Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/759

 CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 745. shares, and, as between himself and the apparent „ , ' i » • • Real owner holder, entitled to the profits thereof, it will not of shares liable avail him as a defence against creditors that the shares did not stand in his name. 1 And thus a person cannot escape liability as a shareholder by taking his shares in the name of an infant. 2 § 743. Summing up, the rationale of the preceding deci- sions may be said to be this. Any person who ap- Rationale pears to be a shareholder, or any person who is ac- tually entitled to the emoluments of shares in a corporation, is liable as a shareholder to creditors. 3 § 744. When, after the insolvency of the corporation, suit is brought bv or on behalf of creditors against „ , ° J ... Fraud, shareholders, either on their statutory liability or when no (Icf G11C6 for unpaid subscriptions, the latter cannot success- fully plead that they were induced to subscribe by fraudulent misrepresentations on the part of the corporation or its officers or agents. 4 Nor can he set up a counterclaim for money paid for his stock. 5 § 745. It is in view of the right of shareholders to contri- bution among themselves, that the English courts Releases hold that directors cannot release shareholders from no defence - liability, except in accordance with the provisions of the deed of settlement. 6 But in America, it is recognized to be the right of creditors that no shareholder shall be released from his liability except in accordance with the constitution house Co., Ill IT. S. 479. The court said that the creditors of the bank were put in no worse position by the transfer thau they would have been in had the shares remained in the name of the pledgor. 1 See Burr v. Wilcox, 22 N. Y. 551; Stover v. Flack, 30 N. Y. 64. 2 Roman v. Fry, 5 J. J. Marsh. (Ky. ) 634. See, also, Cox's Case, 4 De G. J. & S. 53 ; Pugh & Sharman's Case, L. R. 13 Eq. 566; Richardson's Case, L. R. 19 Eq. 588. Compare Maxwell's Case, 24 Beav. 321. 3 See § 749, as to colorable trans- fers. 4 Ogilvie o. Knox Ins. Co., 22 How. 380; Upton v. Tribilcock, 91 U. S. 45; Lantry v. Wallace, 182 U. S. 536; Schaeffer v. Missouri Home Ins. Co., 46 Mo. 248; Upton v. Englehart, 3 Dill. 496; Turner v. Grangers' Life Ins. Co., 65 Ga. 549; Bissell v. Heath, 98 Mich. 472. See Fouche v. Mer- chants' Nat. Bank, 110 Ga. 827. See § 525; compare Weber v. Fickey, 52 Md. 500. 5 Lantry v. Wallace, 182 U. S. 536. 6 See Directors, etc., v. Kisch, L. R. 2 H. L. 99; Smith's Case, L. R. 2 Ch. 604. 739