plied only from the legislative intent. Surely the legislative intent that the full value of the stock authorized and required to be subscribed, in other words, the entire capital, shall be, in fact, paid in when required that it shall be real and not merely nominal,-is plain enough when the authority to exist as a corporation and to do business is given on condition that the capital subscribed shall not be less than a specified sum. A requisition that the subscribed stock shall not be less than $1,000,000 would be idle if the subscribers need pay only a first instalment on their subscriptions; for example, five per cent. Manifestly that would not be what the law intended; and, if its intent was that the whole capital might be called in, it is difficult to see why a subscriber, knowing that intent, and voluntarily becoming a subscriber, does not impliedly engage to pay in full for his shares when payment is required. It is, however, unnecessary to discuss this question further, for it is settled by the judgment of this court. In Upton, Assignee, v. Tribilcock, 1 Otto, 45 (§§ 192–196, supra), we ruled that the original holders of the stock are liable for the unpaid balances at the suit of the assignee in bankruptcy, and that without any express promise to pay. The bankrupt corporation in that case was the same as in this.

But if the law implies a promise by the original holders or subscribers to pay the full par value when it may be called, it follows that an assignee of the stock, when he has come into privity with the company by having stock transferred to him on the company's books, is equally liable. The same reasons exist for implying a promise by him as exist for raising up a promise by his assignor. And such is the law as laid down by the text-writers generally, and by many decisions of the courts. Bond v. Susquehanna Bridge, 6 Har. & J., 128; Hall v. United States Ins. Co., 5 Gill, 484; Railroad Co. v. Boorman, 12 Conn., 530; Haddersfield Canal Co. v. Buckley, 7 T. M., 36. There are a very few cases, it must be admitted, in which it has been held that the purchaser of stock, partially paid, is not liable for calls made after his purchase. Those to which we have been referred are Canal Co. v. Sansom, 1 Binn., 70, where the question seems hardly to have been considered, the claim upon the transferee having been abandoned; and Palmer v. Ridge Mining Co., 34 Penn. St., 288, which is rested upon Sansom's case, and upon the fact that, by the charter, the company was authorized to forfeit the stock for non-payment of calls. We are also referred to Seymour v. Sturgess, 26 N. Y., 134, the circumstances of which were very peculiar. In neither of these cases was it brought to the attention of the court that the stock was a trust fund held for the protection of creditors in the first instance, a fund no part of which either the company or its stockholders was at liberty to withhold. They do not, we think, assert the doctrine which is generally accepted. In Angell & Ames on Corporations, sec. 534, it is said:

"When an original subscriber to the stock of an incorporated company, who is so bound to pay the instalments on his subscription from time to time as they are called in by the company, transfers his stock to another person, such other person is substituted not only to the rights, but to the obligations of the original subscriber, and he is bound to pay up the instalments called for after the transfer to him. The liability to pay the instalments is shifted from the outgoing to the incoming shareholder. A privity is created between the two by the assignment of the one and the acceptance of the other, and also between them and the corporation; for it would be absurd to say, upon general reasoning, that, if the original subscribers have the power of assigning their shares,

they should, after disposing of them, be liable to the burdens which are thrown upon the owners of the stock."

So in Redfield on Railways, 53, it is said the cases agree that whenever the name of the vendee of shares is transferred to the register of shareholders, the vendor is exonerated, and the vendee becomes liable for calls. We think, therefore, the transferee of stock in an incorporated company is liable for calls made after he has been accepted by the company as a stockholder, and his name has been registered on the stock books as a corporator; and, being thus liable, there is an implied promise that he will pay calls made while he continues the owner. All the cases agree that creditors of a corporation may compel payment of the stock subscribed, so far as it is necessary for the satisfaction of the debts due by the company. This results from the fact that the whole subscribed capital is a trust fund for the payment of creditors when the company becomes insolvent. From this it is a legitimate deduction that the stock cannot be released; that is, that the liabilities of the stockholders cannot be discharged by the company to the injury of creditors without payment. The fact, therefore, that in this case the certificate of stock taken by the defendant below was marked "non-assessable," is of no importance. The suit is brought by the assignee in bankruptcy, who represents creditors; and, as against him, the company had no right to release the holders of the stock from the payment of the eighty per cent. unpaid.

The second assignment of error and the third are, in substance, that the court should not have admitted in evidence the order of the district court, directing a call by the assignee of the unpaid balance of the stock, and should not have ruled that the call made under the order was effective to make the liability of the defendant complete. That these assignments cannot be sustained was decided in Sanger v. Upton, 1 Otto, 56,-a case before us at this term. Nothing more need be said in reference to them.

§ 499. Vendor of stock may, and should, order its transfer on books of company.

The last assignment of anything that can be assigned for error is that the court charged the jury as follows: "The only question is, was the defendant a stockholder of the company? If the testimony satisfies you that the defendant purchased of Hale one hundred shares of this stock. and that it was transferred in the books of the company, either by Webster, the defendant, or by Hale, who sold the stock, or by the direction of either of them, then the defendant is liable the same as if he had subscribed for the stock." The objection urged against this is that a transfer on the books directed by Hale, after the purchase by Webster, could not affect the latter's liability. But, if Webster became the purchaser, it was his vendor's duty to make the transfer to him, where only a legal transfer could be made,—namely, on the books of the company; and the purchase was in itself authority to the vendor to make the transfer. Still further, it was Webster's duty to have the legal transfer made to relieve the vendor from liability to future calls. A court of equity will compel a transferee of stock to record the transfer, and to pay all calls after the transfer. 3 De G. & Sm. Ch., 310. If so, it is clear that the vendor may himself request the transfer to be made; and that, when it is made at his request, the buyer becomes responsible for subsequent calls. This, however, does not interfere with the right of one who appears to be a stockholder on the books of a company to show that his name appcars on the books without right and without his authority. The judgment of the circuit court is affirmed.

PULLMAN 2. UPTON.

(6 Otto, 328-331. 1877.)

ERROR to U. S. Circuit Court, Northern District of Illinois.

STATEMENT OF FACTS.- Myers, being the owner of twenty-five shares of stock of the Great Western Insurance Company, transferred them to Pullman, in 1871, as collateral security. Twenty per cent. of the value of the shares had been paid. Pullman had them transferred to him on the books of the company, and took a new certificate. The original capital stock of the company was $100,000, but in 1870 it was increased to $5,000,000, with the alleged consent of the stockholders. The company became bankrupt, the court ordered payment to the assignee of the whole amount unpaid on the capital stock, and this suit was brought against Pullman by the assignee. The fourth and fifth assignments of error, referred to by the court, were that the court erred in admitting in evidence the order of the district court making an assessment, and the notice to Pullman of said assessment.

$ 500. A plea of non-assumpsit admits the competency of a corporation to sue. Whether corporation stock has been properly increased is a question that the state only can raise.

Opinion by MR. JUSTICE STRONG.

The evidence to which the defendant below objected, and to the admission of which he took exception, was quite unimportant. Its object was to prove the existence of the corporation and the increase of the corporate stock. But the existence of the corporation was admitted by the defendant's plea of nonassumpsit; and whether the corporate stock had been properly increased was a question the state only could raise. It is well settled, that, in a suit by a corporation, a plea of the general issue admits the competency of the plaintiff to sue as such. Society for Propagation of the Gospel v. Town of Pawlet, 4 Pet., 480. The first three assignments of error may, therefore, be dismissed without further consideration.

That the fourth and fifth assignments are without merit plainly appears in the report of Sanger v. Upton, 91 U. S., 56, where a similar order and notice to the stockholders was held not merely sufficient, but conclusive as to the right of the assignee to bring suit to enforce the payment of unpaid balances due for the corporate stock.

§ 501. A stockholder in a company is liable for unpaid subscriptions although he holds the stock only as security for a debt.

The only remaining question is, whether an assignee of corporate stock, who has caused it to be transferred to himself on the books of the company, and holds it as collateral security for a debt due from his assignor, is liable for unpaid balances thereon to the company, or to the creditors of the company, after it has become bankrupt. That the original holders and the transferees of the stock are thus liable we held in Upton v. Tribilcock, 91 U. S., 45 (§§ 192–196, supra), Sanger v. Upton, id., 56, and Webster v. Upton, id., 65 (§§ 496-499, supra); and the reasons that controlled our judgment in those cases are of equal force in the present. The creditors of the bankrupt company are entitled to the whole capital of the bankrupt as a fund for the payment of the debts due them. This they cannot have, if the transferee of the shares is not responsible for whatever remains unpaid upon his shares; for by the transfer on the books of the corporation the former owner is discharged. It makes no difference that the legal owner—that is, the one in whose name the stock stands on the books

of the corporation--is in fact only, as between himself and his debtor, a holder for security of the debt, or even that he has no beneficial interest therein. This was ruled in Newry, etc., R'y Co. v. Moss, 14 Beav., 64. In that case it was said that only those persons who appear to be shareholders on the register of the company are liable to pay calls. In In re Phoenix Life Ins. Co., Hoare's Case, 2 John. & H., 229, it appeared that certain shares had been settled upon Hoare and others as trustees in a marriage settlement. The trustees had no beneficial interest, but they were registered as shareholders, and the word "trustees" added in the margin of the register, and they receipted for dividends as trustees. It was held by Vice-Chancellor Wood that they were liable as contributories to the full extent, and not merely to the extent of the trust estate. It was said, "A person who is a shareholder is absolutely liable, although he may be bound to apply the proceeds of the shares upon a trust." In Empire City Bank, 8 Abb. (N. Y.) Pr., 192, reported also in 18 N. Y., 200, the court of appeals held persons responsible as stockholders in respect to the stock standing in their names on the books of the bank, though they held the stock only by way of hypothecation as collateral security for money loaned, and they were held liable for an amount equal to their stock for the unsatisfied debts of the bank. In Adderly v. Storm, 6 Hill (N. Y.), 624, it appeared that one Bush, in 1837, being indebted to the defendants, transferred to them on the books of a company certain shares of stock, and delivered to them the usual certificates. On receiving the certificates the defendants gave Bush a receipt, stating they had received the stock, which they were to dispose of at any time for $200 per share, applying the proceeds to the payment of the notes which Bush owed them, or, if not sold when the notes should be paid, to return the scrip to Bush, or account for it. The last of the notes was paid in September, 1838, and the defendants returned the scrip to Bush, giving also a power of attorney for the transfer of the stock. The retransfer was not made, however, until March 2, 1840, and the defendants were held liable, as stockholders, for a debt of the company contracted in January, 1840; and this, it was said, would be the law, though the plaintiff may not have known, at the time he trusted the company, that the defendants could be reached. So, in Holyoke Bank v. Burnham, 11: Cush. (Mass.), 183, it was decided that a transfer of stock on the books of the bank, intended merely to be held as collateral security, makes the holder liable for the bank debts. It was said the creditor is to be considered the absolute owner, and that his arrangement with his debtor cannot change the character of the ownership. And in Wheelock v. Kost, 77 Ill., 296, the doctrine was asserted that when shares of stock in a banking corporation have been hypothecated and placed in the hands of the transferee, he will be subjected to all the liabilities of ordinary owners, for the reason that the property is in his name and the legal ownership appears to be in him.

These decisions are sufficient to vindicate the judgment of the court below. The case of the plaintiff in error is a hard one, but he cannot be relieved consistently with due observance of well-established law.

Judgment affirmed.

BECHER v. WELLS FLOURING MILL COMPANY.

(Circuit Court for Minnesota: 1 McCrary, 62-65. 1880.)

Opinion by NELSON, J.

STATEMENT OF FACTS.- A suit in equity is brought by the complainants, claiming to be stockholders in the defendant corporation by virtue of cer

tain certificates of stock assigned to them by the persons to whom they were originally issued, and who appear as owners on the books of the corporation. The certificates are not only assigned to the complainants, but written direction is given to the secretary of the corporation to make the necessary transfer upon the books. These certificates represent one hundred and nine shares of the stock forty shares assigned to E. J. Becher, and the remainder to L. A. Becher. The relief prayed for is that the corporation and other defendants, officers and stockholders, may be enjoined from calling or holding any meeting of the company for the purpose of increasing the debt of said corporation; from increasing such debt until after this stock has been transferred to the complainants upon the books of said company, and that the said defendants, and each of them, may be restrained and prohibited from voting upon any stock so as aforesaid assigned to complainants, and from further increasing the debt of said company by any proceeding or in any manner whatever until the further order of the court. A perpetual injunction is also prayed for, as well as general relief.

The defendant corporation was organized under the laws of the state of Minnesota (Minn. R. S., 396), and has been in operation since May 30, 1879, incurring an indebtedness, up to this time, for improvements and milling machinery, to the maximum allowed by the articles of association. It is proposed to call a meeting for the purpose of increasing the stock of the corporation, in accordance with the law, to meet the demands of business, and no notice has been given the complainants.

§ 502. Equitable assignees of stock not shareholders until accepted by company. It is pretty well settled that the assignees of stock certificates in a corporation, by assignment from persons to whom the certificates were originally issued, are not, by virtue of such assignment, shareholders, when the transfer of shares is required to be made upon the books of the company. See Field on Corp., 75; Angell & Ames on Corp.; Minn. R. S., 398, § 135.

503. What title an assignment of a certificate conveys.

The mere assignment gives the assignee an equitable title only, except as against the assignor. The certificates do not constitute property in the corporation; they are the muniments of title, but it is the shares of stock which constitute the property, and the persons whose names appear upon the books of the corporation are presumed to be the stockholders; they have the right to vote and participate in directing the policy of the company. The corporation has not recognized the complainants as stockholders and thus waived any right to require such registry, and the affidavits read on the hearing do not make it clear that a dernand for the transfer of the stock was ever made. If it was, and there was a refusal to comply, legal proceedings would undoubtedly secure to the complainants the proper relief. It is clear that if this court has jurisdiction of the case to grant other equitable relief prayed, it could also entertain claim for damages on account of a refusal to make the proper transfer. This disposes of the preliminary motion to dismiss the bill.

$504. Pledge of stock not a sale thereof, and pledgees have not the rights of stockholders.

It appears from the affidavits read that complainants, being the owners of a flouring mill in the village of Wells, Minnesota, sold it to the defendants Eaton, Thombs, Barnes, Southwick and Stevens, who organized, under the laws of the state of Minnesota, the corporation called "The Wells Flouring Mill Co." They paid a part of the purchase price and gave notes for the balance,