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the settled rule, that a subscription for shares imposes no obligation to pay for them, in the absence of an express promise to do so,' that court declined to enforce the liability of stockholders in a Connecticut corporation for unpaid subscriptions, though the difficulty as to jurisdiction was avoided by the fact that all the stockholders and officers of defendant company were residents of Massachusetts.' But in another case brought by the creditors of an Ohio corporation, to obtain from the defendants a discovery of the stockholders, who were alleged to be liable under the Ohio statute, it being further averred that all the officers and all the books of the company were without the State of Ohio, that court sustained the bill and granted the discovery, no other relief being prayed.'

§ 406. Survival of Action Against Stockholder.— Like other obligations arising out of contract, the right of action against a stockholder for corporate debts, will, if contractual, survive against his personal representative. There are cases, however, which deny to such liabilities the characteristics of a contract and hold that they arise ex delicto. In the jurisdictions, where that doctrine prevails, it is accordingly held that such actions do not survive

1 Andover, etc. T. Co. v. Gould, 6 Mass. 40; Franklin Glass Co. v. White, 14 Mass. 286; Andover, etc. T. Co. v. Hay, 7 Mass. 102; Ripley v. Sampson, 10 Pick. 371; Mechanics' Foundry Co. v. Hall, 121 Mass. 272; Katama Land Co. v. Jernegan, 126 Mass. 155.

2 New Haven Horse Nail Co. v. Linden Spring Co., 142 Mass. 349. See also Rice v. Hosiery Co., 56 N. H. 114; Post v. Toledo, etc. R. Co., 144 Mass. 341; Bank of North America v. Rindge, 27 N. E. Rep. 1015. 3 Post v. Toledo, etc. R. Co., 144 Mass. 341.

* Manville v. Edgar, 8 Mo. App. 324; Savings Assn. v. O'Brien, 51 Hun, 45, 3 N. Y. Supp. 764.

to the personal representative of the deceased stockholder.'

2

§ 407. Original and Secondary Liability-When Stockholders are Principal Debtors.-The contractual liability of the stockholder may be either primary in its nature, that of a principal debtor, or secondary, that of a surety, depending upon the terms of the charter or statute by which it is imposed. Thus where the charter, though granting corporate capacity, makes the stockholders "jointly and severally, personally liable for the payment of all debts," it was held that they were principal debtcrs. And so, too, where such liability was limited so as to continue only until the capital stock was paid in and the fact certified. A provision in the charter of a bank that stockholders "shall be individually liable in amount equal to double the amount of stock owned by them for all the debts of such bank, was held to create an original primary liability, although it was provided in another statute, that private property of stockholders should not be levied upon, while corporate property could be found with which to satisfy the same, and a nulla bona return was made sufficient proof that corporate property could not be found." § 408.

794

Same-Enforcing Such Liability-Illinois

1 Moies v. Sprague, 9 R. I. 541. See also Bangs v. Lincoln, 10 Gray, 600.

2 Harger v. McCullough, 2 Denio, 119. See also Southmayd v. Russ, 3 Conn. 52; Flour City Nat. Bank v. Wechselberg, 45 Fed. Rep. 457; Viele v. Wells, 9 Abb. N. C. 277. Compare Queenan v. Palmer, 117 Ill. 619.

3 Haynes v. Brown, 36 N. H. 545, 563. See also Jessup v. Carnegie, 80 N. Y. 441; Kimball v. Davis, St. Louis Ct. App., Dec. 27, 1892, MS. 4 Stat. Minn. 1849-58, p. 858, § 21.

5 Id. p. 332, § 24.

6 Paine v. Stewart, 33 Conn. 516.

Doctrine.-In Illinois, it has been held that an action at law, by a single creditor, will lie against any stockholder, of an insolvent corporation, to enforce an individual liability, created by its charter.'

§ 409. Same-When Secondarily Liable. - But ordinarily the liability of stockholders is secondary to that of the company. Thus, a statute' making stockholders jointly and severally liable for all debts, until the capital stock is paid in, and the fact properly certified, was held to be secondary, or collateral to the company's undertaking. The equitable lia

bility for a balance of unpaid stock, being contingent upon the default of the company, the real debtor, is likewise secondary and collateral in its nature.'

§ 410. Same-Remedy Against Company must be Exhausted.-Under that general principle of law, which requires the remedy against the principal to be exhausted, before a suit can be maintained against a surety, it is incumbent upon the corporate creditor, to show that further proceedings against the company would be unavailing before he can maintain an action against the stockholder.' The most obvious means of proving this fact would seem to be a judgment against the company and the return of a nulla bona execution. Indeed, the stat

1 Eames v. Doris, 102 Ill. 350, 356, citing Culver v. Third National Bank, 64 Ill. 528; Corwith v. Culver, 69 Ill. 502; Tibballs v. Libby, 87 Ill. 142; Fuller v. Ledden, 87 Ill. 310; Arenz v. Weir, 89 Ill. 25; McCarthy v. Lavasche, 89 Ill. 270.

2 Rev. Stats. Mass. ch. 38, § 4.

3 Knowlton v. Ackley, 8 Cush. 93. See to the same effect, Woods v. Wicks, 75 Tenn. (7 Lea) 40.

Shickle v. Watts, 94 Mo. 410; Andrew v. Vanderbilt, 37 Hun, 468. Shickle v. Watts, 94 Mo. 410; Patterson v. Lynde, 112 Ill. 196; Andrew v. Vanderbilt, 37 Hun, 468; Richards v. Coe, 19 Abb. N. C. 79; Richards v. Beach, 19 Abb. N. C. 84.

6 Shickle v. Watts, 94 Mo. 410; Patterson v. Lynde, 112 III. 196.

utes creating the liability not unfrequently require such a return, as a condition precedent to proceedings against the stockholder.'

§ 411. be in Corporate Domicile.-In the case of a foreign corporation, an interesting question arises as to the forum in which there must be judgment and nulla bona execution against the company in order to fix the stockholder's liability. The cases are not in unison upon this subject. Some hold that such proceedings in the State of the corporate domicile would have that effect,' and others that a judgment and unavailing execution in any other State would be insufficient. A still more liberal rule has been suggested that proceedings in the courts of any one of the places where the corporation is authorized to do business would be enough to charge the stockholder." Still other courts, however, upon the doctrine that a foreign judgment will not support a creditor's bill,' have held that there must be judgment and execution against the company in the State, where it is sought to enforce the stockholder's liability, ignoring the fact that a judgment rendered in the

Same-Whether Nulla Bona Return Must

1 Comp. L. Mich. (1871) § 2852; Laws Kan. 1881, ch. 23, art. 4, § 32; Laws N. Y. 1848, ch. 40, § 10; Rev. Code Iowa, §§ 1173, 1174. See E. Remington Sons v. Samana Bay Co., 140 Mass. 494; Jessup v. Carnegie, 80 N. Y. 441; Paine v. Stewart, 33 Conn. 517.

2 Shickle v. Watts, 94 Mo. 410; Bagley v. Tyler, 43 Mo. App. 195; Viele v. Wells, 9 Abb. N. C. 277; Andrew v. Vanderbilt, 37 Hun, 468. 3 Rocky Mt. Nat. Bank v. Bliss, 89 N. Y. 338; Dean v. Mace, 19 Hun. 391.

4 Bagley v. Tyler, 43 Mo. App. 195. But such a judgment, if rendered after the dissolution of the company, even by the violent and illegal act of the sovereignty creating, would be of no effect. E. Remington & Sons v. Samana Bay Co., 140 Mass. 494.

' Claflin v. McDermott, 12 Fed. Rep. 375; Walser v. Seligman, 13 Fed. Rep. 415; National Tube Works Co. v. Ballou, 42 Fed. Rep. 749.

corporate domicile is not in any proper sense a foreign judgment to the company.'

§ 412. Same Pleading Jurisdictional Facts. Under such a statute, where the liability of the stockholder attaches on the return of an execution unsatisfied, or the dissolution of the corporation, and both these facts were averred in one count of a declaration, in an action to enforce such liability, it was held that, although only one of these facts was necessary to sustain the action, the count was good and the other might be rejected as surplusage."

3

§ 413. Stockholders of Defectively Organized Company. Comity can only recognize a corporation that actually exists. If by accident, mistake or neglect the proper steps were never taken, if the co-adventurers were never vested with the corporate franchise, then, it would seem to follow that the members become liable as partners for corporate undertakings, and the liability must follow them into any jurisdiction in which they undertake to do business in a corporate capacity. Thus a jointstock company, which had attempted to organize under the laws of Pennsylvania, but had omitted to file a certain statement for record, which was made by statute a prerequisite of the vesting of the corporate franchise, undertook to do business in Missouri, it was held that the members were liable as partners in an action of tort.*

1 Globe Rolling Mill Co. v. Ballou, 42 Fed. Rep. 749; Patterson v. Lynde, 112 Ill. 196; Turner Bros. v. Ala. M. & Mfg. Co., 25 Ill. App. 144; Brice v. Munro, 5 Can. L. T. 130.

2 Freeland v. McCullough, 1 Denio, 414, 43 Am. Dec. 685. 3 Cook, Stock & Stockholders, § 230 et seq. 4 Ante, § 7; Smith v. Warden, 86 Mo. 382. Forbes, 148 Mass. 249, 19 N. E. Rep. 342. Ohio St. 158; Medill v. Collier, 16 Ohio St. 599; Rianhard v. Hovey, 13 Ohio, 300.

See also Montgomery v. Compare Bank v. Hall, 35

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