The Chancellor.
The cause has been brought to a
hearing by the plaintiffs upon the bill and answer, and consequently, the answer is to be taken for true “in all points.” This was one of Lord Bacon’s rules, (rule 64.) and it was afterwards adopted by Lord Clarendon ; and it is a rule admitted throughout the books to be well settled. (Grosvenor v. Cartwright, 2 Ch. Cas. 21. Bohun’s Cur. Canc. 149.) All the averments, in the answer, are to be taken for true; and even where the defendant states, that he believes and hopes to be able to prove such and such matters, they must be considered as proved, as the plaintiff, by not replying, has excluded the defendant from the opportunity of proving his averments. (Barker v. Wyld, 1 Vern. 140.)
Every allegation of fraud and intentional abuse of trust, is fully and explicitly denied in the answer; and I am now to inquire whether the facts charged and admitted, are sufficient to warrant a decree in favour of the plaintiffs, notwithstanding there be no fraud in fact imputable to the defendants, and notwithstanding every averment in the answer of any matter of fact, is to be taken for true.
The plaintiffs contend, that the defendants, who subscribed the certificate, filed in the secretary’s office, in 1815, in pursuance of the statute, and in order to constitute themselves a body politic and corporate, were guilty of fraud, in declaring, “ that the amount of the capital stock of the Company should be 40,000 dollars,” inasmuch as only 33,000 dollars were originally subscribed. The answer to this objection is very obvious and decisive. The statute could not have had reference to the whole capital then ac*224taally subscribed, for the subscriptions were of course to be made after the corporation was created. There could not * be subscriptions to the stock of a corporation until the corporation was actually created, and if no more subscriptions could afterwards be procured than to the amount of 33,000 dollars, would that render the parties chargeable with fraud in law, (for fraud, in fact, is out of the question,) in filing the original certificate ? Or, suppose it should be deemed advisable not to create a capital to the whole amount limited by the charter, and that a less sum would be adequate to the objects of the company, can it, for a moment, be supposed, that the trustees, or original associates, are liable, individually, for the deficiency ? The act provides, that the trustees may call in the capital actually subscribed, to such extent only as they should deem proper. It rests entirely in their discretion, and to be governed by their sense of the exigencies of their business.
It is undoubtedly a far-fetched suggestion, that the plaintiffs were induced, in 1817, to give credit on the assumption of a capital originally subscribed, to 40,000 dollars, when it is not stated that the plaintiffs made any inquiries as to the fact, and when the credit of the company, in 1817, must have rested upon circumstances then existing. Their stability must have depended upon the manner in which their capital had been previously employed and dispersed, and upon the probable productiveness, at that time, of capital employed upon cotton fabrics.
It is further contended, that the stockholders were individually responsible, to the extent of their shares of stock, for the debts of the company, according to the provision of the statute, on the ground that the corporation was dissolved; and the corporation is said to have been dissolved by the sales on execution of their real and personal estate, and by the suspension of the business of the factory. The defendants admit the sales and the suspension of the business of the factory, arising from the depreciation of cot*225ton stuffs, and the numerous suits brought against them; but they deny that, in point of fact, the corporation is dissolved, * ® and aver, that the company has been constantly in operation, and the trustees regularly elected and continued in succession, and the business of the company constantly transacted, down to the filing of the bill. There was the regular annual election of trustees, in October, 1820, a few months before the filing of the bill; and again in October, 1821, eight months after the commencement of the suit; and in September, 1821, there were calls made upon the stockholders for payment of three different instalments upon their shares, by a resolution of the trustees. It does not follow that a corporation is dissolved by the sale of it visible and tangible property, for the payment of debts, and by the temporary suspension of its business, so long as it has the moral and legal capacity to increase its subscriptions, call in more capital, and re-assume its business. There could be no room for doubt as to the actual existence of the corporation, if it were not for the decision of the Court of Errors, in the case of Slee v. Bloom (19 Johns. Rep. 456.) On examination of the reasons delivered by the Chief Justice in the Court of Errors, it appears to me, that the doctrine upon which that case was decided, does not apply to this. It was there admitted, that neither “ mis-user nor non-user could be relied on as a substantial and specific ground of a dissolution.” The ground upon which the corporation in that case was held to be dissolved, was, that the corporation had done, and suffered to be done, acts equivalent to a direct surrender. It not only ceased to own any property, but the trustees had ceased to act .from December, 1817, to the filing of the bill in April, 1819, and had done no act in that time “ manifesting an intention to resume their corporate functions.”
I do not think I am warranted in carrying that decision beyond the circumstances of the case, and to hold that *226one of these circumstances, viz. the sale of their visible property, is, of itself, sufficient evidence of a surrender, when all the other material circumstances are wanting. What essentially distinguishes that case from this is, that there the trustees had virtually renounced their trust, and ceased to act, and the regular annual election of trustees was discontinued. That was, in fact, the best evidence the case afforded of a virtual surrender. But here, every such presumption is rebutted by the acts and declarations of the trustees. They continue their succession, they meet and pass resolutions, direct further instalments to be paid in, and deny, in their answer, that they have surrendered or renounced their corporate trust; and they aver, that the company has been constantly in operation. Though their real property had been sold on execution, yet no deed had been executed, and no title passed. The company had still a portion of the year remaining unexpired to redeem the land, when the bill was filed. Under all these circumstances, I think I should not be warranted by the doctrine of the case of She v. Bloom, and there is nothing, certainly, in the English law to warrant me, in holding the corporation in this case to have been dissolved by the surrender or abandonment of its corporate powers.
Here, then, a fatal objection at once presents itself to this bill. The corporation, in its corporate capacity, is not a party to a suit for a corporate debt; and the individual stockholders are not responsible, in their private capacity, as upon a dissolution of the company.
And, if we were not embarrassed by this technical objection, and the question was fairly before me, under competent parties, touching the abuse of trust by the several defendants, I could not hold that a single charge was supported upon the admissions and against the averments in the answer.
What is the language of the answer to the charges *227in the bill? It is, that the subscriptions were received in good faith, and deemed by the trustees an adequate capital. The embarrasments of the company did not arise from the want of funds, but from the general decline of manufacturing business, and the loss of all profit in the manufacturing of cotton goods. The funds received have been faithfully expended in the payment of debts, and the current and unavoidable expenses of the establishment. The defendants do not believe they ever wrote a letter to B. Huntington, representing the company to be solvent, though they verily believed it to be so, in October, 1817 The notes which the company gave to Smith, and which he passed to the plaintiffs, were no doubt given for a valuable consideration, and were given upwards of nine months before Smith passed them away. It is impossible to deduce any inference of fraud against the defendants, from the negotiation of the notes. The judgment in favour of B. Huntington, was honestly and bona fide confessed, for a full and fair consideration; and the personal property of the company was duly, regularly, and fairly sold and purchased in by a part of the defendants, with no other view than to indemnify themselves for personal responsibilities assumed for debts contracted for the benefit and use of the company. The personal property, so sold, would not, at the time, have sold for a greater price in cash. It was purchased by part of the defendants, in full belief that they had a right to purchase it on their own account, and for the purpose mentioned. They always . intended to surrender it up to the company upon being reimbursed, and they did afterwards relinquish all claim to it; and it has since been sold on execution for the balance of Huntington’s judgment, and purchased by an agent of Huntington, and the defendants have not the custody or control of the property, and are willing it should be sold under any execution against the company, upon the reimbursement of the sums paid by them. The ac*228count of Francis Brown fy Co. against the company, was correct and just, and the trustees who examined it, allowed it to be so, and authorized a cognovit to be given in the action commenced against the company by the Browns. The real estate of the company was sold on execution under that judgment, and purchased by those creditors for its full value. The whole transaction was conducted in good faith, and the defendants say, they have at all times used their best endeavours to collect the calls on the stockholders, and suits are now pending for the recovery of instalments. In short, the defendants, by their answer, repel every suggestion of fraud, and explain every transaction, and insist on an honest discharge of their trust to the best of their ability.
This is the substance of the answer; and assuming it to be true in all points, I cannot see any ground for the charges in the bill, or any title to relief, as against these individual defendants.
There is a balance due on the mortgage given by the company, and assigned to the plaintiffs; but the bill is not adapted for the foreclosure of that mortgage. The company are a necessary party, for they are the mortgagors. There does not appear, therefore, tobe any sufficient ground for the bill, and, consequently, it must be dismissed. But considering the nature and difficulties of this case, and the circumstances which led the plaintiffs to institute the suit, I shall not charge them with the defendants’ costs. The case has, indeed, been attended with peculiar interest, owing to the former unsuccessful efforts of the plaintiffs to repair their losses, in respect to this same demand. (4 Johns, Ch. Rep. 671. S. C.)
Bill dismissed, without costs.