Woolverton v. Taylor

Citations

• 132 Ill. 197

Syllabus

<p>1. Corporations—corporate indebtedness—in excess of capital stock— power of the officers of the corporation, and of their individual liability to creditors. In the absence oí statutory prohibition, it is not unla-wiul for the officers of a corporation to contract debts in excess of its capital stock, but it may, like individuals, incur debts to the full extent of its credit.' The statute declaring the individual liability of the officers of a corporation to creditors, under certain circumstances, does not prohibit the contracting of indebtedness in excess of its capital stock, nor does it inflict a penalty on the directors and officers for so doing. It simply creates a new right of civil action against them in favor of the creditors of the corporation.</p> <p>2. Same—conditions to fix the liability of corporate officers. Where a stock corporation incurs indebtedness in excess of its capital stock, the directors and officers assenting thereto are not liable to be proceeded against by creditors to recover such excess until such creditors have first obtained judgment against the corporation. This statutory liability of the officers of the corporation is stricti juris, and does not attach so long as the debt can be made out of the corporation.</p> <p>3. Same—rights of the general creditors—as against the corporate officers. The statute makes the officers who assent to the increase of the indebtedness of the corporation beyond its capital stock, guilty of a violation of their trust, and, so far as this excess is necessary, they are required to make good the debts of the creditors who have suffered by their breach of trust. This liability constitutes a fund for the benefit of all the creditors who are entitled to share in it, in proportion to the amount of their debts, so far as it may be necessary to pay such debts. This distribution must be made in a court of equity.</p> <p>4. It does not follow, because the creditor who files his bill must allege and prove the corpo