Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/764

 § 750.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. shares in trust for the former, the transferrer will be free from further liability in respect of the shares. 1 The English law does not recognize the doctrine that corporate funds are held in trust for creditors as well as shareholders, and the English decisions respecting the transfer of shares seem con- sistent with the general English view of corporation law. Provisions in English deeds of settlement are regarded as existing for the security of shareholders; and creditors are held to derive few rights directly from them. And so, in regard to the " Winding-up Act," Lord Romilly says : " The object of the Winding-up Act was only to settle the equities between the partners in order that when the partnership was wound up, they might obtain contribution from each other." 2 § 750. From what has been said of the relations between Relation creditors and shareholders, it is plain that upon the between insolvency or winding-up of a corporation, a cred- hoiders and itor has a right to be paid the debt due him prior whiiiing^up! to any of the rights of shareholders in respect of Dividends. j-he corporate funds. 3 When a dividend, however, has been duly declared from surplus profits, the capital of the company being left entire, a shareholder is entitled to his portion of the dividend in preference to the claims of creditors; even though he may not call for it until the company has be- 1 Jessopp's Case. 2 De G. & J. 638; De Pass's Case, 4 De G. & J. 544; Harrison's Case, L. R. 6 Ch. 286; King's Case, ib. 196; Master's Case, L. R. 7 Ch. 292; Williams's Case, 1 Ch. Div. 576. In the following cases the transfer was held merely color- able, and the transferrer remained liable: Chinnock'sCase, Johns. (Eng. Ch.)714; Hyam's Case, 1 De G. F. & J. 75; Costello's Case, 2 De G. F. & J. 302; Budd's Case, 3 De G. F. & J. 297; Ex parte Kintrea, L. R. 5 Ch. 95. 2 In re Philips, 18 Beav. 629; com- pare, regarding the English view, § 524. 3 Brewer v. Michigan Salt Ass'n, 58 Mich. 351; compare Banigan v. Hard, 134 U. S. 291. Rights of 1U creditors of the corporation are su- perior as to corporate assets to the rights of creditors of a stockholder, though he own the concern. State v. Commercial State Bank, 28 Neb. 677. Where a national bank is de- clared in default by the comptroller, and a sufficient f und is realized from its assets to pay all claims against it, and leave a surplus, interest should be allowed on claims during the period of administration, before ap- propriating the surplus to the share- holders. Chemical Nat. B'k r. Bailey, 12 Blatchf. 480. See, also, Hart's Appeal, 96 Pa. St. 355; Lura ». Rob- ertson, 6 Wall. 277; and compare Cochran v. Ocean Dry Dock Co., 30 La. Ann. Pt. II. 1365.