Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/720

 § 703.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. invention of any new doctrine to enforce so familiar a rule of equity. It is the misrepresentation of fact in stating the amount of capital to be greater than it really is that is the true basis of the liability of the stockholder in such cases ; and it follows that it is only such creditors who have relied, or who can fairly be presumed to have relied, upon the professed amount of capital, in whose favor the law will recognize and enforce an equity against the holders of ' bonus stock.' " ' The above reasoning is certainly forcible, and the decision, as well as that in Ilandley v. Stutz, is in harmony with usual modes of conducting the affairs of corporations. It is to be borne in mind, however, that the " trust fund " doctrine rests primarily on the view that the amount of stock named in the charter constitutes a statement to all the world that that is the amount of capital on which the corporation is to do business. Now, as it would seem to be false on principle to say that the amount of stock named in the charter does constitute such a statement, and means money or money's worth, but that no such idea is connected with any subsequent issue or increase of stock, recent cases tend to uphold the indiscriminate issue of fictitious stock. § 703. Creditors in order to enforce their main right to Creditors' have the nominal value of the capital stock actually remedies. p a j^ j n? h ave the subsidiary right to compel the directors to make calls ; 2 or creditors may themselves bring 1 Hospesw. Northwestern Mfg. Co., 48 Minn. 174, 197, Opinion of court per Mitchell, J. See, also, Bickley v. Schlag, 4(5 N. J. Eq. 532; Hehberd v. South West. L. & C. Co., 55 N. J. Eq. 18; Wallace v. Carpenter Co., 70 Minn. 321 ; and Hastings Malting Co. v. Iron Range Co., 65 Minn. 28. 2 See §661. In the ordinary case of a solvent corporation there is no liability on shareholders to pay in the capital until an assessment is levied by the proper corporate authorities; but when the corporation becomes in- solvent, especially if it ceases to be a going concern, this condition piece- 700 dent ceases to exist, and payment is compellable at the suit of creditors, although no assessment has been made. Hatch v. Dana, 101 U. S. 205; Wilbur, Assignee, v. Stock- holders, In re Glen Iron Works, 18 Bankr. Reg. 178; S. C, 13 Phila. 479; Holmes v. Sherwood, 3 McCrary, 405; Crawford v. Rohrer, 59 Md. 599. See Kohler v. Agassiz, 99 Cal. 9. Compare Seymour v. Sturges, 26 N. Y. 134. Unpaid stock " in cases of insol- vency is due as an entirety; it is due to the aggregate of the credit- ors; only so much is due as is requi- site to discharge the indebtedness of