Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/721

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 703. a bill in equity against the delinquent shareholders. 1 But a creditor cannot sustain a bill against shareholders for satis- faction of his claim from their unpaid subscriptions until he has exhausted his legal remedies against the corporation and its the corporation after all other assets have been thereto applied; as a necessary consequent there must be an account of debts, assets, and un- paid capital taken; when such ac- count has been taken, and the amount required from each stock- holder has been ascertained, an as- sessment ordering the payment of such proportionate amount by each may be made by a court of compe- tent jurisdiction in a proceeding in which the corporation and the stock- holders should be made defendants. " I consider it as the clear result of the authorities that, except in cases where the corporate author- ities have themselves made calls which are authorized by the sub- scription contracts, there is abso- lutely no liability of any kind what- ever, on the part of the stockholder to pay any part of his unpaid capital, except under and by force of an as- sessment made as above stated." Bunn's Appeal (or Lane's Appeal), 105 Pa. St. 49, 67, per Green, J., giv- ing opinion of the Supreme Court of Pennsylvania. This case disapproves In re Glen Iron Works, 13 Weekly Notes, 387; S. C, 13 Phila. 479. See, also, Bell's Appeal, 115 Pa. St. 88, and compare Citizen's, etc., S'v'gs B'k v. Gillespie, 115 Pa. St. 564; Cumberland Lumber Co. v. Clinton Hill Lumber Co., 57 N. J. Eq. 627. Consequently, on the insolvency of a corporation, unpaid and uncalled amounts due upon the capital stock cannot be attached by a judgment creditor of the corporation by means of an attachment execution. Bunn's Appeal, supra. 1 Gaff v. Flesher, 33 Ohio St. 107; Harmon ». Page, 62 Cal. 448; Baines v. Babcock, 95 Cal. 581; Universal Fire Ins. Co. v. Tabor, 16 Col. 531; Washington S'v'gs Bk. v. Butchers' & D. B'k, 107 Mo. 133; Bailey v. Pittsburg Coal R. Co., 139 Pa. St. 213; Lane's Appeal, 105 Pa. St. 49; Allen v. Montgomery R. R. Co., 11 Ala. 437, 449; Hightower v. Thorn- ton, 8 Ga. 486, 504 ; Harmon v. Hunt, 116 N. C. 678; see Jones v. Jarman, 34 Ark. 323; Haslettu. Wotherspoon, 1 Strobh. Eq. (S. C.) 209; Martin v. South Salem Land Co., 94 Va. 28; Harris v. Gateway Land Co., 128 Ala. 652. A shareholder cannot plead against creditors, that interest on instalments already paid in, has not been paid him by the corpora- tion as promised. Wood v. Pearce, 2 Disney (Ohio), 411. See, also, cases in succeeding notes. But an action at law does not lie by a creditor against a shareholder for unpaid subscriptions. Patterson v. Lynde, 106 U. S. 519; Van Pelt v. Gardner, 54 Neb. 702; Burch v. Taylor, 1 Wash. 245. See Bunn's Appeal, supra. But compare Potts v. Wal- lace, 146 U. S. 689. A statute giving creditors a right, on return of execu- tion against corporations unsatisfied, to an execution against shareholders to the extent of their unpaid sub- scriptions, does not increase share- holders' liability, and is constitu- tional. Hill v. Merchants' Ins. Co., 134 U. S. 515. A stockholder cannot be garnisheed on his unpaid subscrip- tion by a creditor of the corporation, when no call has been made. KcKel- vey v. Crockett, 18 Nev. 238. As to 701