John A. Roebling’s Sons Co. v. Mode
Delaware Superior Court
17 Del. 515, 43 A. 480 (1899)
John A. Roebling’s Sons Company (Roebling’s) (plaintiff) was a judgment creditor of Kent Iron & Hardware Company (Kent Iron), an insolvent corporation. Roebling’s alleged that Kent Iron issued a dividend despite not having any earnings or surplus out of which such a dividend could be lawfully paid. Mr. Mode (defendant) was one of the directors of Kent Iron who authorized this dividend. Because Kent Iron was insolvent, Roebling’s could not have collected the full balance of its judgment from Kent Iron itself. Instead, Roebling’s sued Mode for the balance of its judgment against Kent Iron under a statutory provision that held directors of corporations personally liable to creditors for certain unlawful distributions.
Rule of Law
Holding and Reasoning (Lore, C.J.)
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