Corporation, Liability of officers. In order to hold an officer of a corporation liable for its debts, under Pub. Sts. c. 106, § 60, on the ground that he signed a certificate required by law knowing it to be false, bad faith on the part of the defendant must be shown.
In a suit in equity to hold the president of a corporation liable for its debts, under Pub. Sts. c. 106, § 60, on the ground that he signed a certificate required by law knowing it to be false, it appeared, that the corporation was formed by changing a Maine corporation into a Massachusetts corporation, each step being taken under advice of counsel, that the president had signed a certificate that the whole amount of the capital stock had been paid in in full and had been invested by depositing it in a certain bank, that when this certificate was filed the president knew that there was a credit in the bank to the amount of the capital stock, but also knew that it was placed there in order that a check drawn upon it for the full amount of the account should be exchanged for the president's note to the bank, which afterwards was done, that before making the certificate the president sought the advice of counsel and was told that the transaction was a compliance with the provision of the statute requiring the capital stock to be paid in, and that he made the statement contained in the certificate in good faith. Held, that, even assuming that the certificate was false, there was no evidence of bad faith and the president could not be held liable.
HAMMOND, J.
Upon the facts agreed there can be no reasonable doubt that the only ultimate object of the various steps taken was to change the Maine corporation to a Massachusetts corporation, with its capital stock reduced one fifth. There was no actual sale of anything because the sellers were in substance the buyers; nor was there any change in the assets or liabilities. At the end of the transaction each stockholder had the same relative interest in the property as before. All this was intended from the first, and each step, including the opening of the account in the bank to the credit of the Massachusetts corporation, was taken solely to carry out this intention. If, therefore, the defence rested entirely upon the proposition that the certificate that the whole amount of the capital stock had been paid in in cash and had been invested by depositing it in the bank was true, there would seem to be a pretty clear case for the plaintiff.
But even if it be assumed that the certificate was false, the bill cannot be maintained against the defendant Chase unless it also appears that he knew it to be false. There can be no doubt that he knew all the facts and the purpose of all the transactions. While it is true that at the time the certificate was filed he knew that there was a credit in the bank to the amount of the capital stock, he also knew that it was not placed there for any other purpose than that for which it was finally used, namely, that a check to be drawn upon it for the full amount of the account should finally be exchanged for Chase's note to the bank.
The statute is penal in its nature and is to be strictly construed. It is intended to punish wilful falsehood. There must be mala fides. Stebbins v. Edmands, 12 Gray, 203. Felker v. Standard Yarn Co. 150 Mass. 264. It is agreed that in all these matters Chase acted under and in accordance with the advice of counsel. We understand by this that this business of changing one corporation into the other was supervised by counsel, that the nature of the steps to be taken and the manner of taking them in order that there should be a full compliance with our laws was left to his direction, and that everything was done as he advised. One of the questions arising was whether under the circumstances the opening of the account in the bank to the credit of the new corporation was a compliance with the statute as to the payment of the capital in cash. Upon this Chase sought advice and was told that it was a compliance and that the capital stock had been so paid in within the meaning of the statute. Having been so advised on this question and as to making the certificate to that effect, he made it accordingly. The question before him was one of the construction of a statute, a legal question, and, whatever may be thought of the soundness of the advice under which he acted, we cannot say that he did not act in good faith. It would be hard to say that a man is to be held to mala fides simply because, acting in accordance with the opinion and advice of his counsel learned in the law, he in good faith makes a statement as true which upon a correct interpretation of the law is not true.
Bill dismissed.