by a material alteration of the note, the same as others, for that is a matter of contract, but such discharge does not affect their statutory liability;20 nor does it affect the liability of the corporation when the alteration was made by its secretary before delivery and it received the proceeds of it.

The estate of a deceased stockholder is liable for the debts of the corporation which were incurred after the death of the stockholder (the estate not yet having been distributed), and the claim need not be first presented for allowance, and suit may be brought against the administrator without joining the heirs;27 but if the estate has been distributed, and the legatee has accepted the stock, he then becomes personally liable for such debts.

The creditor is not limited to separate suits against the individual stockholders, but may enforce this liability by a bill in equity in the nature of a creditor's bill against all the stockholders; necessarily, of course, for the benefit of all creditors.28 (See title "Creditor's Bill," on stock subscriptions, infra.)

WHO ARE STOCKHOLDERS?

Who are such is not defined in the constitution. Section 322 of the Civil Code, after repeating this provision of the constitution, describes them with some minuteness. It was held under this section that this liability of a party extended not only to all stock which stood in his name upon the books, whether he was the real owner or only a pledgee, but also to all other stock

26 Pelton v. San Jacinto Lumber Co., 113 Cal. 21, 25, 45 Pac. 12. 27 Miller & Lux v. Katz, 10 Cal. App. 576, 102 Pac. 946; Western Pacific R. Co. v. Godfrey, 166 Cal. 346, Ann. Cas. 1915B, 825, 136 Pac. 284.

28 Harmon v. Page, 62 Cal. 448; Tatum v. Rosenthal, 95 Cal. 129-134, 29 Am. St. Rep. 97, 30 Pac. 136.

of which he was the real owner although it stood on the books in the name of another.29 This statute and construction may make two persons liable for the same shares,30 each in full, so that double the usual amount might be recovered on account of such shares.

It is said by the district court of appeals31 that "the term 'stockholder' or 'owner,' as used in the statute, is not confined to one who appears upon the books of the corporation as such, but to the real owner, notwithstanding the fact that the stock as shown by the books appears in the name of another. While the latter, though not the owner, may be required to respond to a creditor of the corporation, such liability is based not upon ownership, but upon grounds of estoppel to deny ownership," and the fact that the corporation has neglected to enter the stockholder's name as such upon its books, or actually to issue the certificates for the shares to the stockholder, does not relieve him from liability. This rule might, in a possible case where all the stock stood in the names of one set of persons but was really owned by another set, make the liability double the amount of the debt. It was held in this case that a stockholder could show that stock had been sold and paid for, though not issued, to proportionally diminish his liability, and that no formal contract is necessary to constitute one a stockholder; any agree

29 Duke v. Huntington, 130 Cal. 272, 274, 62 Pac. 510; Baines v. Babcock, 95 Cal. 581-593, 29 Am. St. Rep. 158, 27 Pac. 674, 30 Pac. 776.

30 Baines v. Babcock, 95 Cal. 581, 29 Am. St. Rep. 158, 27 Pac. 674, 30 Pac. 776; Abbott v. Jack, 136 Cal. 510, 69 Pac. 257; O'Connor v. Witherby, 111 Cal. 523, 530, 44 Pac. 227; Hurlburt v. Arthur, 140 Cal. 103, 98 Am. St. Rep. 17, 73 Pac. 734; Hughes Mfg. etc. Co. v. Wilcox, 13 Cal. App. 22, 108 Pac. 871.

31 Hughes Mfg. etc. Co. v. Wilcox, 13 Cal. App. 22, 108 Pac. 871.

82 Hughes Mfg. etc. Co. v. Wilcox, 13 Cal. App. 22, 28, 108 Pac. 871, citing California case. A petition for a rehearing of this case was denied by the supreme court.

Cal. Corp.-24

ment or act showing such intention on his part is sufficient. The converse of this rule is also true; the stockholder may show, in the absence of estoppel, that the corporate books fail to show the full amount of the holdings of other stockholders.

Where stock was issued to the wife, and stood for three years on the books of the company in her name, although she assigned it two months after its date to her husband, which transfer was not made on the books of the company, the wife was liable as a stockholder for debts contracted during the three years.33

It is not a fraud committed on a corporation for its stockholders to conceal their interest in another corporation dealing with it, if they do not control the action of the corporation; as mere stockholders they owed no duty to the corporation.34

It has been held where the defendant had given away his stock before the indebtedness was incurred, although it was not transferred on the books of the corporation to the donee, that the original holder was not liable for debts incurred after so parting with the stock.35 The section reads "each stockholder" is liable, etc., in proportion to the "amount of stock or shares owned by him," etc., and defines "stockholder" as applying to "such persons as appear by the books of the corporation to be such, but also to every equitable owner of stock," etc. Substituting the definition for the word "stockholder" we would have "such persons as appear by the books of the corporation to be such and also every equitable owner of stock" shall be liable for the debts of the corporation contracted "during the time he was [such] a stockholder as the amount of stocks or shares owned by him bears to the whole 83 Abbott v. Jack, 136 Cal. 510, 513, 69 Pac. 257. 34 Fox v. Mackay, 125 Cal. 54-64, 57 Pac. 670, 672.

85 Moore v. Boyd, 74 Cal. 167-174, 15 Pac. 670.

subscribed capital stock." Such an interpretation based upon ownership would prevent two persons being liable on account of the same shares, and would make the purchaser (the equitable owner) who had not had the shares transferred to his own name, liable as he should be, instead of the vendor, or both of them. But the rule is different as to assessments,36 on unpaid stock; there only the registered holder is liable.

Section 298 of the Civil Code is as follows:

§ 298. The owners of shares in a corporation which has a capital stock are called stockholders. If a corporation has no capital stock, the corporators and their successors are called members.

The court says37 that this section "does not need or admit of the construction that only those are stockholders who are owners of stock. This section does not purport to be a definition of the term 'stockholder' or to limit its extent as would have been the case if it had said that stockholders are those who own stock in a corporation, but is consistent with holding that others may be stockholders than merely those who are the owners of stock" and holding that the registered holder is the stockholder although some other person may be the real owner. This reasoning increases the difficulty, for whatever may be the status of other persons, this section declares that the owners of shares. are stockholders and if so this decision adds another stockholder for the same share.

In a case lately decided by the supreme court (Western Pacific R. Co. v. Godfrey, 166 Cal. 346, Ann. Cas. 1915B, 825, 136 Pac. 284) that court says the word

36 Visalia & T. R. Co. v. Hyde, 110 Cal. 632, 52 Am. St. Rep. 136, 43 Pac. 10.

37 Smith v. San Francisco & N. P. Ry. Co., 115 Cal. 584, 593, 56 Am. St. Rep. 119, 35 L. R. A. 309, 47 Pac. 582. Section cited in Market St. Ry. Co. v. Hellman, 109 Cal. 571, 588, 42 Pac. 225.

"stockholder" in the constitution bears the "commonsense meaning" which arises in the mind of "the layman," and that "owner" and "stockholder," when applied to corporation stock, are "synonymous," and add that it would not be within the power of the legislature to limit the meaning of the word "stockholder," but says, further, that it appears to have been the purpose of that body to enlarge the term to include others not otherwise included therein.

If one hold stock as pledgee, but has the stock transferred on the books of the company to his name, he is liable.38 But where the stock is transferred on the books to a party who was a pledgee, without describing him as such, and without the knowledge of the pledgee, who, on discovering the fact, demanded that the proper correction be made, but it was not done, the pledgee was not liable.39 Nor if the pledgee has the transfer properly noted on the books as a pledge is he liable.40

There is a material difference between the liability of a person in whose name as trustee stocks stand on the books of a corporation, and the liability of such a party to assessment under section 331 of the Civil Code. In the former he is not liable if he merely holds the title

38 Hurlburt v. Arthur, 140 Cal. 103, 98 Am. St. Rep. 17, 73 Pac. 734; People's Home Savings Bank v. Rauer, 2 Cal. App. 445, 84 Pac. 329; see Hanson v. Sherman, 25 Cal. App. 169, 143 Pac. 73.

89 Welch v. Gillelen, 147 Cal. 571, 82 Pac. 248; Shattuck & Desmond W. Co. v. Gillelen, 154 Cal. 778, 99 Pac. 348. Nor can a person be made a stockholder in this manner without his consent, Mudgett v. Horrell, 33 Cal. 25. The statute is construed to mean those who knowingly and willingly permit their names to appear on the books of the corporation as stockholders. Query: How would this rule affect the assignor of a stock certificate where the assignee failed to have the transfer to himself entered upon the books of the corporation?

40 Borland v. Nevada Bank, 99 Cal. 89, 37 Am. St. Rep. 32, 33 Pac.