foreign state except under the doctrine of comity, where the statute under which he derives his authority gives him no such right, and he does not possess the legal title to the assets sought to be collected, but only the right to sue and collect them, and there has been no judicial determination in his own state of the amount to be collected.52 And it has also been held that he will not be permitted to maintain such a suit under the doctrine of comity where the method of ascertaining the amount of the stockholder's liability is contrary to the public policy of the state where the action is brought, in that the assessment is made by such officer arbitrarily, and without any judicial determination of the necessity for making it.53

Of course a foreign receiver may sue where he has also been appointed receiver by the court of the forum.54 And where a stockholder is duly served with process in the parent suit, in which a receiver is directed and empowered to sue in other states, the right of the receiver to sue him in another state is res adjudicata as to him.55

The right of an assignee or receiver of a corporation to maintain an action in other states against stockholders to collect a balance due on their subscriptions has been considered in a previous section.56

§ 4254. Discharge of stockholders; waiver, release and payment— Scope. The discharge of a stockholder from the statutory liability for corporate debts by a transfer of his shares has been considered in former sections.57 We have also considered the discharge of a stockholder by forfeiture or sale of his shares for nonpayment of calls. or assessments,58 and the question whether the liability of a stockholder survives his death, so that it may be enforced against his personal representative.59 We are to consider, in this section, waiver by creditors of the right to enforce the liability, release or discharge of stockholders by creditors, discharge by payment, and the like.

§ 4255. Waiver, release or discharge by creditors generally. Since a statutory or constitutional provision making the stockholders. of a corporation individually liable for its debts is intended solely for the benefit of creditors,60 it is clear that it may be waived by

52 The New York superintendent of banks has no right to maintain such an action in Tennessee. Van Tuyl v. Carpenter, 135 Tenn. 629, 188 S. W. 234.

53 Van Tuyl v. Carpenter, 135 Tenn. 629, 188 S. W. 234.

54 Wyman v. Bowman, 127 Fed. 257.
55 Burr v. Smith, 113 Fed. 858.
56 See 4131, supra.

57 See $4196 et seq., supra.
58 See § 665, supra.

59 See § 4195, supra.

60 See § 4210, supra.

them, and this may be either by express agreement or by their acts.61 There is no liability on the part of stockholders, therefore, if the creditor, at the time he contracted with the corporation, excluded such. liability by express agreement.62 There may be such a waiver by inserting a stipulation to that effect in all the contracts of a corporation.63 And an oral agreement by a creditor at the time of entering into a written contract with the corporation, that there shall be no liability on the part of the stockholders, does not violate the rule against parol evidence to vary a written contract, and is binding.64 Creditors may also release stockholders from liability after their debts have been contracted; 65 as by accepting some other person or corporation as a substituted debtor, or, in other words, by consenting to a novation.66 And since a creditor may lawfully contract to surrender

61 Wells v. Black, 117 Cal. 157, 37 L. R. A. 619, 59 Am. St. Rep. 162, 48 Pac. 1090; Robinson v. Bidwell, 22 Cal. 379; Bush v. Robinson, 95 Ky. 492, 26 S. W. 178; Brown v. Eastern Slate Co., 134 Mass. 590.

That a creditor may waive his right to enforce the liability of a stockholder for the amount of his unpaid subscription, see § 4105, supra.

62 United States v. Stanford, 70 Fed. 346, aff'g 69 Fed. 25, judgment aff'd 161 U. S. 412, 40 L. Ed. 751; French v. Teschemaker, 24 Cal. 518; Robinson v. Bidwell, 22 Cal. 379; Bush V. Robinson, 95 Ky. 492, 26 S. W. 178; Basshor v. Forbes, 36 Md. 154; Brown v. Eastern Slate Co., 134 Mass.

590.

See also Downer v. Union Land Co. of St. Paul, 113 Minn. 410, 129 N. W. 777. Compare Preston v. Cincinnati, C. & H. V. R. Co., 36 Fed. 54. In Assets Realization Co. v. Howard, 211 N. Y. 430, 105 N. E. 680, aff'g 152 N. Y. App. Div. 900, 136 N. Y. Supp. 1130, 70 N. Y. Misc. 651, 127 N. Y. Supp. 798, it was held that, under an agreement whereby the assets of an insolvent bank were taken over by another bank, which agreed to pay its liabilities, such assets were the sole source from which repayment of advances made by the latter bank, and satisfaction of its claim for serv

ices rendered by it, to the former bank were to be made, so that the latter bank had no claim against the stockholders of the former where the assets taken over were insufficient for that purpose.

63 French v. Teschemaker, 24 Cal. 518. See also Lum v. American Wheel & Vehicle Co., 165 Cal. 657, Ann. Cas. 1915 A 816, 133 Pac. 303.

64 Basshor v. Forbes, 36 Md. 154; Brown v. Eastern Slate Co., 134 Mass. 590.

65 See New England Commercial Bank v. Newport Steam Factory, 6 R. I. 154, 75 Am. Dec. 688.

A creditor may lawfully contract to surrender or waive the right to enforce the stockholders' liability. Anglo-American Land, Mortgage & Agency Co., Ltd. v. Lombard, 132 Fed. 721, certiorari denied 196 U. S. 638, 49 L. Ed. 630 (mem. dec.).

66In the nature of things there is no acceptance of one person as a substituted debtor where there is no release of another, but there may be a release of a debtor without substituting another in his place. In this sense the two things are different, but both must concur to effect a novation, which is the substitution of a new debtor in the place of an old one with intent to release the latter." Anglo

or waive the right to enforce the liability of the stockholders, he may become estopped from enforcing this liability.67

§ 4256. Release of individual stockholders. makes stockholders primarily liable with the corporation, so that they are in effect joint debtors with the corporation, release of a stockholder by a creditor discharges the corporation and the other stockholders.68 Where the liability is several only, a release of one stockholder by a creditor does not release the others.69 Where stockholders are jointly and severally liable for corporate debts in proportion to their stock, a release of one stockholder by a creditor from his proportion of the debt releases the other stockholders only pro tanto.70

§ 4257. Extension of time of payment, etc. Where the statute imposing individual liability for corporate debts upon stockholders, in express terms, or impliedly, under the construction placed upon it by the courts, makes the stockholders liable merely as sureties or guarantors, a creditor releases stockholders from liability if, without their consent, he extends the time of payment by taking the note of the corporation for his claim, or otherwise,71 or if he parts with or renders

unavailable any security or fund which he has a right to apply in satisfaction of the debt.72 It is otherwise, however, where stockholders are originally and primarily liable, and not liable merely as sureties or guarantors, and under such circumstances they are not discharged by an extension of the time of payment,73 or because the creditor has released or settled with persons secondarily liable.74

When a statute gives laborers, servants or employees of a corporation a claim against stockholders in addition to the liability of the corporation, an employee, by taking a note from the corporation, and attempting to collect the same out of the assets of the corporation, does not waive his rights against the stockholders.75

The effect of an extension of the time of payment upon the liability of a person who has transferred his stock 76 upon the running of the statute of limitations," and where the statute requires, as a condition of the personal liability of stockholders for a corporate debt, that an action shall be brought against the corporation on the debt within a specified time after it becomes due,78 has been considered in other sections.

§4258.-Effect of taking guaranty from stockholders. If some of the stockholders of a corporation personally guarantee the payment of advances made to the corporation, or any other debt of the corporation, without anything being said as to their liability as stockholders, their guaranty does not relieve them from their statutory liability. They are liable as guarantors by virtue of their contract, and are also liable as stockholders by virtue of the statute, without regard to their guaranty.79

holders
is that of sureties or guar-
antors, see § 4177, supra.

72 Assets Realization Co. v. Howard, 70 N. Y. Misc. 651, 127 N. Y. Supp. 798, judgment aff'd 152 N. Y. App. Div. 900, 136 N. Y. Supp. 1130, 211 N. Y. 430, 105 N. E. 680.

V.

73 Knickerbocker Trust Co. v. Myers, 133 Fed. 764, judgment aff'd 139 Fed. 111, 1 L. R. A. (N. S.) 1171; Grew v. Breed, 10 Metc. (Mass.) 569; Harger McCullough, 2 Den. (N. Y.) 119. And see Boice v. Hodge, 51 Ohio St. 236, 46 Am. St. Rep. 569, 37 N. E. 265; Painesville Nat. Bank v. King Varnish Co., 8 Ohio Cir. Ct. 563; Taylor v. West Liberty Wheel Co., 6

Ohio Dec. 947; Aultman's Appeal, 98
Pa. St. 505.

As to whether the liability of stockholders is that of sureties or guarantors, see 4177, supra.

74 Knickerbocker Trust Co. V. Myers, 133 Fed. 764, judgment aff'd 139 Fed. 111, 1 L. R. A. (N. S.) 1171. 75 Jackson v. Meek, 87 Tenn. 69, 10 Am. St. Rep. 620, 9 S. W. 225.

76 See § 4197, supra.
77 See § 4239, supra.
78 See § 4234, supra.

79 London & S. F. Bank v. Parrott, 125 Cal. 472, 73 Am. St. Rep 64, 58 Pac. 164.

§ 4259. Payment by or release of corporation. Of course, payment of a debt by the corporation discharges stockholders from liability, and part payment discharges them pro tanto.80 Stockholders are not released from liability for a corporate debt, however, by an unexecuted agreement by a corporation with a holder of its notes to convey property to him in payment thereof.81

Under a statute making stockholders liable for corporate debts, there can be no liability for a claim against the corporation when it ceases to be a corporate debt. Anything, therefore, which releases or discharges a corporation from liability for a corporate debt necessarily releases or discharges the stockholders, 82 unless there is some provision to the contrary. Such has been held the effect of a release of a corporation by creditors in insolvency proceedings, in the absence of provision to the contrary,83 and of the payment of a corporate debt by a surety, in jurisdictions where such payment operates to extinguish the debt.84

It has been said that a suspension of the remedy against the corporation does not extinguish the debt, and hence does not affect the liability of the stockholders.85 But, as we have seen, there is no lia

80 Western Pac. R. Co. v. Godfrey, 166 Cal. 346, Ann. Cas. 1915 B 825, 136 Pac. 284; San Jose Sav. Bank v. Pharis, 58 Cal. 380. See also Eva v. Andersen, 166 Cal. 420, 137 Pac. 16.

The liability of a stockholder is only for his proportion of such part of a debt or liability as remains unpaid. Western Pac. R. Co. v. Godfrey, 166 Cal. 346, Ann. Cas. 1915 B 825, 136 Pac. 284.

Even where a person who transfers his stock remains liable for debts previously contracted, he is not liable for debts which existed prior to the transfer, but have since been paid. See 4198, supra.

81 Grew v. Breed, 10 Metc.. (Mass.) 569.

82 Mohr v. Minnesota Elevator Co., 40 Minn. 343, 41. N. W. 1074. See Prince v. Lynch, 38 Cal. 528, 99 Am. Dec. 427.

"Whatever satisfies or extinguishes the debt as to the corporation, extinguishes, also, the liability of the stock

holders, because the creditor can claim only one satisfaction of the debt." Young v. Rosenbaum, 39 Cal. 646.

"As the liability of the stockholder to contribution for a payment of a corporate debt presupposes the existence of such debt, it must necessarily follow that when the corporation debt is extinguished the statutory liability of the stockholders at once ceases. Yule v. Bishop, 133 Cal. 574, 65 Pac. 1094, 62 Pac. 68.

83 See § 4264, infra.

84 Yule v. Bishop, 133 Cal. 574, 65 Pac. 1094, 62 Pac. 68.

Upon such payment the original liability is extinguished and a new liability arises against the corporation and its stockholders, based on the contract of suretyship, to reimburse the surety for what he has expended, including necessary costs and expenses. Yule v. Bishop, 133 Cal. 574, 65 Pac. 1094, 62 Pac. 68.

85 Young v. Rosenbaum, 39 Cal. 646.