Bain v. . Loan Association

Bukwkll, J.: The counsel for the appellant concedes in this Court that the answers of his Honor to the first and second questions propounded by the receiver are correct, but contends that his answers to the third and fourth questions are not in accord with the rights of the creditors of the two concerns, the joint stock company and the defendant corporation. It is necessary first to determine in what relation the members of the first Clinton Loan Association (the joint stock company), stand towards the creditors of that concern. *252 Each member i.s liable to each creditor for the full amount of his claim. This is so because that association was a partnership, and suit may be brought by each creditor against any or all of the partners. The Code, §§187 and 222. We speak now of the liability of the members to the creditors, and not of the liability of the members inter sese. It was not a corporation. There was no special charter from the General Assembly making it an artificial person capable of contracting. Its members had not complied with the provision of the general law (The Code, cli. 16, and acts amending it) so as thus to acquire for their association this artificial corporate existence, and, indeed, they seem to have been engaged in a business (banking) which prevented them from availing themselves of the provisions of the general law, and becoming a corporation or an incorporated joint stock company. The Code, §§677, 684. Mr. Beach, in his'work on private corporations, section 1.67, says: “A joint stock company may be defined to be a partnership whereof the capital is divided into shares which are transferable without the express consent of all the copartners. Its articles of association have the same relation to it that the charter has to an incorporated company, regulating the duties of the officers and the duties and obligations of the members among themselves. At common law they have none of the rights and immunities of regularly incorporated companies', being nothing more than partnerships, and every member of the company is liable for the debts of the concern, no matter what-the private arrangement among themselves may be.” All the authorities seem to be to the same effect- We have in this State no statutes regulating the law of such companies, such as are in force in England and in New York, and in some other States. Such being the relation of “the stockholders of the old concern, who are also creditors thereof ” to the other ered- *253 itors, we conclude that the proper answer to the third question is, “No,” for they arc members of a bankrupt firm, and a partner is not allowed to prove against a bankrupt estate of the firm for an amount owed him by tlie firm in competition with joint creditors, for he is their debtor. 2 Bates on Partnership, section 836. We think that the fourth question of the receiver should also be answered, “No.” The “new concern” is a corporation. None of its stockholders have paid any part of their subscriptions for stock. Foundry Co. v. Killian, 99 N. C., 501. They are debtors to the full amount subscribed by them, and cannot be allowed to appropriate any part of the fund belonging to the other creditors till their liability has been paid, The receiver should retain all dividends on debts due to stockholders thus indebted to the corporation until he is ready to make a final settlement with all the creditors. The receiver will pay the costs out of the funds in his hands. Judgment Modified.