tain cases, be unnecessary as a pre-requisite to instituting suit against the shareholder personally, it may, nevertheless, be necessary in the course of the action against the shareholder to show a judgment against the company as evidence of the measure of damages.1 § 124. Exceptions to the foregoing rule.-In actions by creditors to enforce the personal liability of stockholders, if it be clearly shown that the corporation has no property with which to satisfy the plaintiff's demands; that it is notoriously insolvent; that it has made an assignment for the benefit of creditors, or has been adjudged a bankrupt, or has been dis 3 1 First Nat. Bank of Garretsville v. Geene, (1884) 64 Iowa, 445. Cf. Cleveland v. Marine Bank, (1863) 17 Wis. 545. Section 25 of the New York business corporations act (chapter 611, Laws 1875) is identical with section 24 of the act of 1848 for organizing manufacturing corporations, which exempts stockholders from liability for corporate debts in certain cases, except that the act of 1875 omits a clause of the earlier act to the effect that stockholders shall not be liable "until an execution against the company shall have been returned unsatisfied." But it is held that an action may be maintained against a stockholder in a limited liability company, organized under the act of 1875, for a corporate debt, pending an action against the company and before judgment therein, although section 37 of the act provides that "no execution shall issue ,against any stockholder individually until execution has been issued against the company and returned unsatisfied." Walton v. Coe, (1888) 110 N. Y. 109. 2 Garretsville Bank v. Greene, (1885) 64 Iowa, 445, where it was held that the right of action by a corporation creditor against a stockholder to the extent of the unpaid balance due on 2 his stock, accrues when it is clear that the corporation has no property from which the claim may be collected and not from the time of recovery of judgment against the corporation. So in Knight v. Frost, (1885) 14 Mo. App. 331, where a statute provided for proceedings against stockholders when property of the corporation on which to levy an execution could not be found, it was held that proceedings could be had upon evidence that there was no property to levy on, without waiting till the return day of the execution. 3 Terry v. Tubman, (1875) 92 U. S. 156; Flash v. Conn, (1883) 109 U. S. 371; Camden v. Doremus, (1845) 3 How. 533; Reynolds v. Douglas, (1836) 12 Pet. 497: Kimber v. Eank of Fulton, 49 Ga. 419; Hodges v. Silver Hill Mining Co., (1881) 9 Onegon, 200. Cf. Toucey v. Bowen, (1855) 1 Biss. 81. 4 Chamberlain v. Brownberg, 83 Ala. 576. 5 Shellington v. Howland, (1873) 53 N. Y. 371; State Savings Assoc. v. Kellogg, (1873) 52 Mo. 583; Dryden v. Kellogg, (1876) 2 Mo. App. 87. Cf. Ansonia Brass & Copper Co. v. New Lamp Chimney Co., (1873) 53 N. Y. 123; s. c. (1875) 91 U. S. 656; Lovett 2 solved, that it has ceased to exercise its functions and is without funds and in debt, it is not necessary further to allege that the plaintiffs have recovered judgment against the corporation upon which an execution has been returned unsatisfied. In such cases creditors will not be required to await v. Cornwell, (1831) 6 Wend. 369; People v. Bartlett, (1842) 3 Hill, 570; Loomis v. Tifft, (1853) 16 Barb. 541; Walser v. Seligman, (1881) 21 Blatchf. 130. Contra, Birmingham National Bank v. Mosser, (1878) 14 Hun, 605. Terry Tubman, (1875) 92 U. S. 156; Terry v. Anderson, (1887) 95 U. S. 628, 636; Kincaid v. Divinelle, (1875) 59 N. Y. 548; Patterson v. Lynde, (1884) 112 Ill. 196; Kimber v. Bank of Fulton, 49 Ga. 419. Cf. McDonnell v. Alabama Gold Life Ins. Co., (1889) 85 Ala. 401, where it is held that neither the constitution nor the statute of Alabama, relating to the liability of stockholders for the debts of the corporation, limits the remedy to judgment creditors, and it enures to all creditors alike, upon the dissolution of the corporation. Cf. Hollingshead v. Woodward, (1885) 35 Hun, 410. For the sake of the remedy against the stockholders and in favor of creditors, a virtual surrender of the corporate rights and a dissolution of the corporation may be presumed from a transfer of all the corporate assets, and from other circumstances which would not ordinarily create a dissolution per se. Under the Missouri statute, creditors may, in such cases, bring their suits against any persons who were stockholders at the time of the dissolution of the corporation. Kehlor v. Lademann, (1883) 11 Mo. App. 550. 2 Penniman v. Briggs, (1824) 1 Hopk, Ch. (N. Y.) 343; Slee v. Bloom, (1822) 19 Johns. 456; Bank of Pough keepsie v. Ibbotson, (1840) 24 Wend. 479. Cf. Terry v. Anderson, (1877) 95 U. S. 628; Remington v. Samana Bay Co., (1886) 140 Mass. 494. 3 Morgan v. Lewis, (1888) 46 Ohio St. 1, where it was alleged that the company was insolvent; that it had entirely ceased to do business; and that it had made an assignment for the benefit of creditors, having neither money, credit nor materials with which to transact business. Acc. Shellington v. Howland, (1873) 53 N. Y. 371; State Savings Assoc. v. Kellogg, (1873) 52 Mo. 583; Dryden v. Kellogg, 2 Mo. App. 87. Cf. Ansonia Brass & Copper Co. v. New Lamp Chimney Co., (1873) 53 N. Y. 123; s. c. affirmed, (1875) 91 U. S. 656; Kincaid v. Divinelle, (1875) 59 N. Y. 548; Birmingham Nat. Bank v. Mosser, (1878) 14 Hun, 605; Hollingshead v. Woodward, (1885) 35 Hun, 410; Paine v. Stewart, (1886) 33 Conn. 516; Chamberlain v. Huguenot Manuf. Co., (1875) 118 Mass. 532. Laws N. Y. 1875, c. 611, § 25, exempting the stockholders of business corporations organized under that act from liability in certain cases, is identical with section 24 of the act of 1848, except that it omits the provision of the act of 1848 that the stockholders shall not be liable "until an execution issued against the company shall have been returned unsatisfied." Accordingly an action can be maintained against the stockholders of a corporation organized under the act of 1875, though no execution had been issued against the company. Richards v. Beach, (1889) 5 N. Y. Supl. 574; s. c. 12 N. Y. St. Rep. 136; and pending an the collection of doubtful claims or claims in litigation. The stockholders must pay promptly, and take upon themselves the onus of delay and risk as to all such cases. Even where the statute requires it, a suit to enforce a statutory liability need not be delayed until all the corporate property has been applied to the payment of debts, if it be clear that such property will be sufficient to pay everything. And there are cases holding that the shareholder's liability under particular statutes is "unconditional, original and immediate, not dependent on the insufficiency of corporate assets, and not collateral to that of the corporation, upon the event of its insolvency." Under the New Hampshire statute, it is sufficient to render the stockholders personally liable that a demand be made upon the corporation to pay the debt or to expose property to attachment. In Missouri it is held that where judgments obtained in a foreign jurisdiction against a corporation of that jurisdiction, prove unavailing by reason of the insolvency of the corporation, it is not necessary, in a proceeding in a court action against the corporation, before judgment therein. Young v. Brice, (1889) 18 N. Y. St. Rep. 945; s. c. 3 N. Y. Supl. 123; Walton v. Coe, 110 N. Y. 109. 1 Moses v. Ocoee Bank, (1878) 1 Lea, 398, 414; Stark v. Burke, 9 La. Ann. 341. 3 with the obligation to make good their subscriptions to unpaid capital stock, or in those where a constitutional or statutory liability is imposed beyond the amount of the subscription, to a fixed sum, but on each in proportion to his share in the capital stock." Perkins v. Church, (1859) 31 2 Munger v. Jacobson, (1881) 99 Ill. Barb. 84; Southmayd v. Russ, (1819) 349. * Manufacturing Co. v. Bradley, (1881) 105 U. S. 175, 181, per Matthews, J., who continuing said, "It is, in one aspect, a suretyship for the corporation, for by section 37 of the act, any stockholder paying a debt of the company for which he is personally liable, is entitled to an action against it for indemnity, in which he may take the corporate assets, but is without recourse upon the property of any other stockholder. The jurisdiction in equity, then, can not rest upon the administration of a trust fund, as in cases where delinquent stockholders are charged 3 Conn. 52; Culver v. Third National Bank, (1871) 64 Ill. 528; Davidson v. Rankin, (1868) 34 Cal. 503; Young v. Rosenbaum, (1870) 39 Cal. 646; Witherhead v. Allen, (1867) 4 Abb. App. Dec. 628; Morrow v. Superior Court, (1883) 64 Cal. 383; Bird & Co. v. Calvert, (1884) 22 S. C. 292, 297, saying, "The obligation in one sense may possibly be termed collateral, but we can not see that in any sense it is secondary and enforceable only after judgment and a return of nulla bona against the corporation.” 4 Connecticut River Savings Bank v. Fiske, (1885) 60 N. Y. 363. of equity in Missouri against a holder of unpaid stock, to obtain judgment of dissolution of the corporation, that fact appearing sufficiently aliunde. The statute requiring judgment does not apply in such a case. And in South Carolina it has been held that where the charter of a corporation made each shareholder liable to creditors for five per cent. on his stock, judgment need not be taken against the corporation before action brought to enforce the liability of a shareholder.' In California before the adoption of the present constitution, under a statute of that State declaring each stockholder of a life insurance company individually liable for such proportion of its debts as the amount of his stock bore to the whole stock, a creditor could sue a stockholder at law without first bringing an action against the company.3 4 § 125. To whom the liability attaches.- (a) The registered holder.- To ascertain what persons are liable as stockholders to the creditors of the company, recourse must be had to the corporate records. For this purpose the creditors are entitled to an examination of the books. And persons whose names are found to be registered thereon as holders of the stock, are presumed to be the regular and lawful owners of the shares and as such liable for the company's debts. In Eng 1 Shickle v. Watts, (1888) 94 Mo. 410. N. Y. 213; Erskine v. Loewenstein, 82 Mo. 301; s. c. 11 Mo. App. 595; Bird & Co. v. Calvert, (1884) 22 Pittsburgh &c. R. Co. v. Applegate, S. C. 292. 21 W. Va. 172; Appeal of Miller, 3 Morrow v. San Francisco Superior (1881) 1 Pa. Sup. Ct. 120; Graff v. Court, (1885) 64 Cal. 383. Note to Thompson v. Reno Savings Bank, 3 Am. St. Rep. 806, 866; Branson v. Oregonian Ry. Co., 10 Oregon, 278; Henkle v. Salem Manuf. Co., 39 Ohio St. 547; Williams' Case, L. R. 1 Ch. Div. 576; Sichell's Case, L. R. 3 Ch. 119; Bugg's Case, 2 Dr. & Sm. 452. Marshall Foundry Co. v. Killain, (1888) 99 N. C. 501; s. c. 6 Am. St. Rep. 539; Brewer v. Michigan Salt Assoc., (1886) 58 Mich. 351. National Bank v. Case, 99 U. S. 628; Turnbull v. Payson, 95 U. S. 4.8: Wakefield v. Fargo, (1882) 90 Pittsburgh &c. R. Co., (1858) 31 Pa. land it is provided by statute that the production of the reg. ister of shareholders shall be prima facie evidence of the defendant being a shareholder. If the company keep no subscription book, the fact that the defendant was a subscriber may be proven aliunde. In an action to enforce a shareholder's individual liability, it is sufficient if it appear that he was a shareholder at the time of the institution of the action, without it being shown that he occupied that position at the time of the accrual of the cause of action. As has been aptly said, the unlucky passengers are those on board when the ship goes down. § 126. (b) Transferrers. made in good faith and not in De G. M. & G. 576; Gower's Case, (1868) L. R. 6 Eq. 77; Fox v. Clifton, (1830) 6 Bing. (Eng.) 776; "Who are Chargeable as Stockholders," (1879) 8 Cent. L. J. 182; "What is a Contributory," 2 Jour. Jur. 521; Case of the Reciprocity Bank, (1860) 22 N. Y. 9; Slee v. Bloom, (1821) 19 Johns. Fisher v. Seligman, (1881) 75 Mo. 13; Dane v. Young, (1872) 61 Me. 160; Wheelock v. Kost, (1875) 77 Ill. 296. 456; 1 The Companies Clauses Act, (1845) 8 Vic. ch. 16, § 28; Birkenhead &c. Ry. Co. v. Brownrigg, 4 Ex. 426; Bain v. Whitehaven Ry. Co., 3 H. L. 1; London &c. Ry. Co. v. McMichael, 5 Ex. 855; s. c. 20 L. J. Ex. 6; Inglis v. Great Northern Ry. Co., 16 Jur. 895; s. c. 1 Macq. 112. 2 Thus in Ross v. Bank of Gold Hill, (Nev. 1888) 19 Pacif. Rep. 243, which was an action by a creditor of a bank against the subscribers to its capital stock, it was proved that one defendant, at the organization of the bank, paid $200, and took a certificate to that effect, and that upon the payment of the "balance due" he would be entitled to twenty shares at $100 each. Defendant testified that he regarded the trans 3 An absolute transfer of shares." view of the impending insolv action as an option giving him the right to take the stock by the payment of the residue, or forfeit the amount paid. It was proved that the bank received the money as part of its capital, and the managing offi. cer testified that there were $1,800 yet due. The bank kept no subscription book, but it was held that the defendant was shown to be a subscriber. In the same case it was shown that another defendant paid in ten per cent. and took a similar certificate; that he was one of the incorporators, and kept an open account at the bank for several years after its organization. Defendant testified that the money paid was a loan to one of the officers of the bank, for which he had demanded payment before the bank's complications. The officer referred to testified that the money was paid upon the capital stock of the bank, and the evidence was considered sufficient to show that the defendant was a subscriber. 3 Root v. Sinnock, 120 Ill, 350; s. c. 60 Am. Rep. 558. 4" Who are Chargeable as Stockholders," (1879) 8 Cent. L. J. 182. Billings v. Robinson, (1884) 94 |