Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/748

 § 732.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. a shareholder at law, to enforce the statutory liability of the latter, it is then competent for the shareholder to set off a debt owing him from the corporation. 1 "The statutory lia- bility constitutes a fund which belongs to the creditors to secure the payment of their debts ; but it belongs to all the creditors, as well those who are stockholders as those who are not. The defendant as a creditor, has an interest in the fund as well us the plaintiff, and his debt was one that would be chargeable against the fund, because it was a debt against the company, for the payment of which stockholders were indi- vidually liable, and this would be so irrespective of the ques- tion whether the money advanced by the defendant was used to pay obligations for which he was individually liable or not. An action at law cannot be maintained against a stockholder, who is also a creditor to an amount equal to his stock, for the reason that he has an interest in the fund sued for, and it can- not be known but that the whole fund is sufficient to pay all the debts. No accounting can be had, because the proper parties are not before the court." 2 A case recently arose in New York, where the defendant, who was indebted to the corporation for his unpaid subscrip- tion, was sued by a creditor to recover, under the Manufactur- ing Companies Act of 1848, an amount equal to the stock held by the defendant. The corporation was also indebted to the defendant, and this indebtedness he sought to set off in the action brought against him by the creditor. The Court of Appeals held that the defendant could set off only the excess of the indebtedness of the corporation to him over his indebted- ness on his unpaid subscription to it; and since, as a matter of fact, the balance was in favor of the corporation, the set- off was entirely disallowed. 3 him from the principal debtor (i. e., the corporation). Ball Electric Light Co. v. Child, 68 Conn. 522. iMathez v. Neidig, 72 N. Y. 100; Jerman v. Benton, 79 Mo. 148; con- tra, Lauraglenn Mills v. Ruff, 57 S. C. 53. Accord, Pierce ». Security Co., 60 Kas. 164. But see Buchanan v. Meisser, 105 111. 638. A stockholder who buys up claims against an in- 728 solvent corporation can set them off only at the amount he paid for them. Abbey v. Long, 44 Kan. 688. 2 Mathez v. Neidig, 72 N. Y. 100, 104; opinion of the court per Church, C. J. See Matter of Empire City Bank, 18 X. Y. 199, 227; Agate v. Sands, 73 N. Y. 620. 3 Wheeler v. Millar, 90 N. Y. 353. Compare Ernmert v. Smith, 40 Md.