NOTES OF CURRENT DECISIONS OF TnE
UNITED STATES SUPREME COURT. Corporations-Unauthorized Issue o.f Stock. SCOVILLE '0. THAYER. A case in error to the circuit court of the United States for the district of Massachusetts was decided in the supreme court of the United l::'tates on March 13,1882, by Woods, J.,-Mr. Justice Field and Mr. Justice Bray dissenting,-to the following effect: When the amount of the capital stock of an incorporated company is limited by its charter, all stock issued in excess of the limit is unauthorized and void. A holder of such unauthorized stock is not entitled to any of the rights, or subject to any of the liabilities, of a holder of authorized stock. Holders of such unauthorized stock are not estopped to set up its invalidity as a defence to an action in the interests of creditors brought against them, to recover the balance unpaid thereon, by the fact that they attended the at which it was voted to issue the same, or that they received and held certificates therefor, or that the otIicers and agents of the company rlilpresented its capital to be equal to the amount of both its authorized and unauthorized stock. When tlie company which has issued stock beyond the limit prescribed by its charter has been adjudicated bankrupt, the holders of the unauthorized stock are not entitled to have money paid thereon applied as a credit on the unpaid balance due on the unauthorized stock held by them. Subscribers to the stock of an incorporated company paid 20 per cent. on their shares, and it was agreed between them and the company that no further assessments should be made thereon, and certificates for full-paid shares were issued to them. The company was adjudicated bankrupt, and it became necessary to assess the unpaid stock to satisfy claims of creditors of the company. Held, (1) that the agreement between the company and its stockholders was in equity void as to creditors. (2) '.chat before an action at law could be maintained by the assignees in bankruptcy against a stockholder to recover upon his unpaid subscription of stock, some proceeding in the interest of creditors in a court of competent jurisdiction, to set aside the agreement between the stockholders and the company, and to make an assessment upon such unpaid stock, was necessary. (3) That until such order of the court and assessment, or sume authorized demand upon the stockholder to pay the balance due on the stock, no cause of action accrued (189)
190
FEDERAL REPORTER.
against him in favor of the assignees, and the limitation prescribed by the second ,;ection of the bankrupt act did not begin to rnn in his favor. J. E. McKeigham and A. A. Ramsey, for plaintiff. Sidlley Bartlett and Russell & Putnam, for defendant. '.rhe cases cited in the opinion were: As to the power of corporations, express and implied: Fertilizer Co. v. Hyde Park, 97 U.S. 659; Salomons v. Laing, 12 Beav. 339; Eastern Cos. R. Co. v. Hawkes, 5 H. L. Cas. 34tl. That a corpora_ tion has no implied power to change the amount of its capital as prescribed in its charter: Mechanics' Bank v. New York & N. H',R. Co. 13 N. Y. New York & N. H. R. Co. v. Schuyler, 34 N. Y. 30; Railway Co. v. Allerton, 18 Wall. 233; Stace&Worth's Case, Law Rep.4 Ch.682. That where the increase of stock is authorized by law a stockholder cannot set up informalities in the issuance of stock: Upton v. Tribilcock,91 U. S. 45; Chubb v. Upton, 95 U. S. 665: Pullman v. Upton, 96 U. S. 328. As to the distinction between shares which the company had no power to issue and those which they had power to issue: Lathrop v. Kneeland, 46 Barb. 432; Mackley's Case, L. R. 1 Ch. D. 247; Stace & Worth's Case, ld. 4 Ch. 682. That a holder of elaims against an insolvent corporation cannot set them off against his liability to assessment on his stock: Sawyer v. Hoag, 17 Wall. 610: Sanger v. 56; Scammon v. Kimball, 92 U. S. 362; Morgan Co. v. Allen, Upton, 91 103 U. S. 498: Wilcox v. Plummer, 4 Pet. 172; Amy v. Dubuque, 98 U. S. 470; Waterhouse v. Jamieson, L. R. 2 H. L. 29; Ex parte Currie, 3 De G., J. & S. 367: Carling's Case, L. R. 1 Ch. Div. 115: New Albany v. Burke, 11 Wall. 96: Burke v. Smith, 16 Wall. 390: Wood v. Dumner, 3 Mason, 308; Mumma'v. Potomac Co. 8 Pet. 286; Ogilvie v. Knox Ins. Co. 22 How. 387. That a court. of equity, when the company refuses or neglects to make a call for the unpaid subscription to stock: Curry v. Woodward, 53 Ala. 371; Robinson v.Bank of Darien, 18 Ga.65; Ward v. Griswoldville Manuf'g Co. 16 (Jonn. 601: and the statute of limitations does not begin to run until order of court or demand; Van Hook v. Whitelock, 3 Paige, 409; Salisbury v. Black, {) Har. & J. 293; Walter v. Walter, 1 Whart. 292: Quigg v. Kittredge, 18 N. H. 137: Nimms v. Walker, 14 La. Ann. 581. '.rhat a suit lies by a billholder of an insolvent bank against a stockholder to enforce his individual liability to pay the bills of the bank: Terry v. Tubman, 92 U. S. 156, distinguisbed. The statute of limitations begins to run against the bank and its creditors in favor of the stockholder when the bank stops paym ent: Baker v. Atlas Bank, 9 Met. 182: Com. v. Cochituate Bank, 3 Allen, 42.
Practice-Appeal-Certificate of Division-Forfeiture under Internal Revenue Laws. UNITED STATES 'll. An information was filed in the district eourt for the western district of Wisconsin for the forfeiture of the right, title, and interest of Severin Schulte in certain real estate on which he carried on the business of a distiller without giving bond as required by law, and with intent to deprive the United States of the tax on spirits distilled by him. Upon the trial in the district court, held by Judge Bunn, Schulte was by spechil verdict found guilty as charged, and that he held the legal title to the real estate subject to a mortgage to each of two claimants; and it was