Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/794

 § 786.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XV. itor is statutory and the statute provides a remedy whereby shareholders shall obtain contribution from each other, the statutory remedy must be followed. 1 There is no implied promise on the part of shareholders to idemnify others, who, at the request of the former, became sureties for the corpora- tion. 2 § 784. The relations among shareholders may be compli- Where ^a.ted by a shareholder being also a creditor of the share- corporation. In such case those rights and liabili- holders are - also cred- ties of the person holding such double status which appertain to him as shareholder must be regarded as distinct from the rights which belong to him as creditor. Ordinarily such a person can bring no action to enforce his rights as creditor in a form that will render it impracticable to discriminate between the two positions held by him; nor can an action by such a person suing as creditor be maintained in a court which has not the capacity to adjust his rights and liabilities. 3 § 785. In an honestly conducted corporation the interests of all shareholders will for the most part coincide, Classes of , share- unless there are different classes or shareholders. A separation of shareholders into classes with some- what divergent interests may be occasioned by the issue of preferred shares, or might possibly arise from the fact that part of the shareholders own fully paid-up shares, while the shares of others are not fully paid up. § 786. Preferred shares are usually issued to obtain further capital for the prosecution of the corporate enterprise; and the rights of the holders as against the holders of preferred common shares depend on the terms of the issue of holders. the preferred shares. 5 The usual provision included in those terms, the one, in fact, which constitutes shares preferred shares, is that the holders shall receive from & Cres. 419. Compare Schaeffer v. Phoenix Brewery Co., 4 Mo. App. 115. See § 733. 4 See §§ 559a, 5596. i O'Reilly v. Bard, 105 Pa. St. 569; Brinham v. Wellersburg Coal Co., 47 Pa. St. 43. 2 Larson v. Dayton, 52 Iowa, 597. 8 See Thayer v. Union Tool Co., 4 Gray, 75; Bailey v. Bancker, 3 Hill (N. Y.), 188; Smith v. Huckabee, 53 Ala. 191; Milburn v. Codd, 7 Barn. 774 5 For the power of a corporation to issue preferred shares, see §§ 571, 572.