itors. We refer to the Massachusetts act of 1830, entitled "An act defining the general powers and duties of manufacturing corporations." The substance of this act is, that each and every member shall be jointly and severally liable for all the debts, until the whole amount of the capital stock shall have been actually paid in, and not afterwards; or not after a certificate, signed and sworn to by certain of the officers of the company, that a member has contributed his full share of the stock, has been recorded in the registry of deeds in the county wherein the manufactory shall be established. The act also provides, that if such certificate be wilfully false in any material representation, then all the officers, who have signed the same, shall be liable personally for all claims and demands against the corporation, which were created while they were members. And if the president and directors of any such corporation shall declare and pay, or cause to be declared and paid, any dividend, such corporation being at the time insolvent, or if payment of such dividend would render it insolvent, they are all (with the exception of those who protest against it) made personally liable for the full amount of such dividend so declared and paid.

The liability of stockholders of joint stock incorporated companies has been the subject of frequent attention in the State of New York. In that State, an act relative to manufacturing corporations, passed in 1811, declares, "that for all debts, which shall be due and owing by the company at the time of its dissolution, the persons then composing such company shall be individually responsible, to the extent of their respective shares of stock in the said company, and no further." Some of the charters of companies, since incorporated in that State, contain a provision, that the stockholders "shall be holden, in their individual capacities, responsible jointly and severally for the payment of all debts contracted by the said company to the nominal amount of the stock held by such stockholders respectively; and any person having any demand against the said company may sue any stockholder singly, or any two or more stockholders thereof jointly, and recover in any court having cognizance thereof; provided

such suit shall not be maintained without proof, that such demand had been presented to the proper officer of said company for payment thereof, and the payment thereof neglected or refused. The revised laws of New York, in the regulations respecting moneyed corporations, provide, that each stockholder shall be liable ratably for corporate debts, but not to an amount exceeding the nominal amount of his shares.' In

'Extracts from Revised Statutes, vol. 1, chap. 18, p. 592, 593. "Of Incorporations." Title 2d, Article 1st.

"§ 14. Every insolvency of a moneyed corporation shall be deemed fraudulent, unless its affairs shall appear, upon investigation, to have been fairly and legally administered, and generally, with the same care and diligence, that agents, receiving compensation for their services, are bound by law to observe; and it shall be incumbent on the directors and stockholders of every such insolvent corporation, to repel by proof the presumption of fraud.

"15. In every case of a fraudulent insolvency, the directors of the insolvent company, by whose acts or omissions the insolvency was wholly or in part occasioned, and whether then in office or not, shall each be liable to the stockholders and creditors of the company, for his proportional share of their respective losses; the proportion to be ascertained by dividing the whole loss among the whole number of directors liable for reimbursement; but this section shall not be construed to diminish the liability of directors, as before declared, who shall have violated or have been concerned in violating, the provisions of this article.

"16. If the moneys, remaining due to the creditors of a corporation whose insolvency shall be adjudged fraudulent, after the distribution of its effects, shall not be collected, in whole or in part, from the directors liable for their reimbursement, the deficiency shall be made good, by the contribution of the stockholders of the company; the whole amount of the deficiency shall be assessed on the whole number of shares of the capital stock, and the sum necessary to be paid on each share shall be then ascer tained, and each stockholder shall be liable for the sum assessed on the number of shares held by him, not exceeding the nominal amount of such shares, in addition to the sums paid, or which he may be liable to pay, on account of those shares.

"§ 17. If the amount assessed on the shares of any stockholder, under the provisions of the last section, shall not be collected from such stockholder, by reason of his insolvency, or his absence from this State, the sum remaining due on such assessment shall be recoverable against the person,

Rhode Island, it is provided, in the latest bank charters, that in case of default and mismanagement on the part of the directors, and of a want of corporate property to pay the corporate debts, the members of the company shall be individually responsible for such debts.

5. We now proceed to consider the new and peculiar class of cases, that owe their origin to statutes of the kind we have referred to in the preceding section, imposing a responsibility upon the members of a private corporation, in case of the neglect of the corporate body to pay the demands which it has incurred. There is no question as to the constitutional authority of the legislature to pass such statutes, though that question was raised in Massachusetts. The authority of the legislature was objected to, as infringing some of the principles of the constitution, and particularly two of the articles of the declaration of rights of that State; the first of which is intended to secure the liberty and property of the citizen, and the second, to establish the right of trial by jury. If the fact were so, said Mr. C. J. Parker, the laws would undoubtedly be void. But all who are members of the corporation are virtually defendants in the action, and have an opportunity to be heard, in the form they have chosen by joining the company. As to those who have become members, after judgment against a corporation, or after a debt has accrued, they voluntarily subject themselves to the inconvenience, having the means to satisfy themselves of the solvency of the company, if they choose to make the inquiry.'

Where it is provided, in an act creating such a corporation,

from whom the delinquent stockholder, at any time within six months previous to the insolvency of the company, shall have received a transfer of the shares, or any portion of the shares held by him; and every person having made such transfer shall be liable in the same manner, and for the same proportion, that he would have been liable, had he continued to hold the shares so transferred."

1 Per Parker, C. J. in Marcy v. Clark, 17 Mass. R. 335; see also Child v. Coffin, 17 Mass. R. 64.

that the individuals composing it shall be liable, at the time of the dissolution of the company, for the debts then due, an inability of the company, by reason of a total want of funds, to exercise its corporate powers, will be deemed a dissolution. That is to say, it is not necessary in such a case, that the corporate rights should be regularly adjudged forfeited by any tribunal, before a creditor can maintain a suit against a stockholder. The government has no interest in dissolving a manufacturing or trading corporation, and it is not within the control of the creditors of the company to proceed by scire facias, and information of the nature of the writ of quo warranto, in order to obtain a judgment, that a corporation has forfeited its franchises. The case of Penniman v. Briggs, in the court of chancery of the State of New York,' fully supports these positions. In that case it was decided, that a corporation for manufacturing purposes, formed under the act of 22d March, 1811, having ceased to act as a manufacturing company, and being without funds, and indebted, was dissolved, within the intent of the act, so as to give a remedy to creditors against the individual stockholders. And it was further held, that an election of trustees, made apparently for no purpose but to keep the company in existence, did not prevent such dissolution. The true question, as the Chancellor considered, was, whether the company was not dissolved, in the sense of the statute authorizing its creation. The statute, he said, contemplated the dissolution of the company, as an event which might occur, within the time prescribed for its existence; and the remedy given to creditors against stockholders was evidently intended for every mode of dissolution, which might deprive a creditor of an effectual remedy against the corporate body.

In Kentucky, a judgment, execution and return of no property is sufficient ground for proceeding against the stockholders. And so in Maine. And the judgment is at least

2

1 1 Hopkins (N. Y.) Chan. R. 300; and in error, 8 Cow. (N. Y.) R. 387; also Bank of Poughkeepsie v. Ibbotson, 24 Wend. (N. Y.) R. 473.

* Castleman v. Holmes, 4 J. J. Marsh. (Ken.) R. 1.
'Drinkwater v. Portland Marine Railway, 6 Shep. (Me.) R. 35.

prima facie evidence of the validity of the debt.' Under the Revised Statutes of Massachusetts, though a creditor has two demands against a manufacturing company, one only of which the stockholders are liable to pay, recovers a single judgment on all the demands, yet he may levy his execution on the personal property of a stockholder, to the amount of the demand which the stockholders are liable to pay. And if a person holds stock in a manufacturing corporation as trustee, and also holds other property on the same trust, such other property may be taken for the debts of such company, if the stockholders of the company are liable to pay its debts."

A debt contracted by the agents or trustees of the company, renders the stockholders personally liable to the extent imposed by the statute. In the case of Slee v. Bloom et al. in the Court of Errors of the State of New York, it appeared that the respondents associated together for establishing a cotton manufactory, and became a corporation for twenty years, according to the provisions of an act passed in March, 1811, the seventh section of which declared "that for debt which shall be due and owing by the company at the time of its dissolution, the persons then composing such company shall be individually responsible, to the extent of their respective shares of stock in said company. The corporation in November, 1816, executed a bond to the appellant, under their corporate seal, on which a judgment was obtained in May, 1817. The corporation having been dissolved in February, 1818, it was held that the judgment debt of the corporation was binding and conclusive on the respondents individually, to the extent of their respective shares. The Chancellor had, however, previously decided, that the judgment was not conclusive upon the respondents in their individual capacities, on the ground,

4

Moss v. Oakley, 2 Hill (N. Y.) R. 265.
Stedman v. Eveleth, 6 Met. (Mass.) R. 114.

Stedman v. Eveleth, 6 Met. (Mass.) R. 114.

20 Johns. (N. Y.) R. 66. The original case in Chancery will be found in 5 Johns. (N. Y.) Ch. R. 366; and proceedings on appeal also in 19 Johns. (N. Y.) R. 456.