Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/755

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 739. a certain amount no action ordinarily lies against a shareholder to enforce his subscription until the entire amount is sub- scribed for, yet if the directors undertake to organize the com- pany upon a partial subscription of the capital stock, and a subscriber takes part in such organization, knowing that the whole amount has not been taken, and attends corporate meet- ings at which money is voted and contracts are made for pur- chases, he will be estopped in a suit by a creditor from pleading that the capital stock had never been fully subscribed for. 1 § 739. On the other hand, persons who have contracted with a de facto corporation as a corporation, cannot „ J L. Nor can the deny its corporate existence in order to charge its creditor shareholders individually as partners. 2 But it is held that when the enabling act under which a corporation is formed provides that a substantial failure to comply with its requirements shall render the shareholders individually liable, ami the statute is not complied with, they are primarily liable, and may be sued by a creditor before the corporate assets are exhausted; and this, although the creditor has dealt with the corporation as a corporation. 3 the corporate enterprise has been abandoned, in an action brought against him by a creditor. Bish v. Bradford, 17 Ind. 490. i Garling v. Baechtel, 41 Md. 305. When sued upon his statutory lia- bility a shareholder who has accepted his certificate and received dividends, cannot plead that the certificate was issued before an increase of capital stock was all paid in, although the statute provided that no such in- crease should be valid until it was all paid in. Scott v. Demeese, 181 U. S. 202; cf. Lantry v. Wallace, 182 U. S. 536. 2 Stout v. Zulick, 48 N. J. L. 599; Merchants', etc., Bank v. Stone, 38 Mich. 779; Am. Mirror Co. v. Bulk- ley, 107 Mich. 447; Richards v. Min- nesota Savings Bank, 75 Minn. 196; Humphrey u. Mooney, 5 Colorado, 282; Second National Bank c. Hall, 35 Ohio St. 158; Stafford Nat. Bk. v. Palmer, 47 Conn. 443; First Nat. Bk. i Almy, 117 Mass. 476; Laflin, etc., Powder Co. v. Sinsheimer, 46 Md. 315. Sniders' Sons Co. v. Troy, 91 Ala. 224; Cory v. Lee, 93 Ala. 468; Larned v. Beal, 65 N. H. 184; Rutherford v. Hill, 22 Oreg. 218; Boyington ». Van Etten, 62 Ark. 63; Kleckner v. Turk, 45 Neb. 176. See Trowbridge v. Scudder, 11 Cush. 83; New York Iron Mine v. First Nat. Bk., 39 Mich. 644; Heald v. Owen, 79 Iowa, 23. But see Johnson v. Corser, 34 Minn. 355, and compare Foster v. Moulton, 35 Minn. 458. See § 148. 3 Clegg v. Hamilton, etc., Grange Co., 61 Iowa, 121; Marshall v. Har- ris, 55 Iowa, 182; Kaiser v. Lawrence Sav'gs Bk., 56 Iowa, 104; Eisfield v. Kenworth, 50 Iowa, 389; Heuer v. 735