Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/729

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 714. those which impose a limited, as well as those which impose an unlimited liability — that a creditor shall ^5^^ obtain judgment against the corporation, and that ® x ^ t t i( i? execution shall be levied thereunder, and returned eorpora- wholly or partially unsatisfied before he can proceed against a shareholder individually. 1 § 714. The general nature of the personal statutory liability of shareholders for corporate indebtedness has been ^ T • it Nature of much discussed; 2 some courts having held such ha- statutory bility to be that of partners ; while in Michigan it is ia * * y " said to be that of guarantors. The truth is, the liability of 1 But these conditions precedent are not always imposed. Thus, when it was provided by a certain charter that the " members of the company shall be jointly and severally liable for all debts and contracts made by the company until the whole amount of the capital stock fixed and limited by the corporation" is paid in, it was held that the liability of share- holders was unconditional, original, and immediate, not dependent on the insufficiency of the corporate assets, and not collateral to that of the corporation, upon the event of its insolvency; and that upon a bill filed against a corporation for a debt under seal, the shareholders were properly made parties, in order to avoid a multiplicity of suits. Man- ufacturing Co. v. Bradley, 105 U. S. 175. See, also, Culver ». Third Nat. B'k, 64 111. 528; Bird v. Calvert, 22 S. C. 292. On the other hand, such conditions may be implied from the tenor of the statute. Thus, where shareholders in a bank were made liable jointly and severally to creditors for the de- posits, it was held that their liability was secondary, and could not be en- forced until the assets of the bank had been exhausted. Mean's Ap- peal, 85 Pa. St. 75. See, also, Har- per v. Union M'fg Co., 100 111. 225. Compare Hatch v. Burroughs, 1 Woods, 439; Grindle v. Stone, 78 Me. 176; Trust Co. ». Loan Co., 92 Me. 444. See, also, § 724. After an insolvent corporation has made an assignment, the rule requiring a re- turn of execution against it unsatis- fied before proceeding against share- holders on their statutory liability no longer applies. Barrick v. Gif- ford, 47 O. St. 180. 2 The statutory liability of share- holders, whether limited or unlim- ited, which last is unusual, ordinarily arises ex contractu, and is not a pen- alty. See Norris v. Wrenschall, 34 Md. 492; Flash ». Conn, 109 U. S. 371. Such liability cannot be re- pealed so as to affect the vested rights of creditors. Hawthorne v. Calef, 2 Wall. 10; Provident SVgs Ins. v. Jackson Place Skating Rink, 52 Mo. 552. Not even by a state con- stitutional amendment. St. Louis R'y Supplies Co. v. Harbine, 2 Mo. App. 134. See §§ 500, 501 ; also § 735. It survives the death of a share- holder, and attaches to his personal representatives. Richmond v. Irons, 121 U. S. 27; Grew v. Breed, 10 Met. (Mass.) 569; Cochran v. Wiechers, 119 N. Y. 399; Hansen v. Davison, 73 Minn. 454. Where this liability sounds in con- tract it will be enforced outside the 709