Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/573

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 542. and may be in a position to defend in a suit brought to enforce his subscription to it. 1 Further, when the capital stock is limited by the charter, all stock issued in excess of such limit is void, and a holder thereof is not entitled to the rights of a shareholder, 2 nor is he estopped from setting up its invalidity as a defence to an action in the interest of creditors, brought to recover the balance unpaid thereon. 3 But when the corpo- ration has become bankrupt, the holder of void stock is not entitled to have money paid thereon applied as a credit on the unpaid balance due on authorized stock held by him. 4 In an action by a corporation to recover a subscription, the fact that it has taken subscriptions in excess of its limit does not itself bar a recovery, if the corporation has retained a sufficient amount of its authorized stock which it is ready and able to issue. 5 § 542. Insolvency of the corporation is no defence to a suit brought to collect a subscription. 6 And the IdsoIvgkcv assignee or receiver of the corporation succeeds to of corpora- all its rights and may recover unpaid subscriptions tence^G^ for the benefit of shareholders and creditors. 7 But Reiver ° f a receiver cannot enforce the payment of a subscrip- the issue of shares below par, and declaring void shares so issued, a subscriber to stock at less than par is in pari delicto with the corporation and cannot sue on the contract to force it to issue such stock to him, nor can he sue to recover back moneys paid on account. Clarke v. Lincoln Lumber Co., 59 Wis. 655. Compare § 522c. 1 See last note. 2 N. Y. & N. H. R. R. Co. b. Schuyler, 34 N. Y. 30; Scoville v. Thayer, 105 U. S. 143; Oler v. Balto. & Randallstown R. R. Co., 41 Md. 583; Grangers' L., etc., Ius. Co. v. Kamper, 73 Ala. 325. 8 Scoville v. Thayer, supra ; Clark v. Turner, 73 Ga. 1 ; Kampman v. Tarver, 87 Tex. 491 ; Railroad v. Sneed, 99 Tenn. 1. 4 Scoville v. Thayer, supra. 6 Oler v. Balto. & Randallstown R. R. Co., 41 Md. 583. That the cor- poration had illegally increased its stock, is no defence to a note given for a subscription, when it is not alleged that the illegal cannot be distinguished from the legal stock. Merrill v. Reaver, 50 Iowa, 404. But an innocent person buying void stock from a corporation may recover the price. Lincoln v. Express Co., 45 La. Ann. 729. 6 Dill u. Wabash Valley R. R. Co., 21 111. 91 ; Shuey v. Holmes, 22 Wash. 193. It is no defence to a suit on a subscription to its stock, brought by a railroad company, that the gov- ernor of the state had seized the road. Mull ins v. North and South R. R. Co., 54 Ga. 580. The fact that 7 For note 7 see p. 554. 553