Robinson v. Farnsworth

TYLER, P. J.

Suit to enforce liability against corporation directors.

The complaint alleges that in the month of April, 1927, defendants were directors of the Pickwick Spark Plug Co., a corporation, and at that time they incurred an indebtedness on behalf of the corporation in excess of its subscribed capital stock. This action was brought to enforce such liability.

It was defendants’ contention in the court below that the statute (Civ. Code, sec. 309) upon which the action was based had been repealed, and that the liability of directors for

[138]

such an act therefore no longer existed. At the close of plaintiff’s case, a motion for a nonsuit was made on the ground stated. The trial court granted the motion and judgment went for defendants. From such judgment this appeal is prosecuted.

It is now conceded by respondents, as indeed it must be, that section 404 of the Civil Code contains, as claimed by appellant, a general saving clause preserving the rights to creditors, accruing under the repealed section prior to its repeal. It is not disputed that the liability here sought to be enforced was thus created. Hence, under its provision, the repeal of section 309 of the Civil Code in 1929 (Stats. 1929, p. 1266) did not abate or impair plaintiff’s alleged cause of action. (See

Western Mortgage & Guaranty Co.

v.

Gray,

*

(Cal. App.) 291 Pac. 670;

Peterson

v.

Ball,

211 Cal. 461 [74 A. L. R. 187, 296 Pac. 291].) Respondents, however, now contend for the first time on appeal, that an action of this character should be in the form of a creditor’s bill in equity rather than in the form of an individual or private action, for which reason the nonsuit was properly granted. The repealed statute imposed a liability against directors of corporations for incurring debts beyond their subscribed capital stock. The statute provided in express terms that such directors were in their individual and private capacities, jointly and severally liable to the corporation and to the creditors thereof, to the full amount of the debt contracted.