mistaken as to the construction, it is no ground in equity or law for setting aside the obligation of the contract. Chesapeake & Ohio Canal Co. v. Dulany.* 4 Cr. C. C., 85.

§ 324. Position of stockholder on consolidation.- A stockholder of a company upon its consolidation with another becomes a stockholder in the new company, which would, unless otherwise provided, succeed to the duties as well as the rights of the constituent companies. A bill by a stockholder, upon the theory that he was still a member of the old company, is defective. It would also be defective if it did not make the old company a party. (Citing Davenport v. Dawes, 18 Wall., 626.) Ridgway Township v. Griswold,* 1 McC., 151. $325. Subscriber bound by alteration in charter. The original subscribers to the stock of a corporation are bound by alterations made in the charter by subsequent legislation with the consent of the corporation. Chesapeake & Ohio Canal Co. v. Robertson, 4 Cr. C. C., 291. § 326. Dividends paid in fraud of creditors.— A bank or its assignee in bankruptcy may recover from shareholders dividends or other moneys paid in fraud of creditors. Main v. Mills,* 6 Biss., 98.

§ 327. Dividends applied in payment of assessments.- An assessment of stock laid for the purpose of controlling the payment of dividends payable on the same day, and actually applied as an extinguishment or set-off of the dividends, amounts to a merger and revocation of the dividends; and the corporation could not apply the portion of such dividends accruing to a single stockholder in payment of a debt due to it from such stockholder, but must apply it in payment of the assessments against his stock, as was done with the assessments against the stock of the other stockholders. Ex parte Winsor,* 3 Story, 411.

§ 328. Tax on dividends. - The Chicago, Burlington & Quincy Railway Company made various advances to the Peoria & Oquawaka Railway Company, amounting in all to more than $150,000, to enable the latter company to complete the construction of its railway. These advances were secured by leases and other contracts in the nature of mortgages, and which were foreclosed, the Burlington Company becoming the purchaser at the foreclosure sale. Subsequently the Burlington Company issued certificates of stock representative of this new acquisition to its corporate property, which certificates were distributed among its stockholders. The United States revenue collector claimed a right, on behalf of his government, to three per cent. of its stock dividends, or $29,285, under section 81 of the internal revenue act of July 1, 1862, authorizing a tax of three per cent. upon the dividends of railway companies. Held, that the dividends upon which the act of congress authorized a tax of three per cent. were dividends which were payable in money, and which could be withheld or not from stockholders at the pleasure of directors, and that a stock dividend repaying advancements made before the passage of the act of congress, in the nature of loans, were not taxable under such act. Chicago, etc., R. Co. v. Page, 1 Biss., 461.

§ 329. Relief in equity. If directors will not pay their own calls upon stock, while they enforce them against other shareholders, equity will afford such others relief. (Citing Dodge v. Woolsey, 18 How., 331.) Grant v. Attrill,* 11 Fed. R., 469,

III. PERSONAL LIABILITY OF STOCKHOLDERS.

SUMMARY Remedy in equity, §§ 330, 332.- Liable only for par value, and pro rata, § 331.Remedy at law, § 333.— Several liability, § 334.- Joinder of parties, § 335.—Statute not penal, § 336; and may be enforced in other states, §§ 336, 337.- Constitution not selfenforcing. § 338.— Statutes must be strictly followed, § 339.— Company not dissolved, when, § 340.- Liable without a call, §§ 341, 342; when not liable, § 343.— Capital stock may be followed, § 344.- Insolvency must be alleged, § 345; other allegations, § 346.— Company should be made a party; other parties, § 347.- Not entitled to division of capital stock, § 348.- Liable for contribution, § 349.- Accepting stock as fully paid up, §§ 350, 351.— Suit in equity by judgment creditor, §§ 352, 353.— Parties not sued are liable to contribution, § 354.--Repeal of double liability, § 355; not unconstitutional, § 356.— Double liability not property, §§ 357-359.

§ 330. Where a charter makes shareholders "bound respectively for all the debts of the bank in proportion to their stock held therein," an action at law will not lie by a creditor of the company against a stockholder. The remedy is in equity. A suit for an accounting and contribution should be brought and the corporation and all of the stockholders should be made parties. Pollard v. Bailey, SS 360, 361. See § 403.

§ 331. Under a chaiter provision that stockholders are "bound respectively for all the debts of the bank in proportion to their stock held therein," their liability is not limited to the par value of their stock; neither are they bound absolutely for the payment of the full VOL. X-10 145

amount of that, but each must pay a sum which shall bear the same proportion to the whole indebtedness that his stock bears to the whole capital. Ibid. See § 415.

§ 332. A suit to enforce the personal liability of a stockholder in a company should be in the nature of a suit in equity by or for all creditors, and cannot be at law by one creditor for himself alone against two stockholders, who are not jointly liable on account of the shares standing in their respective names. Terry v. Little, §§ 362, 363. See § 403.

§ 333. Under the Massachusetts statutes prescribing the enforcement of the individual liability of stockholders of the corporation, the action must be at law and not by creditor's bill in equity. Morley v. Thayer, §§ 366–371.

§ 334. The liability of stockholders for unpaid subscriptions in law and in equity is several and not joint. Hatch v. Dana, § 372-375.

§ 335. On a creditor's bill to subject unpaid stock subscriptions to the payment of debts due a creditor of the corporation, it is not necessary that all the stockholders shall be made parties. Ibid. See $$ 347, 405.

$336. A statute making stockholders liable to the creditors of a corporation to an amount equal to their stock is not penal in the sense that it can only be enforced in the state that enacted it. Cuykendall v. Miles, SS 364, 365.

§ 337. Comity sanctions the enforcement in one state of the liability of stockholders of corporations imposed by laws of other states. Ibid.

§ 338. A constitutional provision ordaining that “dues from corporations shall be secured by the individual liability of the stockholders, and by such other means as shall be provided by law," is not self-executing, and an action cannot be brought under it to enforce the personal liability of a stockholder; but further legislation is necessary, making such stockholder individually liable for the debts of the corporation and prescribing the means to enforce his liability. Morley v. Thayer, §§ 366–371.

§ 339. Stockholders are only liable for corporate debts by virtue of the statute, which must be strictly followed. Ibid.

§ 340. A corporation is not dissolved, so as to warrant suit against a stockholder upon his personal liability, by the bankruptcy of the corporation, or its failure to elect officers or to do business. Ibid.

§ 341. The fact that subscriptions to stock are payable "as called for by the company' does not protect the stockholders from liabilities to creditors where no such call has been made; a creditor's bill in equity being a "call" to which such stockholders must respond. Hatch v. Dana, §§ 372-375.

§ 342. Stockholders are liable to creditors for the full amount of their unpaid subscriptions to the capital stock of the corporation, or for so much as is necessary to pay their claims, and no previous assessment against such shareholders need be shown. Holmes v. Sherwood, SS 390-391.

§ 343. Where the charter of a company prescribed the instalments by which forty per cent. of the stock subscribed should be paid in, and then declared that the residue, or any portion thereof, should not be called for unless by the assent of three-fourths of the stockholders, and then only to increase the business of the company, held, that shareholders were not liable, except as the charter provided, for the remaining sixty per cent., even to creditors of the company. Paper Co. v. Waples, SS 376, 377.

§ 344. The capital stock of a company is a trust fund to secure its debts. It may be followed by creditors into the hands of stockholders or any other person having notice of the trust. Wood v. Dummer, §§ 378-388. See § 314.

§ 345. In an action to make stockholders liable personally to a creditor of a corporation, the insolvency of the company or the unavailability of its assets must be alleged. Ibid. See § 408.

§ 346. In such an action, an allegation that the capital stock is a trust fund, and that the surplus only, after payment of debts, belongs to the stockholders, is necessary. Ibid.

$347. In an action to subject to personal liability a stockholder in a corporation, it should, unless defunct, be made a party; but it is not necessary to make all stockholders parties on the ground that all are liable to contribution. Ibid. See SS 335, 405.

$348. Stockholders are not entitled to a division of the capital stock of the company until after all creditors' claims are satisfied. Ibid.

$ 349. Where the stockholders of a bank whose charter has expired are sued by holders of its outstanding bills, in whose favor judgment is rendered, the decree against such stockholders who are before the court should only compel them to pay a contributory share of the debt in the proportion which the stock held by them bears to the whole capital stock. Ibid. $350. The acceptance of a certificate of stock not fully paid up ipso facto obligates the holder to make up its par value, if the duty of the corporation to its creditors requires it, although he originally agreed to take the stock as fully paid up. Flinn v. Bagley, § 389.

§ 351. A corporation voted to increase its capital stock, which was then worth sixty-six and two-thirds per cent. of its par value. It was therefore determined that the increase of stock should be sold at sixty-six and two-thirds cents on the dollar, which arrangement was carried out without any fraud being intended or effected. Held, that persons taking such stock were liable for the remaining thirty-three and a third per cent. of its par value to creditors of the corporation. Ibid.

$ 352. A creditor of a corporation, after execution returned unsatisfied, may maintain a suit in a court of equity, in his own behalf and in behalf of such other creditors as wish to become parties thereto, against the corporation and its delinquent stockholders, and may have a decree that an account of the assets and debts of the corporation be taken, and that the stockholders pay in and account for so much as may be due from them respectively to the corporation on account of their stock as will be sufficient to pay the debts represented by the complainant and the other creditors joined. Holmes v. Sherwood, §§ 390–394.

§ 353. Although the charter of an insurance company may authorize creditors to enforce contribution against individual stockholders by an action at law, such charter does not deprive a court of equity of its jurisdiction to entertain a bill filed against numerous stockholders for discovery, account and contribution. Ibid.

§ 354. Where several shareholders are sued by creditors of the corporation, and there are several shareholders not within the jurisdiction and not made parties defendant, the stockholders sued may look to such other stockholders for contribution; but it is not necessary that all of such other stockholders shall be made defendants. Ibid.

§ 355. Subscribers after the repeal of a double liability enactment incur only a single liability, although they took stock created but not issued before the repeal. Ochiltree v. Railway Co., § 395. See § 422.

§ 356. It is not an impairment of the obligation of a contract between a railroad company and its creditor to hold that the repeal of a double liability clause releases from double liability stockholders who became such after the passage of the repealing act, although they purchased stock created but not issued before such repealing act was passed. Ibid.

$357. The liability of a stockholder under a double liability clause is not part of the "estate, property or equitable interests" of a corporation, and does not pass to a receiver thereof. Jacobson v. Allen, §§ 396–399.

$358. Neither a receiver, an assignee in insolvency, nor an assignee under a voluntary general assignment for the benefit of creditors, each of whom represents creditors as well as the insolvent, acquires any right to enforce the double liability of stockholders or any other such statutory collateral obligation given to creditors or to a body of creditors for the payment of the debts of the insolvent company. Ibid.

§ 359. The double liability of stockholders to creditors may be regarded as a collateral statutory obligation of the stockholders for the benefit of the creditors by which the former became sureties to the latter for the debts of the corporation. Ibid. [NOTES.-See §§ 400-428.]

POLLARD v. BAILEY.

(20 Wallace, 520-527. 1874.)

ERROR to U. S. District Court, Middle District of Alabama.

STATEMENT OF FACTS.- The Central Bank of Alabama was created with a capital of $900,000, divided into shares of $100 each, under a charter whose provisions, for the purposes of this case, are set out in the opinion. One Pollard took two hundred shares, or $2,000, in 1865. The bank became insolvent, and in 1869 it ceased to do business, leaving about $700,000 of bills outstanding and unpaid. In 1872 Bailey, having $17,000 of these bills, sued Pollard at law, assuming that he could hold him liable under section 16, article 2, of the bank charter. No other creditors or stockholders were referred to in the declaration, a demurrer to which was overruled and judgment rendered for plaintiff. Writ of error by defendant.

Opinion by WAITE, C. J.

The right of Bailey to maintain his action against Pollard depends upon the construction to be given to the charter of the bank. Pollard does not deny his liability to the creditors, but insists that it cannot be enforced in this

manner. He is one of the stockholders of the bank and Bailey one of its creditors. Stockholders are, by article 2, section 16, of the charter, "bound respectively for all the debts of the bank in proportion to their stock holden therein." The action below was at law, by one creditor against one stockholder, to recover the full amount of his debt, without regard to the other creditors or the ability of the other stockholders to respond to their obligations under the charter. The stock of Pollard, at its par value, exceeds in amount the debt owing to Bailey, but it is admitted that the other indebtedness of the bank is very large, and nearly, if not quite, equal to the entire capital.

$ 360. Where, by the charter of a bank, each stockholder is liable in case of insolvency to his proportion of the debts of the bank, he cannot be sued at law by an individual creditor.

Each stockholder is bound for the debts in proportion to his stock. His liability is not limited to the par value of his stock, neither is he bound absolutely for the payment of the full amount of that. He must pay a sum which shall bear the same proportion to the whole indebtedness that his stock bears to the whole capital, and is not required to pay more. For the purposes of this case it is not necessary to decide what effect the insolvency of any of the stockholders would have upon the liability of such as are solvent. It is certain that no stockholder is liable for more than his proportion of the debts. This proportion can only be ascertained upon an account of the debts and stock and a pro rata distribution of the indebtedness among the several stockholders. The proper action, therefore, to enforce the liability is one in which such an account can be stated and distribution made. Such an action calls specially for the exercise of the powers of a court of equity, which can bring before it all the necessary parties and adjust all their rights. Every stockholder, when called upon to perform his obligations, has the right to require that the extent thereof shall then be determined once for all, as well that which he is under to his associate stockholders as that to the creditors. Otherwise he might be made to respond to the creditors under one rule and obtain his relief from the other stockholders under another. The provision, therefore, for a proportionate liability is equivalent to a provision for an appropriate form of equitable action to enforce it. The case is different from what it would be if the charter had provided generally that all stockholders should be individually liable for the payment of the debts. The cases from New York cited upon the argument, and which are supposed to be in opposition to the view we have taken, involved the consideration of such a liability.

But when section 16 is taken in connection with sections 20 and 21, it is very apparent that it was the intention of the legislature only to charge the stockholders upon a proper account, and in the manner therein provided for. The intention of the legislature, when properly ascertained, must govern in the construction of every statute. For such purpose the whole statute must be examined. Single sentences and single provisions are not to be selected and construed by themselves, but the whole must be taken together.

As has been seen, section 16 created the liability, but provided no remedy for its enforcement except by implication. Section 20, however, provides in substance that if any debt due from the bank, exceeding $100 in amount, shall remain unpaid for more than ten days after proper demand, the holder may file a bill in the proper chancery court for the settlement of all the debts of the bank, if he elects so to do, and may, on certain specified proof, pray an injunction to restrain the bank and its officers from paying out, or in

any manner transferring or delivering to any person, any money or assets of the bank, or incurring any obligations until the order is vacated or modified. It further provides that, upon certain findings, the chancellor shall proceed to inquire whether the bank is solvent or not; and if, upon such inquiry, he shall find that it is not clearly solvent, he may make an order declaring the same to be insolvent and require its affairs to be wound up and settled, and, under certain circumstances, appoint a receiver for that purpose. Section 21 provides that if the bank be found insolvent, and settlement of its affairs ordered, the same shall be done upon bill filed in said chancery court under the orders of the court and the rules in chancery, and that full distribution shall be made of the assets according to the rights of all parties, billholders having priority over other debts due from the bank. After the assets were exhausted, if they were not sufficient to pay all debts and liabilities, a further call was directed upon the shareholders for further payment of capital to an amount equal to the deficiency, which was to be apportioned among all the shares of stock, and an order made for the payment by each shareholder of the sum or proportion of his shares. This apportioned call the receiver was required to collect and apply.

$361. Liability of stockholder a creature of statute; extent of liability.

The individual liability of stockholders in a corporation for the payment of its debts is always a creature of statute. At common law it does not exist. The statute which creates it may also declare the purposes of its creation, and provide for the manner of its enforcement. After an examination of the several sections of this charter, it cannot for a moment be doubted that it was not only the intention to provide for a proportionate liability, but for a pro rata distribution of the fund arising therefrom among the different creditors, according to their several priorities. Every provision is entirely inconsistent with the idea that one creditor could, by an individual suit, appropriate to himself the entire benefit of the security, and exclude all others. A common fund was created for the common benefit, to be collected and distributed by the receiver, who was made the common agent of all. There was no liability except for the deficiency. That was to be apportioned and collected for the common benefit. It was not only to be apportioned and collected, but the mode of apportionment and the manner of collection were specially provided for. The liability and the remedy were created by the same statute. This being so, the remedy provided is exclusive of all others. A general liability created by statute without a remedy may be enforced by an appropriate common law action. But where the provision for the liability is coupled with a provision for a special remedy, that remedy, and that alone, must be employed. It follows as a necessary consequence from these premises that the action of Bailey cannot be maintained, and that the demurrer to his declaration should have been sustained.

But it is claimed that by section 22 Bailey, as a billholder, had the right to move in the proper court for the collection of any bill the payment of which had been refused. This clearly refers to an enforcement of the liability of the bank itself and not to that of the stockholders. Judgment reversed, and the cause remanded with instructions to sustain the demurrer to the declaration, and give judgment accordingly.

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