Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/716

 § 70±] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. estop himself by paying a call and acting as a shareholder. 1 The capital stock, whether actually paid up or subject to call, constitutes the primary fund to be applied in furthering the objects of incorporation. It is the fund which subscribers are bound to contribute, and which creditors may rely on for the payment of their claims. 13 It need not be altogether cash, but may consist partly in buildings, plant, and properties. Accord- ingly, a shareholder may pay for his shares in property or even in services, provided such property or services be fairly worth the par value of the capital stock received as fully paid up in return. 3 § 702. To issue shares as fully paid up for property known to the corporation and the shareholder receiving them to be grossly below their par value, is a fraud on creditors, for whose benefit the shareholder to whom the shares are issued may be compelled to make up the difference. 4 This rule has been held not to be Liability iu respect of shares is- sued for property. sisting (as against creditors) on the condition. Lee v. Imbrie, 13 Oreg. 510. 1 Cornell and Michler's Appeal, 114 Pa. St. 153. 2 See Thompson v. Reno SVgs Bank, 19 Nev. 103 and §§ 654, 655. When sued by a creditor a sub- scriber cannot plead an agreement not contained on the face of the subscription, that the subscription was to be paid only under certain conditions. Hickman v. Wilson, 104 111. 54; Hawkins v. Citizens 1 Inv. Co., 38 Or. 544. See §521. 8 Coit v. Gold Amalgamating Co., 119 U. S. 343. See §522c. But a subscriber cannot as against creditors set up a collateral agree- ment that his subscription was to be paid in land which the corpora- tion had no authority to acquire. Noble v. Callender, 20 Ohio St. 199- Compare In re Glen Iron Works, Wilbur v. Stockholders, 13 Pliila. (Pa.) 479; S. C, 18 Baukr. Reg. 178. "The public has a right to assume, GOG where the stock of a company has all been issued as full- paid stock, that it has been paid for in full in money, or in property at a fair value." Goff v. Hawkeye Pump, etc., Co., 62 Iowa, 691, 694, opinion of court per Adams. J. Where a corporation is- sued all its stock fur a patent which turned out worthless, the stock- holders were held liable to credit- ors. Chisholm Bros. v. Forney, 65 Iowa, 333. Where the articles of in- corporation provided that 15 per cent, only of the par value of shares be paid in, it was held that payment of the balance of 85 per cent, could not be enforced by a receiver ap- pointed after the corporation became insolvent. Bent v. Underdown, 156 Ind. 516. Jackson r. Traer, 64 Iowa, 469; Free- man v. Stine, 15 Phila. (Penn. ) 37; Crawford v. Rohrer, 59 Md. 599; Os- good «. King, 42 Iowa, 478; Wishard v. Hansen, 99 Iowa, 307; Wether- bee v. Baker, 35 N. J. Eq. 501 ; Elyton
 * Stout o. Hubbell, 104 la. 499;