of an association may bring an action, which should properly be instituted by the receiver, only when he shows a request by him to the receiver to bring the action. Where through fraudulent conspiracy the directors have refused to sue, they should be made parties defendant to the action brought by the stockholder: Slattery v. St. Louis etc. Transportation Co. 91 Mo. 217; 60 Am. Rep. 215.

2 Park v. Uister etc. Co. 25 W. Va. 108.

3 Rothwell v. Robinson (Minn. 1883), 4 R'y & Corp Law J. 213. Acc. Kelsey v. Sargent, 40 Hun. 150. Cf. Poole v. West Point etc. Assoc. 30 Fed. Rep. 513.

4 Rothwell v. Robinson (Minn. 1988), 4 R'y & Corp. Law J. 213.

5 Nathan v. Tompkins, 82 Ala. 437.

6 Currier v. New York etc. R. R. Co. 35 Hun, 355.

7 Dunphy v. Travelers' Newspaper Assoc. (1888) 146 Mass. 495.

§ 418. What interest in stock will entitle its holder to sue herein.—In a bill filed by stockholders to correct a mistake in a deed to the corporation, an averment that complainants are owners of a majority of the stock, but without any statement as to how or where they became so, or whether they were stockholders at the time the matter complained of occurred, or became stockholders afterwards, is not a sufficient averment of their relation to the corporation, or of their interest in the subject of the suit, to enable them to bring it in their own names, where it appears that, although the corporation had expired by limitation, it still exists for the purpose of winding-up, and that, although most of the directors are dead, one of them survives, and that no application has been made to him to bring the suit, nor any effort to call together the stockholders, or to obtain any united action in the assertion of this claim.' The original allottee or the purchaser of scrip issued to raise funds for a particular purpose, whether he has been registered or not, may maintain an action on behalf of himself and other scripholders to restrain the company from applying the funds to other purposes, and the ven

2

dor of the scrip need not be a party. It has been held that the holder of a scrip certificate cannot maintain an action on behalf of himself and all other shareholders after he has assigned the shares mentioned in the scrip. It would seem that a

shareholder who is a mere trustee cannot maintain a representative action. It is no objection to an action by a shareholder that he has become a shareholder for the purpose of bringing the action; 5 although a person who is indemnified by other parties, and is not in good faith acting in his own interest as shareholder, will not be allowed to maintain an action."

1 Taylor v. Holmes, 127 U. S. 489.

2 Bagshaw v. Eastern Union R'y Co. 7 Hare, 114; S. C. 2 Macn. & G. 389.

3 Doyle v. Muntz, 5 Hare, 509.

4 Bagshaw v. Eastern Union R'y Co. 7 Hare, 114; S. C. 2 Macn. & G. 389. The doubt expressed in the head-note to Mills v. Northern R'y of Buenos Ayres Co. 5 Ch. 620, as to whether persons having an equitable interest in shares, but not being registered shareholders, can maintain an action to restain an act ultra vires, does not appear to be supported either by the judgment or by principle. (See Great Western R'y Co. v. Rushout, 5 De Gex & S. 290). The trustees should, of course, be made parties to such an action: Browne & Theobald's Railway Law, 105,

5 Seaton v. Grant, 2 Ch. 459; Bloxam v. Metropolitan R'y Co. 3 Ch. 337. 6 Forrest v. Manchester etc. R'y Co. 7 Jur. N. S. 887; 4 De Gex, F. & T. 126; Tilber v. L. B. & S. C. R'y Co. 1 Hurl. & M. 489; Browne & Theobald's Railway Law, 105.

(B.)

$419. Of the shareholder's liability to corpoporate creditors.-Probably the most important practical difference between an incorporated company and an ordinary association or partnership, is the exemption of the private property of the members of a corporation from the claims of creditors, beyond the amount which they have staked upon the success of the enterprise. Upon the share

holders of banking and manufacturing companies an additional liability equal to the amount of stock held by them is sometimes imposed by statute or by charter. But the general rule, in the absence of statutory or charter provisions imposing a greater liability, is that the shareholders of a corporation are liable to corporate creditors only to the amount remaining unpaid upon the shares to which they have subscribed. In Alabama, West Virginia, Missouri, Nebraska and Oregon, there are constitutional guaranties that stockholders shall in no case be liable otherwise than for unpaid stock owned by them. In New York it is enacted by the General Railroad Act of 1850, that each shareholder of any company formed thereunder shall be individually liable to the creditors of the company, to an amount equal to the amount unpaid on the stock held by him, for all the debts and liabilities of the company, until the whole amount of the capital stock held by him shall have been paid to the company.

3

1 Cf. Root v. Sinnock, 120 Ill. 350; 60 Am. Rep. 558.

2 Stimson's Am. Stat. Law (1886), § 449.

3 N. Y. Laws of 1850, ch. 140, § 10, as amended by N. Y. Laws of 1854, ch. 282.

₫ 420. The extent of the liability.-If the whole amount due upon unpaid subscriptions be not required to meet the corporate liabilities, then only so much as is requisite can be collected in an action instituted by the creditors of the company.1 Neither are the shareholders to be charged with the payment of debts due to corporate creditors who neglect to appear and prove their claims."3 Where, subsequently to an assignment made by a

corporation for the benefit of its creditors, suit to collect unpaid subscriptions is instituted, and no evidence of an assessment is adduced, recovery can be had only in case the whole of the unpaid subscriptions is needed for the payment of the corporate debts. A suit by corporate creditors, to obtain satisfaction of their claims by enforcing the payment of the unpaid balance due on stock, is a proceeding to enforce the equitable obligations of the shareholders; and, since it is competent to call in only so much of the unpaid capital as is necessary to discharge the debts, and that only after the exhaustion of all other assets, there should be an account taken of the amount of debts, assets and unpaid capital, and a decree made for an assessment on each shareholder of the amount due from him. A shareholder who has been compelled to pay more than his just proportion of the corporate debts, is entitled to contribution from the other shareholders. Accordingly the defendant stockholders may file a cross-bill to bring in all other delinquent stockholders, within the jurisdiction of the court. For upon plain principles of equity, if all the parties who are liable have not been brought before the court, those who are defendants of record cannot be charged with the liability which should devolve upon those who are absent, unless it be shown that they are insolvent, or beyond the jurisdiction of the court. And it is competent to adduce evidence as to whether or not there is any property in the hands of the assignee, for the benefit of creditors, which can be applied in satisfaction of the claim; and, in Wisconsin, when such property cannot be found, the court may, in accordance

with the statute, find out the respective liabilities of the shareholders and enforce the same by judgment, without a receiver being appointed, or the proceedings being stayed, before it is ascertained whether there is to be any dividend made by the assignee to the creditors. But although the corporation may have assets consisting of debts owing it from other parties, the creditors will not be required to await the collection of doubtful claims, or claims in litigation. "The shareholders must pay and pay promptly, and take upon themselves the onus of delay and risk as to all such cases.

1 Appeal of Bell, 115 Pa. St. 88.

2 Richmond v. Irons, 121 U. S. 27

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3 Citizens' etc. Trust Co. v. Gillespie, 115 Pa. St. 564. 4 Appeal of Bell (1887), 115 Pa. St. 88.

5 Holmes v. Sherwood, 3 McCrary, 405; Marsh v. Burroughs, 1 Woods, 463; Stover v. Flack, 30 N. Y. 64; Aspinwall v. Torrence, 1 Lans. 381; Masters v. Rossie etc. Mining Co. 2 Sand. Ch. 301; Slee v. Bloom, 19 Johns. 453; 10 Am. Dec. 273; Farron v. Bivings, 13 Rich. Eq. 25; Millaudon v. New Orleans etc. R. R. Co. 3 Rob. (La.) 488; Matthews v. Albers, 24 Md. 527; Middletown Bank v. Magill, 5 Conn. 28; Erickson v. Nesmith, 46 N. H. 371; 77 m. Dec. 78; Hadley v. Russell, 40 N. H. 109; Brinham v. Willersburg Coal Co. 47 Penn. St. 43; Umsted v. Buskirk, 17 Ohio St. 113; Meisser v. Thompson, 9 Bradw. 368; S. C. sub. nom. Thomson v. Meisser, 108 Ill. 359: Wincock v. Turpin, 96 III. 135; Stewart v. Lav, 5 Iowa, 604. Cf. Andrews v. Coflender, 13 Pick. 484; Gray v. Coffin, 9 Cush. 192; Sutton's Case, 3 De Gex & S. 262.

6 Hatch v. Dana, 101 U. S. 205; Woods v. Dummer, 3 Mason, 307; Marsh v. Burroughs, 1 Woods, 463; Holmes v. Sherwood, 3 McCrary, 405; Masters v. Rossie etc. Mining Co. 2 Sand. 301; N. Y. Code of Civil Procedure, §§ 3701-704; Hadley v. Russell, 40 N. H. 109; Umsted v. Buskirk, 17 Ohio St. 113; Hodges v. Silver Hill Mining Co. 9 Or. 200.

7 Marsh v. Burroughs, 1 Wood, 463; Wood v. Dummer, 3 Mason, 307; Bonewitz v. Van Wert County Bank, 41 Ohio St. 78; Cook on Stock & Stockh. § 206. Cf. Erickson v. Nesmith, 46 N. H. 371; 77 Am. Dec. 78; Holmes v. Sherwood, 3 McCrary, 405.

8 Wis. Rev. Stat. 1878, § 3224.

9 Sleeper v. Goodwin, 67 Wis. 577.

10 Moses v. Ocoee Bank, 1 Lea, 398, 414. Acc. Stark v. Burke, 9 La. An. 341.

§ 421. Liability for laborers' wages.-In several States a personal liability is imposed by statute up

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