the stock, at a meeting at
^which at least three-fourths of the stock is
represented, and that, if such sale be of the
•corporate property, the corporation shall be
dissolved, is merely a limitation of the com-
mon-law powers of the directors and major-
ity stockholders, and does not authorize two-
thirds of the stock of a prosperous concern
to sell all of its property against the protest
-of any other shareholder. Forrester v. Bos-
ton & M. Consol. Copper, etc., Co., Sup. Ct.
Mont., 55 Pac. Rep. 229 (1898), reargued, 55
Pac. Rep. 333.

Xiability of directors.

The directors are personally liable for
-death from the explosion of powder unlaw-
fully kept in the corporation's warehouse.



though they had no knowledge thereof. If
by exercising ordinary diligence as directors,
they could have known that the warehouse
contained an unlawful amount Cameron
V. Kenyon-Connell Commercial Co., Sup. Ct.
Mont, 50 Pac. Rep. 358 (1899). The burden
is on the directors to show that by the ex-
ercise of ordinary diligence, they could not
have discovered that the powder was stored
in unlawful quantities. Id.



Bights of minority.

The ratification by a majority of the stock-
holders of an illegal and incomplete trans-
fer of the corporate property may be en-
joined by the minority stockholders, even
though their stock was acquired after the
transfer was made. Forrester v. Boston &
M. Consol. Copper, etc., Co., Sup. Ct Mont,
55 Pac. Rep. 229; reargued 55 Pac. Rep. 353
(1898). What constitutes laches. Id.

The holders of after-acquii*ed stock may
enjoin the ratification of an illegal transfer
of corporate property, the former owners of
the stock not having participated in the
transaction. Forrester v. Boston & M. Con-
sol. Copper, etc., Co., Sup. Ct Mont, 55 Pac
Rep. 353 (1898).



Liability of stockholders.

Since Comp. Stat 1887, div. 5, ch. 25, § 457,
a judgment creditor whose execution against
the corporation has been returned unsatis-
fled may go into equity to obtain relief
against the stockholders. Under the pro-
visions of the Const., art. 15, i 10, and If 457
and 458 of the Compiled Statutes, by which
a stockholder is liable for the amount unpaid
on his stock until the whole amount of



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Decisions.



stock subscribed for has been paid in, an
issue of stock as full paid for property
at a false valuation, renders the stockholders
liable for the difference between the actual
value of the property and the par value of
the stock. Kelly v. Fourth of July Min. Co.,
Sup. Ct Mont, 53 Pac. Rep. 959 (1898).

One accepting mining stock issued to him
with knowledge that it represented a mine
worth only one and two-thirds per cent, of
the total stock subscribed cannot escape lia-
bility to creditors for the unpaid balance
on the ground that he did not sign the stock
subscription list Id.

See Anno. Corp. L., Mont, p. 18 and p. 7.

Beceiverfl.

A shareholder of a corporation may pro-
cure the appointment of a receiver pending
an investigation of charges of fraud and
mismanagement against the trustees. State
ex rel. Boston & M. Consol. Copper, etc., Co.
V. District Court of Silverbow Co., Sup. Ct
Mont, 56 Pac. Rep. 219 (1899). The ap-
pointment of a receiver of a corporation pen-



dente lite does not necessarily mean its dis-
solution. Id.
See Anno. Corp. L., Mont, p. 27.

Foreign corx>oration8.

It is not necessary for a foreign corpora-
tion bringing action on a domestic contract,
to allege that it has complied with the statu-
tory conditions precedent to doing business
in the State, where the petition shows facts
making the transaction prima facie inter-
state commerce. Zion Co-operative Mer-
cantile Assn. V. Mayo, Sup. Ct. Mont, 55
Pac. Rep. 915 (1899).

Failure of mortgagee to comply with State
law governing foreign corporations does not
avoid a decree of foreclosure as against at-
taching creditors of mortgagor. Miller v.
Yates, Sup. Ct Mont., 56 Pac. Rep. 356
(1899). A false allegation that the mortga-
gee has complied with State laws govern-
ing foreign corporations does not avoid de-
cree of foreclosure as against attaching
creditors of mortgagor. Id.

Foreign corporations, see Anno. Corp. L.,
Mont., p. 24.



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LAWS OF 1«99.



CHAPTEB 33.
Beceivers.
AN ACT concerning the compensation of re-
ceivers.

Section 1. Receivers shall receive for their
services such compensation as the court in
Its discretion may award, subject to the fol-
lowing restrictions:

First, Receivers appointed for the purpose
of preserving and protecting property pend-
ing litigation or for the purpose of continu-
ing the business of the debtor or corporation
pending litigation or when financially em-
barrassed may be awarded a salary or lump
sum;

Second, Receivers appointed for the pur-
pose of winding up the aflfalrs of a debtor or
corporation reducing the assets to cash and
distributing them shall be awarded as com-
pensation for such services a percentage
upon the cash received and properly ac-
counted for by them. Which percentage may
be Increased where extraordinary services
have been performed and correspondingly
reduced where the services have not been
meritoriously performed.

CHAPTEB 84.

Fire Escapes.
i 4. That within six (6) months after the
passage of this act, all buildings In this
State, which are four or more stories In
height, excepting such as are used for pri-
vate residences exclusively, but including
flats and apartment buildings, shall be pro-
vided with one or more metallic ladder or
stair Are escapes attached to the outer walls
thereof, and provided with platforms of such
size and dimensions, and such proximity to
one or more windows of each story above
the first, as to render- access to such ladder
or stairs from each such story easy and
safe, and shall also be provided with one or
more automatic metallic fire escapes, or
other proper devices, to be attached to the
Inside of said buildings so as to afford an
effective means of escape to all occupants
who, for any reason, are unable to use said
ladders or stairs; the number, material, loca-
tion and construction of such escapes to be
subject to the approval of the commissioner
of lal>or or his deputy; Provided, however,



that all buildings more than two stories in
height used for manufacturing purposes, or
for hotels, dormitories, schools, seminaries^
hospitals, or asylums, shall have at least one
such fire escape for every fifty persons, and
one such automatic metallic escape for every
twenty-five persons, for which working,
sleeping, or living accommodations are pro-
vided above the second stories of said build-
Ings; and that all public halls, which provide
seating room above the first or ground story,
shall be provided with such numbers of said
ladders or other fire escapes as said com-
missioner of labor or his deputy shall desig-
nate.

CHAPTEB 107.
Hours of Labor of Females.

AN ACT to regulate and limit the hours of
employment of females In manufacturing^
mechanical and mercantile establishments,
hotels and restaurants; to provide for its
enforcement and a penalty for Its viola-
tion.

Section 1. That no female shall be em-
ployed In any manufacturing, mechanical or
mercantile establishments, hotel or restau-
rant in this State more than sixty hours
during any one week and that ten hours
shaH constitute a day's labor. The hours of
each day may be so arranged as to permit
the employment of such females at any time
from six o'clock a. m. to ten o'clock p. m.;
but in no case shall such employment ex-
ceed ten hours in any one day.

i 2. Every such employer shall post in a
conspicuous place In every room where such
females are employed, a printed notice, stat-
ing the number of hours work required of
them each day of the week the hours com-
mencing and stopping such work and the
hours when the time or times allowed for
dinner or for other meals begins and ends.
Printed forms of said notice shall be fur-
nished by the deputy labor commissioner,
and the form of such notice approved by the
attorney-general of this State.

$ 3. Every such employer in such estab-
lishment, shall provide suitable seats for the
females so employed, and shall permit the
use of such seats by them when they are not
necessarily engaged in the active duties for
which they are employed.



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9 4. Any employer, overseer, superintend-
ent or other agents of any such employer
who shall violate any of the provisions of
this act, shall be fined for each offense in a
sum not less than twenty dollars nor more
than fifty dollars; and it is hereby made
the duty of the deputy labor commissioner to
enforce tlie provisions of this act; Provided,
however, that nothing in this act shall be
construed to prevent any other person from
enforcing its provisions.



CHAFTEB 108.

Employment of Children.

AN ACT to regulate the employment of chil-
dren in manufacturing, mechanical, indus-
trial and mercantile establishments, to pro-
vide a penalty for its violation and the
enforcement of its provisions and to re-
peal sections 245aa, 245bb, and 245cc of
the Criminal Code of the State of Ne-
braslca; That the provisions of this act
shall be Itnown as sections 245aa, 245bb,
245CC, 245CC-1, 245cc-2, 245cc-3 of the Crim-
inal Code of Nebraska.

S 245aa. That any male or female child un-
^er the age of ten years shall not be em-
ployed in any manufacturing, mechanical,
industrial or mercantile establishment.

$ 245bb. That any male or female child
under the age of fourteen years shall not
be employed in any manufacturing, mechan-
ical, industrial or mercantile establishment,
except during the vacations of the public
schools; unless during the year next preced-
ing such employment, said child has for at
least twenty weeks attended some public or
private day scliool where the English is
taught; nor shall such employment continue,
unless such child shall in each and every
jear attend scliool as herein provided, and
no child shall be so employed who does
not present a certificate signed by the presi-
dent and secretary of the school board of the
school district in which said child resides,
of their compliance with the requirements of
this section. Nor shall any owner, superin-
tendent or overseer of any such establish-



ment, parent or guardian consent to or per-
mit the employment of any child contrary
to the provisions of this act

$ 245cc. Any owner, superintendent or
overseer of any such establishment, sliall re-
quire and keep on file, open to the inspec-
tion of the public, a certificate of the age,
place of birth and residence of every male
and female child under sixteen years of age
employed therein, so long as such child is
so employed; which certificate shall also
state, in case the child is under fourteen
yeai*s of age, the amount of said child's
school attendance during the year next pre-
ceding his employment, and such certificate
shall be signed by the president and secre-
tary of the school board of the school dis-
trict in which such child resides, and the
forms of certificate herein referred to shall
1)0 approved by the attorney-general of this
State.

§ 245CC-1. Any person who shall be con-
victed of a violation of any of the provisions
of this act shall pay for every such offense
a fine of not less than twenty dollars nor
more than fifty dollars; Provided, however.
That no conviction shall be had under this
act, unless the proceedings therefor shall be
commenced within one year after the of-
fense shall have been committed.

§ 245CC-2. It is hereby made the duty of
tlie deputy labor commissioner of this
State upon complaint being filed with him
to inspect any and all establishments to
which this act applies, and ascertain
whether any of the provisions of this act
have been violated. Whenever it shall
come to his knowledge that any of the pro-
visions of this act have been or are being
violated, it shall be his duty to cause the
same to be enforced. Provided, however.
That nothing in this section contained shall
be construed to prevent any other person
from causing the enforcement of the pro-
visions of this act

§ 245CC-3. Sections 245aa, 245bb, and 245cc
of the Criminal Code now in force are
hereby repealed, and the provisions of this
act shall be known as sections 245aa, 245bb,
24.5CC, 245CC-1, 245cc-2, 245cc-3, of the Crim-
inal Code of the State of Nebraska.



DECISIONS.

(Include those contained in 78 N. W. Rep.)



Btock assessments.

In the absence of statutory authority or
power given by articles of incorporation
there can be no assessment against or on
paid-up stock of a corporation. The fully-
paid-up stock of a corporation is the per-



sonal property of the owner, and the articles
of incorporation and laws of the State are
elemental of the contract existent between
the corporation and the owner of stock, and
may not be so amended by legislative enact-
ment as to make the paid-up stock subject to



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an assessment on general or specific assess-
ments, and forfeitable or subject to sum-
mary sale by the corporation for the non-
payment of such assessment. Enterprise
Ditch Co. V. Moffltt, 79 N. W. Rep. 560.

An assessment, as that term is under-
stood in cori>oration law, is a levy made on
the stock of the corporation requiring the
stockholder to pay in proportion to the
amount of stock owned by him. Omaha
Law Library Assn. v. Connell, 55 Neb. 396;
8. c, 75 N. W. Rep. 837.

Neb. Stats., $ 351; Anno. Corp L., Neb.,
p. 15.

In a suit against a stockholder to recover
assessments levied against him, it will be
presumed that the stock certificate bearing
the corporate seal of the corporation was is-
sued and signed by the officer having au-
thority so to do. In such a suit the validity
of tlie incorporation of the corporation Is a
collateral issue, and the stockholder is es-
topped from asserting that it is not a cor-
poration de Jure. Davis Est. v. Watkins,
Sup. Ct. Neb.; s. c, 76 N. W. Rep. 574.

Suit to recover subscriptions; pleadings.

Where In a suit by a corporation against
a subscriber to Its stock to recover his un-
paid subscription, the defense is that the
entire capital stock was not subscribed, a
reply which avers that the defendant waived
the non-iMiyment of the entire stock Is good
as against a demurrer. Such a plea Is not
a conclusion of law, but the averment of an
ultimate fact, included In which are all the
Ingredients which constitute waiver. Under
such a plea the acts and omissions of the de-
fendant which tend to show, or from which
may be Inferred, an intention on his part to
waive subscription of the entire capital
stock. Is competent and relevant. Maefar-
land V. West Side Imp. Assn., 76 N. W. Rep.

Suits by receivers on stock subscriptions.
A suit by the receiver of a corporation
against stockholders, to recover their unpaid
stock subscriptions, will not lie until the
amount Justly due from the corporation has
been ascertained, and the corporate property
exhausted. Where the directory of a corpo-
ration, before it is put Into the hands of a
receiver, makes a call or assessment on the
stock subscribers for all or a part of their
stock subscriptions, such calls become at
once corporate property or assets of the cor-
poration, and may be sued for and collected
by a receiver sub.sequently appointed, as any
other assets of the corporation. Wvraan v.
Williams, Sup. Ct. Neb.; s. c, 74 N. W. Rep.
48.

Preferences of directors and officers by in-
solvent corporations.
A director of an insolvent corporation may
not through any advantage gained by reason
of, or which may be taken of, his director-



ship, obtain or receive a preference of a
debt of the corporation to him, or in which
he is materially interested; but a Judgment
for such a debt, received without any such
advantage, will be upheld, even though it
may work a preference of the debt. One of
the directors of a corporation, who had made
It a loan and who under the order of the
managing board relative to issuance of
promissory notes to members who had made
loans to the company, was entitled to receive
such a note, died, and his son was appointed
administrator of the estate and became a di-
rector of the corporation. He applied for
and there was issued to him as administra-
tor, a note of the corporation in the amount
of the loan debt. The corporation became
Insolvent, and thereafter there was recov-
ered a Judgment against it, and in favor of
the administrator by default, for the amount
due on the note. It was held, from the evi-
dence, that there had been no advantage
taken by the son of the deceased director, as
administrator of his estate, of the former's
position of director of the corporation, to ob-
tain in the suit and Judgment on the note,
a preference over other creditors of the cor-
poration. Nebraska Nat. Bank v. Clark, 78
X. W. Rep. 527.

See Neb. Stats., § 326; Anno. Corp. L.,
Neb., p. 9.

In the absence of actual fraud an insol-
vent corporation may prefer one or more of
its creditors to the exclusion of others. But
a corporation may not prefer a debt owing
to its secretary, treasurer, or a director.
Seeds Dry-Plate Co. v. Heyn Photo-Supply
Co., Sup. Ct Neb.; s. c, 77 N. W. Rep. 660.

The directors of an Insolvent corporation
cannot lawfully appropriate its assets to the
payment of debts due them from it, to the
entire exclusion of the other corporate cred-
itors. Wyman v. Williams, Sup. Ct Neb.;
74 N. W. Rep. 48.

Insolvency; void mortgage to officers.

The assets of an insolvent corporation con-
stitute a trust fund in the hands of its di-
rectors to be used by them In paying corpo-
rate debts. A mortgage executed by an in-
solvent corporation to secure a debt due
from it to one of its officers or directors is
illegal and void. So, also, Is a mortgage ex-
ecuted to a third person to secure a debt for
the payment of which one of its officers or
directors Is personally bound- Stough v.
Ponca Mill Co., 54 Neb. 500; s. c, 74 N. W.
Rep. 868.

Preference of creditors of insolvent corpo-
ration.

An Insolvent corporation, merely because
it Is a corporation. Is not prohibited from
prefoning particular creditors. A corpora-
tion resolved to remove its stock of mer-
chandise to a distant city and effect a con-
solidation there with another corporation.



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Afterwards, its managing officers deter-
mined, in order to avoid trouble witli cred-
itors, to retain a portion of the goods, sell
them, and apply the proceeds to the payment
of debts. No trust was created, and no
provision made for the manner of the appli-
cation of the proceeds. It was held that
this arrangement did not constitute the
goods a trust fund for the payment of cred-
itors pro rata. German Nat Bank v. First
Nat. Bank, 55 Neb. 8C; s. c, 75 N. W. Rep.
531.

Creditors of an insolvent corporation do
not acquire any specific lien on the corporate
assets. Until the legal remedy against the
coi'poratlon hiia been exhausted, a creditor
of an Insolvent and dissolved corporation
cannot obtain satisfaction of his claim by
suit against a stockholder who has In any
way come Into possession of corporate as-
sets. Wehn V. Fall, 55 Neb. 547; s. c, 7G
N. W. Rep. 13.

Insolvency; illegal transfer.

The president, one director and a stock-
holder who was not a director, acting with-
out authority from the board of directors,
sold all the visible assets of an insolvent
corporation, and turned the proceeds of the
sale over to a single creditor, a corporation,
in which two of the persons so acting were
interested, and of which they were directors.
It was held that such acts amounted to a
conversion of the corporate property. Such
acts were reported to a meeting of the board
of directors, attended by four out of seven
members, two of whom were directors of the
preferred corporation. No action was taken.
This did not constitute a ratification of the
acts of the persons selling the assets and
paying out the proceeds. If a transaction
between two corporations effected by the
votes of directors common to both, can, in
any couit, be sustained, it must only be on
an affirmative showing of good faith. Id.

Liability of stockholders; effect and ap-
plication of constitutional provision.

It is the settled doctrine of the Supreme
Court of Nebraska that the liability of a
stockholder of a banking corporation, under
the provisions of section 7 of article 13 of
the Constitution, is for the creation of a
trust fund for the benefit of all creditors,
and an action to enforce such liability must
be prosecuted for the benefit of all the cred-
itors of the corporation against all the stock-
holders within the Jurisdiction of the court
Plckeiing v. Hastings, Sup. Ct Neb.; s. c,
76 N. W. Rep. 587.

Neb. Const, art. 13, i 7; Anno. Corp. L.,
Neb., p. 7.

This section is applicable to the stock-
holder's liability in banking corporations, as
described in section 7 of this article. Such
liability must be enforced by or on behalf
of all creditors and against all stockholders



liable. Hastings v. Bamd, 55 Neb. 93; a
c, 75 N. W. Rep. 49.

Action to enforce liability.

An action for the enforcement of the indi-
vidual liability of the stockholders of a
banking corporation must be prosecuted by
one creditor for the benefit of all, or by the
receiver of the corporation. A creditor may
not intervene in such an action instituted by
the receiver, at least where it is not made to
appear that the receiver is not prosecuting
the case in good faith for the best interests
of the cre<lltors, or in some way has disre-
garded or violated the duties of his trust in
that regard. Brown v. Brink, 78 N. W. Rep.
280.

Accrual of action to enforce liability.

A cori)oration creditor's cause of action
against stockholders to subject their unpaid
stock subscriptions to the payment of his
debt accrues when the exact amount justly
due the creditors from the corporation has
been ascertained and the corporate property
exhausted. Within the meaning of this sec-
tion (Const., art. 13, § 4; Anno. Corp. L., Neb.,
p. 6.), the exact amount justly due has been
ascertained when the creditors* claim against
the corporation has been reduced to judg-
ment; and the corporate property has been
exhausted when execution issued In such
Judgment has been duly returned unsatis-
fied. To such a suit the corporation is not a
necessary party. Van Pelt v. Gardner, 54
Neb. 701; s, c, 75 N. W. Rep. 974; s. c.
reported 74 N. W. Rep. 1085.

Liability cannot be limited.

A provision in the charter of a corpora-
tion that the private property of a stock-
holder shall not be liable for the debts of
the corporation, is void in so far as it at-
tempts to exempt the stockholder from lia-
bility for his unpaid stock subscription for
the payment of corporate debts. The pres-
ent Constitution not only determines what
the liability of a stockholder in a corporation
for the corporate debts thereof shall be, but
it Umits this liability; and it is not within
the power of the legislature to extend it
Id.

Extent of UabiUty.

The liability of a stock subscriber for cor-
porate debts, except he be a stock subscriber
of a banking corporation. Is limited to the
amount of his unpaid stock subscription.
As between the stock subscribers and the
creditors of a corporation, each stock sub-
scriber is liable to the extent of his unpaid
stock subscription. As between themselves,
each stock subscriber is liable for his pro-
portionate share of the corporate debts; and
one stock subscriber who has been com-
pelled to pay more than his proportionate
share, may sue his co-subscribers for con-
tribution. Id.



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PartiM to action.

One creditor of a corporation cannot main-
tain an action in his own name and for his



Online LibraryRobert C. (Robert Cushing) CummingThe annotated corporation laws of all the states, generally applicable to stock corporations ... in three volumes → online text (page 62 of 92)