imposed additional liabilities upon bank stockholders. And these statutes will doubtless be held to apply to all corporations with banking powers, whether they are named banks or trust companies, but the double liability would only apply to that part of their business transactions which was that of a bank. Sometimes the stockholders of the bank are made liable for its debts upon insolvency or dissolution. In one instance found in State Savings Bank v. Foster, 76 N. W. R. 499 (Mich.), the stock liability is for depositors, but not other creditors. At other times they are made liable to a certain amount for debts contracted while they were stockholders, regardless of a transfer. By other statutes the stockholders existing at the time suit is brought are made liable. In some instances both the stockholders when the debt was contracted, and those existing at the time suit is brought, are made liable. There have been in times past statutes imposing on stockholders in state banks of issue a particular liability upon the circulating notes of the bank. Under our national banking system the notes of national banks are fully secured. But the stockholders of national banks are made liable for an amount equal to the amount of their stock in addition to the stock subscription for the debts of the bank. This is the common form of liability for bank shareholders. Only those who are stockholders at the time when insolvency impends are liable under the national bank act. There are yet other statutes which make stockholders liable for certain acts of the corporation, which liability is something in the nature of a penalty. It is not the purpose of the writer to examine this subject minutely, for it is so complicated with general corporation law that it would swell this chapter beyond reasonable limits. The subject has been fully treated by excellent authorities.1

§ 59. Liability on stock subscription.— The engagement which a stockholder makes when subscribing for stock is to pay the amount of his stock subscription. This engagement

1 See 3 Thompson on Corp., secs. 2325-3843, who must have made an

extensive use of a learned note, 3 Am. St. R. 806.

is a contract with the corporation which becomes binding as soon as the corporation is formed. This capital fund must be paid to the corporation. If the statute requires payment in specie it must be so made. If the law of the particular jurisdiction permits a payment in something else than money, payment may be so made. The contract may be avoided, it is true, on the ground of fraud if the subscriber is not estopped from making that defense. But conceding a valid subscription, the subscribed capital becomes the security of the creditors, and the stockholders are powerless to make any arrangement among themselves relieving them from this liability. Nor can this capital stock be divided up among the stockholders to the prejudice of the creditors of the corporation. If a stockholder has given a note to the corporation in payment of his subscription, he cannot defend against it on the ground that the corporation had no power to take it. Nor can a stockholder escape this liability by showing that the bank was not properly organized; but it has been held that a violation of law in organizing the bank would be pleadable against this stock subscription. Even this decision is wrong unless it is explainable on the theory that it was a contract which the law forbade. The state can be compelled to meet this liability. It will not avail the stockholder to show that he has paid the notes of the bank up to the extent of his liability,10 nor that he has paid a judgment against

1 King v. Elliot, 5 Smedes & M. 428, on a statutory implication. 2 See § 19, supra.

3 See 3 Am. St. R. 824 et seq., in note; Bissell v. Heath, 98 Mich. 472; In re Empire City Bank, 6 Abb. Pr. 385, and see § 48, ante.

4 Sagory v. Dubois, 3 Sandf. Ch. 466; Palmer v. Lawrence, 3 Sandf. 161; Dayton v. Borst, 7 Bosw. 115. Wood v. Dummer, 3 Mason, 308; Bank of St. Mary's v. St. John, 25 Ala. 566, a case where the directors and all who participated were held liable for the money and for profits.

6 Finnell v. Sandford, 17 B. Mon. 748; Farmers' Bank v. Jenks, 7 Metc. 592.

7 Palmer v. Lawrence, 3 Sandf. 161.

8 North Missouri Co. v. Winkler, 33 Mo. 354. If it had been the statutory liability, this defense would have been irrelevant beyond a doubt.

9 Curran v. Arkansas, 15 How. 304. See note to § 48, ante.

10 Marsh v. Burrows, 1 Woods, 463. See § 315, notes 15 and 16, post.

himself as a partner responsible for the bank's debts." If the subscriber sells his stock to the bank he is still liable,12 but it has been held otherwise. But a valid transfer completed and assented to by the bank releases the original subscriber, unless a statute makes him liable.13 The authorities heretofore cited as to the effect of a transfer when not in good faith or for the purpose of avoiding liability are all in point here. The right to call in unpaid stock subscriptions, however, it has been held in a case of doubtful authority, ma V be taken away by statute as to debts contracted after the statute was passed.15 The ruling shows the result of foolish schemes for state banking.

§ 60. Statutory modifications.- Some instances occur where the statute makes the original subscriber a guarantor of the payment of the stock subscription by a transferee.' Statutes which were works of supererogation have been passed declaring the stockholders liable for unpaid subscriptions. This is merely declaring the liability that the law already imposed. Courts have in some instances construed statutes making the stockholder liable for the amount of his stock to be declaratory of a liability to the amount of the original subscription, but not a double liability. These statutes have some bearing upon the matter of remedy.1

§ 61. Remedies upon stock subscriptions. The unpaid stock subscription belongs to the corporation, and the method

11 Bates v. Lewis, 3 Ohio St. 459. The payment was after suit brought.

12 In re Reciprocity Bank, 22 N. Y. 9. Contra, Robinson v. Bank of Darien, 18 Ga. 65. This latter bank was well named. See 10 Macaulay's England, 185.

13 Cowles v. Cromwell, 25 Barb. 413.

14 See SS 49, 50, ante.

15 Robinson v. Bank of Darien, 18 Ga. 65. If it is a contract this case

is wrong. See Hawthorne v. Calef, 2 Wall. 10, which holds the double liability to be an unrepealable contract. But the original stock subscription must be a contract between all the stockholders. It is mere folly to say the legislature can vary private contracts.

1 Marr v. Bank of West Tennessee, 4 Lea, 578; Harper v. Carroll, 69 N. W. R. 610 (Minn.).

1 See next section.

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,1 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, and in one state even when not due, but this ruling is anomalous.7 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.

6 Robertson v. Noeninger, 20 Ill. 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.

the liability for unpaid subscriptions and makes the stockholder liable therefor, it would seem on principle that the liability created was a legal liability and no longer cognizable solely in equity. So one case has held,10 but other courts have decided otherwise."1

§ 61a. Other questions as to this liability.—The right of the creditor to proceed by bill in equity accrues, of course, when he has exhausted his remedy at law. But where the bank has refused payment, or has become insolvent, the right accrues at once. In a suit by a creditor in equity, the corporation is a necessary party to the action, since the unpaid subscription belongs to it. When the remedy against the bank is barred, it is also barred against the stockholder,3 and the statute begins to run from the accrual of the liability. When the bank's remedy against the stockholder is barred, the creditor is also barred from proceeding against him.

§ 62. Nature of statutory liability for debts.— The various liabilities for debts of the bank created by statute against bank stockholders, whatever the nature of them may be, whether primary or secondary, whether joint or several, have one feature in common, to wit: they are all contractual. Ordinarily such a contractual relation would be one quasi-contractual in its nature;' and as pointed out by the

10 Smith v. Londoner, 5 Cal. 365, citing two Illinois cases. See also Stephens v. Fox, 83 N. Y. 313, and cases cited.

11 Patterson v. Lynde, 106 U. S. 519, citing an Oregon case. The court fails to see that the statute creates a quasi-contract where be fore only a remedy in equity existed, and therefore gives a remedy at law. The cases in note 10, supra, are therefore correct, unless the bank was insolvent, when the statute in some states is held to re

quire equal distribution of the assets.

1 Wood v. Dummer, 3 Mason, 308. 2 Wood v. Dummer, supra.

3 Fleischer v. Rentchler, 17 Bradw. 402.

4 Godfrey v. Terry, 97 U. S. 171; Baker v. Atlas Bank, 9 Metc. 182; Long v. Bank of Yanceyville, 90 N. C. 405; Amer v. Armstrong, 6 Pa. Co. Ct. R. 392. These cases, while not in point as to the facts, are in point as to the principle.

1 This distinction between con