M. I. Wilcox Cordage & Supply Co. v. Mosher

Moore, J. This is an action brought to recover from the directors of a corporation a debt of the corporation to plaintiff, and is based upon the willful neglect of the directors to file the annual report of the corporation’s affairs in January, 1895, as required by Act No. 232 of the Public Acts of 1885. Defendants were sole directors of a corporation known as Mosher, Bissell & Mather, which was doing business in West Bay City during the year 1895, and for two years prior thereto. Defendants Mosher and Bissell were president and secretary of said corporation, respectively. No annual report of the affairs of said corporation was filed in 1895 in the office of the county clerk or the secretary of state, as required by section 12 of Act No. 232 of the Public Acts of 1885, nor was any report of the condition of the affairs of said corporation filed during 1895 until September 23, 1895. . The latter report showed that the corporation was practically insolvent. During the period of its default in filing the report required by law, the. Mosher, Bissell & Mather corporation became indebted to plaintiff upon a promissory note dated July 23, 1895, payable 60 days after date, to the order of plaintiff, in the sum of $131.52 and interest, and an open account for goods sold and delivered to said corporation between June 3 and September 19, 1895, amounting to $203.55. The circuit judge directed a verdict for defendants, because the debt was incurred after June 1, 1895, and before the 19th of September of that year. Plaintiff appeals. The circuit judge erred in making the disposition of the case he did, for the reason assigned. Bank of Saginaw v. Pierson, 112 Mich. 410. It is said by defendants that as plaintiff was a foreign corporation, and had not paid the fee required by Act [66] No. 79, Pub. Acts 1893, it cannot recover in this action. The goods were sold by itinerant salesmen, and we think the case in that respect is controlled by Coit & Co. v. Sutton, 102 Mich. 324. It is also objected that plaintiff had not recovered a judgment against the corporation, and therefore could not sue the directors. The statute does not require the creditor to put its claim into a judgment against the corporation before it has a right of action against the directors. 3 How. Stat. § 4161b1; Patterson v. Stewart, 41 Minn. 84. It is urged upon the part of the defendants that the liability of the directors is a several, and not a joint, liability, and that this action cannot be maintained. No proof was offered on the part of any of the defendants. The failure to file the reports as required by law was shown. The neglect to file the reports is presumed to be intentional and willful. Van Etten v. Eaton, 19 Mich. 187; Gennert v. Ives, 102 Mich. 547; Bank of Saginaw v. Pierson, supra. Under the record as made, all of the defendants were liable, and we can see no objection to suing all of them in one action. 1 Cook, Stock, Stockh. & Corp. Law, § 221, note. Judgment is reversed, and new trial ordered. The other Justices concurred.