the proceeds given to the company, was held, in Draper v. Beadle, 16 W. Dig., 475, not to be conclusive evidence of an over-valuation, but that the question was still one of fact for the jury. Id. See Lake Sup. Iron Co. v. Drexel, 90 N. Y., 87; 15 W. Dig., 341.

Where the stock of a corporation is issued in form for property, it is to be regarded as full-paid stock, unless there are, in said issue, a fraudulent over-valuation and an intent to evade the statute. Draper v. Beadle, 16 W. Dig., 475.

In an action to charge a holder of stock issued for property purchased by the company on the ground of a fraudulent over-valuation thereof, proof of an offer for part of it, made to and refused by the company, if in good faith, bears with force, and is admissible, upon the question as to whether or not there had been & fraudulent over-valuation of the land by the trustees. Thurber v. Thompson, 21 Hun, 472.

Where the evidence is not conclusive, the question whether the trustees, in exchanging the stock of the company for the property taken, were endeavoring to evade and circumvent the law, should be submitted to the jury. Lake Sup. Iron Co. v. Drexel, 90 N. Y., 87; Douglass v. Ireland, 73 Id., 100; Brockway v. Same, 61 How., 372.

It must be shown that the company, with the concurrence of the stockholder, shall have acted in bad faith in issuing the amount of stock delivered for the prop erty purchased. Nat. T. W. Co. v. Gilfillan, 46 Hun, 248; Douglass v. Ireland, 73 N. Y., 100; Thurston v. Duffy, 38 Hun, 327; Lake Sup. Iron Co. v. Drexel, 90 N. Y., 87; Blake v. Griswold, 103 N. Y., 429.

To charge the holder of stock, issued upon and for the purchase of property, it must be shown that the purchase was in bad faith and to evade the statute. Douglas v. Ireland, 73 N. Y., 100. No other fraudulent intent need be alleged or proved than that the stock exceeded in amount the value of such property, and that the trustees so issued it deliberately and with knowledge of the real value of the property. Id. The value of the property must be determined, and evidence thereof is competent. Id.

The trustees are the judges both as to the necessity for, and the value of the property. Schenck v. Andrews, 57 N. Y., 133. Good faith and the exercise of & proper discretion and honest judgment meet the requirement. Id.

A mere mistake or error of judgment, by the trustees, either as to the necessity of the purchase or as to the value of the property so purchased, if made in good faith and not in evasion of the provision of the statute, will not subject a holder of stock issued in payment for the property purchased to liability under this section. Schenck v. Andrews, 57 N. Y., 133; Gamble v. Queens Co. W. Co., 52 Hun, 166; 25 Abb. N. C., 410.

Where the capital stock has been issued for property purchased for the corpora tion without any actual fraudulent intent, subscribers who became such subsequent to such transaction, and did not participate in it, can not sue each other in an action at law. Dodge v. Havemeyer, 4 N. Y. St. Rep., 561. The remedy, in such case, is by a suit for an accounting to fix the pro rata liability of the stockholders, and not by a suit to recover the whole debt from an individual stockholder. Id.; Mathez v. Neidig, 72 N. Y., 100; McMaster v. Davidson, 29 Hun, 542; Bailey v. Bancker, 3 Hill, 188; Richardson v. Abendroth, 43 Barb., 162. Fraud in such cases is an important element, and must be affirmatively proved. Dodge v. Havemeyer, 4 N. Y. St. Rep., 561; Brown v. Smith, 13 Hun, 409; aff'd 80 N. Y., 650; Schenck v. Andrews, 57 id., 133; Boynton v. Same, 63 id., 93; Lake Superior Co. v. Drexel, 90 id., 93; Douglass v. Ireland, 73 id., 100.

The holder of capital stock issued for property acquired by the corporation, is not exempted from liability under this section, where such stock exceeded in amount the value of the property in exchange for which it was issued, and the trustees have deliberately, and with knowledge of its real value, over-valued it and paid in stock for it an amount which they knew was in excess of its actual value. Douglas v. Ireland, 73 N. Y., 160; Boynton v. Hatch, 47 id., 225; Same v. Andrews, 63 id., 93; Schenck v. Same, 57 id., 133; Lake Superior Co. v. Drexel, 90 id., 87; Blake v. Griswold, 103 id., 429; Brown v. Smith, 13 Hun, 408; aff'd 80 N. Y., 650; National Tube Co. v. Gilfillan, 124 N. Y., 302; Dodge v. Havemeyer, 4 N. Y. St. Rep., 561; Goodrich v. Dorman, 38 id., 198.

A purchase of property from one of the trustees for the benefit of the corpora tion may be made under this section, if made in good faith, for a proper consideration, and without any attempt to evade the statute. Knowles v. Duffy, 40 Hun, 485. This rule applies though the entire capital stock is paid therefor. Id.

Where property, procured in exchange for stock, is purchased at an over-valuation, not through an error of judgment, but in bad faith and to evade the statute, the stockholders are individually liable. Nat. T. W. Co. v. Gilfillan, 124 N. Y., 302. The statute liability constitutes a fund which belongs to the creditors to secure the payment of their debts. Mathez v. Neidig, 72 N. Y., 100. It belongs to all the creditors, as well those who are, as those who are not, stockholders. Id.

The stockholders, under this and following sections, are liable in an original and primary sense, like partners or members of an unincorporated association, and their liability is not created by the statute of incorporation. Corning v. McCullough, 1 N. Y., 47.

A stockholder, who is liable for the debts of the company to the amount of the stock held by him, does not stand in the light of a guarantor or surety, but is a principal debtor. Moss v. McCullough, 7 Barb., 279.

The property of every corporation is to be regarded as a trust fund for the payment of its debts. Hastings v. Drew, 76 N. Y., 9. The creditors have a lien thereon and may follow it into the hands of the director and stockholders. Id. Where such property has been divided among the stockholders, a judgment creditor, after returns of an execution against the corporation unsatisfied, can maintain an action; in the nature of a creditor's bill against a stockholder, to reach whatever was so received by him. Id.

A creditor of a corporation, the stockholders of which are liable for its debts, may bring a suit in equity against all stockholders liable to him, and in favor of all creditors jointly interested with him who choose to come in and share in the benefits and expenses of his suit for the establishment of a fund, for the adjustment of all liabilities to contribute thereto, and of all claims thereon. Pfohl v. Simpson, 74 N. Y., 137; Mathez v. Neidig, 72 id., 100; Griffith v. Mangam, 73 id., 611; Weeks v. Love, 50 id., 568. Such action will not give a right or impose a liability which does not exist otherwise. Id.

This personal liability may be enforced in an equitable action against all the stockholders. Weeks v. Love, 50 N. Y., 568; Briggs v. Penneman, 8 Cow., 387; Mann v. Pentz, 3 N. Y., 415; Osgood v. Laytin, 5 Abb., N. S,, 1.

The creditor has his election to bring an action at law against a stockholder, or to bring an action in equity, and have an accounting between all the stockholders and all the creditors, wherein the rights of each can be ascertained and protected. Mathez v. Neidig, 72 N. Y., 100; Bank of Poughkeepsie v. Ibbotson, 24 Wend., 73; Briggs v. Pennington, 8 Cow., 392; Garrison v. Howe, 17 N. Y., 458; Matter of Empire City Bk., 18 N. Y., 227.

An action at law can be maintained against one of several stockholders to recover a debt owing by the corporation. Weeks v. Love, 50 N. Y., 568; Bank of Poughkeepsie v. Ibbotson, 24 Wend., 472; Garrison v. Howe, 17 N. Y., 458. Such action can be maintained by a single creditor. Id. This section is not confined to the case of a suit against a stockholder by a sole creditor of the corporation. Id. One of several creditors is entitled to maintain the action. Id. It is not a joint right in the creditors generally. Id.

A creditor can, after exhausting his remedy at law, maintain an action against a stockholder, to reach his unpaid subscription, and be subrogated to the right of the company, without joining other stockholders or creditors. Wheeler v. Millar, 90 N. Y., 353; Hatch v. Dana, 101 U. S., 205; Bartlett v. Drew, 57 N. Y., 587.

If the creditor can not find a responsible stockholder, who is not, at the same time, a creditor to the amount of his stock, he must proceed for an account, if he ascertains that such a proceeding will result in recovering his debt. Garrison v. Howe, 17 N. Y., 458.

A creditor may proceed by suit, in the nature of a common law action, against a single stockholder. Garrison v. Howe, 17 N. Y., 458; Bank of Poughkeepsie v. Ibbotson, 24 Wend., 473. He is not compelled to bring an equitable action for an accounting, but may do so. Id. It is not necessary to make all the stockholders defendants to an action by a creditor of a corporation under this section. Abbott v. Aspinwall, 26 Barb., 202 Each creditor has a remedy against each stockholder. Id. Such remedy is not against such stockholders only as have not paid for their stock. Id. The stock held, not the amount of stock unpaid for, gives the measure of the recovery. Id. Creditors may enforce contribution from the stockholders, if the trustees neglect to do so. Briggs v. Penniman, 8 Cow., 387.

Where a stockholder is sued to enforce his individual liability in a case where an account and the enforcing of all liabilities will relieve him from the whole or a

part of the debt claimed, he may himself resort to a suit for such account, and for distribution. Garrison v. Howe, 17 N. Y., 458; Bank of Poughkeepsie v. Ibbotson, 24 Wend., 473.

An assignee of a judgment against a corporation may use the name of the plaintiff in the judgment in an action to enforce the liability of a stockholder. Harger v. McCullough, 2 Denio, 119.

The stockholders and the amount of stock held by them may be established by proof of payments on account of stock, and the taking of the usual stock certificates. Dorris v. French, 4 Hun, 292. But these facts may be proved by the ordinary mode of subscribing the agreement to unite in the formation of the company, and to take a number of shares of stock therein specified. Id.

The stock subscription paper, signed by a person, is relevant and competent evidence upon the question whether he was a stockholder. Partridge v. Badger, 25 Barb., 146. Testimony of witnesses, who were present at an election of directors, is competent as to who were elected. Id. The books of the company are not the sole evidence upon this point. Id. Proof as to who acted as such, is proper. Id. A judgment recovered against a corporation within a year from the time when the debt had become due and payable, was held, in Hall v. Siegel, 7 Lans., 206, not to be evidence of a stockholder's liability in an action brought against him after the year had expired.

Judgment against the corporation is evidence against the stockholder, when Bued on his individual liability. Hill v. Spencer, 34 Supr., 304.

In an action against stockholders of a corporation, brought by a creditor, to charge them individually with a corporate debt, under a statute giving the creditor a right to sue one or all of the stockholders together with the corporation, a judgment obtained against the company is sufficient evidence of its indebtedness to charge the stockholders, unless shown to have been obtained through collusion or fraud. Conklin v. Furman, 57 Barb., 484; aff'd 48 N. Y., 527, on another point.

company.

It was held, in Slee v. Bloom, 20 Johns., 669, that a stockholder, when sued alone for the recovery of the same debt, was concluded by the judgment against the See Moss v. Oakley, 2 Hill, 265; Moss v. McCullough, 7 Barb., 279. But the court held, in Moss v. McCullough, 5 Hill, 131, that a judgment against the company was not, as against a stockholder, when sued separately for the same debt, even prima facie evidence of the debt sued upon. Strong v. Wheaton, 38 Barb., 616; Jackson v. Griswold, 4 Hill, 522.

In Belmont v. Coleman, 21 N. Y., 96, and McMahon v. Macy, 51 id., 155, the question as to the effect of a judgment against the company, in an action against a stockholder under this section, was considered, but the case was disposed of upon another point.

In an action against a stockholder to enforce the payment of his unpaid subscription by a creditor, a judgment recovered against the company is competent evidence of the plaintiff's status as a creditor of the company and of the amount due him. Stephens v. Fox, 83 N. Y., 313; aff'g 17 Hun, 438; Hastings v. Drew, 76 N. Y., 9; Mills v. Stewart, 41 id., 389; Christensen v. Eno, 21 W. Dig., 202. The ground of such holding is that the stockholder owed to the corporation, and to any one who succeeded to its rights, the amount he had agreed to pay, which he had not paid.

and

In an action under this section, the judgment against the corporation furnishes no evidence whatever of the indebtedness, and the creditor must prove, entirely outside of the judgment, the liability of the corporation. Berridge v. Abernethy, 24 W. Dig., 513; Kinciad v. Dwinelle, 59 N. Y., 551; Wheeler v. Miller, 24 Hun,

541.

The only purpose for which such judgment can be used as evidence is, after the existence of the debt has been established, to prove that it has been prosecuted to judgment against the company as one step requisite to establish the stockholder's liability under this section, in performance of the condition precedent prescribed by the next section. Lawyer v. Bosebrook, 48 Hun, 453; Kincaid v. Dwinelle, 59 N. Y., 548.

In an action brought to reach property of the corporation, which was subject to the lien of the judgment of the creditor, and to apply the same to its payment and satisfaction, the judgment is at least regarded as prima facie evidence. Hastings v. Drew, 76 N. Y., 9.

It was held, in McDowall v. Sheehan, 36 N. Y. St. Rep., 104, that it was proper

and necessary, in an action under this section, to prove the judgment against the company. The purpose or effect of such proof was not stated.

An action will not lie by one stockholder, against fellow stockholders, of a corporation, to enforce a personal liability for a debt of the company. Richardson v. Abendroth, 43 Barb., 162.

A subscriber to the capital stock of a corporation, when the right to alter or repeal its charter is reserved to the legislature, is not discharged from his subscription by a subsequent amendment to the charter, but will be regarded as having consented to the change. Union H. Co. v. Hersee, 79 N. Y., 454.

That a stockholder was induced to accept his stock by reason of an untruthful statement, will not avail against an innocent creditor of the corporation. McDowall v. Sheehan, 36 N. Y. St. Rep., 104.

It must be shown that the defendant was a stockholder when the indebtedness of the corporation accrued. Tucker v. Gilman, 121 N. Y., 189.

No secret transfer will avail to release the stockholder from his obligations, or deprive the creditors of the corporation of the right to look to him as the responsible party liable for the debts of the corporation. Shellington v. Howland, 53 N. Y.,

371.

The stockholders, under this section, are principal debtors and not sureties. Harger v. McCullough, 2 Denio, 119. An extension of the time of payment given to the corporation by a creditor does not discharge a stockholder, who has not assented to such extension, and who is subsequently sued on account of his individual liability. Id.

By extending time for payment of debt due from manufacturing corporation, by one or several contracts, creditor loses his claim upon shareholders under this section. Hardman v. Sage, 124 N. Y., 25.

When stockholders are relieved from liability by transfer. Tucker v. Gilman, 121 N. Y., 189.

Transfer, made before indebtedness accrued, is defense. Id.

Payment by stockholder to another creditor of full liability, though subsequent to action, is defense. Richards v. Brice, 15 Daly, 144.

A dissolution of the corporation for not paying in the capital stock, within the prescribed time, does not at all affect the stockholder's liability under this section. King v. Duncan, 38 Hun, 461. It is expressly provided by section 6, chap. 567 of, 1890, that the dissolution for any cause shall not take away or impair any remedy against the company, its stockholders or officers, for any liabilities incurred pre

vious to its dissolution.

A corporation can only be dissolved by a formal judgment. Hollingshead v. Woodward, 35 Hun, 410.

When the liability of a stockholder is released by a cancellation of his stock. Hollingshead v. Woodward, 35 Hun, 410.

The failure of the clerk to do his duty by making a record of the certificate can not prejudice stockholders or trustees who have done all the law requires of them, or that they have the power to do. Sutherland v. Olcott, 29 Hun, 161; Boynton v. Hatch, 47 N. Y., 225.

The filing of the certificate relieves the stockholders from all personal liability. Sutherland v. Olcott, 29 Hun, 161.

One must be a stockholder in fact, in order to be liable, and not merely a subscriber whose stock has been forfeited, and who no longer holds it. Mills v. Stewart, 41 N. Y., 384.

An original corporator and signer of the articles of incorporation, who subscribed but did not pay for certain number of shares of stock, was a trustee and secretary of the corporation and actively engaged in its management, and appeared upon the corporate books as a stockholder, is a stockholder within the meaning of this section. Wheeler v. Millar, 90 N. Y., 353. Neither the issuing of a certificate, nor payment, is essential to make him such. Id. The certificate is only evidence of ownership. Id. This can be inferred from other facts. Id.

A person, who gives to a corporation his promissory note, payable at a future time, for a specified number of shares of its capital stock, and takes a receipt from an officer of the company, expressing that such note, when paid, will be in full for such shares, does not become a stockholder until the note matures and is paid, and a stock certificate is issued. Tracy . Yates, 18 Barb., 152.

Where the corporation formed, or attempted to be formed, is different in its purposes from that in which a subscriber agreed to take stock, the condition of his

contract is not performed, and he is not liable in an action to recover the amount of his subscription. Dorris v. Sweeney, 60 N. Y., 463.

The legal and effectual formation of a corporation is a condition precedent to & subscriber's obligation to pay for stock. Dorris v. Sweeney, 60 N. Y., 463. Irregularities subsequent to organization of corporation furnish no defense to corporation or its directors or stockholders. Demarest v. Flack, 16 Daly, 337. A defect in the proceedings to organize a corporation is no defense to a stockholder, sued under this section, who has participated in its acts of user as a corporation de facto, and appeared as a stockholder upon its books when the debt for which he is sued was contracted. Eaton v. Aspinwall, 19 N. Y., 119.

The burden, under this section, is on the creditor to show that the capital stock of the company has not been paid in. Bruce v. Driggs, 25 How., 71; or that the certificate of payment in full has not been filed.

Subsequent recovery of judgment against the company on notes given for services rendered prior to the filing of the certificate estops the creditor from resorting to the original consideration, in order to charge the stockholders with the payment of the debt. Sutherland v. Olcott, 29 Hun, 161.

Though a person is not a stockholder at the time the contract is made, he is liable for the installments falling due thereunder after he became, and while he continues to be a stockholder. McMaster v. Davidson, 29 Hun, 542.

A stockholder may set up and rely upon the defense that the stock held and owned by him was issued in payment for property, purchased by the trustees and necessary for the business, and that it was full paid stock, not liable to any further calls or payments. Lewis v. Ryder, 13 Abb., Î. It is very doubtful whether this is now the law. Stock issued for moncy and property is placed on the same footing by section 42 of this act, and no preference is shown to holders of the latter kind under section 40.

An action at law, under this section, can not be maintained against a stockholder, who is also a creditor to an amount equal to his stock. Mathez v. Neidig, 72 N. Y., 100.

It was held, in Chambers v. Lewis, 28 N. Y., 454, that a creditor, in setting up in his answer by way of counter-claim, the liability of the plaintiff as a stockholder, under a similar statute, must aver that the plaintiff held an amount of stock in the company equal to the amount of the debt of the defendant, for which the plaintiff is sought to be held personally liable.

In order to enable a defendant stockholder to interpose the defense, that he is a creditor of the corporation, he need not bring himself within the provisions of the following section, (58). That section has no application to such case. Mathez v. Neidig, 72 N. Y., 100.

A loan by a stockholder to the corporation to an amount equal to his stock, constitutes a defense in an action brought against him under this section. Agate . Sands, 73 N. Y., 620. The fact that security was taken for the loan is immaterial. Id.; Wheeler . Millar, 90 N. Y., 353. See also Christensen v. Colby, 43 Hun, 362. To make such defense, the stockholder must be really a creditor of the company. Wheeler v. Millar, 90 N. Y., 353. He is not in reality a creditor, if he owes on his unpaid subscription as much or more than enough to balance and extinguish his demand against the company. Id. It matters not that his debt has not been actually applied on the subscription; nor that it has not been pleaded; nor that his liability upon his subscription can not be asserted by the creditor in such action. Id.

In an action under this section, it is a defense, that the stockholder is also a creditor of the company to an amount exceeding the amount of stock held by him. Richards v. Croker, 19 Abb. N. C., 73.

In an action under this act, it is a sufficient defense that the stockholder sued is himself a creditor of the co: pony to an amount equaling his stock. Richards. Kinsley, 27 W. Dig., 372; Briggs. Penniman, 8 Cow., 387; Wheeler v. Millar, 90 N. Y., 35; Garrison . Howe, 17 id., 458; Mathez v. Neidig, 72 id., 100. Payment of his full liability under this section by a stockholder to another creditor, though after the present action was brought, is a good defense. Richards . Brice, 20 N. Y. St. Rep., 289.

A stockholder, when judgment has passed against him, and his personal liability is fixed for the debts of the corporation to an amount equal to the stock held by him, or when he has paid debts of the corporation to that amount is relieved from further liability. Weeks v. Love, 50 N. Y., 568.