Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/735

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 719. done before he became a partner." But by purchasing par- tially paid-up shares, the buyer, to the extent of the unpaid subscriptions due on them, renders himself liable for the debts of the corporation, whether contracted before or after he be- came a shareholder. 1 Further on in the same extract, Baron Lindley says in substance, that the entry of a new partner into a firm cannot by any implied ratification make him liable for the previously contracted indebtedness of the firm, be- cause, in contracting such indebtedness, the firm did not act in his behalf. But, on the other hand, acts of a corporation are always done on behalf of persons occupying in respect of that corporate enterprise the status of shareholder, either at the time the acts were done, or subsequently. This is im- plied by the principle of " perpetual succession," fundamental m corporation law. 2 Accordingly, the general rule that trans- ferees of shares succeed to the rights and liabilities of their transferrers, is established beyond controversy. 3 1 Webster v. Upton, 91 TJ. S. 65; Moses v. Ocoll Bank, 1 Lea (Tenn. ), 398. 2 See §§ 15, 17. 8 Hartford and N. H. R. R. Co. v. Boorman, 12 Conn. 530; Mann v. Currie, 2 Barb. 294; Webster v. Up- ton, 91 U. S. 65; Moses v. Ocoll Bank, 1 Lea (Tenn. ), 398; Barton Nat. Bank v. Atkins, 72 Vt. 33. See § 587. "When a person takes shares in a company, he, as between himself and other shareholders, takes these shares with all the rights and liabil- ities attaching to them, so that his co-shareholders have a perfect right to insist upon his contributing with them towards the liquidation of debts contracted before he joined the company. And even as to cred- itors, the liability of shareholders to them does not depend altogether upon the principles of partnership, but upon statutory enactments. 1 ' 1 Lindley on Part., 394, citing Taylor v. Iflll, 1 N. R. 566, V. C. W.; Cape's Executors' Case, 2 De G. M. & G. 562; Mahew's Case, 5 De G. M. & G. 837. It may be stated generally that in all companies regulated by the Companies Act of 1862, an in- coming shareholder is, so long as he remains a shareholder, liable to creditors in respect of debts in- curred by the company before he became a shareholder." 1 Lindley on Part., 395. See Olson v. Cook, 57 Minn. 552; First Nat. Bk. v. Plow Co., 58 ib. 167. Compare Blundell v. Winsor, 8 Sim. 601, 613. Under certain statutes, however, e. g. (New York Mfg. Co.'s Act of 1848), shareholders are held not liable to creditors for the debts of the company contracted before they be- came shareholders. Tracy v. Yeates, 18 Barb. 152; Phillips v. Therasson, 11 Hun, 141; Weber v. Fickey, 47 Md. 196; contra, Curtis v. Harlow, 12 Mete. 3. Compare Longley v. Little, 26 Me. 162. Nevertheless, a transferee may be liable to indem- nity his transferrer in respect of a debt for which, to creditors, the 715