Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/690

 § 072.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XI. Corporate property, when ex- empt from execution. liability for unpaid subscriptions. 1 And in all cases, in order to entitle a debtor of the corporation to set off a claim against it, the claim must have been acquired before the assets of the corporation have come under the control of a court of equity. 2 § 671. When a corporation is created in order to subserve some public purpose, its creditors may not be per- mitted, for reasons of public policy, to enforce their rights in a manner that would render the corpora- tion incapable of fulfilling its public duty. Thus, a corporate franchise to take tolls on a canal cannot be seized and sold under an execution, unless express authority to that effect exists in some statute of the state granting the charter. 3 Neither can lands or works essential to the enjoyment of a franchise be separated from it, and sold under such process. 4 But lands belonging to a railroad company, which are not used for corporate purposes, nor necessary to the full enjoyment and exercise of the corporate franchises, may be sold on execution against the corporation. 5 The relations between a corporation and certain special classes of its creditors may now be more particularly referred to. § 672. When an ordinary deposit is received by a bank and placed to the credit of the depositor, the relation between a neither of principal and agent, nor of bailor and i See § 729. 2 Smith v. Mosby, 9 Heisk. (Tenn.) 501; Lanier v. Gayoso Savings Inst., ib. 506. See §§810, 811. When a corporation places its funds in the hands of its general manager as trustee for safe-keeping and to use in the affairs of the corporation, such trustee cannot, in the event of the corporation's insolvency, set off a debt owing him from the cor- poration against the claim of its as- signee for creditors for such moneys. First National Bank v. Barnum Wire Works, 58 Mich. 124. 8 Gue v. Tide Water Canal Co., 24 How. 257. See, also, State v. Rives, 5 Ired. L. (N. C.) 297; State v. 670 Middletown Turnpike Co., 65 N. J. L. 73. 4 Gue v. Tide Water Canal Co., supra ; East Alabama R'y Co. v. Doe, 114 U. S. 340; Youngman v. Elmira, etc., R. R. Co., 65 Pa. St. 278; Louisville, N. A., etc., R'y Co. v. Boney, 117 Ind. 501; Overton Bridge Co. v. Means, 33 Neb. 857. See Bank v. Tanning Co., 170 Pa. St. 1. See, also, in regard to personal property belonging to a railroad, Philips v. Winslow, 18 B. Mon. (Ky.) 431, where the same principle was applied. Compare § 334. 6 Plymouth R. R. Co. v. Colwell, 39 Pa. St. 337. See Shamokiu Valley R. R. Co. v. Livermore, 47 Pa. St. 465.