of obtaining the subscription is for the proper authority in the corporation to make a call. If the stockholder does not pay he is suable at law upon his contract; the form of the action, since the contract is a specialty, is either debt or covenant at common law. But if the corporation will not make the call, a creditor's bill lies in favor of the creditor who has exhausted his remedy against the corporation,' or where the pursuit of that remedy would be useless.2 Mandamus also lies in some jurisdictions, and on principle wherever the common law is in force, to compel the proper authorities of the corporation to make a call. But this remedy is cumbrous and little used, and in some jurisdictions is practically denied. Where the unpaid subscription is due by call and unpaid, the creditor may garnish the corporation,3 and in one state even when not due, but this ruling is anomalous." But the remedy in equity is complete, and the court, where the assets are insufficient, will make a call for the unpaid subscription and may compel discovery from the stockholders. The judgment against the corporation is conclusive upon the stockholders. Since the unpaid subscriptions are an asset of the corporation, they pass to the assignee or receiver, who may sue upon them in equity, joining all the stockholders or some of them. After a receiver has been appointed, a repeal of the statute under which he was appointed will not prevent his prosecution of the suit. But where the remedy is pursued by the creditor, it is sometimes desirable that he proceed at law on account of his chance for a priority. In such case the law of the particular jurisdiction must settle the remedy. Where the statute enforces

1 See 3 Am. St. R. 810 et seq., in note.

2 See last citation.

"Robertson v. Noeninger, 20 IIL App. 227. See Gasch v. World's Fair Excursion and Transp. Co., 59 Ill.

3 Patterson v. Lynde, 112 Ill. 196, App. 391. for foreign corporation.

4 Ward v. Griswold Co., 16 Conn. 593; Dalton R. R. Co. v. McDaniel, 56 Ga. 191.

5 See 3 Am. St. R. 807, in note; but see note 7, infra.

7 Lane's Appeal, 105 Pa. 49.

8 Robinson v. Carey, 8 Ga. 527. He may sue at law if a call has been made.

9 Farmers' Bank v. Jenks, 7 Met. 592.

obligation may be enforced in another state, because it is not penal in its nature. It survives against the personal representative of a deceased stockholder." It covers all manner of debts and liabilities that fall within the terms of the statute. The word "debts," in these statutes, seems to mean every kind of a contractual claim; but a claim for a tort does not become a debt because it is reduced to a judgment, which is ordinarily called a debt of record. These decisions are erroneous, because founded on a misconception of a quasi-contract. There are some liabilities against stockholders which are penal in their nature and not enforced in other states. The remedy of special nature provided will not be applied in another state.10

§ 63. General character of liability. The statutes are so varied, and the character of the liability established so different, that it is difficult to attain any general rule. But the power of the legislature to impose the liability as to future debts exists wherever the right to alter the charter has been reserved,' and it seems that even without such a power reserved the legislature can impose the liability upon the stockholders as a condition to the corporation further doing business, which imposition is valid as to all the stockholders who continue in the corporation,2 certainly as to those who accept the condition. As to the rule of construction to be adopted for such statutes, some states have held they must

5 Flash v. Conn, 109 U. S. 371; Nimic v. Iron Works, 25 W. Va. 184. But see Post v. Toledo R. R. Co., 144 Mass. 341, which is put upon grounds of procedure. Lawler v. Burt, 7 Ohio St. 340, affirms that the liability is in tort.

6 Richmond v. Irons, 121 U. S. 27; Wickham v. Hull, 60 Fed. R. 326. But see New England Bank v. New port Steam Fac., 6 R. I. 154.

7 See 3 Am. St. R. 844, in note. 8 See last citation.

9 Sayles v. Brown, 40 Fed. R. 8. 10 Christensen v. Eno, 106 N. Y. 97; Lowry v. Inman, 46 N. Y. 119.

1 Sherman v. Smith, 1 Black, 587; Allen v. Walsh, 25 Minn. 543; Gray v. Coffin, 9 Cush. 192; Heidenger v. Spruance, 101 Ill. 278.

2 U. S. Trust Co. v. U. S. Fire Ins. Co., 18 N. Y. 199; In re Reciprocity Bank, 22 N. Y. 9; In re Oliver Lee & Co.'s Bank, 21 N. Y. 9.

Owen v. Purdy, 12 Ohio St. 73.

be strictly construed, others liberally; but the better.rule seems to be that they should be given a reasonable construc tion. There seems to be a general agreement among the different states upon the proposition that the liability incurred by the stockholders is not that of sureties or guarantors, although in most cases, though not in all, an ascertainment by some officer, sometimes a sheriff with an execution, sometimes a comptroller of the currency, is required that the assets of the corporation are insufficient to pay the debts of the corporation. The liability, however, is that of principal debtor,10 except in a few instances where there have been anomalous rulings." This liability, too, the creditor may waive, either by his express contract or by conduct." liability cannot be created by a by-law or by the form of the certificates, but stockholders may make themselves so liable by conduct amounting to an estoppel, or by an express agreement.13

The

§ 64. Joint or several liability.- Whether the liability created by these statutes is joint or several has an important bearing upon the remedy to be adopted in order to enforce it. It seems plain that where the statute places no limit upon the extent of the liability it is joint. But wherever

4 Appeal of Gunkle, 48 Pa. 13; Baker v. Atlas Bank, 9 Met. 182. 5 See 3 Am. St. R. 836.

6 See last note.

7 See 2 Morawetz on Corp., sec. 879; Hewett v. Adams, 54 Me. 206; Sterne v. Atherton, 51 Pac. R. 791 (Kan.).

Hastings v. Barnd, 75 N. W. R. 49; McLaughlin v. O'Neil, 51 Pac. R. 251; Pickering v. Hastings, 76 N. W. R. 587.

9 State v. Union Stock Yards Bank, 70 N. W. R. 752 (Iowa); Barnes v. Arnold, 51 N. Y. Supp. 1109.

10 Hobart v. Johnson, 8 Fed. R. 493; Irons v. Manuf. Nat. Bank, 21 Fed.

R. 197; Fuller v. Ledden, 87 Ill. 310; Coleman v. White, 14 Wis. 762; s. C., 80 Am. Dec. 797; Schalucky v. Field, 124 Ill. 617; s. c., 7 Am. St. R. 397; Mitchell v. Beckman, 64 Cal. 117.

11 Wilson v. Book, 13 Wash. 676. But this opinion amounts only to saying that the assets must be exhausted. See 3 Am. St. R. 851, in note.

12 New England Bank v. Newport Steam Fac., 6 R. I. 154; Van Horn v. Whitlock, 26 Wend. 43.

13 See 3 Am. St. R. 835, in note. 1 Shafer v. Moriarity, 46 Ind. 9; Deming v. Bull, 10 Conn. 409.

6

the debt was refused, stockholders at the time of suit brought, or stockholders at the time insolvency impended, are meant. It is held even that both the stockholders at the time the debt was contracted and when the action was brought are liable. Where a stockholder who is such at the time the debt was contracted is made liable, a transfer does not relieve him of this liability, and the contraction of the debt would seem to cover an instalment of a debt falling due. Where those are made liable who were stockholders at the time the action was brought or insolvency impended, a transfer in good faith, and not colorable nor for the purpose of evading the responsibility, nor made after insolvency, relieves the transferror of liability. The fact that the stock is not paid for in full of the subscription price has no bearing upon the statutory responsibility.

§ 67. Remedy, whether at law or in equity. This subject is involved in the greatest confusion. It seems extraordinary that courts can reach such totally different conclusions about a simple matter. In the first place, it is conceded that if the statute gives a special remedy in the particular forum where the suit is brought, that remedy must be followed. Since no one has a vested right in a mere remedy, the remedy may be changed, but not so as to deprive the complainant of all remedy. But the statutes are

3 Bond v. Appleton, 8 Mass. 472.

4 Cleveland v. Burnham, 55 Wis. 598; Middleton Bank v. Magill, 5 Conn. 28.

7 See 3 Am. St. R. 860 et seq., in note.

8 See SS 46-53, ante.

9 See Matthews v. Albert, 24 Md.

5 As under national bank act. 527; Wheeler v. Millar, 90 N. Y. 353. See § 70, post.

6 Curtiss v. Harlow, 12 Met. 3; Holyoke Bank v. Burnham, 11 Cush. 183; Brown v. Hitchcock, 36 Ohio St. 667; Sayles v. Bates, 15 R. I. 342; Freeland v. McCullough, 1 Denio, 414; Root v. Sinnock, 120 Ill. 350. The transferror is sometimes made surety for the transferee. Marr v. Bank of West Tennessee, 4 Lea, 578.

1 Thompson on Liability of Stockholders, § 73; Hawthorne v. Calef, 2 Wall. 10. All matters of remedy are governed by the law of the forum where suit is brought. Special remedies given where the right accrued, but not where remedy is sought, will not be applied in the latter forum. Lowry v. Inman, 46 N. Y. 119; Christensen v. Eno, 106 N. Y. 97.

frequently silent as to the remedy, and the courts are left to fix some rule that will be followed. If, as already pointed out, this liability is one of quasi-contract or contract, there ought to be no doubt that an action at law would lie upon it. There might difficulty arise in the matter of proof, but that ought not to affect the legal right. It is perfectly consistent with the foregoing proposition that a suit in equity would also lie for the purpose of avoiding a multiplicity of actions. It is also perfectly consistent with this proposition that the action at law would not lie until the party had exhausted his remedy against the corporation. The advantage for the action at law is that thereby the first creditor suing, or at any rate first getting a judgment, obtains a priority, of which he cannot be deprived by the person owing the liability, and he is not compelled to share the fruits of his diligence with any other creditor, as he would be compelled in equity. In the next place the creditor can single out one stockholder who is most conveniently situated to be sued, and sue him alone without being troubled with the delay or the expense of services upon numerous parties defendant. Again, the stockholder in such an action could not set off any debt which the corporation owed to him, as he might do if sued in equity. Nor if the suit is at law could it be treated as a creditor's bill and the judgment at law required to be that of the forum where the equitable remedy is sought." But when the decisions are consulted they speak "a various

2 Parker v. Carolina Sav. Bank, Harrison, 12 Bradw. 457, semble, 31 S. E. R. 673 (S. C.). contra, and Boyd v. Hall, 56 Ga. 563.

Thebus v. Smiley, 110 Ill. 316; Cole v. Butler, 43 Me. 401; Jones v. Wiltberger, 42 Ga. 575; Bates v. Lewis, 3 Ohio St. 459. Compare City of Chicago v. Hall, 103 Ill. 342; Savings Ass'n v. Kellogg, 63 Mo. 540. 4 In re Empire City Bank, 18 N. Y. 199; Buchanan v. Meisser, 105 Ill. 638; Burnap v. Harkins Engine Co., 127 Mass. 586; Paine v. Stewart, 33 Conn. 516. But compare Gauch v.

5 Welles v. Stout, 38 Fed. R. 807. But this is not the general rule. See Hobart v. Gould, 8 Fed. R. 57; Sowles v. Witters, 39 Fed. R. 403. Except where the claim of the stockholder is good as against the creditors in general. But see Wheeler v. Millar, 90 N. Y. 353. 6 Patterson v. Lynde, 112 Ill. 196, which case is clearly wrong upon this point.