terpreted by its courts, determine the nature and extent of the liability. And accordingly, if by the law of the State of charter the stockholder may set off against his liability a debt due to him from the corporation, being regarded as equitably liable only for the balance, he may do this in any State in which he may be sued. And if any special form of proceeding is required by the law of the State of charter, as for instance, that a judgment should first be obtained against the corporation before the individual can be sued, this procedure must be followed. So whether a husband is liable to contribute on his wife's stock depends upon the law of the State of charter.5

§ 443. Liability for unpaid subscription.

A person who has subscribed for stock, and has agreed to pay for it, but has not done so, is evidently liable to the company for the amount he has subscribed, and this liability arises entirely from contract. Primarily a creditor of the corporation has nothing to do with it. The corporation must call for the payment of the subscription, and must then enforce its call by getting in the amount from the stockholders. This liability to respond to calls for unpaid subscription to the capital stock, is like any other debt due to the corpora

2 Nashua Savings Bank v. Anglo-American L. M. & A. Co., 189 U. S. 221, 47 L. ed. 782; Morris v. Glenn, 87 Ala. 628; Young v. Farwell, 139 Ill. 326, 28 N. E. 845; Fowler v. Lamson, 146 Ill. 472, 34 N. E. 932; Mandel v. Swan Land & Cattle Co., 154 Ill. 177, 40 N. E. 462; First Nat. Bank v. Gustin M. C. M. Co., 42 Minn. 327, 44 N. W. 198, 18 A. S. R. 510, 6 L. R. A. 676; Tompkins v. Blakey, 70 N. H. 584, 49 Atl. 111; Molson's Bank v. Boardman, 47 Hun (N. Y.), 135; Aldrich v. Anchor C. & D. Co., 24 Ore. 32, 32 Pac. 756, 41 A. S. R. 831; Ball v. Anderson, 196 Pa. 86, 46 Atl. 366; Vance v. McNabb Coal & Coke Co., (Tenn. Ch. App.) 48 S. W. 235; Farr v. Briggs, 72 Vt. 225, 47 Atl. 793, 82 A. S. R. 930; Nimick v. Mingo Iron Works Co., 25 W. Va. 184.

3 Mechanics' Sav. Bank v. Fidelity I. T. & S. D. Co., 87 Fed. 113; Broadway Nat. Bank v. Baker, 176 Mass. 294, 57 N. E. 633; Sargent v. Stetson, 181 Mass. 371, 63 N. E. 929; Ball v. Anderson, 196 Pa. 86, 46 Atl. 366. 4 Fourth Nat. Bank v. Francklyn, 120 U. S. 747, 30 L. ed. 825. 5 In re Federal Bank of Australia, 8 Bkr. Cas. (New So. Wales) 35.

9

tion. Upon this obligation suit may be brought in any State by the corporation, or by its representative, as for instance its receiver or assignee. The amount of the call may be fixed by the directors, or if a receiver has been appointed it may be fixed by the appointing court; and suit for the amount may then be brought in any State. The effect of this order of assessment is to fix the amount which any stockholder liable under his contract of subscription should pay, and to authorize the receiver to bring suits against stockholders for the same, but not to determine whether any particular stockholder is liable for anything; and one who is sued as stockholder may therefore interpose any personal defence, as for instance, that he is not a stockholder, or that the statute of limitations has run in his favor; 10 or (where such defence is allowed in a similar action in the State of charter) that the call was for an illegal purpose and ultra vires.11

But while a creditor has no direct right to come upon the stockholder, he may take advantage of any method of reaching him open to him in the State where he sues. If the claim has not been enforced by the corporation it is an asset, and if such

• Mandel v. Swan Land & Cattle Co., 154 Ill. 177, 40 N. E. 462; Sigua Iron Co. v. Brown, 171 N. Y. 488, 64 N. E. 194.

7 Mann v. Cooke, 20 Conn. 178; Fish v. Smith, 73 Conn. 377, 47 Atl. 711; Dayton v. Borst, 31 N. Y. 435; In re Hercules Ins. Co., 6 Ir. Eq. 207. Contra, In re Hollyford C. M. Co., L. R. 5 Ch. 93; In re City of Glasgow Bank, 14 Ch. Div. 628. In Vermont the foreign receiver is not allowed to sue in his own name. Murtey v. Allen, 71 Vt. 377, 45 Atl. 752, 76 A. S. R. 779; Sparks v. Estabrooks, 72 Vt. 101, 47 Atl. 394.

8 Stoddard v. Lum, 159 N. Y. 265, 53 N. E. 1108, 70 A. S. R. 541, 45 L. R. A. 551.

9 Hawkins v. Glenn, 131 U. S. 319, 33 L. ed. 184; Lehman v. Glenn, 87 Ala. 618; Glenn v. Williams, 60 Md. 93; Mut. Fire Ins. Co. v. Phoenix Furniture Co., 108 Mich. 170, 66 N. W. 1095, 62 A. S. R. 693, 34 L. R. A. 694; Commonwealth Mut. Fire Ins. Co. v. Hayden, 60 Neb. 636, 83 N. W. 992; Parker v. Stoughton Mill Co., 91 Wis. 174, 64 N. W. 751, 51 A. S. R. 881. 10 Glenn v. Marbury, 145 U. S. 499, 506, 36 L. ed. 790; Great Western Tel. Co. v. Purdy, 162 U. S. 329, 40 L. ed. 986.

11 Bank of China v. Morse, 168 N. Y. 458, 61 N. E. 774, 85 A. S. R. 676, 56 L. R. A. 139.

remedy is permitted, a creditor may reach it either by garnishment or by a creditors' bill. The subscribing stockholder should be treated in the same way as any other debtor of the company. If the law of the forum permits the garnishment of such a claim, the creditor may reach it in that way.12 If a creditor can reach the claim only by a creditors' bill, he must thus proceed, making the corporation and all the stockholders parties.13

Where the stock was taken without any agreement to pay for it (as for instance, if it were in exchange for property of small value, or were given as a bonus to purchasers of bonds) there is no agreement to be enforced, and in the absence of a statute no creditor could claim a right against the stockholder. A creditor could have no right against a subscriber, founded on his agreement, unless the corporation could sue him on the contract.14 The case would, however, be different if the stock, purporting to be fully paid up, was issued at fifty per cent. of the par value; in spite of the statement contained in the share, the original subscriber still owes fifty per cent., and that amount may be collected from him in a proper proceeding. 15

§ 444. Statutory liability to the corporation.

Where by statute the stock is liable to assessment for the payment of debts, and a call has been made by the corporation or its representative, the amount due may be collected in another State, either by the corporation itself 16 or by its

12 In re Queensland Mercantile and Agency Co., [1891] 1 Ch. 536; Cooper v. Adel Security Co., 122 N. C. 463, 30 S. E. 348.

13 Patterson v. Lynde, 112 Ill. 196; Tuttle v. Bank of Republic, 161 Ill. 497, 44 N. E. 984; Turner v. Alabama M. & M. Co., 25 Ill. App. 144; Rule v. Omega S. & G. Co., 64 Minn. 326, 67 N. W. 60; Shickle v. Watts, 94 Mo. 410; Griffith v. Mangam, 73 N. Y. 611; Aultman's Appeal, 98 Pa. 505.

14 New Haven Horse Nail Co. v. Linden Spring Co., 142 Mass. 349, 7 N. E. 773; Seymour v. Sturgess, 26 N. Y. 134; Christensen v. Eno, 106 N. Y. 97.

15 Guerney v. Moore, 131 Mo. 650, 32 S. W. 1132.

16 Pfaff v. Gruen, 92 Mo. App. 560.

receiver.17 If by the law of the State of charter the stockholder is liable to the creditor only, a receiver of the corporation cannot sue, 18 and conversely if the receiver is entitled to get in the amount, a creditor cannot sue in a foreign State. 19 The binding effect of a judgment by which a call is ordered is the same as in the case of a call on the subscriber's liability.20

If the liability is such that a creditors' bill may be maintained upon it, this may be done in the foreign State.21

§ 445. Direct absolute liability to the creditor.

Similarly, when the law of the State of charter creates a direct absolute liability of the stockholder to the creditor, there is an ordinary suretyship obligation, imposed on the stockholder at the time of the original transaction, and capable of being enforced by an ordinary action sounding in contract or debt. If the nature of the liability is such by the law that created it, that any creditor could sue any stockholder and recover from him up to the amount which he is liable to pay leaving it for him to recover such contribution as may be due him from other stockholders, this liability may be enforced in any State. 22

"It certainly concerns the due administration of justice that all stockholders, wherever they reside, should be com

17 Howarth v. Ellwanger, 86 Fed. 54; Kirtley v. Holmes, 107 Fed. 1; Childs v. Cleaves, 95 Me. 498, 50 Atl. 714; Howarth v. Lombard, 175 Mass. 570, 56 N. E. 888, 49 L. R. A. 301; Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489, 47 L. R. A. 725; Wigton v. Kenney, 51 App. Div. 215; Cushing v. Perot, 175 Pa. 66, 34 Atl. 447, 52 A. S. R. 835, 34 L. R. A. 737 (semble); King v. Cochran, (Vt.) 56 Atl. 667. Contra, Hunt v. Whewell, (Wis.) 99 N. W. 599.

18 Hale v. Allinson, 188 U. S. 56, 47 L. ed. 380.

19 Cushing v. Perot, 175 Pa. 66, 34 Atl. 447, 52 A. S. R. 835, 34 L. R. A. 737.

20 Childs v. Cleaves, 95 Me. 498, 50 Atl. 714; King v. Cochran, (Vt.) 56 Atl. 667.

21 Bartlett v. Drew, 57 N. Y. 587.

22 Flash v. Conn, 109 U. S. 371, 27 L. ed. 966 (s. c., 16 Fla. 428); Whitman

v. Oxford Nat. Bank, 176 U. S. 559, 44 L. ed. 587; Hancock Nat. Bank v.

pelled by proceedings somewhere to perform the statutory obligations toward creditors of the corporation which they have assumed by becoming stockholders. . . .

"The legislature of Kansas has chosen to give to the creditors of certain of its corporations the security which the individual liability of each stockholder affords, to the extent prescribed by its statutes, leaving the burden of enforcing contribution from other stockholders on any stockholder who has been compelled to pay anything in discharge of the debts of the corporation.

"Persons becoming stockholders in foreign corporations can ascertain the nature and extent of the liability of the stockholders in such corporations according to the laws of the State or country under which the corporations are organized, and they cannot complain if this liability is enforced against them." 23

Judgment in favor of the creditor against the corporation in its own State is ordinarily conclusive in every State against a stockholder as to the existence of the debt.24 A stockholder

Farnum, 176 U. S. 640, 44 L. ed. 619 (reversing 20 R. I. 466, 40 Atl. 340); Rhodes v. U. S. Nat. Bank, 66 Fed. 512; McVicar v. Jones, 70 Fed. 754; Mechanic's Savings Bank v. Fidelity Ins. T. & S. D. Co., 87 Fed. 113; Dexter v. Edmands, 89 Fed. 467; Hale v. Hardon, 95 Fed. 747; Ferguson v. Sherman, 116 Cal. 169, 47 Pac. 1023; Bell v. Farwell, 176 Ill. 489, 52 N. E. 346; Hancock Nat. Bank v. Ellis, 172 Mass, 39, 51 N. E. 207, 70 A. S. R. 232, 42 L. R. A. 396; Broadway Nat. Bank v. Baker, 176 Mass. 294, 57 N. E. 603; Western Nat. Bank v. Lawrence, 117 Mich. 669, 76 N. W. 105; First Nat. Bank v. Gustin M. C. M. Co., 42 Minn. 327, 44 N. W. 198, 18 A. S. R. 510, 6 L. R. A. 676 (semble); Guerney v. Moore, 131 Mo. 650, 32 S. W. 1132; Tompkins v. Blakey, 70 N. H. 584, 49 Atl. 111; Perkins v. Church, 31 Barb. 84; Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489; Savings Assoc. v. O'Brien, 51 Hun, 45, 3 N. Y. S. 764; Blair v. Newbegin, 65 Oh. St. 425, 62 N. E. 1040; Aldrich v. Anchor Coal & Development Co., 24 Ore. 32, 32 Pac. 756, 41 A. S. R. 831; Cushing v. Perot, 175 Pa. 66, 34 Atl. 447, 52 A. S. R. 835, 34 L. R. A. 737; Sackett's Harbor Bank v. Blake, 3 Rich. Eq. 225.

23 Field, C. J., in Hancock Nat. Bank v. Ellis, 172 Mass. 39, 51 N. E. 207, 70 A. S. R. 232, 42 L. R. A. 396.

24 American Nat. Bank v. Supplee, 115 Fed. 657; Howarth v. Lombard, 175 Mass. 570, 56 N. E. 888; Straw & E. Mfg. Co. v. L. D. Kilbourne B. &