Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/757

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 741 ' to become a shareholder, or held himself out as such, or ac- cepted a certificate, he may plead that his name was placed on the books of the corporation without his authority 1 unless the circumstances are such as affect him with notice of its having been placed there. 2 If a person subscribes for shares, signs the articles of association, acts as an officer, and appears as a share- holder on the books, he will not, as against creditors, be per- mitted to deny that he is such, although no certificate has ever been issued to him. 3 And when sued by a creditor, mere ir- regularities in becoming a shareholder will not avail the de- fendant. 4 It has also been held that if a person makes a subscription conditioned on an amendment to the charter being obtained from the legislature, and subsequently the corporation is organ- ized without obtaining the amendment, the defendant taking no active part in its organization, he may be held as a share- holder if he pays up a portion of his subscription, and, through his clerk, takes a receipt wherein the corporation receipts for " ten per cent of his stock in this bank." 5 § 741. One to whom shares have been transferred in pledge or as collateral security for money loaned, but who appears on the books of the corporation as the of shines owner of the shares, is liable to creditors, or for security 6 ™ 1 their benefit as a shareholder. 6 For this the Fed- bone v. Hager, 46 Pa. St. 48; com- pare Chapman and Barber's case, Law Rep. 3 Eq. 361. »Mudgett v. Horrell, 33 Cal. 25; see Matter of Reciprocity Bauk, 22 N. Y. 10, 17; Simmons v. Hill, 96 Mo. 679. 2 As, for instance, if defendant be- comes cashier of a bank and acts as such. Finn v. Brown, 142 U. S. 56. 3 Wheeler v. Millar, 90 N. Y. 353- In general a certificate is not essential to constitute a person a shareholder, §511. 4 Holyoke Bank v. Goodman Paper Mfg. Co., 9 Cush. 576; Burr v. Wil- cox, 22 N. Y. 551. Compare Ex parte Hennessy, 2 McNaghten & Gordon, 201; Blien v. Rand, 77 Minn. 110. 47 6 Lehman v. Warner, 61 Ala. 455; See §§517-521, as to conditional sub- scriptions. e Nat. Bk. v. Case, 99 U. S. 628; Pullman v. Upton, 96 U. S. 328; Fouche v. Merchants' Nat. Bank, 110 Ga. 827; Adderly v. Storm, 6 Hill (N. Y.), 624; Roosevelt v. Brown, 11 N. Y. 148; Holyoke Bnnk v. Burn- ham, 11 Cush. 183; Magruder v. Colston, 44 Md. 349; Crease v. Bab- cock, 10 Mete. 525; Wheelock v. Kost, 77 111. 296; Hale v. Walker, 31 Iowa, 344; Bowden v. Farmers', etc., Bk., 1 Hughes, 307; Erskine v. Loe- wenstein, 82 Mo. 301. Nat. Comm'l Bk. v. McDonnell, 92 Ala. 388; Tut- hill Spr'g Co. v. Smith, 90 Iowa f 331. Semble contra, McMahon v. 737