
    *Bezl. Wells and others v. Hanse Wilson and others.
    Manufacturing association is a joint stock company, subject to the law of partnership, and its officers may, without special authority, bind the company for a loan of money. As between the members themselves, stock may be assigned, so as to discharge the assignor, though the mode prescribed be not pursued, if the company receive and treat the assignee as a partner, and cease to regard the assignox as such.
    This cause came before the court by an appeal on behalf of the defendants, from a decree against them in the court of common pleas, and was adjourned here for decision from Jefferson county. It was a suit in chancery between the members of “ The Steuben-ville Manufacturing Company,” the object of which was to settle and adjust the rights and liabilities of the members, and close its concerns. The bill, answers, exhibits, and depositions are very voluminous, but the material facts upon which the decision was grounded are abstracted from them, and occupy much less space. They are as follows :
    In the month of August, 1812, the company was first organized and commenced operations. In conformity with the provisions of the original articles of the association, the stock was extended on April 9, 1814, and then consisted of thirty-eight shares of five hundred dollars each, which was then held by the following named persons, who are here arranged as they stand, complainants and defendants:
    Complainants.
    B. Wells.................. 1 share.
    W. Wallace.............. 4 “
    D. Larri more........... 2 “
    J. G-. Henning......... 1 “
    J. C. Wright............ 1 “
    J. Abrahams............ 1 “
    Thos. Patton............ 1 “
    
    11
    Dependants.
    H. Wilson................ 1 share.
    J. G-albraith............. 2 “
    D. Hoge.................. 2 “
    W. Hamilton............ 2 “
    S. Patterson............. 6 “
    T. Henderson............ 2 “
    J. Larrimore............ 2 “
    S. Hunter................. 2 “
    J. Wilson................. 2 “
    R. Carrol.................. 1 “
    A. Moderwell............ 3 “
    T. McK. Thompson.... 2 “
    27
    
      
      After this new arrangement, the copartners agreed upon additional articles for their government, under which a board, of directors, a president, a secretary, and a treasurer, were chosen to manage the affairs of the company, by whom aud their successors duly chosen the business was subsequently *conducted. Amongst the provisions of the articles the following, treated as the third of the new articles, is the only one necessary to bo inserted :
    “ The stock shall be transferable on the books of the company, to be kept by the secretary, in such manner as to entitle the assignee to all the rights and privileges, and to subject him to the same liabilities and penalties as the assignor: provided, that no share of stock shall be transferred or assigned until the same shall have been offered to the company at one of their meetings, and an offer thereof made to them, that they may purchase the same for the use of-the company, if they please; and provided, also, that no transfer shall be made until all calls previously made by said company, on each share proposed to be transferred, shall have been paid into the treasury.”
    The stock was all called in and paid, and the amount invested in ground, buildings, and machinery for a steam mill and cotton factory. In June, 1815, the directors commenced borrowing money for the use of the company, and before June 6, 1816, had incurred a debt exceeding fourteen thousand dollars, which was finally increased to about nineteen thousand, when the compeny found it impracticable to do a further business.
    With a view to a dissolution of the company, some part of the members, in June, 1819, filed a petition against the others, in the court of common pleas for Jefferson county, praying for partition of the real estate. An order for partition was made, and a report •that the property could not be divided was also made, upon which the court directed a sale. At this sale B. Wells became the purchaser, as it was understood, in trust for the parties interested.
    On June 6,1814, Galbraith transferred his two shares to J. Larri more, and early in April, 1815, Hamilton transferred his two shares to Moderwell. Neither of these transfers were made in the manner prescribed by the articles, but the company permitted Moderwell to represent them as owner. No debts were incurred at the time these sales were made.
    On June 6,1816, Hunter sold his shares to Moderwell. On the 7th of the same month, Hanse and J. Wilson sold their shares to Moderwell also. These transfers *were not formally entered on the books, but the company admitted Moderwell to represent them. At this period the company was indebted to the banks above fourteen thousand dollars, borrowed for its use by a part of the complainants upon their own personal credit.
    In August, 1816, Hoge sold his shares to Gray, but did not transfer them on the books. Gray was never recognized as the owner by any act of the company.
    Carrol, December 20,1816, sold to Kells, but without transferring on the books. Kells was, however, upon one or two occasions, received to act with them as members.
    When the transfers were made to Larrimore, Moderwell, Gray, and Kells, they were all considered responsible and solvent men. And the master commissioner, who took the account in the cause, reported the real estate owned by the company then worth a greater sum than the debts at that time due from them.
    Subsequent transfers were made by Kells and Gray, to persons notoriously insolvent, who again transferred to others, none of whom ever acted as members of the company. Patterson was dead, Henderson and Moderwell were both insolvent, and the complainants were personally liable for a debt of about nineteen thousand dollars, upon account of the company. They filed this bill in the court of common pleas, praying that the real property purchased by Wells might be decreed a trust, and sold for the payment of the debts; and that contribution might be decreed amongst the other copartners, to pay the balance of debts due upon account of the' company.
    The defendants, Galbraith, Hamilton, H. and J. Wilson, Hunter, Hoge, and Carrol, each answered, and by their answers denied their liability. They insisted, that by the transfer of their stock, and the acceptance of their assignees, as owners, by the company, their responsibility ceased. They denied the authority of the directors to borrow money, and render the individuals of the company liable for the repayment; and they insisted that the sale of the real estate upon partition was made subject to the payment of all the debts; and that the purchaser, one of the complainants, consequently became charged with them. In point of fact, the evidence did not sustain this latter position. The court of common *pleas, by an interlocutory decree, directed the sale of the real estate for the benefit of the company, which was effected at ten thousand dollars, and confirmed. Upon the final hearing, that court dismissed the bill as to Hamilton, Galbraith, and Kells, and the other defendants, except Henderson, Carrol, H. Wilson, J. Wilson, Hunter, Hoge Thompson, and Moderwell; and decreed these latter defendants to contribute for the payment of the debts, charging upon all the solvent partners the proportion otherwise chargeable upon Henderson and Moderwell. From so much of this decree as charged them with contribution, the defendants appealed. The complainants did not appeal from that part of the decree which dismissed their bill as to certain defendants. All parties acquiesced in the sale of the real property; so that in this court the only questions agitated were, the liability of the defendants as partners, and the authority of the directors to bind the company for loans.
    Goodenow, for complainants:
    This is a partnership concern, and so treated by all the members of the company who have answered. It must, consequently, be decided upon according to the law of partnership. And on the subject of partnership associations, we hold it a sound principle, that without a special provision for that purpose, no individual of a company ■could withdraw, or, in other words, dissolve the partnership, without the consent of the whole. It is a question in which every member has an equal voice; and of which numbers can not deprive him. Take, for instance, a partnership of A., B., and C. Could C. abandon, “give up the ship,” and discharge himself from responsibility, ,or even liability, with the consent of B., but without the consent of A.? He could not; the law would still hold him liable, until the .last cent of loss was apportioned’and paid.
    The law will permit partners to form any rule of dissolution between -themselves, which they may deem expedient; and when formed by mutual consent, will compel each partner to abide by it to its fullest extent. So we should willingly accede, that in the first era of this company, while it transacted business in democratic style, the regular admission *of an assignee to take the pla'ee of an assignor, and an entry of such admission appearing upon the records of the company, may be considered as an exoneration of the assignor from any liability to the members of the company, his former partners; for such act would be a mutual dissolution of the former partnership ; and the admission of the assignee operated to form a new partnership. Hence we say, that the admission of R. Carrol, J. Wilson, and T. Patton absolved their assignors from all liability on the shares which they transferred to these new members. Yet, we say further, lest we should be misapprehended, that although a majority, under the old articles of said company, might so manage as to effect a dissolution, they could not, as a majority, absolve the obligation of any of the members to strangers or to each other.
    The section in the new articles which authorized an individual to transfer his stock and release himself from future obligations, is in these words :
    “Art. III. The stock shall be transferable on the books of the company, to be kept by the secretary in such manner as to entitle the assignee to all the rights and privileges, and to subject him or her to the same liabilities and penalties as the assignor; provided, that no share of stock shall be transferred or assigned until the same shall have been offered to the company at one of their meetings, and an offer thereof made to them that they may purchase the same for the use of the company, if they please. And provided, also, that no transfer shall be made, until all calls previously made by said company, on each share proposed to be transferred, shall have been paid into the treasury.”
    Before a member could claim the benefit of this provision, and say that his assignee was subject to all his liabilities as an original stockholder, he must have complied with the provision in all its requisitions. It was, as between him and the company, an ex parte proceeding, and he was bound to know that he pursued the provision in its strict sense. But we are yet to learn that even if he pursued this provision strictly and thoroughly as an assignor, he would thereby exonerate himself from any obligation he might previously have been under to the company or its members. The proviso itself evinces ours to be the correct construction, provided *that all previous calls are paid, etc. This proviso was made for the facility of the company in calling in its stock, etc. It is clear that the transfer subjects the assignee prospectively to the duties and obligations which might attach to the original holder had the stock remained with him.
    The language of this section, touching the transfer, is like that usually employed in the like instance in incorporated companies, excepting, that in this, the stock is first to be offered to the cornpany. But there is a wide difference in the characters of the two kinds of stock; and this difference has probably been a great agent in leading the defendants to ei’rouoous conclusion upon the nature of their stock. The stock of a corporate body is commonly a distinct, separate property, drawing to it no individual or personal responsibility beyond the amount of money adventured. But in the case of an unincorporated company, like the Steubenville Manufacturing Company, the stock attaches itself to a man’s estate, and will draw his last cent to the hammer of the auctioneer. In the former case, neither his purse nor his character is concerned beyond the stock to which he has put his signature; in the latter, both his purse and his name are embarked, and if the ship sinks he must sink with it, for his responsibility ceases only when all the world shall be satisfied in every claim it may hold against the company; and no person can discharge his purse or his name from the fortunes of the company, except by a formal and mutual dissolution. And surely it requires no wisdom above that of an ordinary understanding to know that a dissolution relieves' none of the members from the existing obligations to strangers; nor can it relieve one member from his accountability to another member, only by an express agreement to that effect.
    This doctrine appears a plain and palpable one, and has been recognized by all the respondents in their answers, where they speak of the sale of their stock; for they say they made an express condition in their contracts that their assignees were to take the stock subject to the debts of the company. This condition would have been unnecessary, if the company had in their articles provided, and, by the word liability, expressed such to be their understanding that the assignees became responsible for all prior debts. Because, such being a by-law of the company, the assignee would be Abound, in becoming a member, to inquire and make himself acquainted with the by-laws of the association, and must be held to have voluntarily acquiesced in them.
    Again: If the contrary doctrine bo correct, if the right to transfer be absolute, except as to the two conditions of paying calls, and offering the stock to the company, the stockholder could exercise it in defiance of the will of the company. What would be the result of such doctrine ? It would be this: When A., B. and C. found the partnership losing money they procure some worthless beings to accept of transfers, and thereby release themselves; and every other one in the alphabet does the same, excepting a few whose names are on the company scrip; and these, for being the members on whom the burden of the labor and credit of the company rested, must “ breast the shock ” — “ grin and bear it.”
    It is certain, however, allowing the fullest credit to everything offered on the part of the defendants, that there never was a single transfer made on “the books of the company,” in any “manner” whatever; much less in “such a manner as to entitle the assignee to all the rights and privileges, and subject him to the same liabilities and penalties as the assignor.” No such transfer having been made, it may well be asked on what ground do the defendants claim to be exonerated? They claim that they have done what they could to comply with this provision of the articles, and were prevented by the want of a secretary; that, therefore, they are entitled to the full benefit of it, the same as if transfers had been made in form upon the books of the company. In this argument the facts do not sustain them; and as they remained interested or liable, it was their own fault that they did not take effectual measures to complete their transfers and have the question, of their liability settled. They can not escape a just responsibility on this ground.
    Hallook,.for defendants:
    The complainants claim a decree against Galbraith, Hamilton, Hunter, the two Wilsons, Carrol, and Hoge, respectively, for that proportion of the whole debts of the company which the stock owned by each one bears to the whole stock. They proceed upon the principle that they are yet members *of the company; on the other hand, we claim that they are not now members of the company, and that they ceased to be members when they sold out and transferred.
    As this is an important point in the cause, we shall examine it somewhat in detail. It will be necessary to examine the right of members to transfer, and the manner in which it could be done, both before the additional articles were adopted and afterward.
    I take it to be clear law that any member of a copartnership, unless there is a provision in the articles of copartnership to the contrary, may sell out and transfer his interest in the company at any time, with the consent of the other partners. This is admitted. They may also transfer without consent of partners. 1 Montague on Part. 113; 15 Johns. 57; and this may be to one who is already a member, or to one who is not. 1 Swift Dig. 348, 349; 17 Johns. 525.
    No particular' mode of transfer is necessary. It may be in writing, or it may be by parol. The proof of the transfer will be the same as the proof of any other fact. The doctrine assumed that a private company can only speak through their books in the same manner that a corporation does, is entirely new to me; and it is supported neither by authority nor reason. Indeed," such a doctrine might operate rather hardly upon the complainants in some respects.
    I take it that the mode of proving that the other partners agreed to a transfer will be the same whether it be the transferrer or transferee, or a third person who is wishing to make out that fact. If an assignee, for the purpose of entitling himself to a share of the profits made by a company, should prove that the transferrer assigned his stock or interest to him, either by parol or in writing; that the other members of the company treated him for several years as partner, and joint-owner of the company property — admitted him to act with them as partner — made no objections to the assignment, and ceased to treat the other as a partner,'it would seem to me that no one would say that this was all to go for nothing, because at a meeting of the company a formal resolution had not been passed", and entered on the books of the company, that the assignee was approved of and admitted as a partner. Such a doctrine would be palpably absurd, especially in a court of equity, which professes to overleap forms and ^ceremonies, and proceed at once to the justice of a cause. Or suppose a creditor of the assignee should wish to get at his interest, and should prove his interest in the way above mentioned, or in any other way, as by showing confession of the other partners that the assignee was their partner, would it not be sufficient? These principles apply to ordinary or technical partnerships established under the law merchant. The Steubenville Manufacturing Company, however, is nota partnership, in the legal signification of the term, although it has many of the properties. It is an association of individuals, holding their property in common, assuming the form of a corporation, but not having the powers. The interest of the members is not joint; neither has each one the power of binding the others, by contract or otherwise; and each one does not commit his entire rights to the discretion of each of his copartners; although their liability to third persons, and between themselves, is the same as in a commercial partnership.
    The original articles, or agreement, made at the organization of the company, are binding upon all, as a contract, and will be enforced by courts; and whatever is done in pursuance of the original articles will be binding upon all. But the original constitution, or mutual contract, can not be altered or waived without the consent of all; and whatever is done not in pursuance of the original articles, is not binding upon those who do not assent.
    The case of the North River Steamboat Company, 4 Johns. Ch. 5, 73, is exactly in point; and also Davis v. Hawkins, 3 Maule & Selw. 488. If I am correct as to the legal character of this association, this consequence follows, that each member has an entire dominion over his own share or proportion of the property, and can alien at his own pleasure/provided there is nothing in the con stitution of the society, which he has agreed to, to the contrary. And this he can do without consulting the other members. So one tenant in common of a ship, or a house, may dispose of his interest to another at his own option, and the purchaser becomes a tenant in common with the others, whether they will or not. But one tenant in common may not dispose of the whole property, or pledge the credit of the others. We claim, then, that the members of the Steubenville Manufacturing ^Company, before the adoption of the additional articles, had a right to sell out and transfer to whom they pleased.
    Galbraith ceased to be a member of the company June 6,1814. The fact of the transfer is not denied. The transfer itself is in evidence, and the entry in the book of the treasurer proves it. There is also evidence that the other members assented. They have never treated Galbraith as a member of the company since. He has never had anything to do with the company.
    The company received the balance due on the stock from Larrimore, the assignee, and gave him credit for it. At one meeting of the company, four votes are allowed to the heirs of Lai-rimoré, which includes these shares. This shows the understanding of the company, that Larrimore owned these shares of stock. Not a single act of the company, or any member of it, appears, which goes to show that it was not the understanding of all parties, that Larrimore was the assignee of Galbraith. Having assented to it by their acts for five years, it would be singular that they should be permitted to deny their assent, because it was not formally entered on their book.
    We hold, then, that G-albraith ceased to be a member on June 6,1814. At that time no debts were owing by the company ; those for which- the defendants claim contribution have been contracted since; he therefore can not be made answerable for them. No property of the company ever came to his hand. The bill as to him must be therefore dismissed.
    The mutual agreement between the members of the company, as specified in the third additional article, is, that each member shall first offer his stock to the company, and pay up all calls before he sells. The assignee shall stand in the place of the assignor in all respects, and all transfers shall be made on the books of the company. The parties to a contract may at any time, if they please, waive the whole or any one of the stipulations contained in it; and having so done, they can not afterward insist upon a compliance.
    I shall contend that,, in the case of every one of the defendants for whom I appear, there has been a waiver of the stipulations contained in this article, where they have not been complied with. 8 Com. Dig. 842, Amer. ed.
    *Take the case of William Hamilton, which is the first transfer after the adoption of this article. He transferred to James Larrimore, April 21, 1815. He had not paid up the previous calls; he had not offered his stock to the company; the transfer was not entered on the book of the company at length. Hamilton never afterward attended any company meetings, or interfered in its affairs, and was never in any respect treated by the company as a member until this claim is set up by this suit. Moderwell, through Larrimore, is received as the assignee of this stock by the comjmny; he is charged with the balance due upon it; it is received from him, and he credited with the payment. Moderwell ever afterward represents this stock, and votes it.
    The next transfer in point of time is Hunter’s, on Juno 6, 1816. The two Wilsons transferred on the 7th of the same month. These transfers are so near in point of time that they may be considered as made at the same time. They had all paid up the whole amount of their stock. The two Wilsons had formally offered their stock to the company, who had refused to pturchase. Hunter did not formally offer his stock to the company, and obtain a formal vote, and have it entered in the company book. But he was one of those who offered at the time no vote was taken upon the offers, it being a matter understood that the company would not buy. The only objections to these transfers is, that they were not made on the book of the company kept by the secretary, but on a slip of paper, and given to the assignee. By the third article the company had authorized sales and transfers, if the right did not before exist. The object of requiring the transfers to be made on the book was, it may be presumed, the giving of notice to the company. If they, in fact, had notice, and received the assignee as such, and no injury happened for want of notice, the objection, it seems to me, would have little weight in a court of equity.
    Whatever objections there may have been to these transfers from a neglect to comply with the third additional article, let us examine if they have not been waived, and the transfers assented to, as in Hamilton’s case. Hunter and the Wilsons never after interfered in the affairs of the company. They were never after treated by any of the company as members, until the bringing of this suit, which is more than *four years, unless the petition for partition in 1819 should be considered as treating them as members. If it should, that proceeding was more than three years after these transfers. On the contrary, Moderwell was treated by the company as the owner of Hamilton’s stock, and has been ever since. He represented it and voted it at meetings of the company; and so he did upon that of the two Wilsons. What other acts could have been done, waiving any objections which might have been made to, and assenting to these transfers, I can not conceive. The evidence stares us in the face wherever it is possible to meet any evidence upon the subject.
    The next transfer in the order of time is Robert Carrol’s. He' transferred December 20, 1816. He had paid up all calls of the company, had offered his stock in the same manner as Hunter, and his transfer was not made on the books of the company. His transfer was also accepted, and any objections which might have been made to it, waived by the company. They ceased to treat or consider him as a member, and accepted and treated his assignee as a member standing in his place. His assignee is Thomas Kells. These facts show conclusively that Carrol’s transfer to Kells was agreed to by all parties, and Kells accepted as a member in place of him.
    The transfer of Hoge is the last one I have to notice. This transfer was not actually executed until January, 1817, although sale was made in August, 1816, according to Hoge’s answer. It was, at any rate, made some time before the transfer; and the transfer will take effect from the time of the sale. The equity rule is, that that shall be considered as done which ought to have been done. And the stock was considered, by Gray and the company, as his, December 28, 1816.
    Hoge’s transfer stands in the same situation as the others; he had paid up all calls, offered his stock at the same time, and in the same way, as Hunter and Carrol; but no transfer was made on the company books. But the same waiver of any objection and acceptance of the assignee exists here as in other cases.
    Considering the question as settled that these defendants ceased to be members of the company when they sold out, we will proceed to examine the consequences.
    *In the first place, we claim that they are not liable for any debts of the company contracted after they ceased to be members. The only exception that could be made to this proposition would be, where creditors of the company, who had been in the habit of dealing with them, should continue to give credit to the company without notice that these defendants had left it. A case coming within the exception is not made in the papers. On the contrary, these complainants, and the Bank of Steubenville, had notice of the transfers; Wells, Hoge, and Henning, being directors of the bank, and have acquiesced too long now to make us liable.
    Further, as between the assignor and assignee, the assignee takes the stock or property assigned subject to the debts of the company, due at the time of the assignment. This necessarily results from the manner in which partnership property is held. The partnership property is first liable to the payment of the debts of the company ; and no one member of the company has any right except in the overplus after debts are paid. Swift’s Dig. 345. Therefore, neither can the assignor give, nor the assignee take,- anything more than the assignor’s share in this surplus.
    It also results, from these principles, that although the assignor remains liable to creditors, the assignee is bound in equity to ex onerate him, or indemnify him, at least as far as the property will go, because the fund for the payment of these debts is transferred to, and goes into, the possession of the assignee; and ho becomes a trustee for the due application of the funds. This is the implied undertaking in all cases of sales of an interest in a partnership concern, where there are no express stipulations between the parties which shall vary it.
    These complainants were themselves members of the company at the time of the sale, and have continued so ever since. What right have they to call upon those who have sold out, and left funds in the possession and under the control of the company, more than sufficient to pay all the debts for which the complainants now seek to make them liable. If the company, instead of applying the funds which we left in trust with them to pay off these debts, have wasted them without paying the debts, it is not for them to call upon *us now to pay, although a creditor who had no control of the funds might.
    When we sold out, the debts were but fourteen thousand five hundred dollars. The property which we left in their hands had just cost in cash more than thirty thousand dollars. The assignments were made to persons then responsible, and were acquiesced in until these assignees became insolvent. Until that event, they were treated as members of the company, and we were regarded as strangers. Whatever cause may have occasioned the deterioration of the property, we surely’are innocent in respect to it, and ought not to be charged in favor of .those who, either by negligence, mismanagement, or misfortune, were concerned in it.
    We conclude that the defendants, Galbraith, Hamilton, the Wilsons, Hunter, Carrol, and Hoge, ceased to be members when they sold their stock. That they are not liable for debts subsequently contracted; and that they are discharged from all liability to their copartners for existing debts, because they left with the company sufficient funds to discharge them, and because they were so long treated as persons having no interest in it, by the parties who now claim to subject them.
    Mr. Beebe also argued the cause for the defendants; but the reporter has no copy of his argument.
    Hammond, in reply:
    It seems to me incontrovertible that this is a joint stock cornpany, or public partnership; and as such, its stock is subject to the general law operating upon such companies, where the articles of association make no distinction. It is usually a provision of the articles of association of all public joint stock companies, that the stock shall be assignable. Where this is part of the compact, it would follow, as of course, that this absolute power or right to sell the stock, agreed upon by all as a fundamental rule, could not be limited or controlled by a part. I apprehend, therefore, that this doctrine is only applicable to such public companies as have made their stock transferable by their original and fundamental compact. In such case it is a just and necessary doctrine. . But if applied to a company that have not made *their stock transferable as matter of right, it is unjust and mischievous.
    It is unjust, because it can not be supposed that the omission to declare, the stock transferable was without intention or design; and to enable one member of a company to change the associates and the responsibilities of the other members, without their consent, either in the formation of the company or at the time of the transfer, is to make, not enforce a contract. It is mischievous, because its tendency is to obstruct the business, destroy the harmony, and ruin the credit of the company. Tiewing the subject in the aspect here presented, I conclude that the stock of this company could not be transferred so as to constitute new members without the assent of the company.
    As property, the stock of this company was a subject of contract and barter. In equity, a purchaser of this stock might be regarded as the owner, and claim the profits; or upon a dissolution of the company, he might claim the original capital; but this would be upon the ground that the holder was his trustee, and .known as such to the company; but he could not become a member of the company against their assent.
    The third of the additional articles is intended to make provision generally forexpressing the consent of the company to the admission of assignees of stock as members, instead of leaving the subject open to be decided in each particular case. It contains nothing unreasonable. It requires the transfer to be made on the books of the company. This scorns indispensable. The company ought to know who are its members. Without this knowledge they could not transact business. If, by transfer between the parties, new members could be constituted, without the knowledge of any but the seller and purchaser, it could not be known when a majority of members were present, or by whom a majority of the stock was owned; it could not be known upon whom calls were to be made, nor to whom the officers or agents were responsible. If a suit were to be commenced, none could know who should be made plaintiffs; and if the company were impleaded, it would be impossible to determine who ought to be made defendants. No one member could know his associate; for no one could know to whom others *had transferred. Whatever equitable interest might be acquired in the stock, it is clear actual membership ought not to be changed but upon the company records. And this would certainly be held, even if the company were compelled to receive assignees as members, in the sense asserted by the counsel for defendants.
    The provision that the assignee, when invested with the legal character of membership, shall have all the rights and be subject to all the responsibilities of the assignor, is a necessary consequence of his becoming a member of the company. In the very nature of things these rights and liabilities must commence with his membership, and operate prospectively. Such is the obvious meaning of the terms used; and that they were understood in this sense is evidenced by the subsequent provision that the stock should not be transferred until all previous calls were paid. In all this there is nothing contravening the original articles.
    Suppose the stock absolutely assignable as matter of right, still the right can not avail until the manner of exercising it shall be. agreed upon. It is a right to be enjoyed under the regulation of the company. If not regulated by the fundamental articles, it must be regulated, like all the other rights of the members, by the rules and by-laws. If the company refuse to prescribe a rule or regulation for the exercise of- this right, it violates its duty, and the party aggrieved is in the same situation as if the cempany neglect or refuse to make other-proper and indispensable regulations. But he can not, in this case, any more than others, prescribe a rule for himself, and conclude the company by his own act. When a rule for admitting assignees is once prescribed, the company can not refuse to receive the person who complies with it, whether the stock be made assignable by the original articles, or subsequent agreement of the company. Until such rule be prescribed and complied with, the legal relation and existence of the members of the company can not be changed.
    After the general regulation for admitting members was agreed to, no member was ever admitted, or transfer of stock made, conformably to the law of the company. The consequence is, that no person ever was a member of the company for any legal purpose but such as were members of the ^company on June 13, 1814. And as it respects strangers, I entertain no doubt that the legal liabilities of every one of those persons remain unchanged, except so far as they may be affected by the decease of the parties. If, then, the moneys in question had been loaned direct to the company, and this were an action at law for the money, I should entertain no possible doubt but that all who were members on June 13, 1814, were liable, except those deceased before the money was borrowed.
    Those who were members of the company when the loans were first respectively made are responsible for them, because the amount went to their use, and because the individuals became security upon their responsibility. Upon any other doctrine the most monstrous injustice might be practiced. The company funds originally subscribed were all invested in a steam mill and cotton factory—the whole of a most perishable character. Without funds no business can be done so as to render the stock invested in any way productive. The stockholders are men of property, and it is known that they are responsible for any debts that may be contracted. Individuals lend their names to raise money, from time to time. It is obtained and applied. At length it is ascertained to be a losing concern; when suddenly every member, whose name is not involved in loans, transfers his stock to a man without property; and those who are in advance, whether money or credit, are left without redress. It can not be that any individual can thus discharge himself from the obligations of an existing debt.
    Galbraith claims that he sold his stock to James Larrimore, June 6, 1814; and Hamilton, that he sold his April 10, 1815. But as they never procured their vendees to be admitted in their place by the company, or made a regular transfer according to the bylaws, or additional articles, they both remained legally members of the company. At law, strangers could charge them upon the contracts of the company. But I am inclined to think that their copartners can not charge them in equity for debts contracted after they had ceased, in equity, to have an interest.
    Their case is totally different from that of the other defendants. They sold in good faith, when the company were unincumbered, and while the company were in active operation. *They were never afterward called upon or treated as partners. They owed nothing at the time of their sale; and it can not be supposed that debts were afterward created, or responsibilities incurred upon their credit. If as to' them the bill should be dismissed, they ought not to recover costs, because it was in consequence of their own negligence in not making transfers that it became necessary to make them defendants.
    Hunter sold his stock on the 6th, and the two Wilsons on June 7, 1816. At that time the company had borrowed fourteen thousand five hundred dollars, which had been applied to their uso. I consider that the complainants are to be regarded as security for this money to the lender. If this is not their condition they must be the actual lenders of this sum. In either case, a sale of the stock, had there been an actual transfer on the books, could not change the rights or responsibilities then in existence. No matter who were the lenders, Hunter and the two Wilsons were debtors, and could not shake off their obligation to pay by abandoning the concern.
    It is urged that the conduct of the other parties has discharged Hunter and the Wilsons, by renewing the notes and changing the securities. But this is a refinement which equity can not adopt or recognize. . •
    If the loan be regarded in equity as the debt of the company, and the complainants as surety for its payment, the nature of the debt can not be changed by renewing the notes, or changing the security. The debt was that of the individuals who constituted the company when it was contracted. It was for them that the complainants became responsible, and not for the ideal and abstract entity called the Steubenville Manufacturing Company. Tnis debt and responsibility were incurred for a particular purpose. While the lender would give credit the sureties could incur no just censure if they lent their names to preserve that credit, in the hope that the concern would enable the company to pay the debt. If any one of the debtors wished to discharge his liability he could do so only according to the articles of association and bylaws. He could transfer his stock upon the books, cease to be a member in respect to further transactions, and call upon ali concerned to give him an acquittance, or wind up *the concern so far as he was interested. If the 'associates refused to do this, a court of equity would compel them. But an informal transfer of the stock could not have a more beneficial effect than a formal one. A renewal of the note was a continuance of credit to the original debtors, not an acceptance of new debtors and a discharge of the first, because legally and technically the members of the company were the same. Equity surely would not lend its aid to exonerate the original debtor, if the liability remained in consequence of his own laches, where the credit was originally given to him. If the complainants are to be considered as advancing the money, and therefore creditors of the company, then the renewal of the notes is put out of the case. They wore creditors from the moment the money was advanced, and the defendants have nothing to do with the means by which the money was obtained.
    Whether, then, the complainants be sureties or creditors, a transfer of stock can not affect their rights. That the debt was suffered to subsist, and an effort made to turn the concern to the best account, ought not to be considered as an acquittance of responsible men, and an acceptance ofthose that were not responsible.
    It is insisted that Hunter and the Wilsons can, in no event, be charged with the money borrowed after Tune 7, 1816; and perhaps it may be thought that, in this particular, their case can not be distinguished from that of Galbraith and Hamilton. I am of a different opinion. When Galbraith and Hamilton sold their stock they were liable for nothing, and could have no further interest in the success or failure of the company. Hot so Hunter and the Wilsons. They were liable for a large debt, and were deeply interested that the company concern should be made to' liquidate it’. Subsequent loans, made in good faith for the use of the company, were made for their benefit as much as for any other members of the concern; for, until the debts were paid, no profit could be made by any. They were legally members of the company, legally interested in its prosperity, and legally liable for its debts. They could have no ground to ask equity to relieve them against making payment. And let it be remembered, that this bill is not prosecuted to recover the money advanced for the company alone, or paid for them by the ^complainants as sureties. The object of this bill is to settle the whole transactions, to ascertain the interests of each, and who are members in equity; and, finally, to-close the whole business. It is upon these subjects that the equitable jurisdiction of the court attaches. For the money, I apprehend, the defendants might be made liable at law.
    Another argument is pressed very strongly. It is said that the assignees had been received and acknowledged by the other memmers, and admitted by them to transact business. And it is insisted that members may be admitted without any particular act or form of admission, at least as between the members themselves. This I do not admit. The fact that the assignees were permitted to act as members, proves that the company did not understand the nature of their association and their rights and duties under it. But it can not make the assignees members for any purpose. Admit, however, that they are to be regarded as members, the consequences claimed by the defendants do not legitimately follow. The acceptance, by the company, of the assignee, does not discharge-the assignor of his debts, neither at law nor in equity.
    The provision of the regulation for making transfers, that the assignee shall be subject to the same liabilities and penalties as the assignor, is prospective. It could not be made retrospective. Personal liabilities can not thus be transferred. There is nothing in the terms used that warrant us in maintaining that it was intended to subject the assignee to the personal liabilities of his assignor previously incurred. Such liability could not be created except in a very imperfect manner, and -could not be created at all between others than the members of the company. The rights and privileges of the assignee could not commence until the assignment; and it is clear to me that the article contemplates that the rights and privileges conferred, and the liabilities and penalties to be incurred, should commence at the same time. The legal power of the parties, sound policy, and the terms used, all unite in support of this interpretation.
    By accepting the assignees—had they been formally and legally accepted—the company would not have discharged the assignors from their liabilities unless a distinct discharge was given; and the assignees would not have .incurred these ^liabilities, as between them and the company, unless the one had made an express stipulation and the others had accepted it. Transacting business with the assignees, therefore, proves nothing but that the company received them and accepted them for personal liabilities incurred after their reception.
   By the Court:

We entertain no doubt but that the extension of the stock of the original company, in April, 1814, and the regulations subsequently entered into for managing its affairs, were obligatory upon all the parties; and as all the matters litigated arose subsequent to that event, they must be decided by the rules and regulations made under the new organization. The power .to borrow meney for the use of the company, and to bind the members to repay it, results necessarily from the'power to contract. It seems inherent in all trading companies, unless specially restrained in the articles of association.

The real question-now before the court, and the only one of importance to the parties, is, whether the complainants can hold the defendants, Galbraith, Hamilton, the Wilsons, Hunter, Carrol, and Hoge, to be members of the company, as amongst themselves, and claim contribution of them to make up the losses sustained ? The application to charge them is made to a court of equity, and the facts and circumstances upon which it must be decided, though involved in voluminous papers, are, in truth, confined to a very narrow compass. The partners agree amongst themselves that each one shall be authorized to sell out his interest in the company a'nd substitute in his place a new partner, whom the others are bound to receive, upon complying with certain previous conditions. He shall first offer his stock to the company, and he shall, secondly, pay up so much of it as shall have been called for. These two conditions being performed, every member had an absolute right to transfer his stock on the company books, and the -company were bound to receive his assignee, and look to him for all subsequent liabilities.

When the company were in full operation, in June, 1814, Galbraith transferred his stock, and his assignee was received *and acted with as a member. In April, 1815, the same facts occurred as to Hamilton. At this period no debts were incurred. In June, 1816, Hunter and the Wilsons transferred their stock, and their assignee, previously a member of the company, was received to represent their shares. From this period no one ■of the sellers took any part in the business of the company, nor Were ever treated by the acting and officiating members as partners. When Hunter and the Wilsons sold their stock, the company were indebted, and part of the complainants were personally and individually liable for the debts. But the company property was estimated at a larger sum than the debts due; and the assignees, who under the assignment became members, at least in equity, were also solvent in their circumstances. The company proceed in their business, associate with the assignees as members until the company itself, as such, becomes insolvent, and until the assignees become individually insolvent; and then, after a lapse of more than four years, set up a claim that the defendants, so long disregarded as partners, are to be treated as members, for the purpose of compelling them to share the loss ! And this claim they ask a court of equity to enforce, upon the ground that the assignments were not formally made, and therefore do not techni■cally and legally divest the interests of the defendants. ■ This certainly is not the ordinary and natural office of a court of equity.

It is admitted in argument, indeed it could not be controverted with any hope of success, that the assignments in this case were operative in equity, and would entitle the assignees to share the profits, and to a division of the stock. Suppose that suddenly after these transfers were made, the business of the company had created great profits, and the assignors had refused to make the transfers on the books of the company, and the company had refused to recognize the assignees, or pay to them their dividends, nan it be doubted that a court of equity would have decreed relief? Suppose that, after notice of the informal transfer, the assignors had become insolvent, and the company had persisted in paying them dividends, would not a court of chancery have decreed a transfer, and compelled the company to recognize the assignees as members, and account to them for the dividends paid out?

^Suppose, again, that the creditors of the company, at the time of the transfer, or at a subsequent time, had subjected the assignors to the payment of a portion of the debts upon the doctrine now set up by the complainants that they remained legally members of the company, would not a court of equity give them relief upon the very ground that, in equity, they had ceased to be members, had ceased to have any chance to share the profits, had «eased to act, and that others had been received in their places?

Again: Suppose that, in 1817, a suit at law had been brought against the company for a debt contracted in 1817, and the assignees were made defendants, and the asignors omitted, would that matter avail in a plea in abatement? Would the informality of the assignment be held to counteract the conduct of all the parties, and to fix their rights in contradiction to their own proceedings and acknowledgments? On these points we entertain nodoubt ourselves, and we conceive there is little room for any one' to doubt.

It would, obviously, be most unjust that those who sold out of a profitable concern, or out of one which, though losing, was still-solvent, whose assignee was solvent at the time, and was received and treated by the company as a partner, should afterward be made a partner to subsequent insolvency by a mere informality in making the contract. If this may sometimes occur at law, we can conceive no case in which a court of equity should be made an instrument to produce such a result. And such must be the result if we give the aid which the complainants now ask of us.

But we do not consider that there is any such defect in the transfers as requires the aid of chancery to perfect them. The form or mode prescribed by the articles was intended to confer upon each member the absolute right to transfer his stock, and dissolve the-partnership as to himself and the other partners. This provision-is not regarded as precluding the company from admitting assignments in a different mode, either by positive resolution or by tacit acquiescence. They have, in the case before us, recognized the assignees as their partners by acting with them; and they have •recognized that the assignors were no longer members by ceasing to consult with them. And this conduct, on their part, concludes the complainants.

*lt is urged, in argument, that a certain part of the complainants, who have individually made themselves liable for the debts of the company, may be considered as creditors. But that, we think, can not mend their case. They can not merge the character of partners in that of creditors. And we are by no means satisfied that creditors, who became so with a perfect and full knowledge of all the circumstances, would be aided, in equity, to charge the assignors of the stock. Had it been the intention of the complainants, who were individually liable for the debts due when Hunter and the Wilsons transferred their stock, to look to them-for contribution, notice ought then to haye been given them of such intention. If there were then no such intentions the claim can not now be set up. It would be a fraud to conceal the intention in the first place; and there is no principle for originating a claim upon subsequent matter, which was not contemplated when the transactions, out of which it arises, took place.

We hold, therefore, that G-albraith, Hamilton, Hunter, the two Wilsons, and Carrol are discharged. For it is in proof that Kells was recognized by the company as the assignee of Carrol. There is not satisfactory proof that the company ever received Gray as the assignee of Hoge; the latter must consequently be held liable. No appeal having been taken by the complainants, from so much •of the decree as dismissed the bill as to Kells, he is now before the •court.  