failure to make a report is not incurred by filing a false report.1

§ 934. Effect of repeal of statute.-The fact that directors became such under a statute rendering them liable for specified acts does not make them liable for such acts done after a repeal of the statute.2

such company shall fail to do so all the trustees shall be held jointly and severally liable for the debts then existing and for all that shall be constructed before such report is made. A judgment for costs was held to be a debt within the meaning of this section so as to render the trustees individually liable. Allen v. Clark, 108 N. Y. 269. Under 3 Rev. St. N. Y. (8th ed.), p. 1957, 12, it was held that the trustees cannot be subjected for an alleged liability of the corporation accruing on an accommodation indorsement, which, under its charter, it had po authority to make, and which consequently did not bind it; National Park Bank v. Remsen, 43 F. 226. See also Hardman v. Sage (N. Y.), 26 N. E. 354, reversing 47 Hun, 230, and holding that making certificate of the amount of the capital, and it is paid in a certificate which is signed and acknowledged, but not sworn to, is sufficient. For construction of the term "debt" and for liability of director for making hazardous loan under Massachusetts statute, see Knower v. Haines, 31 Fed. Rep. 513.

1 Matthews v. Patterson (Colo., May, 1891), 26 P. 812.

2 Slaymaker's Admn. v. Jeffrey, 82 Va. 346; Breiting v. Lindauer, 37 Mich. 217; Gregory v. German Bank, 3 Col. 332; Union Iron Co. v. Pierce, 4 Bliss 327; compare Hargroves v. Chambers, 30 G. 580.

938.

939.

940.

941.

When intent will be immaterial.

Personal liability for fraudulent representations.
False statements in prospectuses.

Liability for torts generally.

942. Liability for libel.

943. Character of corporation sometimes important.

944. Negligence of agent.

945. Liability for torts and neglects of sub-agents.

946. Injury to employé through negligence of co-employé. 947. When superior employé stands in place of principal. 948. Defective machinery, material, etc.

949. Servant's knowledge of dangers of employment.

950. Remedy by action for damages against shareholders.

951. Debts ex contractu and liabilities founded on torts given an equal footing.

952. Tort committed after expiration of term of existence.

§ 935. The general rule. Questions of corporate powers and forms are seldom involved in considerations of corporate liability for torts or those of corporate agents except in a collateral and incidental way. Corporations are liable for torts in the same manner and to the same extent as natural persons. Their liability in such cases is not affected by the question whether the acts done are within or without the powers of the corporation, if the acts are such as come within the scope of the powers apparently conferred upon the agents. It has been frequently decided that a corporation was similarly

affected by the torts of the agents as if the latter were acting for an individual.'

In all such cases the common law prohibition against the exercise of unauthorized corporate powers is modified or suspended to promote the ends of justice and to subserve public convenience. A corporation may be punished for contempt of court by a fine and by imprisonment of its officers and agents.2

1 Fishkill Sav., etc., v. Nat. Bank, etc., 80 N. Y. 162; Ranger v. Gt. West. Ry. Co., 5 H. S. Cas. 71-86; Lewis v. Meir, 14 Fed. Rep. 311; Philada R. R. Co. v. Derby, 14 How. 468; Hussey v. King, 3 S. E. Rep. 923; Danver R. G. Ry. Co. v. Harris, 122 U. S. 597; N. J. S. Co. v. Brackett, 121 U. S. 637; Baltimore & P. R. R. Co. v. Fifth Bapt. Ch., 108 U. S. 317, 330; N. O. J. & G. N. R. Co. v. Bailey, 40 Miss. 395; Gruber v. Washington, etc., R. R. Co., 92 N. C.; South Wales Ry. Co. v. Redmond, 10 C. B. (N. S.) 675; N. Y. & R. H. R. R. Co. v. Schuyler, 34 N. Y. 30; State v. Morris & E. R. Co., 23 N. J. L. 360, 367; D. & G. R. Co. v. Harris, 3 N. M. 109; Ramsden v. Boston & A. R. Co., 104 Mass. 117; Peebles v. Patapsco Guano Co., 77 N. C. 233; Chicago & I. R. Co. v. Davis, 86 Ill. 20; Vinas v. Merchants' M. I. Co., 27 La. Ann. 367; Western Un. v. Cyser, 2 Col. 141; Goodspeed v. East Hadden Bank, 22 Conn. 529; South & N. A. R. Co. v. Chappell, 61 Ala. 527; Denver S. P. & P. R. Co. v. Conway, 8 Col. 1; 5 P. 142; Hayes v. Houston & G. N. R. Co., 46 Tex. 272. A corporation may be liable in exemplary damages for wrongful attachment. Jefferson County Sav. Bank v. Eborn, 84 Ala. 529; 4 So. 386.

2 Golden Gate, etc., Min. Co. v. Sup. Ct., 65 Cal. 187; 3 P. 628. An order to show cause why a corporation should not be punished for contempt, for violation of an injunction, may be served on the corporation's attorneys, where the agents of the corporation conceal themselves for the purpose of avoiding service. Eureka Lake & Yuba Canal Co. v. Superior Court Yuba Co., 66 Cal. 311; 5 P. 490.

The petitioner, who was president of a water corporation at the time when an injunction was granted and served on them prohibiting them from maintaining a dam in the channel of a certain watercourse, resigned such office, left the corporation, sold his shares therein, and then purchased the property where said dam had been constructed, and proceeded to maintain the same. Held, that he was properly adjudged guilty of contempt. Morton v. Superior Court, Tulare Co. 65 Cal. 496; 4 P. 439. See also, Iowa B. S. W. Co. v. So. B. W. Co., 30 F. 615.

In a contempt proceeding for violation of an injunction restraining the defendant corporation, and its agents and officers, from the commission of certain acts, the affidavit on which the contempt proceedings were based is sufficient though it does not state that the defendants were the officers, agents, etc., of the corporation, if it does state that they had full knowledge of the issuance, service, and effect of the injunction, and that they violated the injunction by doing the acts complained of, and in contempt of the court. Hedges v. Superior Court of Yuba Co., 67 Cal. 405; 7 P. 767.

§ 936. Fraud of agents.-The same rules governing the liability of individual principals for the fraud of their agents apply to those of corporations whether the frauds be active or constructive only.

By the great preponderance of modern authority a corporation may be liable even when a fraudulent intent in fact is necessary to be proven, the fraud of its agents being imputable to the corporation; as in actions for fraudulent representations.

It is immaterial, in the case of fraudulent representations by reason of which a party suffers loss, whether they were made to him by the agent directly or were made by the agent to the corporation in a report with intent to mislead and deceive the public.3

Where, however, one makes an agent his own agent for the purpose of dealing with a corporation, and the agent is guilty of a fraudulent breach of trust without participation in the fraud or receipt of a benefit from it by the corporation, the latter is not bound to make good the loss.*

1 Ranger v. Great Western R. R. Co., 5 H. L. Cas. 86. When it was insisted that there could be no such thing as authority to commit a wrongful act, such being a violation of the charter, the court said: "This would be a most convenient distinction for corporations to establish. . . . . There would be no possibility of ever convicting a corporation of exceeding its powers and thereby forfeiting its charter or incurring any other penalty if this principle could be established." Life & Fire Ins. Co. v. Mechanic's Fire Ins. Co., 7 Wend. 31. But in a later case it appeared that the president of a corporation had been allowed by the other directors to have possession of the corporate seal and certificate book after they had known him to break his promise of pledging certain shares to them. It was held that the corporation had not been guilty of such negli gence as would render it liable on certificates to which the president had forged the treasurer's name, issued to himself and pledged to secure his individual debt. Hill v. C. F. Jewett Pub. Co. (Mass.), 28 N. E. 142; Powers v. Same (Mass.), 28 N. E. 142, (Aug., 1891.)

2 Nat. Exch. Co. v. Conybeare, 9 H. L. Cas. 711, 738; Barwick v. Eng., etc., Bank, L. R. 2 Ex. 259. The right of an innocent holder of a draft fraudulently drawn by an agent to hold the corporation liable is not affected by the fact that his immediate indorser was also a party to the fraud. Ridgway v. Farmers'

Bank, 12 Searg. & R. 256.

3 Nat. Exch. Co. v. Drew, 32 Eng. L. & Eq. 1.

Tenell v. Branch Bank, 12 Ala. 502. The local agent of a telegraph com

§ 937. Liability for false representations of agents.— Most of the rules stated in many of the authorities, ancient and modern, by which to test the principal's liability for the active frauds of his agents are vague and often misleading. The expression most commonly met with is that employers are liable for the fraudulent acts of their agents when at the time of the commission of the fraud the agent is acting within the scope of his employment, and his misconduct naturally connects itself with the service or duty being performed. The origin of this expression is no doubt due to the implied undertaking of the employer to answer to third parties on contracts which he has clothed the agent with authority to make. But that is a contractual liability and there can be no such relation between the principal and those whom the agent has defrauded. No such power is implied in his contract of employment nor by any legal implication could be included in it. It is true that one person may instigate another to commit a fraud, or even a felony, by prior or contemporaneous counsel or assistance, and may become involved in the legal consequences by subsequent acceptance of the fruits. But the legal liability, both civil and criminal, depends in all such cases not upon a contract of agency, express or implied, for the law does not recognize a contract based upon an illegal or immoral consideration.

Disregarding all mere forms of language, the bare

pany, who was also an agent of an express company, sent a forged dispatch to a merchant in a neighboring city, requesting him to forward money to his correspondent at the former place, to use in buying grain. The dispatch was duly received, and the money in good faith forwarded by express, but was intercepted and converted by the agent. Held, that the telegraph company was liable for the loss, whose proximate cause was the forged dispatch. McCord v. Western Union Tel. Co., 39 Minn. 181; St. Paul Roller-Mill Co. v. Western Union Tel. Co., 39 Minn. 318.