Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/738

 § 723.] THK LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. may not always be necessary for the creditor to aver that the corporation is insolvent, or that the creditor has obtained a judgment against it, unless the statute makes the liability of the shareholder contingent on such insolvency, or requires the creditor to exhaust his remedies against the corporation before suing a shareholder. 1 § 723. In New York, under the Manufacturing Companies Act of 1848, 2 the stockholders were made "severally individ- ually liable to the creditors of the company, . . . . to an amount equal to the amount of stock held by them respec- tively, for all debts and contracts made by such company until the whole amount of capital stock fixed and limited by such company shall have been paid in, and a certificate thereof filed and recorded as prescribed. . . ." 3 Under this act, as amended by chapter 333 of the Laws of 1853, by which shares could be paid for in property, in order to charge the 1 Manufacturing Co. v. Bradley, 105 U. S. 175; Perkins v. Church, 31 Barb. 84; Hodges v. Silver Hill M'g Co., 9 Oregon, 200; Morrow v. Supe- rior Court, 64 Cal. 383. See Culver v. Third Nat. Bank, 64 111. 528; Spence v. Shepard, 57 Ala. 598. Taking a pledge of corporate prop- erty has been held not to prevent the creditor from suing the shareholders without selling the pledge. Sonoma Valley Bank v. Hill, 59 Cal. 107. 2 This statute is now repealed ; but the writer has left in this edition such decisions under it as seem pos- sibly applicable to statutes now in force in New York and elsewhere. The present clause in the New York statute (see ch. 688, § 54, laws of 1892, as amended by laws of 1901, ch. 354,) reads: "Every holder of capital stock not fully paid, in any stock corporation, shall be person- ally liable to its creditors, to an amount equal to the amount unpaid on the stock held by him for debts of the corporation contracted while such stock was held by him." For 718 construction of New York statutes, see Close v. Potter, 155 N. Y. 145. 8 Stockholders are not liable under this clause to a creditor who is also a director. McDowall v. Shehan, 129 N. Y. 200. But see contra, Janney ». Minneapolis Industrial Ex- position, 79 Minn. 488. A stockholder is not relieved from this liability by having paid in full for his own shares. Wheeler v. Millar, 90 N. Y. 353; ace. Tibbals v. Libby, 87 111. 142. Compare Schricker v. Ridings, 65 Mo. 208, and Lewis v. St. Charles County, 5 Mo. App. 225. Although where the corporation has no power to increase its capital stock, stock issued in excess of the limit is void, and the holders of it are not liable to creditors thereon, yet where the power to increase the stock exists, and there is a way in which the increase may lawfully be made, the creditors are entitled to rely on the assumption that the in- crease has been lawfully effected, and the holders of the stock will be