as amendments are required to be recorded. And in case of neglect to give such notice, they shall each be subject to a penalty of five dollars for each and every day during the continuance of such neglect or refusal.

The neglect or refusal to file the report, or to record the notice required by this section to be filed or recorded, shall be deemed wilful when such report or notice is not filed or recorded within the time herein limited.

Whenever any corporation has neglected or refused to make and file its report within twenty days after the time limited in this section, the Secretary of State shall cause notice of that fact to be given by mail to such corporation, directed to its post office address. The certificate of the Secretary of State or his deputy, of the mailing of such notice, shall be prima facie evidence in all courts and places of that fact, and that such notices were duly received by said corporation.

$194. Annual Report.

"No doubt an important reason-perhaps the principal reason for the statutory provision is to enable persons who have occasion to deal with corporations to ascertain their condition and their title to credit."-Bank of Saginaw v. Pierson, 112 Mich. 410-414. See also Van Etten v. Eaton, 19 Mich. 186-191. False reports are a fraud upon such creditors as rely upon them, or upon statements of commercial agencies based upon such reports. Emerson v. Steel & Spring Co., 100 Mich. 127; Silberman v. Munroe, 104 Mich. 352.

The making of a simple, truthful statement would seem, upon its face, to be a task unattended by serious difficulties. It may be so if the proper policy of conservative valuation is adhered to from the beginning. But to harmonize overvaluations in the articles of association, undervaluations in the tax statement, and book values differing from each of these, in an annual statement which is at once a guide for creditors, competitors, dissatisfied stockholders and tax assessors, is not without perplexities. No rule for untangling the knotted skein of inconsistencies sometimes found in corporate books, statements, instruments and reports is ventured. Each case presents independent problems. Difficulties of the kind suggested are best handled by prevention. Clients should be forewarned of the whole breed of troubles with which overvaluations and loose statements are beset. Where shadowy assets and inflated inventories have been carried upon the corporate books, a change of policy is to be recommended.

As a matter of practice, it is suggested that the corporation, or its counsel, should retain a copy of each annual report for purposes of reference and comparison.

$195. Suspension of Corporate Powers.

The act provides that ten days default in filing the annual report shall work a suspension of the corporate powers. The result of the suspension is this, that suit commenced during default (i. e. while the powers are suspended), upon a contract made during default, may be defeated by the defense that the suit is prematurely brought.-Thomp. Corp. Sec. 7956. The suspension apparently has no other effect. To assert that contracts made during default are permanently uninforcible, and that third parties may thus be relieved of all liability upon honest obligations to the corporation, is to assume an intent which the Legislature has not expressed, and which, under the rules of con struction applicable to penal statutes of this character, the courts will certainly decline to read into the act.

$196. Liability of Directors for Default in Filing Annual Statement.

The liability of directors who have "neglected or refused" to join in making the annual report is two-fold:

(a) They are liable for all debts contracted since the last report was filed;

(b) They are liable to the corporation for any damages sustained by it by reason of their refusal or neglect.

These provisions, being penal, must be strictly construed.-People v. Crucible Steel Co., 151 Mich. 618-620; Gennert v. Ives, 103 Mich. 547; Bank of Saginaw v. Pierson, 112 Mich. 410-413; Breitung v. Lindauer, 37 Mich. 217. The directors are exonerated where they have made the report, even though, through some unintentional neglect, or miscarriage, it has not been filed. The penalty for failure to file falls upon the corporation.— Ford River Lumber Co. v. Perron, 148 Mich. 399.

Assumpsit may be brought by any creditor against any one of the directors. Bank of Saginaw v. Pierson, 112 Mich. 410. Or all may be sued jointly.-Wilcox Cordage Co. v. Mosher, 114 Mich. 64-66. A director who is thus forced to pay corporate debts is entitled to contribution.— Thomp. Corp. Sec. 4376.

When the individual liability has once attached, it is not divested by subsequent compliance with the law. Joining in a belated report merely suspends the incurment of further liability.

It is clearly immaterial that the debt sued upon was contracted prior to the election of the director sued, provided the default has continued. His failure to comply with the law after his election, finds no justification in the fact that his predecessor has also failed.

$197. False Report.

A false report is, nevertheless, a report, hence proof that the report filed was false will not sustain an action under this statute.-Bonnell v. Griswold, 80 N. Y. 128.

A false statement filed with the Secretary of State, and used as a basis. of credit by reporting agencies, whose reports are relied upon by creditors in extending credit, perpetrates a fraud which will warrant the creditor, thus misled, in proceeding by attachment.-Emerson v. Steel & Spring Co., 100 Mich. 127-132. And where goods have been bought upon the strength of false reports, it is evidence from which a jury may infer a preconceived fraudulent intent on the part of the vendee not to pay, in support of an action of replevin or trover founded upon the purchase.-Silverman v. Munroe, 104 Mich. 352-355.

$198. Notice of Change of Status.

The act contemplates that notice shall be filed with the Secretary of State within thirty days after.

(a) Dissolution, at law or in chancery;

(b) Termination by limitation, where existence is not renewed;

(c) De facto dissolution by sale of property and franchises;

(d) De facto dissolution by formal election to abandon the corporate purposes and go into liquidation;

(e) General assignment for the benefit of creditors;

(f) Sale of all corporate assets by judicial process;
(g) Adjudication as a bankrupt.

The meaning of the statute may be summarized by saying, that the notice is to be given upon the occurrence of any event amounting to a dissolution de jure or de facto. When such an event has occurred, and the notice required has been duly made and recorded, further annual reports are not demanded or necessary.—Gold v. Slyne, 134 N. Y. 262, 17 L. R. A. 767, and cases there cited.

The notice of change of status is to be recorded "as amendments are required to be recorded," i. e. with both the Secretary of State and the County Clerk of the county where the corporation's principal office is located. -Act, Sec. 2, 9 and 17.

§199. Penalty for Default in Giving Notice of Change of

Status.

The State may proceed to collect $5 per day from each director, for each day embraced in the period of default. The liability is several, and there can be no right of contribution.-Cook's Corp. Sec. 749; Thomp. Corp. Sec. 4095.

§200. Neglect to File Report or Record Notice Deemed Wilful.

It will be noticed that the statute does not create the presumption of wilfulness in cases where the directors neglect or refuse to join in making the annual report. The presumption arises independent of the statute.Van Etten v. Eaton, 19 Mich. 187. And may be rebutted.-Gennert v. Ives. 102 Mich. 547-551.

While the present statute in no instance expressly makes wilfulness a necessary ingredient of the penalized act or neglect, the clause providing that "neglect or refusal to file the report or record the notice required shall be deemed wilful" strongly indicates that, as to these acts, such was the legislative intent. If this be conceded, it follows that rebuttal of the presumption will amount to a complete defense. That this should be true is certainly consistent with justice.

A penal statute is defined to be, "One which enforces a forfeiture or penalty for transgressing its provisions, or doing a thing prohibited." In approving this definition, Justice Montgomery, in People v. Crucible Steel Co., 151 Mich. 618, said: "The term 'penal statute' is oftentimes given a broader meaning, and is used in defining a statute which affords a remedy to a private party, in the nature of penalty." Where the State fails in a suit to enforce a penalty under a penal statute, costs cannot be taxed against the People.-C. L. 1897, Sec. 11277; People v. Crucible Steel Co. (Id.)

$201. Notice of Default.

The notice required by the Act to be given by the Secretary of State applies to annual reports only, and is designated as a measure of fairness, to the end that duplicate reports may be furnished in case those sent have not been received, as happened in Ford River Lumber Co. v. Perron (ante). Failure to give the notice would present no obstacle to enforcement of penalties, through continued default after knowledge of receipt of such notice would certainly tend to support the presumption that the neglect was wilful.

$202. Consolidated Corporation Law.-Section Relating to

General Powers.

Section 13: Every corporation organized or existing under this act shall have power to have succession by its corporate name for the period limited in its charter, or by this act; to sue and be sued in any court of law or equity with the same rights and obligations as a natural person, to make and use a common seal and alter the same at pleasure, to ordain and establish by-laws for the government and regulation of its affairs, and to alter and repeal the same, to elect all necessary officers and to appoint and employ such agents as the business may require.

$203. General Powers.

The powers expressed in Sec. 13 of the Act would be clearly implied had they not been expressly stated. It is doubtful that this section adds anything to the effect of the statute.

$204. By-Laws.

The Act contemplates that there shall be by-laws framed upon the following subjects:

(a) Time, place and manner of electing directors.-Act, Sec. 4.

(b) Appointive officers and agents.-Act, Sec. 6.

(c) Method of convening directors' meeting.-Act, Sec. 10.

(d) Notice of calls on subscriptions.-Act, Sec. 11.

(e) Notice of intended foreclosure of stock lien.-Act, Sec. 24.

(f) Mode of transfer of shares.-Act, Sec. 16.

(g) Time of redemption of preferred stock.-Act, Sec. 35.

By-laws may also properly provide:

(a) For joinder of office of Secretary and Treasurer.-Act, Sec. 6. (b) For assistant secretary and assistant treasurer.-Act, Sec. 6.

(c) For method of filing proxies.-Act, Sec. 10.

(d) That the board shall consist of a certain number.-Act, Sec. 4. (e) That the fiscal year shall end on a certain date.—Act, Sec. 12. (f) That, to be qualified to become directors, stockholders must possess in their own respective names and right a certain number of shares.Marshall's Corp. p. 918.

(g) That dividends, when earned, shall be payable quarterly, semiannually or annually.

(h) That certain officers shall have power to execute corporate checks, notes, contracts and conveyances.-See Cook's Corp., Sec. 719.

(While these powers are ordinarily delegated to the president and secretary, or to the president and treasurer, they may be delegated to a general manager, or to some other corporate agent).

(i) That the duties of absent officers may be temporarily delegated to other officers.-Marshall's Corp., p. 991.

(j) That the secretary and treasurer shall be stockholders. (Otherwise they need not be stockholders).

(k) That the secretary and treasurer shall be directors. they need not be directors).

(Otherwise

(1) That the transfer book shall be closed a certain number of days before the annual election.-Marshall's Corp., p. 801.

(m) That the corporate seal shall embody certain words.-No specific form is legally necessary.-Cook's Corp., Sec. 722.

(n) That notices of all kinds may be served by mail.-Stradley v. Cargill Elevator Co., 135 Mich. 367-375.

§205. Consolidated Corporation Law.-Section Relating to Real Estate.

Section 14. Every such corporation shall have power to purchase, hold and convey all such real estate and personal estate as the purposes of the corporation shall require, and all other real and personal estate which shall have been bona fide con