CHAPTER VII.

OFFICERS AND AGENTS OF FOREIGN CORPORATIONS.

SECTION.

425. Officers and Agents of Foreign Corporations.

426. Control by Court of Equity.

427. Penal Liabilities of Officers and Directors. 428. Same-Omission of Corporate Duties.

§ 425. Officers and Agents of Foreign Companies. -Of course this is not the place for even a brief discussion of the powers, duties and liabilities of officers and agents of corporations. With respect to foreign corporations, it would seem obvious on principle that the rule of comity which by recognizing the legal existence of the foreign corporation recognizes the law of its creation, must recognize and enforce the duties, liabilities and obligations imposed by that law, with perhaps, the single exception, perhaps, of provisions imposing a penalty. This doctrine, aside from the exception mentioned, is not very frequently illustrated by the adjudicated cases.

§ 426. Control by Court of Equity.-While, as we have already seen, a local court will not exercise a visitorial power over a foreign corporation,' and, of course, has no power to remove or appoint trustees or directors of a foreign company, it can, nevertheless, enjoin their action when illegal, or when they 1 Ante, § 226.

are acting fraudulently, or unlawfully, if they, themselves, are personally within the jurisdiction.'

§ 427. Penal Liabilities of Officers and Directors. -In accordance with the principle, to which we referred in discussing the liabilities of stockholders, that penal laws will not be enforced beyond the jurisdiction in which they were enacted,' penalties imposed upon the officers or agents of foreign corporations by charter or the general statutes of the corporate domicile, will not be enforced in the foreign jurisdiction. As to what are penal liabilties in such cases and what are not, the distinction is very similar to that made in the case of the liability of stockholders. If the obligation is by the law of the corporate organization an incident of the office, the liability is evidently contractual, and will be enforced in a foreign jurisdiction. Thus, it was held that a provision in the charter of a foreign bank, that the president and directors shall be jointly and severally individually liable upon any bills or notes that the bank may issue or circulate, and that upon demand and refusal of payment action may be brought against such president and directors jointly and severally, and permitting plaintiff to declare generally for money had and received, with a specification of dates, sums, payees and numbers of bills or notes, confined the plaintiff to no special remedy, but raised a debt in his favor which could be enforced wherever the debtor or his property could be found according to the forms of law of that place."

31 Fed. Rep. 513. Contra: Lawler v. Burt, 7 Ohio St. 340; Sturgis v. Burton, 8 Ohio St. 215.

§ 428. But where a liability for corporate debts is imposed on trustees or officers of a corporation, on failure to file certain statements, showing the financial condition of the company, the obligation is penal;' and so, too, is a personal liability, imposed on officers and directors, for the corporate debts in excess of the amount of capital stock actually paid in. Such penal liability will not be enforced in a foreign jurisdiction.3

Same-Omission of Corporate Duties.

1 Chase v. Curtis, 113 U. S. 452; Steam Engine Co. v. Hubbard, 101 U. S. 188; Merchants' Bank v. Bliss, 35 N. Y. 412; Miller v. White, 50 N. Y. 137; Wiles v. Suydam, 64 N. Y. 173; Easterly v. Barber, 65 N. Y. 252; Veeder v. Baker, 83 N. Y. 156; Stokes v. Stickney, 96 N. Y. 323; Shaler, etc. Quarry Co. v. Bliss, 34 Barb. 309; Kritzer v. Woodson, 19 Mo. 327; Moies v. Sprague, 9 R. I. 541.

2 Bank v. Price, 33 Md. 487; Irvine v. McKeon, 23 Cal. 472.

3 Halsey v. McLean, 12 Allen, 438; Bank v. Price, 33 Md. 487; Derrickson v. Smith, 27 N. J. L. 166; Bird v. Hayden, 1 Robt. 383.

CHAPTER VIII.

NOTICE OF CORPORATE POWERS.

SECTION.

433. The General Rule.

434. Charter Powers of Foreign Corporations.

435. What Legislation Designated by "Charter."

§ 433. The General Rule. The general rule, based upon obvious principles of justice and expediency, is that one who deals with a corporation must take notice of the limitations of its powers imposed by the terms of its charter and the statute law; that dealing knowingly with an artificial being, created by law, it cannot assume the possession by it of any natural powers, and is charged with the duty of ascertaining for himself precisely what granted powers have been vested in it.' On the same principle persons dealing with a joint-stock company, organized under the English statutes, are charged with notice of the powers vested and limited by its deed of settlement."

§ 434. Charter Powers of Foreign Corporations." This rule is applicable to foreign corporations also; certainly as far as concerns limitations upon its powers imposed by its charter. For, although as a general thing, no one is to be charged with notice

1 Beach, Corp., § 384; Morawetz, § 591; Taylor, § 195. 2 Morawetz, Corp., § 595, and cases cited.

of a foreign law, a corporation cannot be said to have any existence aside from the enactment from which it derives its being; its charter goes with it wherever it goes,' and one who deals with the company must be taken to have had in contemplation the legal provisions under which alone it can act.2 § 435. What Legislation Designated by "Charter." -Just what legislation is to be included under the term "charter" in such a case is not altogether clear. A general regulation vesting the assets of insolvent insurance companies in the superintendent of insurance was held, in Relfe v. Rundle,' by the Supreme Court of the United States, to be a part of the organic law of the company. Similar rulings have been made as to other laws, establishing a scheme of liquidation for a specified class of companies. But in Hoyt v. Thompson," a somewhat similar law "to prevent frauds by incorporated companies," which provided for receivers of insolvent companies, and invalidated a transfer of assets made after insolvency, or in contemplation of insolvency, was held to be "substantially an insolvent law, applicable to those bodies, and having no extraterritorial force," notice of which must be brought to a party in another State, when such notice is a material fact.

1 Ante, § 9.

2 Relfe v. Rundle, 103 U. S. 222, 226, 12 Cent. L. J. 130; Hoyt v. Thompson, 19 N. Y. 207, 222; Canada Southern R. Co. v. Gebhard, 109 U. S. 527, 537; Bishop v. Globe Co., 135 Mass. 132. Compare Davis v. Flagstaff S. M. Co., 2 Utah, 74. Contra: City Fire Ins. Co. v. Carrugi, 41 Ga. 660, 673.

3 103 U. S. 222, 226, 12 Cent. L. J. 130.

See post, § 487 and cases cited.

419 N. Y. 207, 220.