The Merchants' Bank of New Haven a. Bliss.

offence and injury to the person to whom they are forfeited, as well as a punishment for a misdemeanor; and penalties whose benefit is given to a party aggrieved, include equally with forfeitures the idea of both such compensation and punishment. The fact of such gift to the injured party does not make a penalty less one; nor would its extension to the whole value of the interest affected, instead of being limited to a fixed sum. On the other hand, it would cease to be a penalty if it were limited to the actual loss of the party. In fact, they are only created in cases where the proof of such loss is difficult, if not impossible, and where, by the probable excess of the penalty beyond the loss to the party injured, or gain to the offender, the latter may be deterred from the offence. It is merely because such penalties may surpass indemnity for loss, and are not measured by it, that they are so termed, because, as was laid down by this court in Fry a. Bennett (1 Abbotts' Pr., 308), every excess merely of even vindictive damages beyond indemnity is a penalty.

The liability of the defendants does not arise from any act connected with the creation of the debt to the plaintiff. That debt is the interest affected by the failure to file a proper report or payment of improper dividends complained of. The grievance of the plaintiff consists of the effect upon his efforts in the collection of such debt, and not of any fraud or other influence in contracting it. The extent of that grievance could not easily be proved. It may not have equalled the whole amount of the debt, for the company may have been innocently insolvent before the time of filing the report required, or the dividends not sufficient to have paid the debts. The infliction upon the trustees of the payment of the whole debt is therefore a penalty, for which an action is given to an aggrieved party.

Moreover, the application of the term "penalty or forfeiture" to such liability as that of the defendants has been fully recognized by the Legislature. Actions for penalties and forfeitures against the directors and stockholders of moneyed corporations and banking associations are provided for in section 109 of the Code; but it will be found, on an examination of the statutes in relation to such corporations and associations, that there is no instance of the infliction of a penalty of a fixed sum upon either directors or stockholders, eo nomine; all those which are imposed are to indemnify an injured party either fully or

The Merchants' Bank of New Haven a. Bliss.

to the extent of the stock owned by the stockholders. (2 Rev. Stat., 5 ed., 591, § 10; b., 592, §§ 15, 16, 17; Ib., 602, § 3.) It is therefore plain that such liabilities as that of the defendants was intended to be embraced by section 92.

Besides these considerations, the period of limitations is made to run from the time the cause of action accrued, not from the time the debt was incurred; the defendants are made liable as trustees long after their liability as stockholders has ceased, and for the full amount of the debts, not merely to the extent of their stock or the injury to the creditor; and they have no right of contribution from the other stockholders. It is difficult to imagine a liability more wanting in all the features of a contract, or more fully possessing those of a penalty.

The demurrer, therefore, to the ninth paragraph of the answer must be overruled.

The tenth paragraph of the answer sets up as a defence, laches on the part of the plaintiffs in suing the company, and notifying the defendants, so as to enable them to proceed against the other stockholders, who are alleged to be solvent. This defence proceeds upon the principle that the other stockholders are involved in the liability of the defendants as trustees, either as joint contractors or sureties. If that were so, it would take away the character of the defendants' liability as a penalty, which has been already disposed of. The demurrer to this part of the answer is well taken, and should be sustained.

The judgment in this case must therefore be, that the order made at special term be reversed, as to the demurrer to the defence contained in the ninth paragraph of the answer, and affirmed as to that to the defence in the tenth, without costs on the appeal; with liberty to both parties to withdraw or amend their defective pleadings in twenty days, on payment of costs.

BOSWORTH, Ch. J.-The demurrer to the defence set up under the ninth head of the answer, presents the question whether the liability imposed by the twelfth and thirteenth sections of the Manufacturing Companies' Act, upon the trustees of a company, is a penalty or forfeiture within the meaning of subdivision 2, section 92, of the Code?

The trustees of a company, incorporated under that act, are not, as trustees, liable for any debt of the company. Neither are

The Merchants' Bank of New Haven a. Bliss.

its stockholders liable for any of its debts,-except those owing to "their laborers, servants, and apprentices, for services performed for such corporation" (§ 18),—after the whole amount of capital fixed by such company has been paid in, and a certificate thereof made and recorded in compliance with section 10 of that act.

But although the trustees being stockholders, and liable under section 10, may have been charged as stockholders, and satisfied the whole liability imposed by that section, yet if the company subsequently omits to perform the duty enjoined by section 12, the trustees will become liable for all the debts of the company.

This liability is imposed upon them as a punishment, and if the duty enjoined by section 12 is not performed, they severally and jointly forfeit a sum to be measured by the amount of the company's then existing debts, and such as it may contract before that duty shall be performed.

To determine whether a liability to which a person is subjected is by way of penalty or forfeiture, it is not necessary that the statute in the language imposing it should denominate it a penalty or forfeiture: when the statute subjects an officer of a company, as such officer, to a liability to pay money, either for omitting to perform a duty enjoined or for doing an act prohibited, and does this in a case where, but for such omission of duty or wrongful act, he would be under no liability, he is thereby subjected to a forfeiture of the sum which he is made liable to pay, and, so far as he is concerned, the imposition of liability is by way of punishment. Subjecting the trustee to such liability is none the less a punishment as to him, although the creditors may recover more than a full indemnity against the consequences of this misconduct by obtaining satisfaction

of their debts.

Each creditor of the company is, under this act, the aggrieved party to whom the action is given, within the meaning of subdivision 2, section 92, of the Code.

Section 12 of the act makes it the duty of the company to file the report therein mentioned; and for the failure of the company to perform the duty, punishes its trustees, by whom alone that duty can be performed. It treats the creditors of the company as the parties aggrieved by this neglect of duty, and for this neglect of duty gives to each an action against the

The Merchants' Bank of New Haven a. Bliss,

trustees jointly and severally for the whole amount of his debt against the company.

The trustees, on being compelled as such to pay to the extent of the liabilities thus imposed on them, have no claim against the company for reimbursement.

In no case are the consequences prescribed by statute, for an omission or violation of duty, more emphatically penal than in the present.

So, too, the liability imposed by section 13 treats the creditors of the company as the parties aggrieved by the misconduct which that section prohibits, and gives them an action to enforce against the trustees the liability imposed upon them by that section for doing the act which it forbids.

The act prohibited by that section is treated as one by which each stockholder receives his true aliquot share of the sum divided, and the creditors, not the company, are regarded as the aggrieved parties.

In this view, the demurrer to the defence now under consideration is not well taken, and should have been overruled · and as to that, the order appealed from should be reversed, with liberty to the plaintiffs to withdraw their demurrer and reply to this part of the answer, on payment of the costs of the de

murrer.

The demurrer to the defence, pleaded under head tenth of the answer, is well taken; and as to that, the order appealed from should be affirmed.

Judgment reversed in respect to the demurrers to the ninth paragraph of the answer, and affirmed as to the residue.

Bull a. Melliss.

BULL a. MELLISS.

Supreme Court, First District; General Term, September, 1861.

EXECUTION AGAINST THE PERSON.

When an order of arrest has been granted against a defendant, as a provisional remedy, an execution may be issued against his person, upon judgment against him, without any order of the court.

A motion for leave to issue such an execution, under such circumstances, should not be denied, but dismissed.

• In How a. FREAR (Supreme Court, First District; At Chambers, 1861), it was Held, that an order of arrest having been granted in the action, and not having been vacated, plaintiff was entitled, after judgment, to issue execution against the person, of course; and it was not necessary, in such case, that the judgment should award the execution, or show that the case was a proper one.

BARNARD, J.-An order of arrest was issued in this action, and the defendant arrested under it, who gave bail. No motion was made to discharge the order : judgment has been entered. Defendant now moves to set aside execution issued against the person, and the arrest thereon, because not warranted by the cause of action or judgment, or issued or allowed by order of the court or of any one of the justices thereof.

An order of arrest having been granted, and remaining in force, is sufficient to support an execution against the person, unless, indeed, the whole proceedings were void, I have looked into the papers to ascertain whether they are void or not, and am of opinion that they are not. It is not necessary that the judgment should award execution against, or that it should appear from the judgment that the case is one in which an arrest is authorized; nor is it necessary that an execution against the person should be directed by a special order.

Defendant also moves to set aside the judgment, on the ground that the court had not jurisdiction of the subject matter. In whatever light the complaint is considered, the court had jurisdiction. It is either an action for an accounting, or an action for money had and received in a trust capacity.

Defendant also moves, on the merits, to have his default in not answering set aside, and for permission to come in and defend.

A similar motion has before been made, on substantially the same papers, and denied. It cannot be again renewed.

Motion denied, with $10 costs of opinion.

In MOLENAER a. KOERNER (Supreme Court, Second District; Special Term, 1861), it was Held, that execution against the person cannot be issued on a judgment, in an action in which the grounds of arrest are extrinsic to the cause of action,—e. g., fraud in contracting the debt sued for,-unless an order of arrest was obtained before judgment; and that fraud in contracting only a part of the debt would not VOL. XIII.-16