by amendment, and also under the earlier bankruptcy laws.48 "The manifest purpose of these provisions is to preserve the creditor's original remedy, notwithstanding the discharge of the corporation, for the collection of the balance of his debt in all cases where some one else besides the corporation, is also liable in any capacity with the corporation. The discharge of a debtor in bankruptcy does not extinguish the debt, but relieves him from all legal obligation to pay. it, leaving unimpaired all remedies for securing payment thereof out of property upon which it is a lien." 49 The act does not create a new liability on the part of the stockholders, or new rights in favor of creditors, but merely preserves the existing remedies of creditors. against the stockholders. 50 § 4265. — Insolvency or bankruptcy proceedings with respect to stockholder. A discharge of an insolvent stockholder in bankruptcy or insolvency proceedings will discharge him from his statutory liability to creditors of the corporation if the circumstances were corporation does not release the stockholders. See also Way v. Barney, 116 Minn. 285, 38 L. R. A. (N. S.) 648, Ann. Cas. 1913 A 719, 133 N. W. 801. 48 Neither the pendency of the bankruptcy proceedings, nor the fact that the creditors have proved their demands in bankruptcy against the Corporation and have received dividends thereon, is a bar to their right to proceed by bill in equity against the stock holders. First Nat. Bank v. Hingham Mfg. Co., 127 Mass. 563. 49 Way v. Barney, 116 Minn. 285, 38 L. R. A. (N. S.) 648, Ann. Cas. 1913 A 719, 133 N. W. 801. 50 In 1913 A Way v. Barney, 116 Minn. 285, 38 L. R. A. (N. S.) 648, Ann. Cas. 719, 133 N. W. 801, in response to a contention that the Minnesota court had previously held that the stockholders' liability for the debts of the corporation is extinguished by its release from its debts, and therefore the Bankruptcy Act could not create a new liability, the court said. "The Bankruptcy Act attempts to do nothing of the kind, but simply to preserve intact all the cred itors' remedies for the collection of the balance of their claims against those who were liable in any manner with the corporation therefor, precisely as it preserves the right of creditors to have satisfied the balance of their debts by enforcing liens and trusts securing the same. As already stated, Congress had plenary power by the Bankruptcy Act to withhold entirely, or to grant, subject to such conditions or limitations as it saw fit, a discharge to a corporation, and by the provisions of the act cited the effect of such discharge is expressly limited. The act creates no new rights in favor of creditors as against parties, other than the corporation, who are liable for its debts, but preserves existing ones intact. The nature of the constitutional liability of stockholders for its debts brings it directly within the limitations of the effect of a discharge of the corporation. We accordingly hold that the discharge in bankruptcy of a Minnesota corporation does not release its stockholders from the liability for its debts imposed by section 3, art. 10, of our state Constitution." such that their claims could have been proved against his estate,51 but not otherwise.52 Under the Bankruptcy Act, a discharge does not release the stockholder where the claim against him is not scheduled, unless the creditor had notice or knowledge of the proceedings;5 and the burden of proving that he had such notice or knowledge is on the bankrupt.54 53 Where insolvency proceedings are pending against a stockholder, his assignee may be made a party to a suit in equity to enforce the liability of all of the stockholders for the benefit of all of the creditors. The suit may be brought and proceed to judgment against them by leave of the insolvency court, for the purpose of establishing the amount due from the insolvent, and the amount so ascertained may be proved as a debt in the insolvency proceedings.55 The rights of creditors of a corporation against the stockholders 51 Irons V. Manufacturers' Nat. Bank of Chicago, 17 Fed. 308, 27 Fed. 591; Dight v. Chapman, 44 Ore. 265, 65 L. R. A. 793, 75 Pac. 585; Marr v. Bank of West Tennessee, 4 Lea (Tenn.) 578. See also Carey v. Mayer, 79 Fed. 926. A decree of a Minnesota court levying an assessment against stockholders of a Minnesota corporation for the amount of their statutory liability is a provable debt in bankruptcy proceedings against a nonresident stockholder. The receiver is the duly authorized agent for the creditors of the corporation, and as such may prove the claim. Dight v. Chapman, 44 Ore. 265, 65 L. R. A. 793, 75 Pac. 585. Since the liability of a stockholder in a banking corporation is contractual, his discharge in bankruptcy upon a petition filed and an adjudication made after the corporation has become insolvent relieves him from liability because such liability on the date of the filing of the petition in bankruptcy is a provable debt. Van Tuyl v. Schwab, 174 N. Y. App. Div. 665, 161 N. Y. Supp. 323, aff'd 220 N. Y. 661, 116 N. E. 1081; Richards v. Schwab, 101 N. Y. Misc. 128, 167 N. Y. Supp. 535. The "liability accrues, not when the company or bank is ascertained to be insolvent, but when it incurs the indebtedness for which the statute renders the stockholder liable," although the enforcement of the liability is postponed until the insolvency has been ascertained. Van Tuyl v. Schwab, 174 N. Y. App. Div. 665, 161 N. Y. Supp. 323, aff'd 220 N. Y. 661, 116 N. E. 1081. 52 See First Nat. Bank of Barre v. Hingham Mfg. Co., 127 Mass. 563; Bangs v. Lincoln, 10 Gray (Mass.) 600; Kelton V. Phillips, 3 Metc. (Mass.) 61. 53 Wineman v. Fisher, 135 Mich. 604, 98 N. W. 404. Knowledge by a receiver of the corporation of the bankruptcy proceedings, acquired while he was cashier of a bank which is also a creditor of the bankrupt, charges him with notice thereof in his capacity as receiver. Dight v. Chapman, 44 Ore. 265, 65 L. R. A. 793, 75 Pac. 585. See standard works on Bankruptcy. 54 Wineman v. Fisher, 135 Mich. 604, 98 N. W. 404. 55 Barton Nat. Bank v. Atkins, 72 Vt. 33, 47 Atl. 176. or their property are not superior to the rights of the individual creditors of the stockholders. Their assets are not in any sense a trust fund to the extent of their liability; and therefore the assets of an insolvent stockholder of an insolvent corporation, or the assets of the insolvent estate of a deceased stockholder, are not, as against his other creditors, subject to any preferential claim for the payment of his statutory liability for the debts of the corporation. And this is true of stockholders in national banks.56 §4266. Contribution among stockholders. Although it seems that, when the liability for corporate debts imposed upon stockholders by statute is penal in its nature,57 a stockholder who has been compelled to pay debts under the statute cannot sue the other stockholders for contribution,58 it is certainly otherwise when the liability is contractual in its nature. In such a case, even when the statute makes the stockholders severally liable to creditors, so that a creditor may proceed against a single stockholder, equity requires that the burden shall be borne by all the stockholders alike in proportion to their shares, and, if one of them is compelled to pay more than his share, he is entitled to contribution from the others.59 56 Peters v. Bain, 133 U. S. 670, 33 L. Ed. 696; In re Beard's Estate, 7 Wyo. 104, 38 L. R. A. 860, 75 Am. St. Rep. 882, 50 Pac. 226. 57 See 4176, supra. 58 See Sayles v. Brown, 40 Fed. 8, where it was held that stockholders of a Rhode Island corporation residing in that state could not enforce contribution against stockholders residing in Maryland where the liability was penal, and hence could not have been enforced against the Maryland stockholders. Where a liability imposed upon directors or other officers for corporate debts is penal in its nature, an officer who has been compelled to pay such a debt cannot sue the other officers for contribution. § 2419, supra. 59 United States. Selig v. Hamilton, 234 U.S. 652, 58 L. Ed. 1518, Ann. Cas. 1917 A 104; Wyman v. Bowman, 127 Fed. 257; Allen v. Fairbanks, 45 Fed. 445, 40 Fed. 188. Illinois. Buchanan v. Meisser, 105 Ill. 638; Wincock v. Turpin, 96 Ill. 135. Indiana. Ewing v. Stultz, 9 Ind. App. 1, 36 N. E. 170. Iowa. Stewart v. Lay, 45 Iowa 604. Kansas. Merrill v. Prescott, 67 Kan. 767, 74 Pac. 259; Pulsifer v. Greene, 96 Me. 438, 52 Atl. 921 (under the laws of Kansas). Maine. Putnam v. Misochi, 189 Mass. 421, 109 Am. St. Rep. 648, 4 Ann. Cas. 733, 75 N. E. 956 (under the Maine statute making stockholders liable to the amount unpaid on their stock). Maryland. Fiery v. Emmert, 36 Md. 464; Matthews v. Albert, 24 Md. 527. Massachusetts. Cary v. Holmes, 2 Way v. Mooers, 135 The question of contribution can seldom arise, however, under a statute making each stockholder of a corporation liable severally for such proportion of each debt of the corporation as the amount of his stock bears to the whole of the capital stock. Under such a statute, no creditor can recover from a stockholder more than his proportion of the debt, and, when a stockholder has paid his proportion of a debt, he has no cause of action against other stockholders to recover back any part of the amount so paid. If other stockholders are not made to pay their proportion, it is the creditor's loss, and the stockholder who has been compelled to pay cannot complain.60 And it has been Minn. 339, 160 N. W. 1014; Selig v. Hamilton, 234 U. S. 652, 58 L. Ed. 1518, Ann. Cas. 1917 A 104. Mississippi. Perkins v. Sanders, 56 Miss. 733. Missouri. Guerney v. Moore, 131 Mo. 650, 32 S. W. 1132. Nebraska. Bennison v. McConnell, 56 Neb. 46, 76 N. W. 412; Van Pelt v. Gardner, 54 Neb. 701, 75 N. W. 874; Wyman v. Bowman, 127 Fed. 257. New Hampshire. Erickson v. Nesmith, 46 N. H. 371; Hadley v. Russell, 40 N. H. 109. New York. Mosler Safe Co. v. Guardian Trust Co., 208 N. Y. 524, 101 N. E. 786, modifying and aff'g judgment 153 App. Div. 117, 138 N. Y. Supp. 298; Mathez v. Neidig, 72 N. Y. 100, 104; Aspinwall v. Sacchi, 57 N. Y. 331; Koons v. Martin, 66 Hun 554, 21 N. Y. Supp. 657; Clark v. Myers, 11 Hun 608; Beers v. Waterbury, 8 Bosw. 396; Aspinwall v. Torrance, 1 Lans. 381. Ohio. Umsted v. Buskirk, 17 Ohio St. 113. Pennsylvania. O'Reilly v. Bard, 105 Pa. St. 569; Brinham v. Wellersburg Coal Co., 47 Pa. St. 43. Rhode Island. Sayles v. Bates, 15 R. I. 342, 5 Atl. 497. South Carolina. Farrow v. Bivings, 13 Rich. Eq. 25. Stockholders who pay an assessment levied for the restoration of the capital stock of a safe deposit company are entitled to contribution to the extent that the proceeds are subsequently used, after the insolvency of the company, in paying corporate creditors. Mosler Safe Co. v. Guardian Trust Co., 208 N. Y. 524, 101 N. E. 786, modifying and aff 'g judgment 153 N. Y. App. Div. 117, 138 N. Y. Supp. 298. See also § 4102, supra. That creditors who are also stockholders of the corporation cannot enforce the liability of the other stockholders by an action at law or by execution, when the statute makes the stockholders liable substantially as partners, but must sue in equity for contribution, see § 4211, supra. 60 When a stockholder has paid his proportion of any debt, or of all the debts of the corporation, he is freed from all liability, and has no cause of action against any stockholder for money so paid. Gardiner v. Bank of Napa, 160 Cal. 577, 117 Pac. 667; Brown v. Merrill, 107 Cal. 446, 48 Am. St. Rep. 145, 40 Pac. 557. See also Sacramento Bank v. Pacific Bank, 121 Cal. 147, 45 L. R. A. 863, 71 Am. St. Rep. 36, 56 Pac. 787. Compare Wolters v. Henningsan, 114 Cal. 433, 46 Pac. 277; Richter v. Henningsan, 110 Cal. 530, 42 Pac. 1077, and Redington v. Cornwell, 90 Cal. 49, 27 Pac. 40, where stockholders of a distilling company who paid a tax for which a federal statute made held that, where the individual stockholders are not liable directly to individual creditors and the liability is enforced in a single suit in equity by or on behalf of all of the creditors and against all of the stockholders,61 the equities of the stockholders as between themselves must be adjusted in that suit, and that stockholders who are joined as defendants therein, and who subsequently pay the entire indebtedness, cannot maintain suits for contribution against other stockholders not so joined, whether they were within the jurisdiction of the court or not.62 An agreement between stockholders that if either of them is obliged to pay any money on his stockholder's liability to creditors who refuse to come into a settlement, they will account with each other and that each will pay half the amount so paid by the other is valid and enforceable as between the parties.6 63 Before a stockholder is entitled to contribution from the other stockholders for costs and expenses incurred in defending an action brought against him to enforce his double liability, it must appear that the defense inured to their benefit, and that the costs and expenses were paid to relieve them from a common burden. So he is not entitled to contribution where it appears that the only defense urged by him was personal to himself, and in no way benefited his co-stockholders.64 A stockholder who voluntarily pays a debt of the corporation for which the stockholders are individually liable, but which he alone could not be compelled to pay, has no remedy against the other members for contribution.65 And a stockholder who, as an officer of the corporation, has contracted a debt in violation of a provision in the charter or articles of incorporation prohibiting the contracting of debts beyond a certain limit, and thereby rendered the stockholders individually liable, is not, on paying the debt, entitled to contribu stockholders liable were held entitled to contribution from other stockholders. 61 See §§ 4218, 4228, supra. 62 Since the matter might have been litigated in the original suit, it is res adjudicata. Rehbein v. Rahr, 109 Wis. 136, 85 N. W. 315; Foster v. Posson, 105 Wis. 99, 81 N. W. 123. for the amount so paid in an action to enforce his liability and that of the other party as stockholders, he will be compelled to account to such other party in such action, in accordance with such agreement. Jones v. Turney & Jones Co., 91 Ohio St. 122, 110 N. E. 191. 64 Harrison v. Scott, 77 Kan. 637, 95 Pac. 1045. 65 Andrews v. Callender, 13 Pick. (Mass.) 484. See also Skinner V. White, Hopk. Ch. (N. Y.) 107. 63 Where one of the parties to such an agreement purchases outstanding claims of creditors who refuse to join in the settlement, and presents a claim |