tion from the other stockholders, unless he shows that they authorized or consented to the creation of the debt. 66 A stockholder's remedy to enforce his right to contribution is by a suit in equity,67 unless some special remedy is prescribed by the statute, in which case the special remedy must be followed.68 It has been held that, when the property of a corporation has been assigned in trust, and creditors are pursuing their statutory remedy against stockholders to compel them to pay the debts of the company, a court of equity has jurisdiction, at the instance of such stockholders, to compel all stockholders to pay the amount due from them, in order that the assets of the company may be realized, and applied in payment of debts and the particular stockholders relieved to that extent from the liability to which they are exposed, and which should be borne by all alike.69 A bill for contribution must aver every fact necessary to entitle the plaintiff to the relief sought.70 The plaintiff must show the number of shares held by each of the parties called upon to contribute, and in strictness should set this forth in his bill, or aver his inability to do so and pray for discovery."1 66 Heald v. Owen, 79 Iowa 23, 44 N. W. 210; Haldeman v. Ainslie, 82 Ky. 395; McFadden v. Leeka, 48 Ohio St. 513, 28 N. E. 874. See also Connecticut River Sav. Bank v. Fiske, 62 N. H. 178 (by statute). 67 United States. Allen v. Fairbanks, 45 Fed. 445, 40 Fed. 188. Illinois. Wincock v. Turpin, 96 Ill. 135. Massachusetts. Putnam v. Misochi, 189 Mass. 421, 109 Am. St. Rep. 648, 4 Ann. Cas. 733, 75 N. E. 956. Michigan. Shurlow v. Lewis, 170 Mich. 493, 41 L. R. A. (N. S.) 975, 136 N. W. 484. New York. Aspinwall v. Sacchi, 57 N. Y. 331. Where one stockholder is entitled to contribution and brings an action against other solvent stockholders who are residents, alleging that certain other stockholders named are nonresident or insolvent and asking for an apportionment as against such stockholders, the action is equitable in its nature and the stockholders made defendants are not entitled to a jury as a matter of right. Merrill v. Prescott, 67 Kan. 767, 74 Pac. 259. See also § 4102, supra. 68 O'Reilly v. Bard, 105 Pa. St. 569; Brinham v. Wellersburg Coal Co., 47 Pa. St. 43. And see Cary v. Holmes, 2 Allen (Mass.) 498; Gray v. Coffin, 9 Cush. (Mass.) 192. When the statute provides for enforcing contribution by actions at law, the remedy is exclusive, and a suit in equity cannot be maintained on the ground of avoiding a multiplicity of suits. Myers v. Sierra Valley Stock & Agricultural Ass'n, 122 Cal. 669, 55 Pac. 689. 69 Fiery v. Emmert, 36 Md. 464. 70 A bill seeking contribution on account of a judgment recovered against and paid by him must allege that such judgment was for a debt of the corporation. Such an averment cannot be supplied by inference. Darlington v. Clemson, 41 Pa. Super. Ct. 309. 71 Darlington v. Clemson, 41 Pa. Super. Ct. 309. The liability of a stockholder to contribute, where the liability imposed by the statute is contractual and not penal, like the liability to creditors,72 survives his death, and may be enforced against his personal representatives.73 And it may be enforced against nonresident stockholders in the courts of other states, even though the principal liability could not be enforced except in the state by which the corporation was created.74 But it has been held that a stockholder's remedy for contribution is against the resident, solvent stockholders, and that they cannot force him to go into another jurisdiction to recover the debt due him.75 As between themselves, all of the stockholders are liable for an equitable proportion of the debts of the corporation, based upon the number of shares owned by each,76 and a release purchased from a creditor of the corporation by a stockholder for less than the full amount of his liability is a defense to an action for contribution by a stockholder who has paid more, only to the extent of the amount actually credited on the judgment by reason of such payment, with interest from the date when payment was made.77 The statute of limitations will run upon a cause of action in favor of a stockholder for contribution based on a claim in his favor against the corporation notwithstanding the pendency of an action against him upon his double liability in which he seeks to offset the same cause of action, since he is not thereby prevented from enforcing such cause of action.78 The right of stockholders to contribution, as between themselves, when they have been compelled to pay in more than their proportion of subscriptions, has been considered in a former section.79 S4267. Subrogation. Where a statute makes each stockholder individually and severally liable to creditors of the corporation, a voluntary payment by a stockholder of an insolvent corporation to a creditor after his personal liability attaches does not enable him to 72 See § 4195, supra. 73 Allen v. Fairbanks, 40 Fed. 188. 74 Allen v. Fairbanks, 45 Fed. 445; Putnam v. Misochi, 189 Mass. 421, 109 Am. St. Rep. 648, 4 Ann. Cas. 733, 75 N. E. 956. See also § 4102, supra. one 75 In an action for contribution by stockholder against his fellow stockholders, the computation should based on the number of resident solvent stockholders, nonresident or be insolvent stockholders being excluded. Merrill v. Prescott, 67 Kan. 767, 74 Pac. 259. 76 Merrill v. Prescott, 67 Kan. 767, 74 Pac. 259. 77 Merrill v. Prescott, 67 Kan. 767, 74 Pac. 259. 78 Harrison v. Scott, 77 Kan. 637, 95 Pac. 1045. See also § 4102, supra. take an assignment of the creditor's claim, and put it in as a claim against the assets in the hands of the assignee, to share pro rata, either to the amount so paid or to the amount of the claim, with other creditors. A stockholder, under such a statute, does not stand towards the corporation in the relation of surety or guarantor, in the sense that he can utilize its debts paid by him as claims against it, the same as other creditors, but the payment of the debt is the payment by him of an original liability, and extinguishes the debt as completely as if paid by the corporation itself.80 Nor can a stockholder who has paid his proportion of the corporate debts maintain an action against the corporation for reimbursement, either on the ground that the primary obligation rested on the corporation and that he was merely a surety, or under the equitable doctrine of subrogation. 81 Under the California provision, by which each stockholder of a corporation is made liable individually and personally for such proportion of all its debts and liabilities as the amount of its capital stock owned by him bears to the whole of the capital stock, it has been held that a stockholder is liable to the corporation for assessments to the full amount that may be due on his subscription to the capital stock for the payment of creditors of the corporation, and that he is also individually answerable to each creditor for such proportion of the latter's claim as the amount of stock held by him bears to the whole of the capital stock; that these two liabilities and the remedies based thereon are concurrent; and therefore that no part of what a stockholder may have paid, either directly to the corporation by way of assessments, or on account of his personal liability directly to a creditor, can be recovered back by him, either by subrogation or otherwise. Therefore, where a creditor proved his claim against an insolvent bank in liquidation, and received his proportion of several dividends from the assets of the bank, and also recovered from a stockholder his proportion of the debt, it was held that he was still entitled to share in subsequent dividends from the assets of the bank, until his claim should be paid in full, in proportion to the amount of his claim, as originally proved and allowed, and without regard to the payment coerced from the stockholder; and also that the stockholder who had made the payment was not entitled to anything out of such dividend, by way of subrogation or otherwise.82 80 Schrader v. Heinzelman Bros., 51 Ill. App. 31, aff'd 150 Ill. 227, 37 N. E. 235. 81 Trindade v. Atwater Canning & Packing Co. (Cal. App.), 128 Pac. 756. 82 Sacramento Bank v. Pacific Bank, 124 Cal. 147, 45 L. R. A. 863, 71 Am. St. Rep. 36, 56 Pac. 787. § 4268. Recovery of voluntary payments. A stockholder who voluntarily pays a corporate debt for which he is not liable, the pay ent not being made under any mistake of fact, but under a mistake of law only, cannot recover the same back, either from the creditor or from the person from whom he purchased his stock, and who could have been held liable to the creditor.83 Nor is a stockholder who voluntarily pays more than the proportion of a corporate debt for which he is liable entitled to be reimbursed for the excess by the corporation.84 Nor can 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, compel contribution by the other stockholders.85 XXXV. ASSESSMENTS ON FULL PAID STOCK 4269. Scope of subdivision. As we have seen in a previous section, the terms "assessment" and "call" are frequently used interchangeably, although the former is the broader of the two. And we have also seen that the term "call" is generally used in referring to demands on the stockholders for unpaid portions of their subscriptions, while the term "assessment," though frequently used as synonymous with "call," is more properly applicable to those contributions which are exacted of stockholders over and above the subscribed or par value of their stock.86 We have already considered the right of a corporation to make calls or assessments upon unpaid subscriptions to their capital stock,87 the rights and liabilities arising out of the issue of watered or fictitiously paid up stock,-that is, stock issued as paid up, when it is not full paid in fact,88 the rights of creditors with respect to unpaid subscriptions,89 and assessments upon stockholders for the payment of debts of an insolvent corporation under the statutes imposing liability over and above the par value of their shares.90 In this subdivision we shall consider the liability of stockholders to calls or assessments upon their shares after they have been in fact fully paid up (aside from the liability under statutes imposing liability for the benefit of creditors), and the right of nonstock cor 83 Danielson v. Yoakum, 116 Cal. 382, 48 Pac. 322. 84 Upton v. Woman's Club of Kern, 19 Cal. App. 127, 124 Pac. 858. 85 See § 4266, supra.. 86 See $688, supra. And see to the same effect Porter v. Northern Fire & Marine Ins. Co., 36 N. D. 199, 161 N. W. 1012, published since the above cited section was written. 87 See $668 et seq., supra. porations to levy assessments over and above the amount which the members have agreed to contribute. § 4270. Right to levy assessments generally. It may happen that, when stockholders or members of a corporation have paid in full into the treasury of the corporation their required contributions to its capital stock or capital, so that their shares or membership are paid for in full, the corporation may have need of further funds. In such a case, the stockholders or members may undoubtedly contribute any additional sums they may choose,91 although the capital stock of a corporation cannot be increased without legislative authority.92 It is well settled, however, that stockholders cannot be compelled to do so, unless additional liability is imposed by statute, or by the charter or articles of association. In the absence of a valid charter or statutory provision therefor, or an express agreement binding upon the stockholders, neither the board of directors nor a majority of the stockholders can levy and collect an assessment upon shares of stock which are fully paid for, whether the assessment is sought to be made for the purpose of raising money needed for the operations of the corporation, or for the purpose of paying its debts.93 And in the case 91 Brodrick v. Brown, 69 Fed. 497. See also Harris v. Northern Blue Grass Land Co., 185 Fed. 192, aff'd Central Wisconsin Trust Co. v. Barter, 194 Fed. 835; Easton Nat. Bank v. American Brick & Tile Co., 69 N. J. Eq. 326, 60 Atl. 54; Dotson v. Hoggan, 44 Utah 295, 140 Pac. 128. Such contributions become assets of the corporation, and do not create debts against it in favor of the stockholders. Brodrick v. Brown, 69 Fed. 497; Bidwell v. Pittsburgh, O. & E. L. Passenger Ry. Co., 114 Pa. St. 535, 6 Atl. 729; Leavitt v. Oxford & G. Silver Min. Co., 3 Utah 265, 1 Pac. 356. Contributions by directors of a bank to make good an impairment of its capital stock must be regarded as gifts, and the bank is under no obligation to return them. Interstate Trust & Banking Co. v. Irwin, 138 La. 325, 70 So. 313; Kennedy v. Young, 136 La. 674, 67 So. 547; Wright v. Gurley, 133 La. 745, 63 So. 310. Moneys furnished by stockholders of a corporation having no cash capital for the purpose of developing the corporate enterprise were held to be in the nature of consentable pro rata assessments on their stock which were not to be treated as loans to or debts by the company. Farrar v. Pneumatic Gate Co., 88 Ill. App. 498. 92 See § 3458, supra. 93 United States. Central Wisconsin Alabama. Smith v. Huckabee, 53 323. California. Bottle Mining & Milling Co. v. Kern, 9 Cal. App. 527, 99 Pac. 994. Idaho. Wall v. Basin Min. Co., 16 Idaho 313, 22 L. R. A. (N. S.) 1013, 101 Pac. 733. |