Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/747

 CHAP. XIH.] SHAREHOLDERS AND CREDITORS. [§ 732. ized and secured for their common benefit ; but, I apprehend, not till then." x § 731. On similar principles, if the statutory liability of shareholders is in effect to contribute to a common _ Set-off. fund to be ratably distributed among creditors, or statutory if their statutory liability assumes this character by virtue of the nature of the proceeding brought to enforce it, a shareholder cannot, against this liability, set off an indebted- ness of the corporation to him. 2 " Under a proceeding for winding up a corporation, where an account of all the debts and of the effects, including the aggregate liabilities of the stockholders, is required to be taken, there is no reason why a creditor should be in any better situation on account of being at the same time a stockholder. In the latter character the constitution and the statute make him liable to the creditors to an amount equal to his stock, or to his just proportion of that amount if the whole is not required ; but as a creditor he is en- titled only to a dividend in proportion to the other creditors. In a case of deficiency in means to pay all the debts, he must take his dividend pro rata. But if he could set off his claim as a creditor against his liability as a stockholder, he might be paid in full, while the other creditors would receive only a part of the amount due them." 3 § 732. When, however, a single creditor can and does sue Iron Co., 4 Barb. 382, 391. This rea- 1 Osgood v. Ogden, 4 Keyes (N. Y. ), 70, 89; opinion of court per Bacon, J. 2 Matter of the Empire City Bank, 18 N. Y. 199; Matthews v. Albert, 24 Md. 527; Hillier v. Allegheny Mut. Ins. Co., 3 Pa. St. 470; Thompson v. Meisser, 108 111. 359; Thebus v. Smiley, 110 111. 316; Grissell's Case, L. R. 1 Ch. 528; Black & Co.'s Case, L. R. 8 Ch. 254; Callisher's Case, L. R. 5 Eq. 214; Barnett's Case, L. R. 19 Eq. 449. See, also, Lawrence v. Nelson, 21 N. Y. 158; Emmert v. Smith, 40 Md. 123; Weber v. Fickey, 47 Md. 196; Bulkley v. Whitcomb, 121 N. Y. 107; Lauraglenn Mills v. Ruff, 57 S. C. 53. But see, perhaps, contra, Briggs v. Penuiman, 8 Cow. (N. Y.) 387; Tallmadge v. Fishkill soning is not applicable when the shareholders' liability is unlimited; because each shareholder "is liable to contribute to any amount until all the liabilities of the company are satisfied, and therefore it signifies nothing to the creditors whether the set-off is allowed or not." Grissell's Case, L. R. 1 Ch. 528, 536, per Lord Chelmsford. 3 Matter of the Empire City Bk., 18 N. Y. 199, 227; opinion of court per Denio, J. In a recent Connecticut case of questionable reasoning, set- off was not allowed on the ground that the shareholder was a guarantor, and a guarantor when sued on his guaranty cannot set off a debt due 727