ant appeared and denied the truth of all the matters alleged in the declaration. Subsequently the parties went to trial, and the verdict and judgment were in favor of the defendant. Exceptions were filed by the plaintiffs, and they sued out a writ of error and removed the cause into this court. When the plaintiffs rested their case, the defendant requested the court to instruct the jury to return a verdict in his favor; and the bill of exceptions shows that the circuit court, being of the opinion that there were no disputed questions of fact, gave the instruction as requested, and that the verdict was in conformity with the instruction. Opposed to that, the plaintiffs insist that the facts proved entitled them to the verdict, and they assign for error the instruction given by the circuit court to the jury.

§ 710. A statute subjecting an officer of a corporation to personal liability for debts of the corporation, because of neglect of duty, is penal in its character and must be strictly construed.

Three principal defenses are set up by the defendant, as follows: 1. That he was never legally elected president of the corporation. 2. That the debt was not contracted while he was acting in the capacity of president of the company. 3. That, by the proper construction of the state statute, he is not liable for the debt due to the plaintiffs, even if the first two points cannot be sustained. Preliminary to those inquiries, the defendant contends that the statute upon which the action is brought is penal, and should be strictly construed; in which proposition the court unhesitatingly concurs. Statutes somewhat similar in character have been passed in several of the states, in all of which states it is held that the statutes are penal, and that, for that reason, their provisions must receive a strict construction. Take, for example, the statute of New York, which provides that, on failure of the company, within twenty days from the 1st of January, to make, publish and file an annual report, all the trustees of the company shall be jointly and severally liable for all the debts of the company then exist. ing, and for all that shall be contracted before such report shall be made. It has repeatedly been held that the act was penal, and that it could not be extended by construction to cases not fairly within its language. Hence it was decided that the trustees could not be held liable on account of the failure to publish and file the annual report unless the debt was contracted during the default, or unless it existed at the time of a subsequent default. Garrison v. Howe, 17 N. Y., 458; Boughton v. Otis, 21 id., 261.

Repeated instances have occurred where suit was brought in one state to enforce the statute liability for the debts of a corporation created by the legis lature of another state, in all which it is held that the statute is penal and that it can only be enforced in the state where the statute was passed. Halsey v. McLean, 12 Allen (Mass.), 438; Derrickson v. Smith, 3 Dutch. (N. J.), 166; Sturges v. Burton, 8 Ohio St., 215; Bank v. Price, 33 Md., 487; Irwin v. McKeon, 23 Cal., 472. Corresponding decisions have been made in other courts, and to such an extent as to justify the remark that the rule is universal. Bird v. Hayden, 1 Rob. (N. Y.), 383; Moier v. Sprague, 9 R. I., 541. Suppose that is so, then it is contended by the defendant that the act cannot be enforced against him unless it appears that he was legally elected president, and that he was under legal obligation to perform the duties of that office. Persons acting publicly as officers of a corporation are ordinarily presumed to be rightfully in office. Bank of United States v. Dandridge, 12 Wheat., 64 (§§ 843-854, infra); Angell & Ames, Corp. (9th ed.), sec. 139. Individuals elected and serving as such officers may incur the statute liability for the corporate debts of the

company, even though irregularities occurred in their election, if in all other respects the evidence brings them within the category of legal default. Newcomb v. Reed, 12 Allen (Mass.), 362; Hagner v. Brown, 36 N. H., 545, 563.

Stockholders elect the directors, and it is claimed by the defendant that he was not legally elected president, because he was not a stockholder, the condition of his subscription having never been fulfilled; but he paid the first instalment, and the evidence reported shows that he acted as a stockholder from the time of his election as president until his resignation. His subscription to the new stock was made before he was elected president, and the bill of exceptions shows that on the following day he paid the required amount of his subscrip-. tion. Power to elect the president is vested in the directors; and the record shows that he was formally elected to the office, and that he acted in that capacity for a month and a half, when he resigned. Beyond controversy, he was the acting president, and in view of the circumstances the court is not inclined to rest the decision of the case upon the ground that the defendant was not, during the period he performed the duties devolved upon the president of the company, legally responsible for the neglect to comply with the requirement of that statute. He acted as president during that period, and, therefore, is liable, if any liability exists, notwithstanding the informality of his election. Thayer v. New England Lithographic Co., 108 Mass., 521.

§ 711. The time that the contract was made, not the time the goods were delivered, fixes the responsibility, if any, under the statute making officers personally liable.

Three months before he was elected president the company contracted with the plaintiffs for a steam-engine, but it was not shipped for delivery to the purchasers until four days after he was elected president and commenced to perform the duties of his office. Certificates of the kind are required to be deposited with the town clerk on or before the 15th of February or of August, and the provision is that the persons neglecting or refusing to comply with such requirements "shall jointly and severally be liable to an action founded on the statute for all debts of such corporation contracted during the period of such neglect or refusal." Intentional neglect and refusal create the liability, and the liability extends to the debts contracted by the company during the period of such neglect and refusal, and to no others, which of itself is sufficient to disprove the theory of the plaintiffs that the defendant can in any view be held liable for the default of his predecessor. Officers of the kind are responsible for the consequences of their own neglect or refusal to comply with the statute requirement while they remain in office, and they continue to be liable. for those consequences even after they go out of office; but they are not responsible for the consequences of subsequent defaults committed by their successors, nor are the successors in such offices in any way responsible for the consequences of such defaults committed by their predecessors in office, for the plain reason that the language of the statute is that the persons so neglecting or refusing shall be liable in an action founded on the statute for all debts of the corporation contracted during the period of such neglect or refusal. Boughton v. Otis, 21 N. Y., 261.

Much aid in construing the statute in question is not required, as the language employed by the legislature speaks its own construction; but if more be needed, it will be found in another decision of the same tribunal as that just cited. Quarry v. Bliss, 27 id., 277. Statutes of the kind are passed for the benefit of creditors, and their reliance always is upon the officers who are

such when they give the credit, and not upon persons who had ceased to be officers, or who might subsequently become such when those in office should go

out.

Three things must concur in order that it can be held that the defendant is liable: 1. That he was president of the corporation. 2. That he intentionally neglected or refused to deposit the described certificate, as required by the statute. 3. That the debt was contracted during the period of such neglect or refusal. Where all these things concur, the president is liable, not for all the debts of the corporation, but for all such as were contracted while he was guilty of such default. If he was not the president at the time of the default, or if the debt was contracted before he was in default, then he is not liable, as the case is not brought within the letter or spirit of the statute. Liability in such a case, as imposed, is in its nature penal, and in order to render such an officer responsible it must appear that he has neglected or refused to do some act which the law made it his duty to perform. Craw v. Easterly, 4 Lans. (N. Y.), 513, 521; Bond v. Clark, 6 Allen (Mass.), 361-363; Harrisburg Bank v. Commonwealth, 26 Penn. St., 451.

Marked differences exist between the provisions of the New York statute and those of the state of Connecticut, the latter being much less stringent than the former. By the New York law the duty of making the annual return is required of the corporation itself, and the penalty for neglect is imposed upon the trustees, who are intrusted with the management of its affairs. Consequently it is a corporate duty, and being such, each succeeding board is bound to perform it if it has been neglected by their predecessors. Unlike that, the duty to deposit the certificate under the Connecticut statute is devolved on the president and secretary in terms which show that a new president does not inherit the consequences of neglect of duty or pecuniary liability from his predecessor in office. He is made liable for his own neglect, and not for that of a prior officer, as clearly appears from the closing sentence of the penal section. In New York the trustees, upon default, are made liable for all the outstanding debts of the corporation, whenever contracted, but in Connecticut the president and secretary are liable only for debts contracted during the period of such neglect or refusal. Prior to his election the president, as such, had no duty to perform in respect to such a certificate, which is a self-evident proposition, and it is equally clear that his duty in that regard ceased when he ceased to be president of the corporation. Certificates of the kind are required to be made and deposited with the town clerk on or before the 15th of February or of August, as explicitly provided by the statute. On the 15th of February of that year his predecessor was in office, and of course the defendant was under no obligation to deposit any such certificate on that day, nor was he in any manner in default because his predecessor did not perform that duty. Argument to show that he could not make and deposit such a certificate before he was elected is unnecessary, as such a proposition would be absurd, from which it follows that he was not under any legal obligation to perform such a service until the 15th of August of the same year, it appearing that his election as president took place less than two months prior to that time.

Concede that it became his duty as president to make and deposit such a certificate with the town clerk on the 15th of August next after his election, still it by no means follows that the present action can be maintained, as it clearly appears that he was not in default before that time. Proof of default in the defendant without more will not maintain the action, as it is also incumbent

upon the plaintiffs to prove that the debt alleged was contracted during the period of such neglect or refusal. Apply that test to the case exhibited in the record and it is clear that the defendant is not liable and that the decision of the court below is correct. When the agreement for the steam-engine was made, the defendant was not president of the corporation, and of course he was not in default at that time, nor was he in default when the engine was delivered and placed in position, because that took place, in any view of the evidence, one month before the 15th of August, when the default of the defendant commenced. Prior to that time the defendant was never in default, and inasmuch as the debt of the plaintiffs was not contracted during the period of his default, he was not liable for that debt. Garrison v. Howe, 17 N. Y., 458, 462. Judgment affirmed.

§ 712. In general.- The acts done by the officers of a corporation are acts done by the corporation itself. Smith v. Poor,* 3 Ware, 148. See § 616.

§ 713. When corporate officers go beyond the powers of the company and do acts not authorized by the charter, then their acts bind themselves and not the company. Ibid.

§ 714. The officers and agents of a corporation constitute all that is visible of its existence, and may be authorized to act for it as well without as within the state creating it. St. Clair v. Cox, 16 Otto, 855.

$715. Officers of a corporation have no right to enter into or participate in a combination, the object of which is to divest the corporation of its property and obtain it for themselves at a sacrifice, or at the lowest price possible. They cannot seek their own profit at the expense of the corporation, its stockholders, or even its bondholders. Such a course is forbidden by their relation to the corporation, and a sale made in violation of such duty will be set aside as fraudulent. Jackson v. Ludeling, 21 Wall., 624.

§ 716. Removal of officers.— Officers of a corporation who are removed by the judgment of a court continue to be de facto officers until such judgment is recorded. Mining Co. v. Anglo Californian Bank,* 14 Otto, 192.

§ 717. Until directors are judicially ousted they are de facto officers of their corporation, holding under color of an election and having charge of the affairs of the company. They are capable of binding it in all matters legally devolving on directors of the company. Anglo Californian Bank v. Mahoney Mining Co.,* 5 Saw., 255.

§ 718. Where an oral decision is rendered declaring that the election of directors then in office was illegal and void, such decision does not oust them from office until the decree embodying it shall be regularly filed or entered of record; and their action, before such decree has been so filed or entered of record, ratifying an overdraft of money from a bank, is a valid ratification, although certain of the directors were informed of the decision ousting them from office. Ibid.

§ 719. Where a corporate officer holds his office during good behavior, an act of the legislature fixing the tenure of such office, at the expiration of which it shall become vacant, impairs the contract under which such person occupies the office, and is unconstitutional. Allen v. McKean, 1 Sumn., 298.

§ 720. An information in the nature of a quo warranto may be sustained at the relation of a private person against a person usurping an office under a private corporation. But it must be a case in which the court would have power to impose a fine, and a case in which the public is concerned. Gunton v. Ingle, 4 Cr. C. C., 438.

§ 721. Eligibility. The charter of a banking corporation requiring that "there shall be fifteen directors, eight of which, at least, shall be practical mechanics," does not require that any of the mechanics shall be in active practice at the time of their election. Gray v. Directors of Mechanics' Bank, 2 Cr. C. C., 51.

§ 722. Election of officers.— A president and a secretary of a corporation cannot be elected at a stockholders' meeting. Authority to elect such officers is vested in the directors. In re St. Helen Mill Co., 3 Saw., 88 (§§ 1049-54).

§ 723. An election of the directors of a corporation is legal although accomplished by a minority of the holders of shares of stock, and although holders of other shares were, by an injunction of a proper court, excluded from voting. Brown v. Pacific Mail Steamship Co., 5 Blatch., 525.

§ 724. De facto officers. An officer who has not given bonds as required by the rules or by-laws of his company, but who has been permitted to exercise his office by the directors, is

a de facto officer, and his acts as such are valid. Bank of United States v. Dandridge, 12 Wheat., 64 ( 843-854).

§ 725. Meetings of directors.- A by-law of a corporation regulating special meetings of directors does not affect third persons. Samuels v. Holliday,* McCañon, 214. See § 605. § 726. A by-law, made simply by the board of directors of a corporation, prescribing the mode of the notice for the meetings of the directors, cannot be extended to affect contracts with third persons. If fair notice of a meeting and its objects is given, it is immaterial how or in what form it was given. Samuel v. Holladay, 1 Woolw., 407.

§ 727. Where, at a meeting of a board of directors of a corporation, formed for the purpose of pecuniary profit, an act is ordered to be done, without objection, either then or subsequently made, to the regularity of the meeting, by any director or stockholder, and the act thus authorized is afterwards performed, its legality cannot be afterwards questioned in a suit in equity, on the ground of irregularity. Ibid.

§ 728. Where a director was known to be ill and unable to attend a meeting of directors of his company, it was doubted by the court whether it was necessary to give him notice of such meeting at all. In any event, held, that a written notice left at his place of business was sufficient to charge him with knowledge of the meeting. Corbett v. Woodward, 5 Saw., 411.

§ 729. Minutes of a meeting of a board of directors of a mine, held nearly a year after the sale of the mine, are inadmissible evidence to charge an absent co-director with knowledge of the contents of a telegram sent to the directors by the president of the company, and with knowledge of the action of the directors upon receipt of the telegram. Emma Silver Mining Co. v. Park, 14 Blatch., 416.

$730. Meetings of directors of a railway company to authorize the issue of bonds secured by mortgage of its property may be held outside of the state in which the road lies. Galveston Railroad v. Cowdrey, 11 Wall., 476.

§ 731. Where the statutes and by laws of a corporation are silent as to the place where special meetings of directors shall be held, such place rests within the discretion of the president, who need not call them to be held at the principal office and place of business of the company, even though the regular annual meeting of the company be required to be held thereat. Corbett v. Woodward, 5 Saw., 411.

§ 732. The use of money obtained by a loan in the affairs of a corporation is not a ratification of the act of its president in making the loan, where there has been no ratification or meeting by the directors of the company after the loan. A corporation acts by its directors, and to do so they, or a majority of them, must meet together as a board, and that fact, and their action thereat, must appear from its records. Ibid.

733. Parties to suits.- In a suit in equity against a corporation, where the officers thereof are made co-defendants with the corporation, and no relief is prayed against such officers which is not prayed against the corporation, and no relief prayed against them as individuals, they are mere nominal parties to the suit. Such persons are not proper parties, and the plaintiff can deprive the corporation of no rights by joining them. Hatch v. Chicago, etc., R. Co., 6 Blatch., 105.

§ 734. Treasurer.- The treasurer of a corporation has authority to bind it by assenting to an adjustment of an account. Bradley v. Richardson,* 23 Vt., 720.

§ 735. The fact that the treasurer of a corporation, who assented on its behalf to an adjustment of its account with another firm, was a member of such firm, does not invalidate such adjustment, the fact of his membership in the firm being know to the corporation, and his resignation of the office of treasurer because of such partnership having been refused by the corporation. Ibid.

§ 736. Bank cashier.- Where the promise in a negotiable note was to O. C. H., cashier, parol evidence is admissible to show that he was cashier of the bank suing upon the note, and that in taking it he acted as the bank's cashier and on its behalf. Baldwin v. Bank of Newbury, 1 Wall., 240.

§ 737. Powers of directors. The directors of a corporation have no power, without the consent of the stockholders, to lease its plant and business or to contract for the sale of the same. Cass v. Manchester Iron & Steel Co., 9 Fed. R., 640 (§§ 915, 916).

§ 738. In California, the board of directors of a mining company may designate the banking institution in which the funds of the company shall be deposited, and may prescribe the mode in which and the officers by whom they shall be withdrawn. They may borrow money for the purposes of the corporation, and may authorize the corporate officers to negotiate loans, to execute notes, and to sign checks drawn against its bank account and for overdrafts. Mining Co. v. Anglo Californian Bank,* 14 Otto, 192.

§ 739. A board of directors who represented but a minority of the stockholders, and who expected to be superseded by an adverse board, made a lease of a mine, with the option to