Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/726

 Sharehold- ers in what respect trustees for creditors. Statute of limitations. § 710.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. properly paid from profits, the company being solvent at the time, its subsequently accruing insolvency will not enable creditors to recover such dividends from the shareholders who have received them. 1 § 709. Since the unpaid subscriptions just as much as those which are actually paid in, are held to constitute the capital of the corporation, 2 shareholders to the extent of their unpaid subscriptions have in their possession funds to which creditors of the corpo- ration may be entitled; and shareholders may therefore, to the extent of their unpaid subscrip- tions, be regarded as trustees for creditors. 3 Accordingly, the statute of limitations does not run against the right of creditors to enforce the payment of unpaid subscriptions until the corporation has ceased to be a going concern, 4 or until a valid call has been made by the directors or by a court of com- petent jurisdiction, or at least some authorized demand has been made on the subscriber. 5 § 710. Further, the body corporate derives its powers to act as such from the constitution of the corporation ; a propo- sition which involves the further proposition that it must ex- ercise its powers in accordance with the terms of such con- stitution. These powers, accordingly, cannot be exercised in McDonald, Rec'r, v. Williams, 174 U. S. 397. Similarly a preferred share- holder is postponed to creditors. St. John v. Erie Railway Co., 22 Wall. 136. In such an action the receiver may make the creditors parties to restrain them from bringing separate suits against the shareholders. Os- good v. Laytin, supra. 1 Reid v. Eatonton M'fg Co., 40 Ga. 98. See McLean v. Eastman, 21 Hun, 312. 2 See § 661. 8 See §§ 41-47. 4 Allibone v. Hager, 46 Pa. St. 48, 54; Payne v. Bullard, 23 Miss. 88; Curry v. Woodward, 53 Ala. 371,376. See Harmon v. Page, 62 Cal. 448; First Nat. B'k v. Green, 64 Iowa, 445; Wilkins v. Worthen, 62 Ark. 401; 706 Swearingen v. Dairy Co. ,198 Pa. St. 68. It was held in Glenn v. Marbury, 145 U. S. 499, that, though a corpora- tion is insolvent and in the hands of a receiver, the statute of limitations does not begin to run until an assess- ment has been made; and see Semple v. Glenn, 91 Ala. 245; Van Pelt v. Gardner, 54 Neb. 702. 5 Scovill v. Thayer, 105 United States, 143, 155; Hawkins v. Glenn, 131 U. S. 319; Glenn v. Liggett, 135 U. S. 533; Great Western Tel. Co. v. Gray, 122 111.630; Washington SVgs B'k v. B. & D. B'k, 107 Mo. 133; Western R. R. Co. v. Avery, 64 N. C. 491; Harris v. Gateway Land Co., 128 Ala. 652. See Glenn v. Saxton, 68 Cal. 353.