
    FREDERICK W. GRIFFITH, et al., Plaintiffs and Appellants, v. DARIUS R. MANGAM, Defendant and Respondent.
    I. CORPORATIONS.
    (1.) Section 5 of the act of New Jersey entitled “an act concerning corporations,” approved February 14, 1846.
    1. Stockholders, liability of to creditors under this SECTION, HOW TO BE ENFORCED.
    
      (a.) By an equitable action only, brought by or on behalf of all the creditors against the corporation, making all the delinquent debtors also defendants, to assess upon and recover from each their pro rata shares of the debts.
    Before Curtis, Ch. J., Sedgwick and Speir, JJ.
    
      Decided May 8, 1877.
    This is an appeal from a judgment dismissing the complaint on referee’s report.
    
      The plaintiffs recovered a judgment for work, &c., against the Patent Lock Shank Button Company, a foreign corporation, incorporated under special act of the legislature of the State of New Jersey. Execution was returned unsatisfied. The defendant was sued as a stockholder, holding stock not fully paid for, in an amount exceeding plaintiffs’ claim.
    The following statute is relied on by the plaintiffs to maintain their action: “ When the whole capital of a corporation shall not be paid in, and the capital paid shall not be sufficient to satisfy the claims of the creditors, each stockholder shall be bound to pay, on each share held by him, the sum necessary to complete- the amount of such share as fixed by the charter of the company, or such proportion of that sum as shall be required to satisfy the creditors of the company.”
    
      Kelly & McCrea, attorneys, and of counsel, for appellants, upon the question discussed in the opinion, urged:
    I. The statute of New Jersey imports a several and individual liability.
    This would be undoubtedly so under the ordinary reading of the statute, each stockholder meaning not all, but each, separate, and independent. But we are not left to any original construction of the statute for its meaning. Analogous statutes have been- expounded, not only in our own courts, but in the courts of other States, and in other forums, which leave no doubt that the provision of the statute' now under examination should be construed to mean, as against stockholders, a separate and several liability, rather than a joint one (Bank of Poughkeepsie v. Ibbottson, 24 Wend. 473 ; Paine v. Stewart, 33 Conn. 516; Stanton v. Wilkinson, N. Y. Times, Feb. 20, 1876; Sanger v. Upton, 1 Otto [U. S. Sup. Ct.].56; Kennedy v. Gibson, 8 Wall. 498; In re Hollister Bank, 27 N. Y. 393).
    II. While the plaintiff might have availed himself of an action against all the stockholders, both on behalf of himself and any other creditor who might choose to come in, we insist that he was not bound to pursue this remedy alone. Upon principle, we think, this action is not to be distinguished from the suit of a creditor seeking to recover its debt from a person having assets belonging to an insolvent corporation (Bartlett v. Drew, 57 N. Y. 587 ; Garrison v. How, 17 Id. 458 ; Sanger v. Upton, 1 Otto, 56; Sawyer v. Hoag, 17 Wall. 610 ; Mann v. Pentz, 3 N. Y. 415 ; Story’s Eq. Jur. § 1252; Tinkham v. Borst, 31 Barb. 407; Ogilvie v. Knox Ins. Co., 22 How. U. S. 380 ; Weeks v. Love, 50 N. Y. 568).
    But it will be urged by the defendant here that the case of Bartlett v. Drew is not in point—that it has no application in its bearing upon the question of a stockholder’s liability. Let us see if this be so. Unpaid stock is as much a part of the property or assets of an Insolvent corporation as any other part of its property. There is no distinction. In the words of Swayne, J., in Sanger v. Upton, supra, “Unpaid stock is as much a part of this pledge (trust fund) and as much a part of the assets of the company, as the cash which has been paid in upon it. As regards creditors there is no distinction between such a demand and any other asset which may form a part of the property and effects of the corporation.”
    If this reasoning is sound, and speaking as it does the large and profound learning of the supreme court of the United States, we may well deem it to be correct, then the case of Bartlett v. Drew, we contend, has not only a very close but controlling application to the one at bar. And, in that view, we think, to use the language of the. opinion in that case, ‘‘ that the consideration of the questions in respect to parties and the form of the action quite unnecessary.”
    III. In opposition to the line of argument contended for in the foregoing points, it will doubtless be urged now, as it was before the learned referee, that there are authorities in this State opposed to the conclusions we. have arrived at, and which are fatal to them. And among these authorities is the case of Mann v. Pentz (3 N. Y. 415). Now, instead of considering this case an authority for the defendant, we think its entire scope and spirit in harmony with the views and position of the plaintiffs which we have already presented, and we are supported in this conclusion by the decision in Bartlett v. Drew, supra.
    
    IV. We consider that it follows from our assumption of the nature and effect of the defendant’s liability herein, that the remedy is not given to all the creditors jointly, but that it is available to each creditor as a several and distinct right. And we are firmly supported by authority in many of the cases already cited for this view of the statute (Bank of Poughkeepsie v. Ibbottson, supra; Briggs v. Penniman, 8 Cow. 387; Garrison v. Howe, 17 N. Y. 458; Weeks v. Love, 50 Id. 568).
    
      Arnold, Elliott & White, attorneys, and J. H. V. Arnold, of counsel, for respondent, on the question discussed by the court, urged:
    I. The defendant’s liability, if any, rests wholly on section 5 of the act of New Jersey entitled “An Act concerning Corporations,” approved February 14, 1846. This act is precisely the same as section 5, title 3, chapter 18, part 1, R. S. of New York. The courts of this State have held that under this New York statute the liability can only be enforced in an equitable action against the corporation and. all delinquent stockholders by or on behalf of all the stockholders (Mann v. Pentz, 3 N. Y. 416). This disposes of the case at bar in favor of defendant. There are other New York decisions to the same effect made upon above cited section of the R. S. and on analogous statutes (Talmadge v. Fiskkill Iron Co., 4 Barb. 
      393 ; Morgan v. N. Y. and Albany R. R. Co., 10 Paige, 290 ; Matter of Hollister Bank, 27 N. Y. 305; Mills v. Stewart, 41 Id. 389; Osgood v. Layton, 3 Abb. Ct. of App.)
    
    II. Under other statutes such as the acts of 1811 and 1848, it has been held that an individual creditor had a right of action against an individual stockholder. These acts, however, were entirely dissimilar in their provisions from the one in question.
    III. The case of Bartlett v. Drew (57 N. Y. 589), is not in antagonism. That case was put on Che ground that the defendant was in possession of assets of the corporation, to which he had no right or title.
   By the Court.—Speir, J.

The only question for review is whether the facts as found, without exception, sustain the conclusions of law. The fact is proved, as found by the referee, that there were other delinquent stockholders besides the defendant, and that the plaintiffs could not recover in this form of action.

It will be seen by reference to this special act, that the only provision under which stockholders are liable for any debts of the company, is contained in the general clause, providing that the corporation shall have all the powers and be subject to the restrictions and liabilities applicable to corporations generally, in the State of Hew Jersey, under the “act concerning corporations,” approved February 14,1846, and the acts supplementary thereto. The fifth section of the act itself contains the provision under which the question arises.

Ho individual or several liability on the part of the stockholder is created by this section. The language is clear and explicit. There are two conditions of liability expressed, in terms. Where the whole capital of the corporation shall not have been paid in, and where the capital paid shall be insufficient to satisfy the claims of creditors, “Each stockholder shall be bound to pay on each share held by him the sum necessary to complete the amount of such share as fixed by the charter of the company, or pay such proportion of the sum as shall be required to satisfy the creditors of the company. ’ ’ The liability is incurred when the capital paid in is insufficient to satisfy the debts against the corporation, and then only to an amount sufficient for that purpose. The liability is to the creditors of the corporation—and not to the individual stockholders— to the extent of what remains unpaid upon their respective shares of the capital stock of the company, or of such proportions thereof as may be necessary to satisfy the debts of the corporation. An account must be first taken of the debts, of the assets, ando of the aihoimt of capital remaining unpaid upon the shares, and the amount unpaid by each stockholder, in order that they may be made equally liable, before each stockholder shall be bound to pay on each share held by him. In short, the stockholders under the statute are not liable to the company, but for the debts, and the debts are due to the creditors and not to the company (Morgan v. N. Y. & Albany R. R. Co., 10 Paige, 290 ; Mann v. Pentz, 3 N. Y. 416). In this last case it was decided that only an equitable action by the creditors against all the stockholders to assess and recover from each their pro rata share of the debts would lie; and that no action on the part of the company could be maintained for that purpose. Yo one creditor of the company can maintain an action against an individual stockholder, for the reason that the liability created by the statute is to the creditors generally, and not to individual creditors, thus creating a liability to the creditors jointly. In equity, this liability enures to the creditors in proportion to the amount of their debts, respectively. A court of law cannot do justice between the parties in a joint action by all the creditors, and work out this equity.

I have not been able to find any decision by the courts in New Jersey conferring directly or by implication any right of action to the corporation against stockholders, or any action at law to any creditor against an individual stockholder where stock is not fully paid up. The statutes under which the decisions in this State are uniform are in all respects the same as the one at bar. In all the cases these statutes have received but one interpretation—a joint liability on the part of delinquent stockholders to pay pro rata according to their stock, and a right on the part of the creditors to have such moneys applied pro rata and equitably in.payment of their debts.

The judgment must be affirmed with costs.

Curtis, Ch. J., and Sedgwick, J., concurred.  