tiff's demurrer to the special plea to the third count. The other rulings excepted to relate to testimony excluded or admitted in accord with the rulings on the demurrers, and to the direction of a verdict for defendant.

tions of the third count, including that of the declaration, and overruling the plainexcess of indebtedness over paid-in capital stock, and that as to the amount of the debt which it was sought to recover. This debt was admitted by the defendant and proved by the plaintiff to be $1,154.28, with interest thereon from June 13, 1907. The only defense claimed was that set up under the special plea to the third count. Upon motion of the defendant, the jury was directed to return a verdict of not guilty in favor of the defendant, and thereupon the plaintiff preferred its bill of exceptions, on which the case is now before this court.

The bill contains six exceptions, which will be more fully set forth hereinafter. The first two are to the rulings sustaining the defendant's demurrer to the first count of

it in connection with the various questions in connection with which it arises.

b. Whether joint or several.

The action must be maintained against all the directors under a statute providing that if the indebtedness of the corporation at any time exceeds the amount of its capital stock, directors of such corporation creating such indebtedness shall be personally individually liable for such excess to the creditors of the corporation. McClave v. Thompson, 36 Hun, 365.

The first exception was to the decision sustaining the demurrer to the first count. The provisions of the statute under which it is sought to charge the defendant with liability in the first count are as follows (Pub. Stat. 1882, chap. 155, §§ 1, 2, 3; Gen. Laws 1896, chap. 180, §§ 1, 2, 3):

"Section 1. The members of every incorporated manufacturing company shall be jointly and severally liable for all debts and contracts made and entered into by such

V. What directors are liable.

a. Necessity that directors be such when

excess occurs.

The statutes regulating this subject usually provide that the directors who contracted the debts in excess of the limit fixed,

or those under whose administration the excess happened, are liable therefor.

Even if the statutes do not expressly make those who were directors at the time of contracting the debt liable therefor, that construction is given.

Thus, under a statute providing that the Under a charter provision making the di- company shall not contract debts exceedrectors under whose administration an ex-ing three fourths the amount of its capital cess shall occur liable for the same, without providing any means by which any one of the directors may escape this liability, an action cannot be brought against a single director, unless a sufficient averment is made showing why the others are left out. Banks v. Darden, 18 Ga. 318.

But it is not necessary for the creditor to join the representatives of deceased directors under a statute authorizing him to sue the survivor alone, but giving him discretion to sue the survivor, or representative of the deceased person, or the survivor in the same action with the representative of such deceased person. Hargroves v. Chambers, 30 Ga. 580. Some of the deceased directors had personal representatives living in the jurisdiction of the court in which the suit was brought.

Where the directors knowingly incur the excess indebtedness, or, being ignorant, where such ignorance is inexcusable, an action for contribution will not be allowed in favor of some of the directors who are compelled to pay the debt, against other directors. Rogers v. Bonnett, 2 Okla. 553, 37 Pac. 1078.

The statute involved in Cornwall v. Eastham, 2 Bush, 561, provided that the directors shall be individually liable jointly and severally to the creditors of the company for the excess, and an action was maintained against one of the directors.

stock paid in, and that if such an indebtedness shall exceed the amount aforesaid, the directors and stockholders shall be personally holden to the creditors of such company, the directors and stockholders who were such at the time the debt was contracted are liable, and not those who occupied that position when suit was brought. Windham Provident Inst. for Sav. V.

Sprague, 43 Vt. 502. Although the debt sued upon in this case was contracted in excess of the limit, at the time the directors held liable therefor ceased to be stockholders (and apparently directors) the debts of the company had been reduced within the limit, but the company was insolvent. The assets had been used in paying other claims, leaving the debt in question unpaid.

So, under the Kentucky form of statute set forth in II. supra, it is necessary that parties sought to be held liable were directors at time the debt was contracted. Gunther v. Baskett Coal Co. 107 Ky. 44, 52 S. W. 931.

If the term of office of certain directors has expired before debts are contracted in excess of the solvent stock, such directors are not liable, although the new board of directors proceeds to pay the bonds so issued in excess of the solvent stock, leaving the bonds issued during the term of the previous board unpaid. Schofield v. Henderson, 67 Ind. 258.

company, except as hereinafter provided, the amount of the capital so fixed and paid until the whole amount of the capital stock fixed and limited by the charter of said company, or by vote of the company in pursuance of the charter or of law, shall have been paid in and a certificate thereof shall have been made and recorded in a book kept for that purpose, in the office of the town clerk of the town wherein the manufactory is established, and no longer, except as hereinafter provided.

"Section 2. The president and directors,

with the treasurer and clerk of such company, within ten days after the payment of the last instalment of the capital stock fixed and limited by the charter or by vote of the company, in pursuance of the charter or of law, shall make a certificate stating

In Bole v. West View Oil Co. 29 Pittsb. L. J. N. S. 98, it did not clearly appear at what time the indebtedness of the company became in excess of the amount of the capital stock. It did appear, however, that the excess existed at a certain stated date, and the directors who served at that

time were held liable.

If the debt contracted by the directors in excess of the limit is paid off, the liability Allison v. of the directors is terminated. Coal Creek & N. R. Coal Co. 87 Tenn. 60, 9 S. W. 226.

The giving of new notes in renewal of old ones is not such an increase of indebtedness as to render a director liable therefor, under a statute providing that no part of the capital stock shall be withdrawn or in any manner diverted from the legitimate business of the company, nor shall the company at any time contract debts to an amount greater than three fourths of the capital actually paid in, and making assenting directors liable for such excess to the creditors of the company, although the notes in question were executed by the company at a time when the debts contracted by it were greater than the limit National Bank v. fixed by the statute.

Paige, 53 Vt. 452.

in, which certificate shall be signed and sworn to by the president, treasurer and clerk and by a majority of the directors, and they shall, within said ten days, lodge the same to be recorded in the book kept as aforesaid in the office of the town clerk of the town wherein the manufactory shall be established. In case of increase of the capital stock of said companies, like proceedings shall be had as to the amount added. and paid in.

"Section 3. If any of said officers shall refuse or neglect to perform the duties required of them as aforesaid, they shall be jointly and severally liable for all debts of the company contracted after the expiration plaintiff, and therefore became personally and individually liable to him.

That those sought to be held liable were directors when the excess happened must be shown by the creditor seeking to impose such liability. Aimen v. Hardin, 60 Ind. 119; Schofield v. Henderson, supra.

Under a statute imposing a liability upon directors under whose administration the excess happened, it is necessary that the creditor prove that debts were contracted under the administration of the directors sought to be held liable. Irvine v. McKeon, 23 Cal. 472.

It must be alleged that the excess happened during the administration of the directors sought to be held liable, under a statute so requiring; a mere allegation that there was an excess is not sufficient. Merchants' Bank v. Stevenson, 5 Allen, 398.

This is sufficiently shown in a suit on a note which is signed by the parties sought to be held liable, as directors. It will not be presumed, in the absence of any averment or showing to that effect, that the debt was contracted previously to the exeAimen v. Hardin, supra. cution of the note.

b. Necessity of assent.

1. In general.

Some statutes impose a liability merely upon assenting directors.

A similar form of statute provides that directors shall be liable for any debts they may contract in the name of the company over and above the solvent stock of such company. Under this statute, where it appears that the directors sought to be held liable protested and objected to the contracting of the excess debts, they cannot be held liable. Schofield v. Henderson, 67 Ind. 258.

A complaint in an action against directors which alleged that the defendants were directors of the corporation, and that indebtedness was incurred which exceeded the amount of the limit fixed by statute, to the extent of about $150,000, and that this indebtedness was created by and with the consent of the defendants, states a cause of Lovelace v. action against the directors. Doran, 39 N. Y. S. R. 679, 15 N. Y. Supp. 278. It is stated that it is to be assumed from the facts stated in the complaint that the plaintiff was a creditor to whom the company had contracted the excess, or in other words that he held an indebtedness which was contracted by the company at a time when it was indebted in a sum that exceeded the limit fixed by statute, and that the defendant directors, as well as the corDirectors who did not assent to the creaporation, assented to the creation of such indebtedness held and represented by the' tion of certain indebtedness cannot be held

It is not necessary that the protest and objection of the writers be reduced to writing and signed by them and entered of record in the proper books of the company. Ibid.

of said ten days and before such certificate, March, A. D. 1904, by vote of the said genshall be recorded as aforesaid."

eral assembly, the company was authorized to increase its capital stock to an amount not exceeding in the aggregate $150,000, and to issue said increase, to wit, $50,000, as first preferred 7 per cent stock. And said company actually increased the capital stock thereof, and prior to the 1st day of December, A. D. 1905, issued capital stock in the sum of $10,727 as first preferred 7 per cent stock, in addition to the amount of capital stock theretofore issued and paid in; and the president and directors, with the treasurer and clerk of said company, did not, within ten days after the payment of the last instalment of said increase of said capital stock as aforesaid, make a certificate stating the amount of the capital stock so to have assented to an increase in the in- sought to hold liable assented to the excess debtedness caused by interest accruing indebtedness. Lewis v. Montgomery, 145 thereon. McClave v. Thompson, 36 Hun, Ill. 30, 33 N. E. 880. It is stated generally 365. in this case that such assent can be given only by some affirmative voluntary act on the part of the directors, or at least some active participation or co-operation in the particular transactions out of which the indebtedness arose.

That part of the first count based on this statute, with which the demurrer is concerned, reads: “And the plaintiff avers that the said company was duly incorporated on the 20th day of June, A. D. 1890, by the general assembly of the state of Rhode Island, etc., and became subject to the provisions of chapters 152 and 155 of the Public Statutes of said state, the capital stock thereof not to exceed $100,000, to be fixed by a vote of the company from time to time, and thereupon the company was duly organized, and thereafterwards, on, to wit, the 1st day of September, A. D. 1891, by vote of the company, the capital stock was fixed at $50,000, and on, to wit, the 2d day of |

It has been held, under a statute providing that if the indebtedness of any company exceed the paid-in capital stock, the directors assenting thereto shall be individually liable to the creditors for said excess, that the director sought to be held liable must have assented to the debt sued upon. Allison v. Coal Creek & N. R. Coal Co. 87 Tenn. 60, 9 S. W. 226; Moulton v. Connell, H. McL. Co. 93 Tenn. 377, 27 S. W. 672; Tradesman Pub. Co. v. Knoxville Car Wheel Co. 95 Tenn. 634, 31 L.R.A. 593, 49 Am. St. Rep. 943, 32 S. W. 1097.

In some statutes dissenting directors who have caused their dissent to be entered at large on the directors' minutes are excepted from the liability imposed upon the directors generally.

Another form of statute provides that any director who objects to contracting such debts, and who shall as soon as may be after the fact comes to his knowledge file his objection in writing, shall be exempt.

Under these statutes the director is liable unless he has entered his protest as provided by statute. A director who has not signed a protest cannot claim exemption by reason thereof. Cornwall v. Eastham, 2 Bush, 561.

A protest once entered is not effectual against debts subsequently incurred in excess of the prescribed limits with the concurrence and sanction of the protesting director. Ibid. It is suggested in this case that such a protest may be constructively prospective against any future debts beyond the capital in the absence of concurrence or sanction.

A provision contained in the act of incorporation involved in Neal v. Moultrie, 12 Ga. 104, and Moultrie v. Smiley, 16 Ga. 289, made dissenting directors liable to creditors, but provided that they in turn might recover of assenting directors.

The absence of a protest, although the director subsequently becomes aware of the action by which the excess debts were created, is not equivalent to an assent. Some affirmative act of assent must be shown. Patterson v. Robinson, 36 Hun, 622.

It has been stated that a statute making liable directors who have knowingly consented to the excessive indebtedness does not provide for a recovery on account of mere inattention or negligence on the part of the directors, but a personal liability can be enforced only where consent is given to the making of the indebtedness with actual knowledge that the limit has already been reached, or is by such act being exceeded. Constructive knowledge, or knowledge which might have been obtained had the directors not been negligent, is not enough. Edward Hines Lumber Co. v. Marquardt, 117 N. W. 666. Iowa, -,

Other forms provide that an absent director may release himself from liability under such a statute by giving notice of his absence.

A provision in the act of incorporation Under a statute merely imposing a lia-in Neal v. Moultrie and Moultrie v. Smiley, bility upon assenting directors, it is neces- supra, made absent directors liable, but sary to show that the directors whom it is provided that they might recover of as

added and paid in, signed and sworn to by the president, treasurer, and clerk, and by a majority of the directors, and did not within said ten days lodge the same to be recorded in the book kept for that purpose in the office of the city clerk of said Pawtucket, wherein the manufactory of said company is established."

The grounds assigned for demurrer to this

count are:

Capital Stock,' passed March 2, 1904, had been made:

"(2) It does not appear that the debt owing by the Pawtucket Steam & Gas Pipe Company was contracted at the expiration of ten days or thereafter after the payment of the last instalment of the increase of the capital stock of the Pawtucket Steam & Gas Pipe Company, as authorized by vote of the general assembly on March 2, 1904.

"(3) It does not appear from the said declaration that the duty ever devolved upon the defendant to file the certificate provided for by chapter 180, § 2, of the General Laws of the state of Rhode Island."

At the hearing of the demurrer two questions were in issue: First, whether the first count is defective in not alleging pay

"(1) It does not appear from said declaration that payment of the last instalment of the increase of the capital stock of the Pawtucket Steam & Gas Pipe Company, as authorized by an act of the general assembly entitled 'An Act Authorizing the Pawtucket Steam & Gas Pipe Company to Increase its senting directors the amount they were com- | stated that the removal by a director of pelled to pay. one person as president, and the substituUnder a statute which makes no exception of another, "and his still continuing tion in case of absent directors, but provides simply in case of an excess of debts that the directors under whose administration it shall happen shall be liable for the same, the fact that a director sued was absent when the excess happened is immaterial; he is notwithstanding this fact liable. Banks v. Darden, 18 Ga. 318.

2. What constitutes assent.

his own official agency and responsibility as a necessarily more vigilant and active director, his co-operation in still carrying on and extending the business, his presumed knowledge of the extension of the company's credit further beyond its capital as necessary to the continued operations, and consequently his knowledge of the fact that it was so extended, and his failure to certify any objection or to prove that he did not concur in or approve the contraction of the debts to the appellees, participating, as he must be presumed to have done, in the new administration of the company's affairs under his own chosen auspices,-these con

Such assent is not shown on the part of directors by showing that they appointed one of their number who had a majority of the shares of stock, general financial agentsiderations sufficiently conduce to the preof the corporation, and gave him complete control of its business affairs. Lewis v. Montgomery, 145 Ill. 30, 33 N. E. 880.

In Slater v. Taylor, 241 Ill. 102, 89 N. E. 271, the directors of an elevator company authorized an agent to buy grain, which necessarily and to their knowledge would and did cause the corporation to become indebted in excess of the amount of the capital stock. It is not clear whether or not this was the only evidence of assent. The court states that the evidence was sufficient to support the finding of the trial court that there had been an assent.

See also Randolph v. Ballard County Bank, 142 Ky. 145, 134 S. W. 165, supra, as to appointment of agent.

A recognition of the indebtedness after its creation is not an assent. Lewis v. Montgomery and Slater v. Taylor, supra. But under a statute making the directors liable in the first instance, but providing that a director may relieve himself of such liability by protesting against the contracting of the excess indebtedness, it has been held that a director who has thus protested cannot take advantage of such protest as against debts subsequently incurred in excess of the limit with his consent, and that such consent may be presumed. Cornwall v. Eastham, 2 Bush, 561.

In Cornwall v. Eastham, supra, it is

sumption that these debts were contracted at his instance or with his sanction."

The assent necessary to render the directors liable must be given by them in their official capacity. It must be shown that the assent was given in the capacity as director acting concurrently with the majority of the official board. It is not necessary that this official assent be founded in the minutes of the board, but it must have been given at an official meeting, whether it appears in the minutes or otherwise. Tradesman Pub. Co. v. Knoxville Car Wheel Co. 95 Tenn. 634, 31 L.R.A. 593, 49 Am. St. Rep. 943, 32 S. W. 1097.

Assent of the directors is shown by a resolution of the corporation to which the directors assented, authorizing the purchase of certain machinery, in which debts beyond the limit were created. Allison v. Coal Creek & N. R. Coal Co. 87 Tenn. 60, 9 S. W. 226.

So, under a statute imposing a liability for excess of debts contracted over the amount of paid-in capital stock, upon the directors "who contracted such debts," it must be shown that the director sought to be charged with liability assented to or contracted the debt officially as a director, acting concurrently with a majority of the board. Consequently, a director who was present, and assented to the purchase by