Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/126

 § 137.] Till': LAW OF PRIVATE CORPORATIONS. [CHAP. VII. shares are not fully paid-up or when individual liability exists respecting them ; for, under such circumstances, the effect would be to impair the corporate assets to the detriment of creditors and holders of other shares. 1 In general, no purchase by a corporation of its stock can relieve the prior holder from his statutory individual liability to creditors. 2 § 13(>. When a corporation has competently purchased shares a corpora- °f its own stock, it may hold them unextinguished reissue^ an ^ re i ssue them; 3 but while the corporation holds shares the shares, it cannot exercise in regard to them privi- puifhasea, . ° r by it ; but leges which pertain to an ordinary shareholder. Ks- voteon pecially it cannot vote on them ; and this last prop- them. osition is not affected by the fact that the shares stand in the name of some trustee for the corporation, or in the names of the directors. 4 § 137. In the enforcement of its rights, a corporation has equal capacity with an individual to bring actions, 5 compro- 1 Currier v. Lebanon Slate Co., 56 N. H. 262; Savings Bank v. Wulfe- kuhler, 19 Kans. 60; Crandall v. Lin- coln, 52 Conn. 73; Columbian Bank's Estate, 147 Pa. St. 422; Adams, etc., Co. v. Deyette, 5 S. Dak. 418. Tbe purchase of its own stock by a cor- poration, made in good faith, with nothing in the apparent condition of the company to suggest insolvency, will be set aside at the suit of cred- itors injured by it. The fact that the shareholder did not know at the time of the indebtedness does not make the transaction valid, for he is, as to creditors, affected with notice of all the equities attaching to the corporate property as a trust fund. Com'l Nat. 15k. v. Burch, 141111.519; Clapp o. Peterson, 104 111. 20. The directors of a corporation which is in process of dissolution cannot pur- chase the shares of some of the stock- holders. Augsburg Land & I. Co. v. Pepper, 95 Va. 92. See §§ 552, 747. 2 See § 747. 8 State v. Smith, 48 Vt. 266; City 106 Bank v. Bruce, 17 N. Y. 507; Wil- liams o. Savage Mfg. Co., 3 Md. Ch. 418; Rivanna Navigation Co. v. Daw- son, 3 Gratt. (Va. ) 19, 25; Clapp v. Peterson, 104111. 26; Commonwealth v. Boston and A. R. R. Co., 142 Mass. 146. 4 Vail ». Hamilton, 85 N. Y. 453; Ex parte Holmes, 5 Cow. 426; Brewster v. Hartley, 37 Cal. 15; Monsseaux ». Urquhart, 19 La. Ann. 482; American Railway Frog Co. v. Haven, 101 Mass. 398. The corporation cannot as repre- senting shares held by it give its as- sent to a mortgage of corporate property, in order to make up the assent of two-thirds of the share- holders as required by statute. Vail v. Hamilton, supra. See § 185. 5 A corporation has the right to sue at common law, see §§12, 14; and has power to execute a bond in a judicial proceeding. Collins v. Hammock, 59 Ala. 448. A corporation may take an assign- ment of a judgment in payment of