foreign corporations, except in cases of fraud injuriously affecting citizens of that State."

1 Mills v. Northern R'y etc. Co. Law R. 5 Ch. 621.

2 Lamar v. American Fire Ins. Co. 6 Paige Ch. 482. In this case the insolvency was caused by an extensive fire, which occurred some time after the day on which the dividend was payable.

3 South Yorkshire R'y Co. v. Great Northern R'y Co. 9 Ex. 55.

4 Brown v. Monmouthshire R'y etc. Co. 13 Beav. 32; Stevens v. South Devon R'y Co. 9 Hare, 313.

5 Yool v. Great Western R'y Co. 20 Law T. N. S. 74.

6 Stringer's Case, Law R. 4 Ch. 475.

7 Howell v. Chicago etc. R. R. Co. 51 Barb. 378.

§ 311. Proceedings to compel payment of dividends declared.-The duty of declaring a dividend where there are funds in hand is indefinite and discretionary with the directors, and in no sense a duty due any particular member of the company; but after a dividend has been declared, the right thereto becomes individualize 1, and the duty to distribute in certain proportions attaches as a right in favor of each of the stockholders which may be enforced by legal proceedings,1 in an action of general assumpsit for the amount due according to the terms of the resolution declaring the dividend;2 or by bill in equity in a proper case; but payment cannot be compelled by mandamus. When a dividend has been declared, but the time of payment has not been fixed by the directors, an action to compel its payment cannot be maintained at law; a bill in equity is the only remedy.5

1 Wool's Railway Law, § 66, citing Keppel v. Petersburgh etc. R. R. Co. Chase's Dec. 167; Carpenter v. New York etc. R. R. Co. 5 Abb. Pr. 277; Le Roy v. Globe Ins. Co. 2 Edw. Ch. 657; Scott v. Central R. R. etc. Co. of Ceorgia, 52 Barb. 45; Jackson v. Newark Plank Road Co. 31 N. J. Law, 277; King v. Patterson etc. R. R. Co. 29 N. J. 504; City of Ohio v. Cleveland et. R. R. Co. G Ohio St. 489; Festial v. King's College, 10 Beav. 491; Davis v. Bank of England, 2 Bing. 393: Coles v. Bank of England, 10 Ad. & E. 437.

2 Jozes v. Terre Haute etc. R. R. Co. 5. N. Y. 196; Kane v. Bloodgood,

7 Johns. Ch. 90; 11 Am. Dec. 417; Keppel v. Petersburgh R. R. Co. Chase's Dec. 167; Westchester etc. R. R. Co. v. Jackson, 77 Pa. St. 321; Jackson v. Newark Plank Road Co. 31 N. J. 277; King v. Patterson etc. R. R. Co. 29 N. J. 504; State v. Baltimore etc. R. R. Co. 6 Gill, 363; City of Ohio v. Cleveland etc. R. R. Co. 6 Ohio St. 489; Dalton v. Midland Counties R'y Co. 13 Com B. 474; Coey v. Belfast etc. R'y Co. Ir. R. 2 C. L. 112; Faucett v. Laurie, 1 Drew. & S. 192.

3 Le Roy v. Globe Insurance Co. 2 Edw. Ch. 657; Beers v. Bridgeport Spring Co. 42 Conn. 17.

4 People v Central etc. Co. 41 Mich. 166; Van Norman v. Central etc. Co. 41 Mich. 166.

5 Scott v. Eagle Fire Ins. Co. 7 Paige, 203; Pratt v. Pratt etc. Co. 33 Conn. 446.

§ 312. The same subject, continued—Whether demand is requisite-Interest.-There are many cases in which it is held that the shareholders cannot maintain an action to enforce the payment of a dividend until demand has been made and refused at the place of payment; and that interest and the statute of limitations do not begin to run until demand and refusal. On the other hand it has been held that the institution of suit is, in itself, a sufficient demand; and that interest, being in the nature of dainages for default of payment, is not dependent upon demand. In those jurisdictions in which demand is a condition precedent to an action to compel the payment of a dividend, a demand upon the bank or party through whom the dividend is made payable is held not sufficient.5

1 Scott v. Central R. R. etc. Co. of Georgia, 52 Barb. 45; Granger v. Bassett, 98 Mass. 452 (a will case). See also Goldsmith v. Swift, 25 Hun, 201; Keppel v. Petersburg R. R. Co. Chase's Dec. 167, 213; State v. Baltimore etc. R. R Co. 6 Gill. 333; King v. Patterson etc. R. R. Co. 29 N. J. 504; Hagar v. Union National Bank, 63 Me. 509. A letter of inquiry is not a sufficient demand: Scott v. Central R. R. etc. Co. of Georgia, 52 Barb. 45.

2 Boardman v. Lake Shore etc. R. R. Co. 84 N. Y. 157, 187; Keppel v. Petersburgh R. R. Co. Chase's Dec. 167, 213; State v. Baltimore etc. R. R. Co. 6 Gill. 353; Philadelphia etc. R. R. Co. v. Cowell, 28 Pa. St. 329; 70 Am. Dec. 128, Philadelphia etc. R. R. Co. v. Hickman, 28 Pa. St. 318. Interest on dividends upon preferred stock is not dependent upon demand having been made: Boardman v. Lake Shore etc. R. R. Co. 84 N. Y. 157, 188; Prouty v. Michigan Southern R. R. Co. 1 Hun, 655, 667.

3 Robinson v. National Bank, 95 N. Y. 637.

4 Adams v. Fort Plain Bank, 36 N. Y. 255.

5 King v. Patterson etc. R. R. Co. 29 N. J. 504.

313. The same subject, continued-Offset and counterclaim.-In an action to enforce the payment of a dividend, the company may plead by way of offset a debt due it from the plaintiff upon an unpaid balance on the purchase price of the stock itself. In England this has become a part of the statutory law of corporations, the Companies' Clauses Act of 1845 providing that "no dividend shall be paid in respect of any share until all calls then due in respect of that and every other share held by the person to whom such dividend may be payable shall have been paid." But a corporation has no right to retain a debt due to it from a stockholder out of his dividend, by way of counterclaim, unless it has a lien upon the stock for debts due it.*

3

1 Bates v. New York Insurance Co. 3 Johns. Ch. 238; King v. Patterson etc. Ry Co. 29 N. J. 504; Citizens' etc. Ins. Co. v. Scott, 45 Ala. 185; Sargent v. Franklin Insurance Co. 8 Pick. 90; Hager v. Union National Bank, 63 Me. 509. Contra, Ex parte Winsor, 3 Story, 411, where an application of a dividend to an unpaid call was held illegal. Mr. Cook, however, questions the soundness of this decision. See Cook on Stock & Stockh. § 547, note.

2 8 Vict. ch. 16, § 123.

3 Att'y-General v. State Bank, 1 Dev. & B. Ch. 545; March v. Eastern R. R. Co. 43 N. H. 515; 77 Am. Dec. 732.

4 Hager v. Union National Bank, 63 Me. 509.

§ 314. Recovery of dividends illegally paid.The directors of a corporation may maintain an action against the shareholders to recover dividends which have been unlawfully declared and paid 1 And dividends illegally paid to the shareholders may be recovered from them by corporate creditors after judgment against the company and return of execution unsatisfied." A transferree of stock is

liable to refund dividends distributed after he purchased the shares; and it is immaterial that the creditor's claim against the corporation accrued prior to the transfer. A valid judgment against the company on a return of nulla bona is requisite; and this judgment against the company is to be regarded as at least prima facie evidence of the validity of the creditors' claims. The receiver, also, of an insolvent company may recover dividends improperly paid, and in the same proceedings obtain an injunction against the corporate creditors to restrain them from suing individually to recover the funds thus illegally disposed of.5 It is immaterial that the shareholders received the dividends innocently, having no actual knowledge of the fact that the capital stock had been infringed upon. But a dividend declared in good faith, and believed at the time to be warranted by the financial condition of the company, cannot be recovered by the corporate creditors upon its subsequent insolvency." A shareholder who has been compelled to repay more than his equitable proportion of a dividend is entitled to contribution from the other members of the company. Where there has been no actual knowledge on the part of the subscriber that a dividend received by him in good faith had been illegally declared, the statute of limitations runs in his favor from the time that it was declared.9

1 Lexington Life etc. Ins. Co. v. Page & Richardson, 17 Mon B. 412; 66 Am. Dec. 165.

2 First National Bank v. Smith, 6 Fed. Rep. 215; Wood v. Dummor, 3 Mason, 308; Railroad Co. v. Howard, 7 Wall. 392; Curran v. State, 15 How. 304; Johnson v. Lafin, 5 Dill. 65, note; Hastings v. Drew, 76 N. Y. 9; Bartlett v. Drew, 57 N. Y. 587; Osgood v. Laytin, 43 Barb. 463; McLean v. Eastman, 21 Hun, 312; Bank of St. Marys v. St. John, 25 Ala. 566; Gratz v. Redd, 4 Mon. B. 178; Heman v. Britton (1886), 88 Mo. 543; Bartholomew v. Bentley, 15 Ohio, 659; Rance's Case, Law R. 6 Ch. 104. Cf. Williams v. Boice, 38 N. J. Eq. 361; Pacific R. R. Co. v. Cutting Jr. 27

Fel. Rep. C38; Paschall v. Whitrett. 11 Ala. 472; Story's Equity (13th ed.), § 12:2. But see Spear v. Grant, 16 Mass. 9, 15; Vose v. Grant, 15 Mass. 505.

3 Hastings v. Drew, 76 N. Y. 9, 18; Hurlburt v. Taylor, 62 Wis. 607, 613, 614.

4 Hastings v. Drew, 76 N. Y. 9, 15, distinguishing Miller v. White, 50 N. Y. 137; Sturges v. Vanderbilt, 73 N. Y. 384, and cases cited supra; McMahon v. Macy, 51 N. Y. 155. Cf. Hurlburt v. Taylor, 62 Wis. 607.

5 Osgood v. Laytin, 5 Keyes, 521; Lexington Life etc. Ins. Co. v. Page & Richards n, 17 Mon. B. 412; 66 Am. Dec. 165. Cf. Butterworth v. O'Brien, 39 Barb. 192; McLean v. Eastman, 21 Hun, 312.

6 Main v. Mills, C Biss. 98, and note; Hastings v. Drew, 76 N. Y. 919; Osgool v. Laytin, 3 Keyes, 521; Sagory v. Dubois, 3 Sand. Ch. 466; Lexington Life etc. Ins. Co. v. Page & Richardson, 17 Mon. B. 412; 66 Am. Dec. 165; Gratz v. Redd, 4 Mon. B. 178; Bank of St. Marys v. St. John, 25 Ala. 566; Clapp v. Peterson, 104 Ill. 26; National Trust Co. v. Miller, 33 N. J. Eq. 155. C. Sawyer v. Hoag. 17 Wall. 610; Railroad Co. v. Howard, 7 Wall. 392; Curra v. State, 15 How. 304; Wood v. Dummer, 3 Mason, 308. 7 Main v. Mills. 6 Biss. 93; Reid v. Eatonton etc. Co. 40 Ga. 98; In re Mercantile etc. Co. Law R. 4 Ch. 475.

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

9 Lexington Life etc. Ins. Co. v. Page & Richardson, 17 Mon. B. 412; 66 Am. Dec. 165,