the bill as such, by their names and places of residence without further description or addition." 193

§ 410. New Jersey.

"Where the whole capital of a corporation shall not have been paid in, and the capital paid shall be insufficient to satisfy its debts and obligations, each stockholder shall be bound to pay on each share held by him the sum necessary to complete the amount of such share, as fixed by the charter of the corporation, or such proportion of that sum as shall be required to satisfy such debts and obligations." 194 This liability may be enforced by a creditor's bill,195 or by a receiver. 196

"The directors of a corporation shall not make dividends except from its surplus, or from the net profits arising from the business of such corporations, nor shall they divide, withdraw, or in any way pay to the stockholders or any of them, any part of the capital stock of such corporation, or reduce its capital stock except as authorized by law; in case of any willful or negligent violation of the provisions of this section, the directors under whose administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large upon the minutes of such directors at the time, or who not then being present, shall have caused their dissent therefrom to be so entered upon learning of such action, shall jointly and severally be liable at any time within six years after paying such dividend, to the stockholders of such corporation, severally and respectively, to the full amount of any loss sustained by such stockholders, or in case of insolvency to the corporation or its receiver to the full amount of any loss sustained by the corporation, by reason of such withdrawal, division or reduction." 197

193 Ibid. § 5.

194 N. J. Corp. Supp. 21.

195 Bickley v. Schlag, 46 N. J. Eq. 533, 20 Atl. 250.

196 Cumberland Land Co. v. Clinton Hill Co., 57 N. J. Eq. 627, 42 Atl. 585. 197 N. J. Corp. Supp. § 30, amended 1904, ch. 143, § 1.

This obligation of the directors to the corporation may be enforced at the suit of a stockholder, although the corporation is still solvent, and although the stockholder does not repay the dividend he has received. In such a suit the court said: "A construction which imputes to the legislature the intent to force a solvent corporation into liquidation as a condition of enabling it to recover from its directors the money necessary to make good the impairment of its capital by them, should not be adopted unless such intent is manifest. The apparent object of the provision is to afford protection equally to the corporation and to its creditors, against loss by reason of the illegal act.

"The words of the statute give this full measure of protection. For disobedience of its mandate 'the directors shall be jointly and severally liable to the corporation—and to its creditors in the event of its dissolution or insolvency,' to the corporation in any event, to the creditors in the event expressed in the statute.

"To say that a person who has been unwittingly induced to exhaust his principal by the mistaken or fraudulent representation of those to whom he has entrusted it that what has been paid to him is income, suffers no injury, is absurd. To refuse him redress, except upon condition that he return the moneys which he has expended in the belief that his capital was intact -notwithstanding that by such expenditure he is rendered penniless-is to put a premium upon fraud in corporate management." 198

"When the officers, directors or stockholders of any corporation shall be liable to pay the debts of the corporation, or any part thereof, any person to whom they are liable may have an action against any one or more of them; and the declaration shall state the claim against the corporation, and the ground on which the plaintiff expects to charge the defendants personally; or the person to whom they are liable may have his

198 Appleton v. American Malting Co., (N. J. L.) 54 Atl. 454.

remedy by bill in chancery. Any officer, director or stockholder who shall pay any debt of a corporation for which he is made liable by the provisions of this act, may recover the amount so paid, in an action against the corporation for money paid for its use, in which action only the property of the corporation shall be liable to be taken, and not the property of any stockholder. No sale or other satisfaction shall be had of the property of any director or stockholder for any debt. of the corporation of which he is such director or stockholder till judgment be obtained therefor against such corporation and execution thereon returned unsatisfied, but any suit brought against any director or stockholder for such debts shall stay after execution levied, or other proceedings to acquire a lien, until such return shall have been made." 199

8411. New Mexico.

There is no stockholders' liability, beyond the commonlaw liability for unpaid subscription.

"It shall not be lawful for the directors to make any dividend except from the surplus profits arising from the business of the corporation; nor to divide, withdraw, or in any way pay to the stockholders, or any of them, any part of the capital stock of the company; nor to reduce the capital stock unless in the manner prescribed in this act; and in case of any violations of the provisions of this section, the directors under whose administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large on the minutes of the board of directors at the time, or were not present when the same did happen, shall in their individual and private capacities be jointly and severally liable to the corporation and the creditors thereof in the event of its dissolution, to the full amount so divided, withdrawn, paid out or reduced: Provided, That this section. shall not be construed to prevent a division and distribution of the capital stock of the company, which shall remain after 199 N. J. Corp. Supp. §§ 93-95.

the payment of all its debts, upon the dissolution of the corporation or the expiration of its charter." 200

"The total amount of debts of the corporation shall not at any time exceed the amount of the capital stock; and in case of any excess, the directors under whose administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large on the minutes of the board of directors at the time, and except those not present when the same did happen, shall, in their individual and private capacities, be liable jointly and severally, to the said corporation, and in the event of its dissolution, to any of the creditors thereof, for the full amount of such excess. "' 201

"No person holding stock as executor, guardian or trustee, or holding it as collateral security, or in pledge, shall be personally subject to any liability as a stockholder of the company; but the person pledging the stock shall be considered as holding the same, and shall be liable as a stockholder accordingly; and the estate and funds in the hands of the executor, administrator, guardian or trustee, shall be liable in like manner, and to the extent as the testator or intestate, or as the ward or person interested in the trust fund would have been if he had been living and competent to act and hold the stock in his own name." 202

8412. New York.

"Every holder of capital stock not fully paid, in any stock corporation, shall be personally liable to its creditors to an amount equal to the amount unpaid on the stock held by him for debts of the corporation contracted while such stock was held by him. . . . The stockholders of every stock corporation shall, jointly and severally, be personally liable for all debts due and owing to any of its laborers, servants, or em

200 N. Mex. Comp. L. § 428.

201 Ibid. § 429.

202 Ibid. § 430.

ployees other than contractors, for services performed by them for such corporation. Before such laborer, servant, or employee shall charge such stockholder for such services, he shall give him notice in writing, within thirty days after the termination of such services, that he intends to hold him liable, and shall commence an action therefor within thirty days after the return of an execution unsatisfied against the corporation upon a judgment recovered against it for services. No person holding stock in any corporation as collateral security, or as executor, administrator, guardian, or trustee, unless he shall have voluntarily invested the trust funds in such stock, shall be personally subject to liability as a stockholder; but the person pledging such stock shall be considered the holder thereof, and shall be liable as stockholder; and the estates and funds in the hands of such executor, administrator, guardian, or trustee shall be liable in the like manner and to the same extent as the testator or intestate, or the ward, or person interested in such trust fund would have been, if he had been living and competent to act and held the same stock in his own name, unless it appears that such executor, administrator, guardian, or trustee voluntarily invested the trust funds in such stocks, in which case he shall be personally liable as a stockholder." 203

"Every corporation may become a full liability corporation by inserting a statement to that effect in the certificate. In this case the stockholders of the corporation shall be severally individually liable to its creditors for all its debts and liabilities, and may be joined as defendants in any action against it. No execution shall issue against any stockholder individually until execution has been issued against the corporation and returned unsatisfied, and all the stockholders shall contribute a proportionate share, according to the number of shares of stock owned by each, of the amount paid by any stockholder on a judgment recovered against him in

203 New York Stock Corp. L. § 54; 1901, ch. 354.