Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 67
LIABILITIES TO CREDITORS OF
CORPORATIONS
Section
§ 67.01 Introduction
§ 67.02 Personal Liability of Authorized Representative
§ 67.03 Loans to Corporation by Directors and Officers
§ 67.04 Ultra Vires Contracts
§ 67.05 Burden of Proof of Fraud
§ 67.06 Laws of State of Incorporation Prevail
§ 67.01 Introduction
Generally, a director of a corporation is not personally liable to
creditors on corporation contracts unless he has personally bound
himself, or has acted for the corporation without authority to do so,1 or
caused the creditors legal injury (such as fraud).2
Directors do not stand in the same relation to general creditors of
a corporation as they occupy when the rights of the corporation
or its stockholders are involved. When creditors assail a
disposition of corporate property, they are not clothed with the
rights of the corporation or the stockholders. Their right to
impeach the transaction depends upon its fraudulent character.3
Additionally, “[e]very officer who intentionally neglects or refuses to
perform a duty imposed by law is liable for all corporate debts contracted
during the period of employment.”4 If the corporation violates a
provision of law which results in its becoming insolvent, the directors
who ordered or assented to the violation are liable to creditors for all
debts contracted after the violation.5
§ 67.02 Personal Liability of Authorized Representative
Under Minnesota law, an authorized representative who signs his or
her own name to an instrument is personally liable for the debt incurred
if the instrument: (1) does not name the person represented or (2) does
not show that the representative signed in a representative capacity.6
Unless otherwise established, “the name of an organization preceded or
followed by the name and office of an authorized individual is a
signature made in a representative capacity.”7 An agent of a corporation
should ensure that any document he or she signs also includes the name
of the person or party represented and the agent’s particular
representative capacity. Absent the foregoing, personal liability may be
established against the agent.
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis
