Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/736

 § 720.] THK LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. § 720. Thus, as there is reason to hold that the purchaser of shares assumes all the liability connected "with them, the reasons for holding that the seller continues liable seem to fail ; as presumably the legislative intention was not to make two sets of shareholders liable for the same indebtedness on the same shares. The creditors in contracting may have re- lied on the individual responsibility of the then shareholders, but none the less were they affected with notice of the trans- ferability of shares. In view of the preceding discussion, and the impropriety of introducing anomalies into corporation law, it would seem correct, in the absence of provision or indication in the statute to the contrary, 1 to hold that all liability in respect of shares ceases upon the absolute a and regular transfer of them to a person capable of succeeding to the liabilities of the former holder ; provided the transfer be not made to an irresponsible person in defraud of creditors. 3 transferee is not, under the statute, held liable; and on that account, if the transferee is solvent aud within the jurisdiction of the court, a creditor suing the transferrer 6hould make the transferee a party. Wheeler v. Faurot, 37 Ohio St. 26. See Brown v. Hitchcock, 36 Ohio St. 667. In Massachusetts, under a stat- ute, whereby shareholders are made jointly and severally liable for all debts and contracts made by the corporation until the whole amount of the capital stock is paid in, a shareholder is liable for debts con- tracted while he remains such, al- though his membership cease before the debts become payable. But he is not liable for debts contracted before he became a shareholder if his membership expires before the debts are payable or suit is brought against him. Holyoke Bank v. Burn- ham, 11 Cush. 183. See Johnson v. Somerville Dyeing, etc., Co., 15 Gray, 216. Compare Curtis v. Harlow, 12 Mete. 3. The liabilities to which a 716 transferee of shares succeeds are those incidental to the relationship of shareholder; they do not include the liability to return dividends im- properly received by the transferrer. Hurlbut v. Taylor, 62 Wis. 607. 1 See Hebdy's, etc., Case, L. R. 2 Eq. 167. 2 See Veiller v. Brown, 18 Hun, 571; §747. 3 See §§ 747-749. The following de- cisions support the result reached in the text: McLaren v. Franciscus, 43 Mo. 452 ; Shrainka v. Allen, 76 Mo. 384; Bond v. Appleton, 8 Mass. 472; Curtis v. Harlow, 12 Mete. 3; Child v. Coffin, 17 Mass. 64; Middleton Bk. v. Magill, 5 Conn. 28 (a case of unlim- ited liability); Ball Elec. Light Co. v. Child, 68 Conn. 522; People's Live Stk. Ins. Co., In re, 56 Minn. 180; Olson v. Cook, 57 Minn. 552; Cleveland v. Burnham, 55 Wis. 598; Nixon v. Green, 11 Exch. 550. See Marcy v. (lark, 17 Mass. 330, 335; Cape's Executors' Case, 2 De G. M. & G. 562; Grisewood & Smith's Case, 4