Supreme Court of the United States, a quasi-contract is not a contract that is protected by the constitutional prohibition against the states of impairing the obligation of a contract. The distinction becomes of importance in case it is desired to issue a writ of attachment. Many statutes permit a writ of attachment to be issued upon a cause of action arising out of a contract, express or implied. Such a contract to be implied must be one implied as an actual agreement of the parties, not one implied contrary to the intention of the parties, or one arising from a statute as a quasi-contract. Therefore if this statutory liability is a quasi-contract in those jurisdictions just spoken of, the writ of attachment would not lie upon it, nor would it be protected against a law taking the liability away as to future contracts. But it has been erroneously decided by the highest authority that this liability of stockholders is a genuine contract, because, it is said, being a provision of law, it is as if written into the articles of agreement of the corporation as a part thereof.3 It has been held that it cannot be repealed by a state statute,* because the obligation of a contract would be impaired. This decision was made through a total misconception. The

tract and quasi-contract is one that courts have much confused, but it is important. See Keener, QuasiContract, ch. I. Prof. Wigmore, in his classification, 25 Am. Law Rev. 695, ignores customary and statutory duties as part of the law of quasi-contract. It was even held expressly by a court of high authority that this liability was not one of contract, but was quasi-contractual. First Nat. Bank v. Hawkins, 79 Fed. R. 51 (C. C. A.). See Amer v. Armstrong, 6 Pa. Co. Ct. R. 392. 2 Louisiana v. New Orleans, 109 U. S. 285.

3 Hawthorne v. Calef, 2 Wall. 10. This case was argued by eminent counsel, but the idea of quasi-contract was not even suggested. See

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 man'ner 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, 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. Newport 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.

3 Owen v. Purdy, 12 Ohio St. 73.

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be strictly construed, others liberally; but the better rule seems to be that they should be given a reasonable construction. 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.12 The 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

§ 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.).

8 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.

there is a limit placed upon the liability, as, for example, where it is in proportion to the stock up to a certain amount, or where it is double the value of the stock held, the liability must be a several one. The reason for this distinction is plain: in the first case, unless the liability be joint, one stockholder could be sued for all the debts of the institution; but in the second case, the liability being of a varying amount as to different stockholders, it must be several. It is true that some statutes declare that the stockholders shall be jointly and severally liable, or as partners,3 yet, if the liability is in proportion to the stock, it must be several. Therefore, as to any of these statutes, it is a confusion of terms to say that the liability is that of partners, even where the statute makes the corporators liable for all debts to the amount of their stock, regardless of any exhaustion of the assets. Since the liability is generally several, if it is ratable there can be no increased liability thrown upon one stockholder by reason of the fact that there are insolvent stockholders, although if the liability is joint that result is obtained, in effect, by a judgment against the joint obligors, and a levy of execution upon those able to respond. A distinction is made in these statutes between a provision rendering a stockholder individually liable to an amount equal to his stock, and a provision making the stockholders responsible to the amount of their stock equally and ratably, or not one for the other."

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2 Kennedy v. Gibson, 8 Wall. 498; United States v. Knox, 102 U. S. 422.

3 See Thompson v. Meisser, 108 Ill. 359. See note 7, infra.

42 Morawetz on Corp., sec. 878. See Coleman v. White, 14 Wis. 700. 5 Culver v. Bank, 64 Ill. 528. See also Matthews v. Albert, 24 Md. 527; Norris v. Johnson, 34 Md. 485.

6 United States v. Knox, 102 U. S. 422; Crease v. Babcock, 10 Met. 524. This must be so where the statute

is held to impose a liability equally and ratably upon stockholders. See In re Hollister Bank, 27 N. Y. 393.

Dupee v. Swigert, 127 Ill. 494. The reason is that the first provision makes the stockholder liable for that amount regardless of the situation of the other stockholders, but the second provision requires a computation of the whole liability and a division thereof according to the amount of stock held.

§ 65. Who can enforce liability. This statutory liability, being imposed for the benefit of creditors, belongs primarily to them. Unless it is so provided by statute, impliedly or expressly, the suit upon this statutory liability cannot be brought by the corporation, nor by its receiver or assignee suing for it. Since the obligation is a quasi-contract, as pointed out in section 62, ante, and is double the stock subscription, a close analysis would show that it is simply a doubling of the stock subscription, and therefore the other party to the contract is the corporation. But the other idea is too firmly rooted to be disturbed. In the case of national banks it was originally held that the receiver of the bank was the proper party to bring the suit; but this rule has now been changed by statute and it may be brought by creditors as well as the receiver. But if the receiver refuses to bring the suit the creditors may do so, even though the state statute gives the right to the receiver or some one else.

§ 66. Who liable.-There is a diversity among the statutes as to those who are liable to respond to this liability. If the statute names the particular class of stockholders who are liable, no difficulty is met. Sometimes the statute fixes the liability upon those who are stockholders when the debt was created, and a certain time thereafter.1 Under statutes that do not fix the class of stockholders liable, it has been variously held that stockholders at the time the debt was contracted,2 stockholders at the time payment of

1 Richmond v. Irons, 121 U. S. 21; Jacobson v. Allen, 20 Blatchf. 525; Steinke v. Loofbourrow, 54 Pac. R. 120; Runner v. Dwiggins, 46 N. E. R. 580, 36 L. R. A. 645. Compare Farmers' Trust Co. v. Funk, 49 Neb. 353. See § 329, post, notes 13, 14, 15, 16, 17.

2 See cases last cited; Worth v. Piedmont Bank, 28 S. E. R. 488; Ueland v. Haugan, 73 N. W. R. 169.

3 Kennedy v. Gibson, 8 Wall. 498; Casey v. Galli, 94 U. S. 674.

4 Harvey v. Lord, 11 Biss. 144; Peters v. Foster, 56 Hun, 607; Irons v. Manufacturers' Nat. Bank, 17 Fed. R. 308; s. c., 27 Fed. R. 591.

5 Anderson v. Seymour, 73 N. W. R. 171, for a state statute.

1 Harper v. Carrol, 62 Minn. 152. 2 Moss v. Oakley, 2 Hill, 265.