scription are regarded in such cases unfavorably.' It is idle to deny that the company has taken the measures required by law to complete its increase of capital, where the holder of the shares by receiving his certificates and entering into engagements with the company, waived the right to object to any such irregularity. If it be conceded that its increased stock was but de facto, and that it could have been annulled or suppressed by the attorney-general, the defendant derives no aid from the admission. He must perform the engagements he has made.

1 Kansas City Hotel Co. v. Hunt, 413; In re Miller's Dale Co., 31 Ch. 57 Mo. 126.

2 Pullman v. Upton, 96 U. S. 329; Chubb v. Upton, (1887) 95 U. S. 665, 668; Veeder v. Mudgett, 95 N. Y. 295; Sheldon &c. Co. v. Eickemeyer &c. Co., 90 N. Y. 607, 612; Kent v. Quicksilver Mining Co., 78 N. Y. 159, 187; Aspinwall v. Sacchi, 57 N. Y. 321; Buffalo &c. R. Co. v. Cary, 26 N. Y. 75; Eaton v. Aspinwall, 19 N. Y. 119; Upton v. Jackson, 1 Flip.

Div. 211. Cf. Morawetz on Corporations, (2d ed.) §§ 761, 767; Thompson on Liability of Stockholders, §§ 160 et seq., 407 et seq. But see 1 Lindley on Partnership, (4th ed.) 134; and 2 Ibid. 1349.

3 Pullman v. Upton, 96 U. S. 329; Chubb v. Upton, 95 U. S. 665, 668; In re Reciprocity Bank, 22 N. Y. 9; Kansas City Hotel Co. v. Harris, 51 Mo. 464.

§ 143. Introductory. At common law the shareholders of corporations are liable for the debts of the corporation only so far as they may have agreed to contribute to the capital stock. Properly speaking, this is not a personal liability to corporate creditors for the debts of the company, but a liability to the company itself upon the contract between themselves and it.2 No further liability can be imposed by means

1 Jackson v. Meek, (1888) 87 Tenn. 69; s. c. 10 Am. St. Rep. 620.

2 United States v. Knox, 102 U. S. 422; Terry v. Little, (1879) 101 U. S. 216, 217; Knower v. Haines, (1887) 31 Fed. Rep. 513; Seymour v. Sturgess, (1862) 26 N. Y. 134; Freeland v. McCullough, (1845) 1 Denio, 414, 422; s. c. 43 Am. Dec. 685, 689, saying, “Without the provision of the statute there is no legal liability, no cause of action against the defendant, assuming him to have been a stock holder at the time the debt was con

tracted;" Smith v. Huckabee, (1875) 53 Ala. 191; Nimick v. Mingo Iron Works, (1884) 25 W. Va. 184; Woods v. Hicks, 7 Lea, 40; Walker v. Lewis, (1878) 49 Tex. 123; Jones v. Jarman, (1879) 34 Ark. 323; Bird v. Calvert, 22 S. C. 292; South Carolina Manuf. Co. v. Bank of South Carolina, 6 Rich. Eq. 227; Inhabitants of Norton v. Hodges, (1868) 100 Mass. 241; Spear v. Grant, 16 Mass. 9; Vose v. Grant, 15 Mass. 505; Trustees v. Flint, 15 Met. 539; Ward v. Griswoldville Manuf. Co., 16 Conn. 593;

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of by-laws, nor by a resolution of the trustees. Neither can a further liability be created by the words "individual property of stockholders liable," on the face of the corporate liabilities. It can arise only by statute; and when such provision is made it can be enforced only as therein provided. It is true that in the early turnpike companies of New England the members were liable to assessment beyond the amount due on their stock; but the shares of those companies had no fixed par value; and the member might escape assessment by submitting to a forfeiture for non-payment. But an additional personal liability to corporate creditors, over and above the amount due the company upon their subscriptions, is imposed by statute in nearly all of the United States. This liability is generally limited in amount to an additional sum equal to the par value of the shares held by each member. But a charter or statutory provision that the members shall be jointly and severally liable for all debts contracted during the time

Atwood v. Rhode Island &c. Bank, (1850) 1 R. I. 376; Warfield Howell & Co. v. Marshall County Canning Co., (1887) 72 Iowa, 666; s. c. 2 Am. St. Rep. 263, where it was held that shareholders who have fully paid their subscriptions can not be required to pay an additional sum to corporate creditors by reason of the manager of the company having made use of a letter head on which the capital stock was stated to be more than it was in fact, the creditors not being shown to have relied on the representation in extending credit to the company; Adams v. : Wiscasset Bank, 1 Me. 361; s. c. 10 7 Am. Dec. 88; Dauchy v. Brown, (1852) 24 Vt. 197; Salt Lake City Nat. Bank v. Hendrickson, (1878) 40 N. J. 52; Green v. Beckman, (1881) 59 Cal. 545; French v. Teschmaker, (1864) 24 Cal. 518; Hampson v. Weare, (1856) 4 Iowa, 13; Shaw v. Boyland, (1861) 16 Ind. 384.

1 Reid v. Eatonton Manuf. Co., 40 Ga. 98; s. c. 2 Am. Rep. 563;

Trustees of Free Schools v. Flint, 13
Met. 539. See note to Thompson v.
Reno Savings Bank, 3 Am. St. Rep.
835.

2 Vincent v. Chapman, 10 Gill & J. 279.

3 Lowry v. Inman, (1871) 46 N. Y. 119.

4 Knower v. Haines, (1887) 31 Fed. Rep. 513; Note to Thompson v. Reno Savings Bank, 3 Am. St. Rep. 835.

5 Middlesex Turnpike Co. v. Swan, (1814) 10 Mass. 384; s. c. 6 Am. Dec. 139.

6 In some States, however, there are constitutional guaranties against the enactment of such statutes. Ala. Const., (1875) art. xiv, § 8; West Va. Const., (1872) art. xi, § 2; Mo. Const., (1875) art. xii, § 9; Neb. Const., (1875) art. xi, § 4; Stimson's Am. Stat. Law, (1886) § 449; Schricker v. Ridings, 65 Mo. 208; Provident Savings Inst. v. Jackson, (1873) 52 Mo. 552; Miller v. Marion, 50 Mo. 55; Perry v. Turner, (1874) 55 Mo. 418. "Vide infra, § 152.

they held stock in the company, without specifying the extent to which they shall be liable, is held to impose an unlimited liability.1

$144. Constitutional and statutory provisions. The constitutional and statutory provisions of the various States relating to the liability of corporate members for the debts of the company are of five kinds: First, those which guaranty the members of corporate bodies against legislation in abrogation of the common law rule of limited liability,2 or which merely re-affirm that rule by declaring them liable for the amount remaining unpaid on their stock or subscriptions; second, those which impose an additional liability upon the contingency of the capital stock not having been fully paid in; third, imposing an absolute personal liability to certain classes of creditors, such as servants, employees and material men;" fourth, imposing an absolute liability for all the debts of the corporation, limited, however, to an additional amount equal

1 Patterson v. Wyomissing Manuf. Co., (1861) 40 Pa. St. 117. Cf. Marsh v. Burroughs, 1 Woods, 403; Erickson v. Nesmith, (1866) 46 N. H. 371. 2 See constitutions of Alabama, West Virginia, Missouri and Nebraska, cited supra, § 143. So also N. Y. Laws of 1838, ch. 260, § 23, declare in respect to stockholders in banking corporations other than national banks (Laws 1838, ch. 260, § 23) that" no shareholder of any such association shall be liable in his individual capacity for any contract, debt or engagement of such association, unless the articles of association by him signed shall have declared that the shareholder shall be so liable." But see Sherman v. Smith, 1 Black, 587, in regard to the amendment as to State banks issuing notes. 3 In New York it is provided that each stockholder in railway corporations shall be individually liable to corporate creditors to an amount equal to the amount unpaid on the

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stock held by him, (General Rail-
road Act of 1850, N. Y. Laws of 1850,
ch. 140, § 10, as amended by Laws
of 1854, ch. 282, § 16) or such pro-
portion of that sum as shall be re-
quired to satisfy the debts of the com-
pany. 1 N. Y. Rev. Stat., tit. 3, ch.
18, § 5. See also infra, § 151.
4 R. I. Rev. Stat. c. 128, § 1, provides
that the members of every incorpo-
rated manufacturing company shall
be jointly and severally liable for all
the debts of the company until the
whole amount of the capital stock
fixed by the charter, or by vote, shall
have been paid in, and a certificate
thereof made and recorded, etc. In
Maryland the ordinary statutory lia-
bility, until the capital stock is paid
in, makes the stockholder liable for
unsubscribed shares. Hager v. Cleve-
land, (1872) 36 Md. 476. Cf. Morris
v. Johnson, (1871) 34 Md. 485.

5 N. Y. Laws of 1875, ch. 392, § 8; Mich. Const., (1850) art. xv, § 7. See also infra, §§ 157, 158.

to the par value of the shares held by each;1 or limited to such a proportional amount of the corporate debts as the shares held by each bear to the whole subscribed stock; and fifth, abrogating entirely the rule of limited liability.

§ 145. Constitutional provisions, when not self-enforcing.- Constitutional provisions declaring in general terms that shareholders shall be individually and personally liable each for his proportion of the corporate liabilities, without specifying the extent of the liability, or which, while designating the amount of liability, indicate that the creditors' remedy "shall be provided by law," are not self-enforcing, and legislative action is necessary to render them effective.

§ 146. Constitutionality of statutes.- When the constitution of a State declares that shareholders shall be individually liable for corporate debts, there is no doubt respecting the power of the legislature to determine the extent and means of enforcing the liability. Even in the absence of such a constitutional provision, the legislature may, where the State has reserved the power of amending and repealing cor