Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/756

 § 740.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. Who are sharehold ers as to creditors. § 740. As evidently the most obvious plea which a defend- ant can interpose, when sued either for unpaid sub- scriptions or on account of statutory liability, is that he is not a shareholder, it is important to de- termine the circumstances or conditions which con- stitute a person a shareholder as to creditors. 1 Where the name of an individual appears on the stock book of a corpora- tion as a shareholder, the prima facie presumption is that he is the owner of stock, and in an action against him by or on behalf of creditors, the burden of proving that he is not such rests on him. 2 If, however, the defendant has never consented Carmichael, 82 Iowa, 288; see Smith v. Colorado Fire Ins. Co., 14 Fed. Rep. 399; Lehman v. Knapp, 48 La. Ann. 1148; Cincinnati C. Co. v. Bate, 9ii Ky. 356. In Bigelow v. Gregory, 73 111. 197, it is said that there is a difference between corporations formed under a general enabling act, in this respect; that if the provisions of an enabling act are not substan- tially complied with, the would-be corporators will be liable as partners. Thus, shareholders have been held liable as partners for contracts made before the articles of incorporation were filed. Garnett v. Richardson, 35 Ark. 145; Ferris v. Thaw, 72 Mo. 446. See Loverin v. McLaughlin, 161 111. 417; Creswell v. Oberly, 17 111. App. 281; see §451, note. Compare Curtis v. Tracy, 169 111. 233. Under such circumstances shareholders would certainly be liable as partners to people dealing with them without knowledge of their attempted incor- poration. Guckert v. Hacke, 159 Pa. St. 203; New York, etc., Bank v. Crowell, 177 Pa. St. 313. Of course persons who engage in business to- gether without taking any steps to incorporate themselves, will be lia- ble as partners, though they have regarded themselves as " stockhold- ers." Faruum o. Patch, 60 N. II. 294. 736 And when persons deal as partners through a common agent, and after- wards become incorporated, but do not change their style or manner of doing business, they will be liable as partners for debts contracted in the business to persons who have had no notice of their incorporation. Mar- tin v. Fewell, 79 Mo. 401. 1 See Wilson v. Seligman, 143 U. S. 41. In general these conditions will be the same as those which render a person liable on his subscription to the corporation. See §§ 510 et seq. 2 Turnbull v. Payson, 95 U. S. 418; Iloagland v. Bell, 36 Barb. 57; Rock- ville, etc., Turnpike Road v. Van Ness. 2 Cr. C. Ct. 449; Pittsburgh, W. and R. R. R. Co. v. Applegate, 21 W. Va. 172; South Branch R'y Co. v. Long's Adm., 43 W. Va. 131. See Stratton v. Lyons, 53 Vt. 130. A stockholder named in a cer- tificate is liable as such unless he promptly disavow the relation. Mc- Ilose v. Wheeler, 45 Pa. St. 32. If the certificate show the stock sub- scribed for, but unpaid, it is conclu- sive as to the liability of the holder to this extent, that he cannot show that the stock was subscribed for by him as an agent of the company, and that such as was owned by him individually was fully paid up. Alii-