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THE GREEN BAG

matter of law is shown by the fact that by the general rule a transferee of stock which purports on its face to be paid up is not liable if he bought without notice,1 and that in some states a creditor who becomes such, know ing that the stock issued as fully paid is not so, cannot require the stockholders to pay the unpaid subscriptions.2 Where the creditor sues the stockholders at law for unpaid subscriptions his action is also on contract; for the creditor, as a statutory outgrowth of the equitable doc trine of subrogation, is given a legal stand ing analogous only to that of the beneficiary of a contract in jurisdictions where such beneficiary is allowed to sue upon the con tract. Even if the creditor sues in equity (and where not controlled by statute the courts will find that he must so sue because thus the rights of all parties may properly be determined3) the creditors suit is still, either in his own right as beneficiary or by subrogation to the corporation's rights, one on the contract.4 Once it is seen that the creditor sues as the statutory beneficiary of

1 Easton Nat'l Banku. Am., etc. Co. (N. J. Ch.), 60 Atl. 54; Coleman v. Howe, 154 Ill. 458, 471—2; Withringham v. Rosenthal, 25 Hun (N. Y.), 580; Brant v. Ehlen, 59 Md. i; Burkinshaw v. Nicolls, 3 App. Cas. 1004. See Foreman v. Bigelow, 4 Clifi (U. S.) 508. Compare Ross v. Kelly, 36 Minn. 38; West Nashville, etc. Co. v. Nashville Savings Bank, 86 Tenn. 252. Colonial Trust Co. v. McMillan, 188 Mo. 547. See Meyer v. Ruby, etc. Co. (Mo. App.) 90 S. W. 821. 1 Terry v. Little, 101 U. S. 216. As to the con stitutional law questions involved in statutory changes, see Myers v. Knickerbocker Trust Co., 139 Fed. Ill.; i L. R. A. (n. s.) 1171 and note. 261. The so-called trust fund doctrine is mislead ing and may be disregarded. See Clark and Marshall on Corporations, §5 767, 768. The pro ceeding to enforce the stockholder's liability is founded on a legal, not an equitable right. Hale v. Coffin, 120 Fed. 470; Anglo-American, etc. Co. v. Lombard, 132 Fed. 721.
 * Easton Nat'l Bk. v. American, etc. Co. supra;
 * See Wyman v. Bowman, 127 Fed. 257, 260.

the contract of subscription, the statutory liability being inserted into the contract by implication of fact and the creditor being regarded as a substantial as contrasted with an incidental beneficiary, it can be under stood how on this branch of the subject the authority is clear that the liability is con tractual * rather than quasi contractual, though the point is somewhat obscured by talk of a trust fund. But it is with regard to the additional statutory liability that real difficulty is experienced. Let us take first the most difficult case, namely, that where by statute the creditor is allowed to sue the stock holder without even joining the corporation as defendant. Is the liability there con tractual? It is possible to say that the subscriber contracts with the corporation not only to pay for his stock, but also to discharge the debts of the corporation to the extent fixed by statute, that is, that the statute enters into and forms a part of the contract of the shareholder when be becomes such, and then to say that the creditor sues as the beneficiary of the contract. On that view the liability is, of course, contractual, and the weight of authorities holds it to be such.2 The subscriber's extra liability being contractual his transferee's liability is of course contractual. But another view of this excess liability of a stockholder, found mainly in dicta, is that no contract in regard to that liability is intended and that the

1 See Clark and Marshall on Corporations, § 794 A late case is Anglo-American, etc. Co. v. Lombard. 132 Fed. 721. Even in the late case of McClaine v. Rankin, 197 U. S. 154, which holds that where the stockholder's liability does not arise until after an assessment made by the Comptroller of the Currency, the liability is strictly quasi contractual — the court calls it "statutory" — it is recognised that where the creditor's right is direct and immediate the liability is contractual. In Hathorne v. Calef, 2 Wall (U. S.) lo, where it was held that, as tc
 * i Cook on Corporations, $th ed., | 223, p. 460.