Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/746

 § 730.] THE r,AW OF PRIVATE CORPORATIONS. [CHAP. XIII. from the corporation. 1 He is first bound as a shareholder to pay whatever may be due on his shares, whereupon he will be entitled to participate in the assets of the corporation ratably with the other creditors. 2 "The debts must be mutual; must be in the same right. . . . The debt which appellant owed for his stock was a trust fund devoted to the payment of all the creditors of the company. As soon as the company be- came insolvent, and this fact became known to the appellant, the right of set-off for an ordinary debt to its full amount ceased. It became a fund belonging equally in equity to all the creditors, and could not be appropriated by the debtor to the exclusive payment of his own claim." 3 § 730. Likewise, a shareholder, who has been paid divi- dends by an insurance company when insolvent, cannot, in a suit by its receiver to recover them, set off his claims as a creditor of the corporation. 4 " The defendant must restore the trust funds re- ceived in violation of law and improperly withheld, and then he will be in a position to claim, as a creditor of the company, a participation in common with other creditors, in a fund real- SetK)ff. Dividends improperly received. A shareholder cannot, under a double liability clause, get a friend to buy up claims at a discount, con- fess judgment in his favor, and then plead this judgment as a bar to other creditors of the corporation. Manville v. Karst, 16 Fed. Rep. 173. See Buchanan v. Meister, 105 111. 638. And when a shareholder is liable to creditors to an amount equal to the stock held by him, he cannot buy up claims at a discount and set them off at their face in a suit by a creditor. Gauch v. Har- rison, 12 111. App. 459; Thompson v. Meisser, 108 111. 359; Thebus v. Smiley, 110 111. 316. When a share- holder pays a debt of the corpora- tion, and takes an assignment, the debt is extinguished, and the share- holders cannot revive it by assign- 726 ing it. Hardy v. Norfolk M'f'g Co., 80 Va. 404. 1 A statute may permit such set-off. Appletou v. Turnbull, 84 Me. 72. 2 Sawyer v. Hoag, 17 Wall. 610. See, also, Lawrence v. Nelson, 21 N. Y. 158; Singer v. Given, 61 Iowa, 93; Boulton Carbon Co. v. Mills, 78 Iowa, 460; Shickle v. Watts, 94 Mo. 410; Thompson v. Reno Sav'gs Bk., 19 Nev. 103; Wilkinson v. Bertock, 111 Ga. 187. Cf. First Nat. B'kt. Rig- gins, 124 N. C. 534; Efrid v. Pied- mont Land, etc., Co., 55 S. C. 78. s Sawyer v. Hoag, 17 Wall. G10. 622; opinion of court per Miller, J. Sem- ble contra, Sav'gs Bank v. Butchers, etc., Bank, 130 Mo. 155. 70.
 * Osgood v. Ogden, 4 Keyes (N. Y.),