Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/749

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 733. When shareholder who is also a creditor cannot sue another §733. A creditor of a corporation who is also a share- holder cannot ordinarily sue another shareholder at law to recover nis debt from the individual statu- tory liability of the latter. For the same liability affects the plaintiff himself, who accordingly is not entitled to recover his full claim from another shareholder at law. shareholder. Contribution from the other share- holders is all that he is entitled to ; and only a court of equity is competent to adjust the rights of the plaintiff and defend- ant. 1 It has even been held that a creditor, who is also a shareholder, is estopped from enforcing the individual liability of another shareholder, when such liability arises on a default in the responsibility for which both plaintiff and defendant share. 2 If, however, one shareholder is, as against a certain other shareholder, entitled to the full amount of a debt due the 123; Weber v. Fickey, 47 Md. 196. As against the liability as share- holder, under this New York statute, shareholders who are also trustees cannot set off the amount which they have paid to extinguish their liabil- ity as trustees to creditors, under another section of the same statute, for failure to file an annual report. Veeder v. Mudgett, 95 N. Y. 295. Not the full amount of his debt from the bank, but the proportion due the shareholder (in a national bank in the hands of a receiver) out of the funds to pay its debts (i. e., the statu- tory liability of shareholders, etc. ), may be set off against his indebted- ness to that fund. King v. Arm- strong, 50 Ohio St. 222. 1 Thayer v. Union Tool Co., 4 Gray, 75; Bailey v. Bancker, 3 Hill (N. Y.), 188; Richardson v. Aben- droth, 43 Barb. 162; Beers v. Water- bury, 8 Bosw. (N. Y.)396; Thomp- son v. Meisser, 108 111. 359. See Bisset v. Kentucky River Nav. Co., 15 Fed. Rep. 353. Compare Clark v. Myers, 11 Hun, 60S; Oswald v. Times Co., 65 Minn. 249. But it has been held that an assignee of a judgment obtained in a suit against the corpo- ration, of which the plaintiff in the suit was a shareholder, may sue a shareholder at law. Woodruff, etc., Iron Works v. Chittenden, 4 Bosw. (N. Y.) 406. But, see, Potter v. Stevens Machine Co., 127 Mass. 592. The New York courts rest their decisions on the not altogether satis- factory grounds that plaintiff and defendant are partners. A moment's consideration will show that even when a shareholder sues his corpo- ration and obtains from it the pay- ment of his demand, he does not in reality obtain the face of his debt; for the corporate assets in which he is interested as a shareholder are so much diminished by the satisfaction of his claim as a creditor. Only when one shareholder sues another, then it is apparent that he is not en- titled to the full amount of the debt. 2 Potter v. Stevens Machine Co., 137 Mass. 592. See § 701, note. 729