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reasonable lookout and to exercise reason- | him from looking for the car or to excuse able care to discover the approach of him for not doing so. The instruction, vehicles towards the car track at such when viewed in the light of the uncontroplaces as said vehicles had the right to verted facts, therefore, was in conformity cross, and to take reasonable and timely pre- with the law as announced by this court in caution to prevent striking or colliding with Little Rock R. & Electric Co. v. Sledge, 108

These instructions, when considered | Ark. 95-110, 158 S. W. 1096. Moreover, the together, as they should be, could not pos- instruction could not have been prejudicial sibly have misled the jury.

in the particulars urged by the appellant, Instructions should not be considered as because the appellant himself testified that in conflict where they can be harmonized, he was looking at the car; that he could see and instruction No. 13, given at the instance the motorman, and the motorman could see of the appellant, should be taken as not in him; that he was looking at the motorman conflict, but as supplementary to and ex- for some distance before the wagon was planatory of, what is meant in instruction struck, and continued to look at the car No. 5, by the use of the words "ordinary i before it struck his wagon; that part of care in the management of his car,” etc. the instruction which told the jury that, if But if the words "ordinary care in the man- plaintiff saw the approaching car and drove agement of his car" did not include the duty in front of it, then the motorman was only upon the part of the motorman to keep a required to use such care to prevent the inlookout for persons and property on the jury as a person of ordinary prudence would track, then it was a defect in the verbiage, have exercised under like circumstances, in which should have been reached by a specific effect told the jury that, if appellant was objection. See St. Louis, I. M. & S. R. Co. guilty of contributory negligence, then the v. Barnett, 65 Ark. 255, 45 S. W. 550, 4 Am. motorman was only required to use ordinary Neg. Rep. 115; Pettus v. Kerr, 87 Ark, 396, care and prudence, after discovering his 112 S. W. 886; St. Louis, I. M. & S. R. Co. peril, to avoid injuring him. This is a corv. Carter, 93 Ark. 589, 126 S. W. 99; Mis-rect statement of the law applicable to the souri & N. A. R. Co. v. Duncan, 104 Ark. facts. 409, 148 S. W. 647.

Instruction No. 8 was as follows: “It Instruction No. 6, given at the instance was the duty of plaintiff to keep a lookout of appellee, of which appellant complains, for cars before going upon defendant's track is as follows: “The court instructs you immediately in front of its moving car, and, that it was the duty of plaintiff before go- if you believe from the evidence that plaining on or attempting to cross the tracks of tiff failed to keep such lookout for defenddefendant company, to look and listen for ant's cars and went upon defendant's track approaching cars, and if you believe from in front of an approaching car, then the the evidence that plaintiff failed to do so, court instructs you that the defendant or if you believe that plaintiff saw or could would not be liable in this action, although have seen the approaching car, and drove or you might believe that its motorman carepermitted his horse to go upon the track in lessly failed to discover plaintiff's peril in front of said car, then you should find for time to have avoided a collision. If plainthe defendant, unless you further find from tiff was guilty of negligence in going upon the evidence that defendant's motorman, defendant's track, then defendant's servant after he saw plaintiff in a perilous position, was only required to exercise ordinary care failed to use such care and caution in stop- for plaintiff's safety after actually discov. ping said car as a person of ordinary care ering him in a place of danger." and prudence would have exercised under The above instruction, like instruction like circumstances."

No. 6, preceding it, correctly declared the The appellant contends that the instruc- law relating to the liability of street railtion was erroneous in telling the jury that way companies, in cases where the evidence it was the duty of plaintiff, before going on proves or tends to prove that the plaintiff or attempting to cross the track of defend is guilty of contributory negligence. In all ant, to look and listen for approaching cars, such cases street railway companies are liaand further erroneous in telling the jury ble only where their servants in charge of that if plaintiff saw or could have seen the the car fail to exercise ordinary care to preapproaching car, and drove or permitted his vent injury after the plaintiff's perilous horse to go upon the track in front of said position has been discovered. Johnson v.

Stewart, 62 Ark. 164, 34 S. W. 889; Hot The undisputed facts show that the appel. Springs Street R. Co. v. Johnson, 64 Ark. lant's view of appellee's approaching car 421, 42 S. W. 833, 3 Am. Neg. Rep. 323. See was unobstructed. There were no circum- also Hot Springs Street R. Co. v. Hildreth, stances developed by the proof to prevent '72 Ark. 572, 82 S. W. 245. The court did not, in instruction 8, tell the jury that ap-1 him to show, that the motorman did not pellant was guilty of contributory negli- make a good stop. The offered testimony gence as matter of law; it submitted the would have tended to show that appellee's issue to the jury.

car, etc.

motorman did not make a good stop. ApThe lookout statute of May 26, 1911 pellant went partly into the proof on this (Laws 1911, p. 275), amending § 6607 of subject, and, in fairness to the appellee, he Kirby's Digest, as construed by this court in should have discovered all that he then had Central R. Co. v. Lindley, 105 Ark. 294, 151 to produce. S. W. 246, and St. Louis, I. M. & S. R. Co. “When the burden of proving any matter v. Gibson, 107 Ark. 431, 155 S. W. 510, and is thrown upon a party by the pleadings, he other cases, has no application to street must generally introduce, in the first inrailways.

stance, all the evidence upon which he reThe same may be said of instruction No. lies; and he cannot, after going into part 14. The objection that this instruction as of his case, reserve the residue of his evisumes as a fact that “plaintiff got into his dence for a subsequent opportunity.” Jones cart and made no effort to avoid a collision" Ev. § 809. is not well taken. The instruction is hypo- "Rebuttal testimony should rebut the testhetical, and states, “if you find from the timony advanced by the other side, and evidence,” etc., "that the plaintiff got into should consist of nothing which might propthe cart."

erly have been advanced as proof in chief." The criticism of instruction No. 11, in re- 2 Elliott, Ev. S8 947, 948. gard to the burden of proof, and which told While the court, in its discretion, might the jury that if the testimony is equally have permitted the evidence to be introbalanced on a certain point, leaving their duced at the time it was offered, yet, since minds in doubt, their verdict should be for it was not rebuttal evidence, and no show. the defendant, etc., is not obnoxious to the ing is made as to why it was not brought criticism that appellant makes of it; but, forward in chief, nothing to indicate that taken as a whole, it, in effect, tells the jury appellant was not in possession of the evithat the plaintiff must establish the mate. dence at the time he was developing his rial allegations of his complaint by a pre- case in chief, nothing to show that it had ponderance of the evidence.

been discovered only after appellee had Appellant complains that the court erred brought forward its testimony, the court in refusing to grant certain prayers for in- did not abuse its discretion in rejecting it. structions in regard to expert testimony, It was within the discretion of the court to but the court had already given, at appel do so, and there was no error in its ruling. lant's request, an instruction which con- 2 Elliott, Ev. § 948, and cases cited in note tained all the law that appellant was 20; Underhill, Ev. p. 551. entitled to on that subject. We are con- The record, upon the whole, is free from vinced that the instructions, as a whole, prejudicial error, and the judgment is there. fairly and correctly submitted the issues to fore affirmed. the jury.

III. The appellant contends that the court erred in refusing to permit him to prove by certain witnesses the distance in RHODE ISLAND SUPREME COURT. which a car going at the speed fixed by ap

J. L. MOTT IRON WORKS pellee's witnesses could be stopped, and that such stop could be made in a distance

JOHN A. ARNOLD. of from 4 to 6 feet. Appellant offered this testimony in rebuttal. Under the issues

(35 R. I. 456, 87 Atl. 17.) raised by the pleadings, the testimony was competent and proper to be introduced by Pleading statutory liability of direct. the appellant in chief. The appellant had

failure to file certificate of alleged that the car

stock payment. was being run at a

1. To render directors of a corporation dangerous and high rate of speed, was not supplied with proper power brakes by which Note. Liability of directors under it could be properly and quickly stopped, statutes purporting to make them and that if the motorman had properly ap

liable for contracting debts in excess

of a fixed limit, plied the brakes as he should have done the appellant would not have been run down I. Introductory, 1029. and injured. The answer denied these alle- II, Forms of statute, 1030.

III. General rules of construction, 1031. gations. To sustain these allegations

IV. Nature of liability. of negligence it was competent for the ap

a. In general, 1031. pellant to prove, and the burden was upon

b. Whether joint or several, 1033.


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tiff :

personally liable for failure to file a cer. XCEPTIONS by plaintiff to rulings of tificate of payment of the capital stock un- the Superior Court for Providence and der a statute compelling them to do so Bristol Counties made during the trial of within a certain time after payment of the an action to enforce the statutory liability last instalment of the stock "fixed and lim-l of a director in the Pawtucket Steam & Gas ited” by statute or vote of the corporation, the complaint must show that the capital Pipe Company, which resulted in a verdict was fixed and limited, and that the last in defendant’s favor. Sustained in part. instalment had been paid.

The facts are stated in the opinion. Corporation director's liability

Messrs. Henry E. Tiepke, Henry M. debt in

of capital bank- Boss, Jr., and Louis W. Dunn, for plainruptcy dividend.

2. The statutory liability to creditors of Defendant is liable notwithstanding pay. directors of a corporation for contracting ments by the trustee in bankruptcy reduced debts in excess of the paid-up capital is not the debts below the statutory limit. affected by the fact that the debt had been

Merchants' Bank v. Stevenson, 10 Gray, reduced under the paid-up capital by divi. dends in bankruptcy proceeding.

232; Re O'Connor, 21 R. I. 465, 79 Am. St.

Rep. 814, 44 Atl. 591; Sayles v. Bates, 15 R. (June 20, 1913.)

I. 342, 5 Atl. 497; Flint v. Boston Woven V. What directors are liable.

IX. Applicability of statute of limitaa. Necessity that directors be such

tions. when excess occurs, 1033.

a. In general, 1050. b. Necessity of assent.

b. When statute begins to run, 1. In general, 1034.

1051. 2. What constitutes assent, X. Effect of expiration of corporate life, 1036.

1052. VI. When liability arises.

1. Introductory. a. In general, 1037. b. Determination of amount of As indicated in the title, the liability of

paid-in capital stock, sub directors under statutes which simply limit

scribed capital stock, etc., 1037. the indebtedness of the corporation withc. Determination of amount of out expressly making them liable in case debts.

this indebtedness is exceeded is not dis1. In general, 1039.

cussed. In this connection it has been held 2. What debts included.

that where the statute limits the indebted(a) In general, 1039. ness, but does not make the directors liable (b) Ordinary debts, 1040. for debts contracted in excess of the limit, (c) Bonded indebtedness, they are not liable, there being no such lia1040,

bility at common law. Frost Mfg. Co. v. (d) Mortgage indebted. Foster, 76 Iowa, 535, 41 N. W. 212. It has

been stated that the liability is of purely (e) Debts due a director, statutory origin. Manns Mercantile Co. v. 1040.

Smith, Miss. -, 64 So. 929. (f) Debts due stock See in this connection the Kentucky cases holder, 1041.

discussed in II. infra. (g) Advances made by The liability is limited to the amount of factors, 1041.

excess. This is assumed in the cases. It (h) Certificates of deposit, was expressly admitted in White v. How, 1042.

3 McLean, 111, Fed. Cas. No. 17,548. (i) Torts, 1042.

That such a liability continues after the 3. Evidence as to debts, 1043. death of the directors against their propd. Effect of waste or destruction of erty in the hands of an executor or admin

assets by assignee, 1043. istrator is apparently provided by statute e. Effect of reduction of debts, in Massachusetts. Hudson v. J. B. Parker 1043.

Mach. Co. 173 Mass. 242, 53 N. E. 867. VII. To whom liability extends.

See McComb v. Kellogg, 16 N. Y. S. R. 16, a. In general, 1044.

1 N. Y. Supp. 206, infra, IV. a, in this conb. To what creditors.

nection. 1. In general, 1045.

The statute does not apply in case of an 2. Doctrine that liability ex- association exercising corporate powers

tends only to creditors without legal authority, but applies only
whose debts con- in case of de jure corporations. Gay v.
tracted in excess of fixed Kohlsaat, 223 Ill. 260, 79 N. E. 77.
limit, 1045.

Such statutes may be abrogated or reVIII. Enforcement of the liability.

pealed by other statutes extending the a. Who may enforce, 1046.

power of the corporation to create debts. b. Where liability may be enforced, Thus, a statute fixing the maximum limit 1047.

of corporate indebtedness at one half the c. When liability may be enforced, capital stock paid in, and making the di1048.

rectors liable for any excess of debts and

ness, 1040.



Hose & Rubber Co. 183 Mass. 114, 66 N. E. Nassau Bank v. Brown, 30 N. J. Eq. 478; 592; Merchants' Bank v. Stevenson, 5 Allen, Continental Nat. Bank v. Buford, 107 Fed. 398; Leighton v. Campbell, 17 R. I. 51, 9 | 188; Merchants’ Bank v. Stevenson, 5 Allen, L.R.A. 187, 20 Atl. 14.

398; Chambers v. Lewis, 28 N. Y. 454; In accordance with the Leighton Case, Whitney v. Cammann, 137 N. Y. 342, 33 N. supra.

E. 305; Anfenger v. Anzeiger Pub. Co. Margarge & Green Co. v. Ziegler, 9 Pa. Colo. 377, 12 Pac. 400; 15 Enc. Pl. Pr. 76; Super. Ct. 438; Frank P. Miller Paper Co. 2 Thomp. Corp. $$ 1346, 1798. v. York Coated Paper Co. 34 Pa. Super. Ct. "After the payment of the last instal. 315.

ment” means after payment of the entire Messrs. William A. Spicer, Jr., Frank capital (fixed or increased). H. Swan, and Edwards & Angell, for Austin v. Berlin, 13 Colo. 198, 22 Pac. defendant:

433; Clow v. Brown, 150 Ind. 185, 48 N. E. A party who seeks to enforce the liability i 1034, 49 N. E. 1057; Leighton v. Campbell, of corporate officers under a statute must : 17 R. I. 51, 9 L.R.A. 187, 20 Atl. 14; Proviallege and prove affirmatively every fact, dence Steam-Engine Co. v. Hubbard, 101 U. default, or contingency upon which his right S. 188, 25 L. ed. 786; 10 Cyc. 853; Merto recover depends.

chants' Bank v. Stevenson, 5 Allen, 398. liabilities above this limit, is repealed as senting directors may be relieved of this to a corporation which is authorized by the liability. Others impose a liability only legislature of the state to issue its bonds upon assenting directors, or upon directors and notes to such an amount as, in addition who contracted the debt, or upon directors to means derived from its stock, should be who consented to the indebtedness, or dinecessary and sufficient for the construc- rectors under whose administration the extion and equipment of its road. Niagara cess happened. Bridge Works v. Jose, 59 N. H. 81.

The liability is usually to the creditors So, a statute providing that the capital of the corporation, but it has been fixed stock or indebtedness, or both, of any cor- in favor of the corporation itself, and to poration created by general or special law, the creditors in case of dissolution. may, with the consent of the persons or Many other variations in the statutes will bodies corporate holding the larger amount be noticed in the discussion, infra. Many of the value of its stock, be increased to of the questions which arise within the such an amount in the aggregate of each scope of the present note are answered by as it shall be necessary to accomplish and the statute governing the case. In fact, a carry on and enlarge the business and pur- decision is valuable only in so far as the poses of the corporation, repeals an existing statute construed is similar to the one gorstatute limiting the amount of indebtedness erning the case in which the user may be of the corporation, and making the directors interested. Consequently, any examination liable for any excess over this limit. Miller of the question here annotated should begin v. York Coated Paper Co. 39 Pa. Super. Ct. with an examination of the statute govern538.

ing the case in which the user may be inThe statute governing the liability of terested. No attempt has been made in the directors was held repealed in Rice v. Ken-note to set out all statutes governing the nedy, 76 Vt. 380, 57 Atl. 971; therefore question, but only those discussed by the the directors who had assented to an ex- courts. There are doubtless many statutes cess of indebtedness were held not liable. that have never been construed by the

courts, and it is doubtless a fact that many II. Forms of statute.

of the decisions have been rendered inap

plicable even in the jurisdiction in which There are two general forms of statutory rendered by changes in the statute. The provisions governing this question. First: necessity for first examining the statute There is the form which provides in sub- thus appears. stance that in case of an excess of debts over a stated limit, the directors shall be make the directors liable for incurring an liable therefor.

excess indebtedness, but, after limiting the Second: Another form prohibits the con- indebtedness, provide that the directors are tracting of debts above a stated limit, and liable for any intentional fraud for failing then provides that in case of excess the di- or refusing to comply substantially with the rectors shall be liable therefor.

articles of incorporation. Under such a The variations of the statutes in other statute it was held in Stafford v. Cain, 13 respects are numerous. The limit of debts Ky. L. Rep. 639, that directors who know. is variously fixed at “50 per cent of the ingly incurred an indebtedness in excess of capital stock," “the paid-in capital stock,” the prescribed limit were guilty of an in“the subscribed capital stock,” “the solvent tentional fraud within the meaning of the stock," and in some instances several times statute, and a creditor whose debt was crethe capital stock.

ated with the knowledge on the part of Again, the statutes vary in making the the directors that the indebtedness had aldirectors liable generally; in making them ready reached the limit prescribed, and who liable generally, but providing that dis-'failed to make his debt out of the corporate

bts "h certain forms of statutes do not expressly

The statute terminates directors' liability | 183 Mass. 114, 66 N. E. 592; Merchants' for a debt contracted while the indebted Bank v. Stevenson, 10 Gray, 235; 2 Thomp. ness exceeds the paid-in capital, upon the Corp. § 1346; Leighton v. Campbell, 17 R. I. reduction of such indebtedness to the 53, 9 L.R.A. 187, 20 Atl. 14. amount of said capital.

Flint v. Boston Woven Hose & Rubber Parkhurst, J., delivered the opinion of Co. 183 Mass. 114, 66 N. E. 592; Slater v. the court: Taylor, 146 Ill. App. 97, 241 I. 102, 89 N. This is an action on the case, brought by E. 271; Leighton v. Campbell, 17 R. I. 51, the plaintiff, a creditor of the Pawtucket 9 L.R.A. 187, 20 Atl. 14; Tradesman Pub. Steam & Gas Pipe Company, a Rhode Island Co. v. Knoxville Car Wheel Co. 95 Tenn. corporation created by special act of the 634, 31 L.R.A. 593, 49 Am. St. Rep. 943, 32 general assembly, to enforce certain statuS. W. 1097; Moore v. Lent, 81 Cal. 502, 22 tory liabilities alleged to have been incurred Pac. 875; Merchants’ Bank v. Stevenson, 10 by the defendant as a director of said comGray, 232.

pany, under the provisions of Pub. Stat. R. Dividends in bankruptcy are a reduction I. 1882, chap. 155, later re-enacted as Gen. within the statute.

Laws (R. I.) 1896, chap. 180. Flint v. Boston Woven Hose & Rubber Co. The declaration contains three counts, but property, could recover from the directors, \ son that the statutes are regarded as creand it was held no protection to them that ating a forfeiture or imposing a penalty. they believed that the debt would be paid. Ibid.; Schofield v. Henderson, 67 Ind. 258; Approved in Gunther v. Baskett Coal Co. Merchants' Bank v. Stevenson, 7 Allen, 489; 107 Ky. 44, 52 S. W. 931.

Manns Mercantile Co. v. Smith, Miss. Nor does the fact that the existing in- 64 So. 929; Kritzer v. Woodson, 19 Mo. debtedness is secured by mortgage, and is 327; Morimura v. Traeger, 11 Pa. Dist. R. therefore of record, charge the creditor with 378; Tradesman Pub. Co. v. Knoxville Car notice that the indebtedness had already Wheel Co. 95 Tenn. 634, 31 L.R.A. 593, 49 exceeded the limit prescribed by the articles Am. St. Rep. 943, 32 S. W. 1097. of incorporation. Stafford v. Cain, supra. Any general characterization of such stat

Under this statute directors who turnutes as penal, however, at once meets with the management of the corporation over contradictions in the decisions. That such to a managing officer who runs the business a statute imposes a penalty was denied in without the knowledge or control of the di- Neal v. Moultrie, 12 Ga. 104, in determining rectors concerning the creation of liabilities whether the right to sue was barred by a in excess of a charter limit, and who, upon special short term statute of limitations their attention being called to the fact that applicable to penalties, fines, or forfeitures. an excess indebtedness had been incurred, In this jurisdiction, however, it is treated ratified the same by giving a note therefor, as a statutory remedy which must be strictare liable under such statute. Randolph v. ly pursued. Banks v. Darden, 18 Ga. 318. Ballard County Bank, 142 Ky. 145, 134 S. This strict construction is evidenced in W. 165.

Walker v. Birchard, 82 Iowa, 388, 48 N. W. That they must be directors at the time | 71, where, under a statute making the dithe debt was incurred, under the Kentucky rectors of a railroad company which has reform of statute, is held in Gunther v. Bas. ceived taxes voted in aid thereof under statkett Coal Co. supra.

utory provisions, liable to the stockholders

of the corporation for double the amount, III. General rules of construction.

estimated at its par value, of the stock held

by them, for encumbering the road in exA rule sustained by the practically uni- cess of a stated sum, the directors were form current of authorities is that such held not so liable where they encumbered statutes as are the subject of this note are the road in excess of the sum named in the to be strictly construed. Woolverton statute prior to the voting of the tax. The Taylor, 132 II. 197, 22 Am. St. Rep. 521, court expressed the opinion that the di23 N. E. 1007; Lewis v. Montgomery, 145 rectors are personally liable to stockholders Ill. 30, 33 N. E. 880; Slater v. Taylor, 241 only in cases where, after the company has Ill. 102, 89 N. E. 271; Walker v. Birchard, received taxes voted in its aid, the bonds 82 Iowa, 388, 48 N. W. 71.

are issued by their authority in excess of It has been stated that, at least, the lia- the limits named in the statute, and the bility of the directors should clearly ap- stock is thereby rendered of less value. The pear. Moore v. Lent, 81 Cal. 502, 22 Pac. statute limited the right of the stock. 875.

holders to recover to cases in which their Every intendment and presumption is in stock was rendered of less value or lost by favor of the director, who is to be held lia- the incurring of the indebtedness. ble only on full and strict proof of all the facts by the statute made essential to cre

IV. Nature of liability. ate the liability. Irvine y. McKeon, 23 Cal.

a. In general. 472.

The rule of strict construction is applied There is very little harmony in the deto such statutes by some courts for the rea- cisions as to the nature of the liability


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