Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/762

 § 748.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. Irregular transfers. liability of the transferrer must be one who succeeds to a per- sonal liability distinct from and in addition to that of the corporation ; some one who can assume the full liability of a shareholder. 1 § 748. If a transfer is irregular, as, for instance, not re- corded on the books of the company, when that formality is required, the transferrer is not freed from his liability; 2 though it does not follow that no liability attaches to his transferee. 3 Creditors are entitled to treat as shareholders all persons whose names appear on the books of the corporation ; and until the name of a shareholder is removed from those books, a creditor is justified in acting on the assumption that that person is a shareholder. It has been held, however, that when a person has done " all in his power " to have his name removed from the company's books, he is freed from liability, although, in fact, his name continues there. 4 This decision seems of doubtful correctness. It is 43; Hunt's Case, ib. 55; Eyre's Case, 31 Beav. 177. But these are English cases; and in England a corporation cannot purchase its own shares. See also cases in following note, and § 552. 1 Matter of Reciprocity Bank, 22 N. Y. 9. See Currier v. Lebanon Slate Co., 56 N. H. 262. See § 134. A person who is a creditor at the time of the transfer to the corpora- tion, may follow the property re- ceived by the shareholder in ex- change for his shares, and subject it to the satisfaction of the full amount of his claim. The defend- ant may have equities over against other shareholders; but this fact the creditor need not heed. Clapp v. Peterson, 104 111. 26. 2 Richmond v. Irons, 121 U. S. 27; Matteson v. Dent, 176 U. S. 521; Worrall v. Judson, 5 Barb. 210;Shel- lington v. Rowland, 53 N". Y. 371 ; Dane v. Young, 61 Me. 160; Fowler ». Ludwig. 34 Me. 455; Cutting v. Damerel, 23 Hun, 339; In re Bach- 742 man, 12 Nat. Bankr. Reg. 223; Plumb v. Bank, 48 Kan. 484; Herri ck v. Wardwell, 58 Oh. St. 294. Compare Jones v. Dunn, 70 Ala. 164; O'Brien o. Cummings, 13 Mo. App. 197. 3 "So far from its being necessary to make a man a contributory, that he should be modo et forma a mem- ber according to the strict provisions of the deed of settlement, that on the contrary, if a man, by repre- sentations that he is entitled to be registered, becomes registered and admitted de facto as a shareholder, he is not at liberty as against those who do not dispute his liability, to refer to or insist on any invalidity as a ground for not being treated as a shareholder. So, if the directors themselves do an irregular act, and admit a man and treat him as a shareholder, they are also bound." Straffon's Exr's Case, 1 DeG. M. & G. 576, 594, per Lord Chan. St. Leonards. 4 Shortbridge v. Bosanquet, 16 Beav. 84. See Whitney v. Butler,