to a corporation." This is undoubtedly the law at the present time. It is a matter of every-day occurrence for corporations to be indicted for violation of statutes, such as the Interstate Commerce laws, the laws relating to trusts and to the employment of women and children.

LIABILITIES OF STOCKHOLDERS, AND OF OFFICERS AND DIRECTORS.

Stockholders in national banks are liable for the debts of the bank to an amount equal to the par value of their stock. As a general rule, the liability of stockholders in State banks and banking companies, and in trust, guaranty and insurance companies, is the same. In other business corporations, except in a very few States, their liability is limited to the amount, if any, remaining unpaid on their stock. In some States, also, stockholders are liable for debts due to workmen, operatives and other employees for services rendered to the corporation.

Officers and directors are agents of the corporation, and as such, as responsible to the corporation under the general law of agency, in the same manner and to the same extent as the agents of a private individual. Thus, even without any statutory provision, they are liable to the corporation for loss or damages occasioned by their fraud, negligence or wilful violation of the charter or by-laws. Besides this general liability, however, the laws of every State have imposed upon them special liabilities and penalties for violations of duty, and in many cases have made them responsible to creditors for debts incurred through their misconduct.

At the present day a business man is frequently interested in corporations in different parts of the country; and it is important for him to know what liabilities he is incurring by owning stock, or becoming an officer or director in a corporation organized in any particular State. And it is important to remember, in this connection, that these liabilities depend upon the laws of the State where the corporation is organized, and not of that where it may be carrying on business. We therefore append to this chapter a brief abstract of the laws of the several States with reference to the statutory liability of stockholders, officers and directors of general business corporations -not including, however, banks and the other financial insti

tutions above mentioned, or railroad, telegraph, telephone and insurance companies, which are usually incorporated under special statutes of their own.

ABSTRACT OF LAWS RELATING TO LIABILITIES OF
STOCKHOLDERS AND DIRECTORS.

ALABAMA. ·

Stockholders in business corporations are liable for debts of the corporation only to the extent of unpaid stock. Officers and directors depreciating stock or bonds with intent to purchase same at less than real value are liable to fine and imprisonment.

ALASKA.

In business corporations stockholder is liable to creditors for amount unpaid on his stock, but, except in insolvency or bankruptcy, only after judgment against the corporation. If bonded indebtedness exceeds amount of paid-in stock, or if stock or bonds be issued for more than cash value of property in reasonable judgment of directors, or if dividends be paid in excess of net profits, or if capital be reduced by loans to stockholders, or if reports or statements are not made as required by law or are materially false, directors assenting are jointly and severally liable to creditors for damages resulting therefrom. Officers also liable for failure to make reports, etc., required by law.

ARIZONA.

Stockholders in general business corporations are liable only to extent of unpaid stock. Directors concurring in making dividends except from surplus profits, or dividing any part of capital among stockholders, or receiving notes in payment of instalments on stock, or to enable a stockholder to withdraw money paid by him, or exchange stock for stock in another corporation, or making false statements in writing as to condition or affairs of corporation, are criminally liable. Every director present Ideemed to concur unless he causes dissent to be entered on minutes of meeting; and also if absent, and facts appear on minutes, and he remains a director for six months, and does not record dissent.

ARKANSAS.

Stockholders are liable only to extent of unpaid stock subscribed by each. Directors declaring dividends when corporation is insolvent, or violating provisions of corporation act thereby causing insolvency, are liable for corporation debts. President and secretary also liable in case of failure to file annual statement of financial condition.

CALIFORNIA.

Each stockholder, except in "limited" corporations, is individually and personally liable for such proportion of all its debts and liabilities contracted or incurred during the time he was a stockholder, as the amount of stock owned by him bears to the whole stock subscribed, and for like proportion of each debt of the corporation, and is not released by transfer of stock. Liability of stockholders in foreign corporations doing business in the State the same. In corporations having "Limited" at end of corporate name, stockholders liable only to extent of unpaid balance on stock. Directors jointly and severally liable for any money embezzled or appropriated by officers. Directors declaring dividends except from net profits, or creating debts beyond subscribed capital, or dividing or reducing capital stock except as authorized, jointly and severally liable for amount of such dividend, etc. Directors declaring dividends except from surplus profits, or paying any part of capital to stockholders, or receiving note in payment of instalment on stock, or to enable a stockholder to withdraw money paid,. or exchanging stock, bonds, etc., of corporation for stock, etc., of another corporation, or making false statement as to condition or affairs of corporation, are also criminally liable. Every director present presumed to concur unless dissent is noted on minutes, or if absent and facts appear on minutes, if he remains a director for six months without causing dissent to be recorded.

COLORADO.

Stockholders are liable for debts of corporation only to extent of unpaid stock. Officers, directors and stockholders jointly and severally liable while fees for increase of capital stock remain unpaid.

Directors assenting to declaration of dividends when corporation is insolvent, or which would render it insolvent, or would diminish capital stock are jointly and severally liable for all debts then existing, and for all thereafter contracted while capital remains so diminished. In case of failure to file annual report of condition, officers and directors jointly and severally liable for all debts of corporation contracted during preceding year until report be filed.

CONNECTICUT.

Stockholders are liable only to extent of unpaid balance on stock held by them. Stockholders voting in favor of reduction of stock rendering corporation insolvent, jointly and severally liable to extent of such reduction for all debts then existing. Directors voting for dividend or distribution of assets except from net profits liable to fine. If such dividend or distribution renders corporation insolvent, they are also jointly and severally liable to amount of such payment for debts existing at time of vote.

DELAWARE.

Stockholders are liable to assessment until stock is fully paid; thereafter stock is non-assessable and not liable for debts of corporation. In case of reduction of stock, directors liable for debts contracted before

publication of certificate of reduction, and stockholders liable for amounts received through such reduction. If dividends be paid otherwise than from net profits, directors authorizing same are liable to extent of such dividend in case of insolvency or dissolution of corporation. Any director absent or dissenting may absolve himself by causing dissent to be entered on minutes of meeting, or by publication. Officers and directors liable for false statements of condition or of business of corporation, authorized by them. Articles of incorporation may state whether private property of stockholders is liable, and to what extent.

DISTRICT OF COLUMBIA.

Stockholders are liable for debts to extent of unpaid balance on stock held by them. Trustees (directors) declaring dividends which would render corporation insolvent, or diminish amount of capital stock, are liable for debts then existing and all thereafter contracted while they remain in office. Directors objecting may exempt themselves by filing certificate of objection with secretary of corporation and Recorder of Deeds of District. Any officer knowingly signing false certificate or report liable jointly and severally for debts of company contracted while stockholder and officer.

FLORIDA.

Stockholders of company doing business before recording copy of charter and filing certificate of payment of ten per cent. of capital stock liable for debts as though copartners. After dissolution, stockholders liable for debts to extent of unpaid balance of stock. Directors declaring dividends when company is insolvent, or which would make it so, jointly and severally liable for debts to the extent of such dividend. Directors absent or objecting not liable.

GEORGIA.

Stockholders are liable for debts to extent of unpaid stock. Persons organizing company and transacting business in its name before minimum amount of stock is subscribed for, liable to creditors to make good such minimum stock with interest. Liability of stockholders continues for six months after transfer.

HAWAII.

Stockholders liable for debts only to extent of unpaid balance of stock. Directors making dividends except from profits, or dividing any part of capital stock among stockholders, or reducing capital stock without express authority, jointly and severally liable, in event of dissolution, to full amount so divided or reduced.

IDAHO.

Stockholders liable for debts contracted while stock is owned by them, to extent of unpaid balance on such stock. Directors authorizing dividends except from surplus profits; or withdrawing or paying to stockholders any part of capital stock; or discounting or receiving notes in payment of instalment, or to enable stockholder to withdraw money paid for stock; or receiving from other corporations shares of stock, notes, bonds, etc., of

such corporation in exchange for stock in their own corporation, are guilty of misdemeanor. Any director presumed to assent if present unless he causes dissent to be entered on minutes of meeting, or, if absent, unless he causes dissent to be entered within six months. Such directors also jointly and severally liable in event of dissolution for full amount of dividend or capital stock so paid or withdrawn.

ILLINOIS.

Stockholders are liable for debts to the extent of unpaid balance on stock owned by them. Directors and officers declaring and paying dividends when corporation is insolvent, or which would make it insolvent, or which would diminish the amount of capital stock, jointly and severally liable for all debts then existing, or thereafter contracted while they remain in office. Directors and officers assenting to incurring indebtedness in excess of amount of capital stock, liable to creditors for such excess. Officers signing report, etc., containing statement known by them to be false, jointly and severally liable for all damages suffered.

INDIANA.

Stockholders in corporations organized prior to 1851 are liable to amount equal to that of stock held when debts were contracted. Stockholders in manufacturing and mining companies liable only for amount of stock subscribed for, but are also individually liable for debts due laborers, servants, apprentices and employees. Stockholders in railroads individually liable for labor in construction of road after assets of corporation are exhausted. If any part of stock be withdrawn and divided before payment of debts, stockholders jointly and severally liable for such debts.

IOWA.

Stockholders are liable to extent of unpaid instalments of stock. Failure to comply with legal requirements as to organization and publicity also renders individual property liable for debts. No other liability unless articles of incorporation otherwise provide. Intentional deception as to means and liabilities of corporation, diversion of funds of corporation to objects other than those mentioned in its articles, and payment of dividends leaving insufficient funds to meet liabilities, render officers and directors liable for damages, and such dividends in the hands of stockholders subject to claims of creditors. Officers and directors are also subject to penalties for such violations of law. Declaring dividends when corporation is insolvent, or which would make it insolvent, or diminish amount of capital, renders officers and directors consenting jointly and severally liable for debts then existing. If indebtedness exceeds amount permitted by law, officers and directors consenting liable to creditors for such excess.

KANSAS.

Stockholders are liable only for unpaid balance of original subscription. Dividends only from net profits. Directors declaring dividends when corporation is insolvent, or which would render it insolvent, jointly and severally