Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/731

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 716. § 716. The temptation to speak of the statutory liability of a shareholder as the liability of a partner is more insidious, because of the resemblance between the two kinds of liability. But it is evident that the status of a shareholder in a corpora- tion, to members of which personal liability attaches, differs much from that of a partner. 1 Shareholders are not, like partners, each other's agents ; unlike partners, they may trans- fer their shares at will ; then ordinarily, even in respect of his statutory liability, a shareholder cannot be sued until the creditor has exhausted his legal remedies against the corpora- tion ; and finally, under some statutes, a shareholder may be sued alone, though in the end he is entitled to contribution from his fellow shareholders. Undoubtedly there remains the main resemblance between the liability of partners and the statutory liability of shareholders, that a shareholder as well as a partner is liable individually for the debts of the corpora- tion or firm, a resemblance which is especially prominent in the unlimited liability 2 of a shareholder who like a partner may be obliged to pay all the debts of the concern. And the danger lies here, lest with eyes fixed on this main resemblance courts overlook minute differences, and in consequence fail to do accurate justice. The perception of a resemblance is often nothing but a failure to see differences. Corporations are largely regulated by statute, and differ in so many respects from partnerships that errors must be introduced by an indis- criminate reasoning from the analogy of the latter institutions. 3 a shareholder within one year after the debt of the corporation became due, the liability of the shareholder cannot be extended by any exten- sion or renewal of the indebtedness of the corporation, as by taking its note. Parrot v. Colby, 6 Hun, 55; S. 0., affd 71 N. Y. 597; Jagger Iron Co. v. Walker, 76 N. Y. 521. Compare Dryden v. Kellogg, 2 Mo. App. 87. But this is very different from an extension to the corporation discharging the shareholder before the expiration of the period limited by the statute for the commence- ment of suit against him. But it was held in Mohr v. Elevator Co., 40 Minn. 343, that the release of a cor- poration through proceedings in in- solvency releases the statutory liabil- ity of shareholders. 1 Corporators are not partners, even though rendered liable by stat- ute for certain debts of the corpora- tion. Baker v. Backus, 32 111. 79. Compare United States v. Knox, 102 IT. S. 422. To see how unlike the liability of partners is the statutory liability of shareholders, see § 727. 2 Unusual in this country. 3 See §§67-69. See Barrick v. Gif- ford, 47 O. St. 180, 189. Shareholders 711