Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/681

 CHAP. XI.] CORPORATION AND CREDITORS. [§ 661. debt due him, to compel the debtors of the corpora- tion to pay their debts. 1 This right of the creditors Unpaid also is usually rendered effective through the ap- scriptions. pointment of a receiver, who will be competent to collect all debts owing the corporation, for the benefit of persons inter- ested, shareholders or creditors. Especially is it competent for the receiver or assignee in insolvency to collect — and in- cumbent on him to do so — all unpaid stock subscriptions. 2 § 661. As stated in Sanger v. Upton, 3 unpaid stock subscrip- tions, just as much as subscriptions actually paid in, constitute part of the capital of the corporation, of the trust fund devoted to the discharge of its indebtedness. Ordinarily, as long as the corporation is a going concern under the management of its regular officers, a call duly made by the board of directors is a condition precedent to the liability of a shareholder to pay any part of his unpaid subscription. 4 If the directors fail to make a call when the unpaid subscriptions are needed to pay the debts of the corporation, a court of equity, on the suit of a creditor, will compel them to do so. 5 Ordinarily, however, to apply for the appointment of a receiver is the course pursued. der no obligation to protest, in order to preserve their rights. An insur- ance company contracts to keep on hand the funds required by law for the security of its patrons; and also to continue its business so as to keep in a condition to perform its engage- ments. People v. Empire Mut. Life Ins. Co., 92 N. Y. 105. 1 Before an alleged creditor of a railroad company can file a creditor's bill to obtain from one of its debtors the satisfaction of his claim, he must establish his debt by a judgment in an action at law. Smith v. Railroad Co., 99 U. S. 398. A judgment cred- itor can garnishee a shareholder (on a judgment against the corporation) for unpaid calls due the corporation. Meints v. East St. Louis, etc., Mill Co., 89 111. 48; Hall & Farley, Trus- tees, v. Henderson, 114 Ala. 601; Ro- man v. Dimmick, 115 Ala. 233; Pick- ering v. Townsend et al., 118 Ala., 351 ; Lea v. Iron Bell Mercantile Co., 119 Ala. 271; Cooper v. Adel Security Co., 122 N. C. 463: Martin v. South Salem Land Co., 94 Va. 28. See Da- vis Bros. 13. Montgomery, etc., Co., 101 Ala. 127. But cannot garnishee a shareholder for unpaid subscrip- tions for which no calls have been made. Teague, Barnett & Co. v. Le Grand, 85 Alabama, 493. 2 See §542. A creditor cannot maintain an action to reach a debt due to the corporation, when the corporation is in the hands of a re- ceiver. First Nat. Bk. v. Dovetail, etc., Co., 143 Ind. 534. 8 § 655. 'See §§703, 517, 543. 8 Germantown Passenger Ry. Co. v. Fitler, 60 Pa. St. 124; Ward e. Gris- woldville Mfg. Co., 16 Conn. 593, 601; Glenn v. Williams, 60 Md. 93; Sco- ville v. Thayer, 105 U. S. 143, 155; Salmon v. Hamborough Co., 1 (Eng.) 661