Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/754

 § 738.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. account of unpaid subscriptions or corporate property improp- erly received by them. 1 § 738. In a suit brought by a creditor against a shareholder share- either for unpaid subscriptions, or on account of bolder can- his statutory liability, the shareholder cannot deny corporate the legal existence of the corporation. 2 If the cor- existence. p 0r ation is illegally or irregularly formed, very likely there will be all the more reason and justice in holding persons who purport to be shareholders therein to their full liability. 3 And, although where the capital stock is fixed at 1 Wetherbee v. Baker, 35 N. J. Eq. 501; Bisset v. Kentucky River Nav. Co., 15 Fed. Rep. 353; Clapp v. Peter- son, 104 111. 26; Glenn v. Williams, 60 Md. 93, 116; Tatum v. Rosenthal, 95 Cal. 129. Held prima facie evi- dence in Hastings?;. Drew, 76 N. Y. 9; Stevens v. Fox, 83 N. Y. 313. In a suit to enforce the statutory liability of shareholders, where the statute provides that, on return of execution against the corporation unsatisfied, plaintiff may proceed against share- holders, the action may be founded on the judgment against the corpo- ration. Guerney v. Moore, 131 Mo. 650. 2 Casey v. Galli, 94 U. S. 673; Eaton v. Aspinwall, 19 N. Y. 119; Hickling v. Wilson, 104 111. 54; Hause v. Mann- heimer, 67 Minn. 194 ; Gardner v. Minneapolis & St. L. Ry., 73 Minn. 517; Danbury & N. R. R. Co. v. Wil- son, 22 Conn. 435 ; McFarlan v. Teuton Ins. Co., 4Denio (N. Y.), 392; Eppes v. Railroad Co., 35 Ala. 33; Beck v. Henderson, 76 Ga. 361; Aultman v. Waddle, 40 Kan. 195 ; Hughes v. Bank of Somersett, 5 Litt. (Ky. ) 47; Tar River Nav. Co. v. Neal, 3 Hawks (N. C), 520; McHose v. Wheeler, 45 Pa. St. 32; Hammond v. Straus, 53 Md. 1 ; Slocum v. Providence Steam, etc., Co., 10 R. I. 112; Wheelock v. Kosl,77Ill. 29r.; Central Agricultural Ass'n o. Alabama Gold Life Ins. Co., 734 70 Ala. 120; McDonnell v. Alabama Gold Life Ins. Co., 85 Ala. 401; Na- tional Com. B'k v. McDonnell, 92 Ala. 388 (the last five cases were ac- tions brought by creditors to enforce statutory liability); Ossipee Hosiery, etc., Co. v. Canney, 54 N. H. 295; Keyser v. Hitz, 2 Mackey (Dist. of Col.), 473; Estate of Davis v. Wat- kins, Rec'r, 56 Neb. 288. See §§ 145 et eeo., and § 537. Shareholders, who form under a special charter, whereby they render themselves liable to creditors in an amount equal to double the amount of their stock, cannot escape by pleading that the charter contra- venes the state constitution. Mc- Carthy v. Lavasche, 89 111. 270. As against creditors suing for unpaid subscriptions a shareholder cannot deny the corporate existence, even when a judgment of ouster has been rendered. Rowland v. Meader Fur- niture Co., 38 Ohio St. 269. 8 Thus a shareholder cannot de- feat an action by the receiver of his bank to recover the amount of a note given for his stock, by showing that he and other shareholders ille- gally gave notes for stock instead of paying cash, in fraud of the banking laws. Farmers', etc., Bank v. Jenks, 7 Mete. 592. See, also, Abbott v. Aspinwall, 26 Barb. 202. Nor can a shareholder plead that