Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/728

 § 713.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. § 712. Classes of statutes imposing personal liability. remainder of the proceeds, is fraudulent as against the general creditors of the company ; and this, although the road was mortgaged far above its value, and did not on the sale in open market bring nearly enough to satisfy even the mortgage debts. 1 Statutes imposing individual liability 2 fall under two heads : those which make the shareholders jointly and severally liable for all the debts of the corporation, and those which add a further limited liability to the liability arising, according to the general rules of corporation law, from subscribing for stock. The extent of this limited liability may be made dependent on the number of shares held, or on the proportion which that number bears to the whole number of shares in the capital stock. Statutes imposing a limited liability may be sub- divided into those in accordance with the tenor and import of which a single creditor ina T sue a single shareholder at law ; and those which are construed to render the shareholders liable to contribute a proportionate amount to a common fund for the ratable benefit of all creditors. To enforce the liability of shareholders under the latter, all the creditors must join in a suit in equity, or one creditor must sue in equity on behalf of all other creditors ; and in so far as is practicable, all the shareholders must be joined as defendants. § 713. It is ordinarily provided by all these statutes — 1 Railroad Co. v. Howard, 7 Wall. 392. But compare Pennsylvania Transportation Co.'s Appeal, 101 Pa. St. 576, where it was held that the bondholders aud shareholders of a railroad company may unite for the purchase of the property of the com- pany at a contemplated foreclosure sale, to prevent a sacrifice of the property; and if the agreement and sale are fair, they do not operate as a fraud on a creditor, who had notice of the sale and an opportunity of bidding. But a creditor who is also a shareholder and votes for and par- ticipates in the distribution of the 708 property of the corporation cannot invoke the doctrine that it is a trust fund, which he can follow into the hands of the individual sharehold- ers. Fort Madison Bank v. Alden, 129 U. S. 372; Thompson v. Bemis Paper Co., 127 Mass. 595. 2 Statutes imposing a further liability on shareholders towards creditors, do not impliedly deprive creditors of their right to enforce payment of subscriptions for stock. See Bunn's Appeal, 105 Pa. St. 49; Warner v. Callender, 20 O. St. 190; Washington S'v'gs B'k v. B. & D. B'k, 107 Mo. 133.