claims are not in the same right, the one being in favor of creditors against the stockholder, and the other being in favor of the stockholder against the corporation; 52 and also that "to adopt any other Montana. Barth v. Pock, 51 Mont. 418, 155 Pac. 282. New York. United States Trust Co. of New York v. United States Fire Ins. Co., 18 N. Y. 199; Barnes v. Arnold, 45 App. Div. 314, 61 N. Y. Supp. $5, aff'g 23 Misc. 197, 51 N. Y. Supp. 1109, judgment aff'd 169 N. Y. 611, 62 N. E. 1093. This is true in an action by the superintendent of banks to enforce the statutory liability of stockholders in a bank or trust company. Richards v. Schwab, 101 Misc. 128, 167 N. Y. Supp. 535; Van Tuyl v. Schwab, 85 Misc. 172, 148 N. Y. Supp. 292. In an action by the superintendent of banks, the defendant cannot set up a debt owing to him by the bank as a counterclaim, or as an equitable set-off, nor can he offset the amount which will eventually be paid to him as a creditor on such claim. Van Tuyl v. Schwab, 165 App. Div. 412, 150 N. Y. Supp. 786. Compare Briggs v. Penniman, 8 Cow. 387, 18 Am. Dec. 454; Slee v. Bloom, 19 Johns. 456, 10 Am. Dec. 273. And see cases eited in note 45, supra. North Carolina. See First Nat. Bank of Winston v. Riggins, 124 N. C. 534, 32 S. E. 801. Ohio. Union Cent. Life Ins. Co. v. Jones, 35 Ohio St. 351. South Carolina. Lauraglenn Mills v. Ruff, 57 S. C. 53, 49 L. R. A. 448, 35 S. E. 387; Parker v. Carolina Sav. Bank, 53 S. C. 583, 69 Am. St. Rep. 888, 31 S. E. 673. Washington. He cannot interpose a counterclaim for unliquidated damages for fraud on the part of the corporation's officers whereby he was induced to purchase the stock. Sheafe v. Larimer, 79 Fed. 921. "The fund collected from an assess ment is held in trust for a ratable distribution among all the creditors, and its character is such as to preclude the idea that a stockholder may have his creditor's claim set off against his stockholder's liability." Barth V. Pock, 51 Mont. 418, 155 Pac. 282. "The stockholder must pay all assessments on the judgment against him in full until so much is paid that the court is fully satisfied that the dividend coming to him on his claim as creditor will fully pay the balance that will be due from him on the further assessments on the judgment against him, when the court may order the collection of further assessments against him stayed." Harper v. Carroll, 66 Minn. 487, 69 N. W. 610, 1069, quoted and followed in Hamilton v. Simon, 178 Fed. 130. As to the right of a stockholder to set off a claim against the corporation against his liability for a balance due on his stock, see § 4132, supra. 52The two claims do not arise in the same right. His claim is against the bank, while his liability is to the creditors-not to the bank." Barth v. Pock, 51 Mont. 418, 155 Pac. 282. In a suit by a receiver to enforce the liability of a stockholder in a Minnesota corporation, the claims are not in the same right, since the receiver represents the creditors and not the corporation. Robinson v. Brown, 126 Fed. 429; Hale v. Calder, 113 Fed. 670; Burget v. Robinson, 113 Fed. 669, certiorari denied 188 U. S. 739, 47 L. Ed. 677 (mem. dec.). In a suit by the superintendent of banks under the New York statute, he represents the creditors while the claim is against the corporation which could not sue to enforce the liability rule would be to prefer a stockholder creditor over other creditors." 53 A stockholder in an insolvent national bank cannot set off against the assessment made upon him by the comptroller of the currency the amount of his deposits in the bank at the time it became insolvent; 54 nor can he counterclaim for money paid for stock purchased from the bank on the ground that he was induced to purchase it by fraud.55 A set-off by stockholders is allowed by express statutory provision. in some jurisdictions.56 In those jurisdictions and cases in which a stockholder is allowed to set off a debt due to him from the corporation, "the stockholder must be really a creditor of the company. He must stand in a relation to it which in equity and justice is as strong as that of the assailant." 57 It has been held, therefore, that, under a statute mak of the stockholder. Van Tuyl v. Schwab, 85 N. Y. Misc. 172, 148 N. Y. Supp. 292. 53 Van Tuyl v. Schwab, 85 N. Y. Misc. 172, 148 N. Y. Supp. 292. "Under a proceeding for winding up a corporation, where an account of all the debts and of the effects, including the aggregate liabilities of the stockholders, is required to be taken, there is no reason why a creditor should be in any better situation on account of being at the same time a stockholder. If he could set * * * off his claim as a creditor against his liability as a stockholder, he might be paid in full, while the other creditors would receive only a part of the amount due them." Judge Denio, in United States Trust Co. v. United States Fire Ins. Co., 18 N. Y. 199, 227. "Since our statute creates a fund for distribution among all creditors ratably, it would be inequitable to other creditors to allow a stockholder in an insolvent bank to set off his claims against the corporation against his statutory liability, for this would give him a preference. Equality here is equity. The stockholder must pay in his dues under the statute, and then share in the common fund ratably with the other creditors. Authorities are very numerous to the effect that in a suit in equity to compel payment of subscriptions for capital. stock, a stockholder cannot set off a debt due him by the corporation. This is so held, because stock subscriptions are treated as a trust fund, in case of insolvency, for the benefit of the corporation creditors, and equity requires its ratable distribution. The same rule should prevail when the statute creating the individual liability of stockholders is construed as providing a common fund for all the creditors." Parker v. Carolina Sav. Bank, 53 S. C. 583, 593, 69 Am. St. Rep. 888, 894. 54 Delano v. Butler, 118 U. S. 634, 30 L. Ed. 260; Williams v. Rose, 218 Fed. 898; Wingate v. Orchard, 75 Fed. 241. See First Nat. Bank of Winston v. Riggins, 124 N. C. 534, 32 S. E. 801. 55 Lantry v. Wallace, 182 U. S. 536, 45 L. Ed. 1218, aff'g 97 Fed. 865, 89 Fed. 1023 (mem. dec.), followed in Hood v. Wallace, 182 U. S. 555, 45 L. Ed. 1227, aff'g 97 Fed. 983 (mem. dec.), 89 Fed. 11. 56 Appleton v. Turnbull, 84 Me. 72, 24 Atl. 592. 57 Judge Finch, in Wheeler v. Millar, 90 N. Y. 553. ing stockholders liable to creditors to an amount equal to the amount of their stock, until the whole capital stock is paid in, a stockholder cannot, in an action against him by creditors of the corporation, set off a claim which he has against the corporation, where he is himself in debt to the corporation upon his stock for a larger amount. "Equitably he is the debtor of the company with his claim against it extinguished, and has nothing upon which to found an equitable claim against the statutory liability."' 58 It has been held that since the claim of the stockholder is an equitable defense, it may be set off although the statute of limitations has run against it; 59 but there is also authority to the contrary.60 If a stockholder buys up claims against the corporation at a discount, after its insolvency, or in contemplation thereof, he can set them off against his statutory liability, if at all, only to the amount which he actually paid therefor.61 As a rule a stockholder cannot set off payments made by him to, or for the benefit of, the corporation for the purpose of restoring its capital so that it can continue in business.62 But he is entitled to credit for payments made to a receiver of the corporation pursuant to an agreement that they were to be applied in reduction of his statutory liability.63 And his liability may be set off against his claim or a dividend due him thereon where he is insolvent or has not paid, even though he himself would not be entitled to a set-off.64 Where an unsatisfied judgment in favor of a stockholder against The bona fides of the stockholder's debt, whether in judgment or otherwise, may be attacked, and it cannot be set off if it is found to be fraudulent. Boyd & Son v. Hall, 56 Ga. 563. He cannot set off claims based on guaranties by the corporation, as to which its obligation is secondary, where its liability has been discharged by his negligence in attempting to enforce the liability of the principal obligor. Manley v. Mayer, 68 Kan. 377, 1 Ann. Cas. 825, 75 Pac. 550. He cannot set off claims for principal and interest guaranteed by the corporation, originally owned by his wife, and taken by him, after suspension of the corporation, to save her from loss. Broadway Nat. Bank v. Baker, 176 Mass. 294, 57 N. E. 603. In Covington Stone & Sand Co. v. Rosedale Elec. Light Jockey Club, 25 Ky. L. Rep. 963, 76 S. W. 506, it was held that it would be inequitable to allow a set-off, since the way in which the affairs of the corporation were managed was in itself a fraud on the creditors, and the stockholders seeking it did not come with clean hands. 58 Wheeler v. Millar, 90 N. Y. 353. 59 Ramsden v. Keene Five Cents Sav. Bank, 198 Fed. 807. 60 Merchants' Ins. Co. v. Hill, 12 Mo. App. 148. See also Strauss v. Denny, 95 Md. 690, 53 Atl. 571, where the debt was held not to be barred. 61 See 4261, infra. 62 See § 4261, infra. 63 See $4261, infra. 64 See § 4211, supra. the corporation, which has been allowed as a set-off in a proceeding to enforce the stockholder's statutory liability for the debts of the corporation, has since been satisfied, it is no defense to another action against him to enforce his statutory liability.65 It has been held that where a stockholder is permitted to set off a claim on debenture bonds of the corporation, he will be required to assign the bonds and a judgment recovered thereon against the company to the creditor.66 § 4247. Priority as between creditors; distribution. When the statute imposes upon stockholders liability directly to creditors which may be enforced by any creditor by an action at law against any stockholder,67 or by an execution against any stockholder,68 a creditor, by suing a stockholder or issuing an execution against him, may thereby obtain priority over other creditors, so far as the liability of that stockholder is concerned. And after such a suit has been commenced against a stockholder, he cannot defeat it by paying the claims of other creditors to the extent of his liability.69 When the statute, however, imposes the liability for the purpose of creating a fund for the common benefit of all the creditors ratably, one creditor cannot, by a suit for his own benefit alone, either at law or in equity, obtain any priority over the other creditors. The liability of the stockholders, as we have seen, must be enforced in equity by a bill brought by all the creditors, or by one or more for the benefit of all who may come in, and the fund realized from the stockholders is to be distributed among them pro rata.7 When a general creditors' bill is brought, other creditors may be enjoined from maintaining independent actions at law or in equity against particular stockholders.71 70 As a general rule, a creditor who is given a preference in the distribution of the assets of a bank on the ground that the fund which he claims as a trust fund was wrongfully received by the officers of the bank, and should be returned to him before the assets are used in the payment of general creditors,72 is not entitled to a preference 65 Simmons v. Heman, 17 Mo. App. 444. 66 Van Pelt v. Strickland, 60 Kan. 584, 57 Pac. 498. 67 See 4218, supra. 68 See § 4221, supra. 69 See § 4261, infra. 70 See §§ 4218, 4228, supra. "A suit to enforce such liability is for the benefit of all the creditors, and no creditor can acquire a priority, or maintain a separate suit if there are other creditors."' Poston v. Hull, 75 Ohio St. 502, 80 N. E. 11. 71 See § 4218, supra. 72 As to preferred claims generally, see the chapter on Insolvency. in the distribution of a fund derived from the enforcement of a statutory liability of the banks' stockholders, since it cannot be claimed that such fund has in any way been augmented by the trust fund. And especially is this true where the statute provides that the fund derived from the assessment of the stockholders shall be distributed equally among all the creditors in proportion to the amount due each. But equity will allow him a preference out of such a fund to the extent to which general assets, which should have been applied to the payment of the preferred claim, were distributed to general creditors before the right to a preference was established, or have been used to defray expenses incurred in enforcing the liability of the stockholders.73 The method of distributing funds derived from the assessment of the transferrer of stock and the transferee, where a transfer does not relieve the transferrer from liability, has been considered in a previous section.74 § 4248. Enforcing liability in other states-General principles. There has been much difficulty in determining the extent to which statutory and constitutional provisions imposing individual liability upon stockholders for corporate debts will be enforced against nonresident stockholders in the courts of other states than that by which the corporation was created and in the federal courts sitting in other states, and there is some conflict in the decisions on the question. Whether the liability can be enforced against stockholders in the courts of other states depends, as we shall see, upon several considerations,-upon whether the liability is contractual or penal in its nature, and, if contractual, upon whether a special remedy is provided, which can only be applied in the state enacting the statute, whether to enforce the liability in the foreign state will result in wrong or injury to its citizens, whether the policy of its own laws will he contravened or impaired, and whether the court can do complete. justice to those who will be affected by its judgment or decree.75 73 Sioux City Stock Yards Co. v. Fribourg, 121 Iowa 230, 96 N. W. 747. 74 See § 4207, supra. 75 See New Haven Horse Nail Co. v. Linden Spring Co., 142 Mass. 349, 7 N. E. 773. is "The fundamental question whether there is a substantive right originating in one state, and a corresponding liability which follows the person against whom it is sought to be enforced into another state. Such a right, arising under the common law, is enforceable everywhere. Such a right, arising under a local statute, will be enforced ex comitate in another state unless there is a good reason for refusing to enforce it. It will be enforced, not because of the existence of the statute, but because |