purpose must be brought in the place of the corporation's domicile.1

But while a judgment regularly obtained against the corporation is conclusive as against it, and also against the stockholders, upon the validity of the creditor's claim, it does not prevent the stockholder from denying his liability to the corporation or to the particular creditor upon any ground which may exist as to which he is not estopped by his conduct or acquiescence.2

The fact that the corporation is insolvent, and the ordinary remedies at law consequently inadequate, are the real grounds upon which a court of equity entertains jurisdiction of a creditor's bill, and these may be established against the stockholders by the ordinary rules of evidence. As where the corporation has been adjudged a bankrupt; where the corporation is notoriously insolvent ;5 or where it has made an assignment for the benefit of creditors."

3

1 Barclay v. Tallman, 4 Edw. Ch. 123; Murray v. Vanderbilt, 39 Barb. 140; B'k of Va. v. Adams, 1 Pars. Eq. 534; Patterson v. Lynde, 112 Ill. 196; Harris v. Pullman, 84 Id. 648. It is held that a proceeding in rem affecting only the property of the corporation attached and execution against that property is not what the rule requires. Rocky Mt. Nat. B'k v. Bliss, 89 N. Y. 338; Brice v. Munro, 5 Canadian Law. Times, 130. For construction and effect of statutory provisions on the subject see Handy v. Draper, 89 N. Y. 334; Richards v. Coe, N. Y. Daily Reg. (Aug. 87); Thornton v. Lane, 11 Ga. 459; McLaren v. Franciscus, 43 Mo. 452; N. E., etc., B'k v. Newport Steam Fac., 6 R. I. 154; Priest v. Essex Mfg. Co., 115 Mass. 380; Cambridge Water Works v. Somerville Dyeing, etc., Co., 4 Allen, 239; Lindsey v. Simonds, 2 Abb. P. R. N. S. 69; Blake v. Hinckle, 10 Yearg. 218; Shellington v. Howland, 53 N. Y. 371; Wehrman v. Rearjirt, 1 Cin. Sup. Ct. 230; Douchy v. Brown, 24 Vt. 197; Drinkwater v. Portland Marine Ry. Co., 18 Me. 35.

2 Lawyer v. Rosebrook, 48 Hun, 453; 1 N. Y. S. 594; Wellington v. Cont. I. Co., 52 Hun, 408; Glenn v. Sumner, 132 U. S. 152; 10 S. C. 41.

3 Borland v. Haven, 37 Fed. Rep. 384.

* State Sav. Ass'n v. Kellogg, 52 Mo. 583; Dryden v. Kellogg, 2 Mo. App. 87; Shellington v. Howland, 53 N. Y. 371; Ansonia Brass & Copper Co. v. New Lamp Chimney Co., 53 N. Y. 123; s. c. 91 U. S. 656; Walser v. Seligman, 21 Blatchf. 130.

5 Hodges v. Silver Hill Min. Co., 9 Or. 200; Terry v. Tubman, 92 U. S. 156; Camden v. Dorenis, 3 How. 515, 533.

6 Morgan v. Lewis, 46 Ohio St. 1, 17 N. E. 558.

But although the corporation have no property from which creditors' claims can be paid, it may be necessary, though not for the purpose of establishing his right, but to ascertain the measure of damages, to first obtain judgment against the corporation.1

§ 824. Parties to creditor's bill.-While the shareholders not immediately proceeded against and the other creditors are not necessary parties to the suit," they are proper parties, and the bill should be so framed as to give them an opportunity to come in, if they choose to do so, on either one or the other side. Creditors may then intervene for their proportionate share in the results of the litigation, and stockholders may have an opportunity to adjust their mutual rights in the same proceeding.3 But it was recently held under

1 See First Nat. B'k of Garrettsville v. Greene, 64 Ia. 445. There are different provisions on the subject affecting different stockholders in different classes of corporations in New York. Under the act of 1875 it is held that a creditor is not bound to delay action against a stockholder in a business corporation, until after judgment and execution thereon returned unsatisfied. Young v. Brice, 18 N. Y. St. R. 945; 3 N. Y. Suppl. 123, following Walton v. Coe, 110 N. Y. 109; 17 N. E. Rep. 676; Richards v. Beach, 12 N. Y. St. R. 136; 5 N. Y. Supp. 574. But a different rule seems to apply to the creditors right against a stockholder in a foreign corporation. Persch v. Simmons, 3 N. Y. Supp. 783. The institution of insolvency proceedings is no bar to a separate action by a creditor against the stockholder in Massachusetts, even where the creditor was a party to the bill upon which such proceedings are based. Nonantinn Worsted Co. v. Hollister Mills, 149 Mass. 359. Nor in Virginia. Lewis' Adm. v. Glenn, 84 Va. 947.

2 Tabor v. G. & P. Mfg. Co., 11 (Colo.) 419; 18 P. 537; Walton v. Coe, 110 N. Y. 109; 17 N. E. 676; Thompson v. Reno Sav. B'k, 19 Nev. 193; Appeal of Cornell, 114 Pa. St. 153; 6 A. 258. Otherwise in Illinois where the proceedings must be had against all the stockholders. Curran v. Bradner, 27 Ill. App. 582. Under peculiar provisions of the Kansas statute the creditor must sue each shareholder separately. Abbey v. Dry G. Co. (Kan.), 24 P. 426.

3 Wetherbee v. Baker, 35 N. J. Eq. 501; Baines v. Babcock (Cal.), 27 P. 674; Same v. Story, Id. 676; Coleman v. White, 14 Wis. 700; Glenn v. Liggett, 135 U. S. 533; Turner v. Ala. M. & M. Co., 25 Ill. App. 144; Carpenter v. Marine B'k, 14 Wis. 705; Adler v. Milwaukee, etc., Mfg. Co., 13 Id. 57; Morgan v. N. Y., etc., R. R. Co., 10 Paige, 290; Masters v. Rorsie Lead Min. Co., 2 Sandf. Ch. 301; Umstead v. Buskirk, 17 O. St. 113; Crease v. Babcock, 51 Mass. 525; Pollard v. Bailey, 20 Wall. 520; Terry v. Little, 101 U. S. 216. See also Dunston v. Hoptonic Co. (Mich.), 47 N. W. 322. Preferred

the New York statute which provides that "a creditor may bring such action," and that the judgment in such action" must provide for a fair distribution of the property of the corporation among its fair and honest creditors," etc., that an action may be maintained by one creditor of a corporation to charge its stockholders individually with the payment of a judgment against it without joining other creditors as parties plaintiff, or stating in substance that the action is brought on behalf of plaintiff and other creditors.1 In proceedings against the stockholders of a national bank that has gone into liquidation, to ascertain and recover assessments for the indebtedness, the stockholders are liable for costs as if they were co-defendants in any ordinary action.2

shareholders may enforce their rights to dividends. Co., 34 F. 582.

McIntosh v. Flint, etc., R.

Under general laws, N. H., c. 166, secs. 13-17, 19,. authorizing courts to appoint assignees for insolvent savings banks, with power to collect and distribute among the creditors the funds thereof, and empowering the courts to restrain proceedings against such banks, the creditor of a bank so in the hands of an assignee cannot maintain a creditor's bill against the debtor of the bank. Brown v. Folsom, 62 N. H. 527. The bill should be so framed as to allow other parties to come in. Crease v. Babcock, 51 Mass. 525; Holmes v. Sherwood, 3 McCrary, 405; Sawyer v. Hoag, 17 Wall. 610; Mills v. Scott, 99 U. S. 25; Bailey v. Schlog (N. J.), 20 A. 250; Patterson v. Lynde, 106 U. S. 519. Inasmuch as only so much of the unpaid capital as is necessary for the payment of the debts can be called in, and that can be done only when all the other assets are exhausted, an account should be taken of the amount of debts, assets, and unpaid capital, and a decree be made for an assessment of the amount due by each stockholder. Bell's Appeal, 115 Pa. 88; 8 A. 177. Where a corporation has made an assignment for the benefit of creditors, the court in chambers during vacation has power to make an order authorizing the assignees to collect the whole of the unpaid subscriptions to the capital stock. Citizens' and Miners' Sav. Bank & Trust Co. v. Gillespie, 115 Pa. 564; 9 A. 73.

1 Woodard v. Holland Medicine Co., 15 N. Y. S. 128; Code Civil Proc. N. Y., § 1793.

2 Irons v. Manufacturers' Nat. Bank, 36 F. 843. Holding also that where the proceedings are being prosecuted by one creditor as representative of all, and the stockholders appeal from a decree against them, which decree is reversed, with costs, the costs incurred by appellee in defence of the appeal will be deducted before any dividend will be declared.

Any creditor may come in on such a bill, establish his claim and share in the distribution.1 It is immaterial whether any mention be made by name of the other creditors or not.2 The corporation should in all cases be made a party defendant.3

All the stockholders in arrears for unpaid subscription who are known, within the jurisdiction of the court and solvent, may be made parties defendant. And stockholders may file a cross bill where all are not made parties, and thus obtain a discovery of the remaining delinquent stockholders, for the purpose of making them parties and enforcing contribution." The as

1 Turnbull v. Prentiss Lumber Co., 55 Mich. 387; Thompson v. Reno Sav. B'k, 19 Nev. 103; Talmadge v. Fishkill Iron Co., 4 Barb. 393; Walker v. Crain, 17 Id. 131.

2 Marsh v. Burroughs, 1 Woods, 463; Crease v. Babcock, 51 Mass. 525; Hatch v. Dana, 101 U. S. 205; App. of Cornell, 114 Pa. 153; 6 Atl. Rep. 258.

3 Mann v. Pentz, 3 N. Y. 415; Walsh v. Memphis, etc., R. R. Co., 2 McCrary, 165; s. c. 19 Fed. Rep. 152; Wilbur v. Stockholders, 18 Bank Reg. 178; Weatherbee v. Baker, 35 N. J. Eq. 501; First Nat. B'k v. Smith, 6 Fed. Rep. 215: Brinkerhoff v. Brown, 7 Johns. Ch. 217. Compare Walser v. Seligman, 21 Blatch. 130; Wellman v. Howland Coal & Iron Wks., 19 Fed. Rep. 51. The reason for excusing the absence of the corporation in the first of these cases was, that it was beyond the jurisdiction of the court and practically defunct.

4 Vick v. Lane, 56 Miss. 681; Walsh v. Memphis, etc., R. R. Co., 2 McCrary, 156; Hadley v. Russell, 40 N. H. 109; Erickson v. Nesmith, 46 Id. 371; Pierce v. Milwaukee, etc., Co., 38 Wis. 253; Coleman v. White, 14 Id. 700; Carpenter v. Marine B'k, 14 Id. 705, n; Umstead v. Buskirk, 17 O. St. 113.

5 Hatch v. Dana, 101 U. S. 205. They may be brought in when discovered by amendment of the original bill when they are unknown to the petitioning creditor and his bill contains a proper prayer. Hipple v. Fire, etc., Imp. Co. (N. J.), 3 Atl. Rep. 682; Bogardus v. Rosendale Mfg. Co., 7 N. Y. 147; Morgan v. N. Y., etc., R. R. Co., 10 Paige, 290. Act Cal., April 2, 1866, relating to the incorporation of mutual insurance companies, provides (sections 8 and 9) that no company organized under the act shall transact business until it shall have obtained a guaranty fund of at least $250,000, which shall consist of the notes of solvent parties, payable to the company as prescribed by its directors, for the better security of its company's dealers, and shall be assets, liable for all its debts next after the assets arising from premiums and other sources, exclusive of the capital stock, until the profits, together with the capital stock, shall equal the aggregate of the original guaranty fund, and the capital stock. Section 17 provides that each stockholder shall be personally liable for the debts of the company in the proportion which the stock owned by him bears to the whole amount. It was held that the claims of the stockholders of an insolvent company, organ

signee, after assignment for the benefit of creditors, is the only proper party plaintiff.1

§ 825. When stockholders not necessary parties.-The stockholders of a corporation are not necessarily parties to a suit by a creditor to settle the construction of a deed of trust, for the benefit of creditors by the corporation to remove the original trustees and substitute a receiver to ascertain the liabilities and assets of the corporation, and to order an assessment upon the stock-. holders for the unpaid balance of the subscriptions. Consequently, an order of a court of equity upon such bill for assessment upon the stock cannot be attacked collaterally upon the ground that the assessment is invalid.2

§ 826. Defences-Statute of limitations, prescription, etc.-The interest and liability of the stockholder and

ized under the act, for moneys paid by them as stockholders on matured policies, are payable out of the general assets, and not out of such guaranty fund. In re Cal. Mut. Life Ins. Co., 81 Cal. 364; 22 P. 869.

Where a judgment creditor of a corporation has issued execution which is returned unsatisfied, he may, under Rev. St. Wis. § 3216 et seq., sue the corporation for the equal benefit of himself and all other creditors who may come in to have it declared insolvent, to sequester all its property, to recover unpaid subscriptions from stockholders, to have a receiver appointed, to restrain the prosecution of actions wherein certain of the creditors have attached some of the property, to enjoin the sheriff from selling the same, and compel him to deliver it to the receiver. Ballin v. J. & E. B. Friend Lace Importing Co. (Wis.), 47 N. W. 516.

Where a corporation fails to interpose the plea of limitations to claims of creditors, individual stockholders cannot set up such defence. MILLER, J., dissenting. Davies v. Gemmell (Md.), 21 A. 712; Gemmell v. Poe, Id.; Brydon v. Gemmell, Id.; North Branch Co. v. Same, Id.

Bouton v. Dement, 22 Ill. App. 619.

* Hawkins v. Glenn, 131 U. S. 319. See also, Sanger v. Upton, 91 U. S. 56, 58; Morgan County v. Allen, 103 U. S. 498, 509; Glenn v. Williams, 60 Md. 93, 116; Hambleton v. Glenn, 13 Va. L. J. 242; Lehman v. Glenn, Ala. Sup. Ct. 1889; Gt. West. Tel. Co. v. Gray, 122 Ill. 630; Vanderwerken v. Glenn (Va.), 21 Am. & Eng. Cor. Cas. 526. Contra, Gt. West. Tel. Co. v. Gray, 23 Ill. App.