Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/760

 § 745.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XHI. of the corporation. 1 " It must also be conceded that if the company has, in fraud of its creditors, released subscribers to its stock from the payment of their subscriptions, the release is inoperative to protect those subscribers against claims of the creditors. ... It has been settled by very numerous decisions that the directors of a company are incompetent to release an original subscriber to its capital stock, or to make any arrangement with him by which the company, its cred- itors or the state, shall lose any of the benefit of his subscrip- tion. Every such arrangement is regarded in equity not merely as ultra vires, but as a fraud upon the other share- holders, upon the public, and upon the creditors of the com- pany." 2 When a subscription payable in property is made for shares, it is no defence to a suit by creditors against the subscriber, that the corporation has returned the property and the subscriber has released all claim to the shares. 3 1 Slee v. Bloom, 19 Johns. (N. Y.) 456; Eisenlord v. Oriental Ins. Co., 29 N. J. Eq. 437; Allen v. Mont- gomery R. R. Co., 11 Ala. 437, 450; Mann v. Cooke, 20 Conn. 178; Pey- chaud v. Hood, 23 La. Ann. 732; Putnam v. New Albany, 4 Biss. 365; Bouton v. Dement, 123 111. 142; com- pare Cooper v. Frederick, 9 Ala. 737 Thus, an unauthorized cancellation of a subscription when the corpora- tion is insolvent, does not as to creditors release the subscriber Rider v. Morrison, 54 Md. 429. See, also, Ailing v. Wenzel, 133 111. 264 So the withdrawal of shareholders, in pursuance of a resolution of the directors in a probably insolvent corporation to allow shareholders to withdraw on payment of five per cent, of their shares on which ninety per cent, was unpaid, is void as to creditors. Gill v. Balis, 72 Mo. 424. A shareholder, however, who surren- ders unpaid stock to a corporation is not liable thereon to a creditor whose claim accrues after the sur- render. Johnson v. Lullman, 15 Mo. 740 App. 55; S. C, 88 Mo. 567; Erskine v. Peck, 13 Mo. App. 280; compare Carter v. Union Printing Co., 54 Ark. 576. On the other hand, a majority of shareholders cannot by a by-law im- pose individual liability on share- holders. Reid v. Eatonton M'f'g Co., 40 Ga. 98. 2 Burke v. Smith, 16 Wall. 390, 394, per Strong, J. Where share- holders were by statute individually liable to the amount of the unpaid balance on their subscriptions, for corporate debts contracted during their ownership of stock, and it was provided that such liability should continue for one year after a trans- fer, it was held that a solvent corpo- ration could not release a sharehold- er so as to affect creditors, even in consideratian of a payment by him of an amount in excess of the calls made or due at the time of his re- lease. Vick v. La Rochelle, 57 Miss. 602. 8 Singer v. Given, 61 Iowa, 93. But it is held that a shareholder