Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/742

 § 726.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. them, the complaint should be so framed that the others may come in and prove their claims before the court or a referee, and share in the distribution of the moneys received. All the stockholders should be made defendants, because they too have a common interest, and without their presence it is im- possible to adjust their rights and liabilities, and protect them from unequal and oppressive burdens. The same reasons exist for making all the stockholders parties to such actions as in proceedings against delinquent stock subscribers to com- pel them to contribute towards the payment of the debts of an insolvent bankrupt corporation. The corporation should be joined, unless it has been dissolved or its assets wholly ex- hausted, for the reason that both creditors and stockholders are interested in closing its affairs, and in having its available property appropriated to the payment of debts, without which there can be no final settlement and adjudication of the rights and liabilities of the parties." * § 726. The underlying distinction seems to be as follows: If the shareholders are made severally and individ- ually liable to the creditors directly, one creditor alone may sue a single shareholder, and at law. If, however, from the general tenor of the statute it may be inferred that the legislative intention was to create a fund which, on the in- ability of the corporation to pay its debts, should be collected and ratably distributed among its creditors, then the liability of each shareholder is rather to contribute to a common fund in a certain proportion than to pay the debt of any one cred- itor. In such case one creditor cannot sue alone ; all the share- holders, so far as practicable, should be made defendants ; and equity is the proper tribunal. 2 Giving the opinion of the Federal Supreme Court in Terry v. Little, 3 Chief Justice Waite said : " The individual lia- i Coleman v. White, 14 Wis. 700, 702, per Dixon, C. J. Compare Taylor v. Goss, etc., M'f'g Co., 11 Col. 419. 2 Pollard v. Bailey, 20 Wall. 520; Terry v. Little, 101 U. S. 216; Eames v. Doris, 102 111. 050; Queenan v. Palmer, 117 111. 619; Crease v. Bab- 722 cock, 10 Mete. (Mass.) 525; Grew v. Breed, ib. 569; Hansen v. Davison, 73 .Minn. 454; McLaughlin v. O'Neil, 7 Wyo. 187. Compare Mills c. Scott, 99 U. S. 25; Bates v. Day, 198 Pa. St. 513. 3 101 U. S. 216, 217.