105 Pa. 49 | Pa. | 1884
delivered the opinion of the court, February 25th, 1884.
In this ease a bill in equity was filed by certain creditors of the Philadelphia and Susquehanna Blue Stone Company, suing as well for themselves as for all other creditors who might become parties thereto, against the company and the holders of its. capital stock, for the purpose of compelling the payment of the unpaid capital stock by the stockholders in order that the same might be applied to the payment of the debts due the plaintiffs. '-'^The bill alleged, and the master found, that the defendant company was incorporated under the general corporation law of April 29th, 1874, that the capital stock was fixed at |24,000, divided into 240 shares at $100 each, that a part only of the stock had been paid in, that the defendants were stockholders at the time of the assignment made by the company for the benefit of its creditors, and were indebted to the company in certain sums, which are set forth in detail, for their unpaid subscriptions to the capital stock, that the eompam’' was wholly insolvent, and all its available assets, except the balances due upon its capital stock, exhausted; that neither the company nor its assignee had made any call or assessment upon the stockholders to pay in the unpaid portion of the capital stock, but, on the contrary, had refused to do so, and that payment of such unpaid balances of the capital stock, or of some part thereof, was- necessary for the payment of the debts due the plaintiffs. i/The bill prayed for an account of the amounts remaining unpaid upon the capital stock, and for a decree that the stockholders pay whatever amounts were due by any of them upon previous assessments, and also that an assessment be levied for so much of the balances due, and not previously
The chief contention before the master, as in this Court, was upon the liability of the stockholders in this proceeding. It was contended, on behalf of the defendants, that they could not be called upon by bill in equity, as proposed in this case, for two reasons:«“First. Because the complainants have a complete and adequate remedy at law specifically provided by the Act of 29th April, 1874, under which the company was incorporated; and, Second. That the plaintiff, John Maxwell, the principal creditor, had a complete and adequate remedy by attachment in execution upon his judgment.
We will consider these defences separately and in their order.
The remedy at law which it is said could be resorted to by the plaintiffs is that which is provided by the fourteenth and fifteenth sections of the Act of 1874. The fourteenth section is, so far as it relates to the present controversy, in the following words, viz.: “ The stockholders in each of said corporations shall be liable in their individual capacity to the amount of stock held by each of them, for all work or labor done, or materials furnished, to carry on the operations of each of said corporations.” The fifteenth section provides the method of proceeding to enforce the liabilities created by the fourteenth.
It will be perceived at once that the liability established by the fourteenth section is of a special and extremely limited character. The stockholder is made directly liable for work and labor done, and for materials furnished to carry on the operations of the corporations. But two kinds of indebtedness only are imposed upon the stockholders, indebtedness for labor and indebtedness for materials furished. No other form or species of debt of the corporation can be collected from the stockholder under this section. Moreover, the liability created by this section is a direct liability from the stockholder to the creditor, and it exists to the amount of the stock held by the stockholder, without any reference to the question whether it has been paid for or not. Hence the stockholder, although he
This liability is, of course, of a purely statutory character, having no existence outside of the legislation, and whenever it is invoked it must be enforced in the very manner prescribed by the other portions of the Act. If that kind of remedy is not literally pursued when that particular liability is proposed to be enforced, there can be no recoveiy. Such were the decisions of this court in many cases, notably in Patterson v. Lane 11 Cas., 275; Hoard v. Wilcox, 11 Wr., 51; Brinham v. The Wellersburg Coal Co., Id., 43; Youghiogheny Shaft Co v. Evans 22 P. F. S., 331; Means’ Appeal, 4 Norr., 75. These were decisions under other Acts, principally the manufacturing law of 1849, but the controlling idea of the whole of them Avas that the liability and the remedy Avere special and statutory and therefore the provisions of the statute must be strictly pursued. Nothing more than this Avas decided in any of them. Thus in Patterson v. Lane, which was under the act of 1849, the 9th section of the Act provided that the stockholders should be individually liable for all the debts and contracts of the corporation, to the amount remaining unpaid on their shares respectively, until the whole amount of the capital stock Avas paid in and a certificate by the officers to that effect was made and recorded. It Avas alleged that a false certificate had been made as to the amount of stock paid in, and that the Avholé had not been paid, and a bill in equity Avas filed against certain stockholders to enforce their individual liability. But we held that such a bill would not lie because by the 23d section a special mode of proceeding for that purpose Avas provided and it must be strictly pursued. This was the whole of that decision. Precisely the same doctrine Avas held and applied in Hoard v. Wilcox, though the source of individual liability was different, and the defect in the proceeding was different, to-wit the corporation was not joined as required by the statute. Thompson J. said on p. 58: “ It is very evident that the remedy of the statute was not followed in these proceedings, and it is also quite apparent on the face of the lease, that it is under the statute that they seek to make the defendants answerable.” He said also “ The remedy for the collection of demands against such institutions is therefore statutory and special and must be followed. This we have lately held in Brinham et al v. The Wellersburg Coal Co. et al., ante p. 43, in obedience to the rule of the Act of 1806 requiring the remedy prescribed by a statute to be pursued.” The other cases referred to above were mere repetitions of the same doctrine applied to the facts involved in them. •
It is true that in the bill in this case the complainants, other than Maxwell, allege that the debts due them are for work and labor done, and materials furnished; and as to Maxwell, proof was offered, and refused, to show that the consideration of his judgment was for materials furnished. But of what consequence is this ? The learned counsel for the appellants argue with much ingenuity and earnestness, that because a statutory and peculiar remedy is given to creditors of this character, that one remedy alone must be pursued, and if it is not, all their other remedies against the same parties are taken from them. In other words, laborers and material men can make the stockholders pay them, because they are stockholders, and by the statute are bound to pay such claims in addition to paying for the whole of their stock, and because they have this right it is their sole, only right of redress against such persons. It is conceded that all other creditors can require the stockholders to pay in their unpaid capital stock in satis
The doctrine that the capital stock of a moneyed corporation is a trust fund available to creditors in the event of insolvency is admitted by the appellants, and-is established by very numerous decisions. A few of them are the following: Sawyer v. Hoag, 17 Wall., 610 ; Sanger v. Upton, 1 Otto, 56 ; Hatch v. Dana, 11 Id., 205 ; Wood v. Dummer, 3 Mas., 308; Webster v. Upton, 1 Otto, 65 ; Wilbur v. The Stockholders, 35 Leg. Int., 346; Story’s Equity, § 1252; Vose v. Grant, 15 Mass., 505 ; Spear v. Grant, 16 Mass., 9; Stang’s Appeal, 10 W. N. C., 409; Messersmith v. Bank, 15 Norr., 440. In Upton v. Tribilcock, 1 Otto, on p. 47, the doctrine is thus fully and forciblj1- expressed: “ The capital stock of a moneyed corporation is a fund for the payment of 'its debts. It is a trust fund of which the directors are the trustees. It is a trust to be managed for the benefit of its shareholders during its life, and for the benefit of its creditors in the event of its dissolution. This duty is a sacred one and cannot be disregarded.” In Sanger v. Upton, 1 Otto, 60, it is said: “ The capital stock of an incorporated company is a fund set apart for the payment of its debts......The creditors have a lien on it in equity. It is publicly pledged to those who deal with the corporation for their security. Unpaid stock is as much a part of this pledge, and as much a part of the assets of the company as the cash which has been paid in upon it.”
U is also entirely clear that the creditors of an insolvent/ corporation may compel, by bill in equity, the payment of the unpaid capital stock in discharge of their debts. Thus in Myers, Assignee, v. Seeley, 10 Nat. Bankruptcy Reg. Rep., 412, it was said: “ Bills by creditors who have judgments against the corporation have been sustained against the c'orporation and its stockholders, said bills being framed in the name of the judgment creditors, and of all others who may choose to come in and be made parties thereto. In such cases the decree has been for an account to be taken of the debts
A special defence was made as to W. M. Bunn, one of the appellants, that he was an assignee of stock in the corporation defendant, and not an original subscriber. It was admitted however that by the seventh section of the Act of 1874 an assignee of stock is 'subject to the same liabilities as an original subscriber. But it is argued that as the fifteenth section provides a special remedy for any liability under the provisions of the Act, the liability of an assignee can only be enforced by pursuing that remedy. The argument is not sound however, because the seventh section simply places assignees in the same position as original subscribers. It does not create any special liability. When it subjects assignees to all the liabilities of subscribers, and gives them all their privileges and immunities, it simply confers a status. To determine what are the liabilities of assignees since this Act, we have simply to inquire what are the liabilities of subscribers. When wo determine the latter we thereby determine the former. We have already shown that among the liabilities of the subscribers is the obligation to pay the unpaid portion of the capital stock. This liability exists outside of the Act of 1874 and of all legislation, and of course attaches to assignees because their position is the same as that of subscribers. The fifteenth section relates only to the special personal liabilities to pay particular debts created by the other sections of the Act. Mr. Bunn is therefore liable specially for debts due to laborers and material men, under the Act, and he is liable as a subscriber for the unpaid capital stock.
I''The second defence alleged relates to the plaintiff, John Maxwell, who was the holder of about seven-eighths of all the indebtedness of the corporation. Mr. Maxwell had obtained a judgment for his debt, and it was argued he had a complete and adequate remedy at law by process of attachment in execution.v *5
This writ is simply a species of execution, the purpose of which is to obtain satisfaction of the judgment upon which it is founded. It is not an original proceeding instituted to enforce a real or supposed legal or equitable liability by the procurement of a judicial decree as its result. In other words
In considering this subject it is necessary to observe some distinctions which must be borne in mind. There is no doubt that a contract of subscription to the stock of a moneyed corporation imposes upon the subscriber an obligation to pay to the corporation the amount of the subscription, according to the terms of the contract. If he fails to pay, the corporation may sue him at law upon his contract and recover whatever may be due. But recovery in this mode must be in accordance with the terms of the contract. If by those terms payment was to be made in any particular manner, or only of á certain portion of the par value, with an agreement that no more was to be paid, such contract is valid and binding upon the corporation. But if the corporation becomes insolvent and all its other assets are exhausted, and it is requisite for the payment of its debts that its unpaid capital should be paid up, then the law changes, and it is perfectly well settled by many decided cases, that all stipulations, conditions and devices agreed upon between the stockholders and the corporation, releasing the former from their obligation to pay in cash the full par value of their stock, become nugatory and void. Notwithstanding such terms of subscription the stockholders, in such circumstances, can be compelled to pay in full 'for their stock. This doctrine results from the character of the capital stock of corporations. It is a trust fund. It exists for the benefit of the creditors whenever their rights and interests require it. Its payment can be enforced in modes which are not available to the corporation and without using its name. Thus, creditors’ bills in the names of individual creditors, whether by judgment or otherwise, proceedings by assignees in bankruptcy either directly by bill or by petition to the court in bankruptcy, and proceedings by insolvent assignees or receivers under direction of the proper courts, are the ordinary modes in which the rights of the creditors are enforced in the circumstances we are now considering. In all of them however, it is absolutely essential that in some mode there should be an ascertainment in some form of the fact of insolvency, of the exhaustion of all other assets, of the amount of the debts due by the corporation, of the amount of capital stock required for the discharge of the debts, and a call or assessment upon the stockholders for the payment of the amount necessary to be paid by each. If the contract of subscription is absolute and without conditions or terms relieving
These principles are announced and illustrated in many eases. Wood v. Dummer, 3 Mason, 308, 314; Sagory v. Dubois, 3 Sandf. Ch. Rep., 467; Ward v. Griswoldville Manuf. Co., 16 Conn., 593; Ogilvie v. Knox Ins. Co., 22 How., 380; Mann v. Pentz, 3 Comst., 415, 423; Adler v. The Milwaukee Patent Brick Manufacturing Co., 13 Wise., 63; Myers v. Seeley, 10 Nat. Bank. Reg. Rep., 411; Upton v. Tribilcock, 1 Otto, 45, 47; Sanger v. Upton, Id., 56, 60; Webster v. Upton, Id., 65; Wilbur v. Stockholders, 39 Leg. Int., 346; Scovill v. Thayer, 15 Otto, 143; Patterson v. Lynde, 16 Id., 519; Sawyer v. Hoag, 17 Wall., 610.
I' The question whether an attachment in execution will lie at the suit of a single creditor to secure payment of his own debt to the exclusion of all other creditors is one whose solution depends upon the application of some of the principles above stated. If the corporation is solvent, and the subscription is in the ordinary form of an absolute engagement to pay the price of the stock, there is no doubt that an attachment in execution is an effective remedy for a judgment creditor of the corporation. The reason is that in such circumstances the amount due by the subscriber to the stock is an ordinary debt due directly by the stockholder to the corporation, the payment of which may be enforced in an action on the contract of subscription. Being a debt due, there is a right of action for its recovery by the company, and therefore it is strictly and properly subject to seizure by attachment. Hence it was held in Peterson v. Sinclair, 2 Norr., 250, that a balance due on a subscription to stock of a corporation is
In Hays v. Lycoming Fire Ins. Co., 2 Out., 184, an attachment was sustained against money due upon an assessment on the premium notes of the company for the purpose of paying losses, but it was expressly said by our brothel' GrOBDOir in the opinion that it was admitted the company was solvent, and the case was not complicated by the question of insolvency. It was held that as the company was solvent and the premium notes were assessable for the payment of the very debt in suit, and the assessment was lawfully made and the money partially paid into the hands of one of the garnishees, it was to be treated as any ordinary debt and subject to attachment as \other debts. In another case between the same parties, reported in 3 Out., 621, the facts were that a member had \sustained a loss by fire, for which he had brought an actibn and obtained judgment before the insolvency of the', company. An attachment in execution was issued, also qefore insolvency, and served upon a member who had given a premium note for his'insurance. He became indebted upon hid note, before insolvency, for the proportionate part necessary to pay the plaintiff’s loss, and nothing remained to be doiie except to ascertain the amount of that proportion. Upon) these distinct grounds the attachment was sustained. Mr. Justice Tbunkey in delivering the opinion said, on p. 625: “ The garnishee gave his notes to the defendant, to be paid in'.such portions and at such times as the directors may, agreeabty to the Act of incorporation, require. The losses by fire occurred, and this judgment for one of said losses was obtained prior to the proceedings for dissolution of the company. Before its dissolution the garnishee became indebted on his premium notes for the proportionate sum necessary for payment of said losses, and nothing remained to be done except to ascertain the proper amount of his indebtedness prior to his liability to an action to enforce payment. The writ of attachment was issued and served before the dissolution of the company, and the debt owing to the defendant by the garnishee became bound by it. After the receiver was appointed by order of the Court, he ascertained the measure or amount of the debt which had been levied upon by the attachment of the plaintiff.”
The foregoing are the only cases of attachment in execution in the Pennsylvania Courts to which we are referred, and with the exception of the case In re Glen Iron Works, bankrupt, 13 W. N. C., 387, to be hereafter considered, are all we have found in the books of reports relating to this subject.
In order to sustain an attachment in execution there must he a debt due from the garnishee to the defendant in the judgment, which may be payable at the time of the service of the writ, or may become payable subsequently. This debt must be at least a cause of action. If it be not, so that it cannot be enforced by the defendant against the garnishee, it certainly cannot be converted into a cause of action by the mere consideration that an attachment has issued instead of a summons in a common law action. If there is an inherent defect in the cause of action itself which prevents any recovery by the defendant or his representative because of the nature of the defect, it is not possible that such defect can be regarded removed simply because another proceeding is adopted.
Now it is manifest, upon the plainest principles, that in the case of an insolvent corporation, all of whose assets are exhausted except its unpaid capital stock, there can be no recovery against a delinquent stockholder until a call or assessment has been made upon him fixing the amount he is required to pay. Prior to insolvency this might be done by the corporation if it is not disabled by the special terms of the subscription contract. But when iiisolveiic}^ and exhaustion of assets exist, the unpaid capital is not available to any one creditor in satisfaction of his debt, because then the whole amount of the unpaid capital is a trust fund which does not belong to the corporation, but to the whole body of its creditors. Hence, whether the proceeding originates in the name of one, or of several, or of all the creditors, the result is the same in each. The capital, when recovered, enures to the benefit of all, and must be distributed among all ratably. Before any recovery can be had in such proceedings, no matter of what particular form, there must be an assessment made by a competent authority. The necessity for an assessment arises from the consideration that only so much of the unpaid capital can be called in as is required for the payment of the unsatisfied debts. If tbe whole unpaid capital is not required the whole cannot be called. In order to ascertain how much is required there must be an account of debts, assets, and unpaid capital taken, and then a decree dor an assessment of the amount due by each stoekholder.^Thus in Mann v. Pentz, 3 Comst., on p. 423, the Court said: “ This liability (for unpaid capital) is only incurred when tbe capital paid in is not sufficient to satisfy the debts against the corporation, and then only to an amount sufficient to satisfy such debts. It is therefore necessary that an account of the assets and of the debts should be taken, of the amount of capital remaining unpaid
In Myers v. Seeley, 10 Nat. Bank. Reg. Rep., 411, the court after stating the rule, says: “The reason of that rule is, that the unpaid subscriptions are assets applicable to the payment of corporate debts which the corporate authorities may call in for corporate purposes. If there are adequate assets other than said calls, then the creditor has no legal or equitable right to insist upon such calls. Primarily the amount due on subscriptions is a debt due to the corporation which it alone can enforce, and unless the corporation is without other assets to meet its obligations, and fails to make the needed calls, creditors cannot interpose. When the facts justify their interposition, an account of assets aud debts should be taken, in order that it may be known what, if anj', calls should be made. No further call should be made than what is sufficient, together with the other assets, to meet all debts ; for the bill by creditors cannot reach beyond the satisfaction of their demands. They have no other equity.”
In Wilbur v. The Stockholders, 39 Leg. Int., 346, Cadwalader, J. said: “ Where the corporation is solvent, the unpaid capital is not due and payable by the stockholders until payment in part or in whole is called for by the corporate authorities, unless a postponement of the payment would be inconsistent with some provision of the Act of incorporation, or with a conventional engagement with the stockholders. Ordinarily there is no such inconsistency of either kind, and- thus in the case of a solvent corporation, a call or levy by the corporate authorities assessing the amount or amounts payable must ordinarily precede any ascertained obligation of the respective stockholders to pay. But in the contrary case of an insolvent corporation the recourse of its creditors does not depend upon such condition precedent, and cannot be thus postponed. Every stockholder is, with relation to creditors, under an obligation to pay so much of the amount represented by his share or shares, of the capital as may be required for the payment of the corporate debt. ’• * ' Upon the insolvency of the corporation the obligations of the stockholders thus at once become assets for the payment of its debts to such an extent as other assets are deficient. To this extent the obligation of every stockholder, in its just proportion, then becomes in equity a debt payable for the benefit of the creditors. No act of the corporation before or after its insolvency can derogate in this respect from the rights of creditors.” In Webster v. Upton, 1 Otto, 71, Strong, J. says: “ All the cases agree that creditors of a corporation may compel payment of the stock subscribed, so far as it is necessary for the satisfaction of the
I consider it as the clear result of the decisions that, except in eases where the corporate authorities have themselves made calls which are authorized by the subscription contracts, there is absolutely no liability of any kind whatever on the part of the stockholder to pay any part of his unpaid capital, except under and by force of an assessment made as above stated. If this be true there is nothing upon which an attachment can fasten at any time prior to the assessment.»'! apprehend this conclusion is sustained by specific authority which I now proceed to indicate.
The case of Chandler, Receiver, v. Siddie, a stockholder, 10 Nat. Bank. Reg. Rep., 236, was an action at law by a receiver of an insolvent insurance company against a single stockholder, to collect eighty per cent., unpaid, of the defendant’s subscription to the capital stock of the company. The subscription contract provided for the payment in instalments, of twenty per cent, of the stock, and that the balance should be subject to the call of the directors as they may be instructed by majority of the stockholders represented at any regular meeting. There was no call by the directors, and the Receiver brought an action at law on the contract to recover the eighty per cent, against one stockholder defendant. The Circuit Court of the United States for the Southern District of Illinois, Milllií, J., in disposing of the case, said on p. 238: “ In this action at law, in which neither the corporation nor its stockholders other than the defendant are before the court, and in which the suit is on the contract of subscription for the entire eighty per cent, alleged to be due, I am of opinion, considering the terms of that contract, and that no call or assessment is alleged, either by the company before the insolvency,
■■/’ If there-was not a'cause of action, nothing to make the defendant liable without an assessment, surely there could be nothing to serve as the foundation of an attachment. Eor the writ of attachment cannot create a liability. It can at best appropriate a liability already existing. But if it already existed it could be enforced in the proceeding on the contract. The attachment'is also on the contract alone where there has been no assessment, and must fall with the action at law built ■upon the same foundation. » 1 4
The case of Adler et al. v. The Milwaukee Patent Brick Manufacturing Co. et al., 13 Wis., 63, was a proceeding by one creditor suing for himself and all other creditors, &c., against the corporation and a number of stockholders to compel the payment of unpaid capital stock in discharge of debts. The general principles we have heretofore stated were announced, and ón p. -70, Dixon, C. J., speaking of the question whether one creditor might acquire a preference over others, said: “ Whether in those cases where the stockholders are not individually liable by law for the debts' of the corporation,. one . creditor lean, by superior diligence, acquire a preference over the other creditors beyond that which- might result from.hi's: judgment becoming a lien on specific property, or his having' otherwise obtained a higher security at law, does not distinctly appear.- ;But the conclusion from the cases and the general doctrinés of courts > of equity is, I think, that he cannot, and. that when .he'is obliged to seek the aid of those 'courts for the] enforcement of -his demand, he must do so for the benefit.of all oth'er:ereditors who .may desire to unite with him, and that all must share alike in proportion to,the amount of their respective claims, in .the funds, which may be realized by the proceeding-.-.. The' maxim' of the law in like cases is, that equálity-.is.equity, and certainly no case more appropriate for its application, could be imagined. I conclude, therefore, and the: authorities clearly tend to show, that such is the prá-ctice. ..¡..i'-- .....
In the case, of Wilbur, assignee, v. Wilson et al., in the Circuit-Court of the United States for the Eastern District of Pennsylvania, 21 Oct. Sess., 1875, not reported, common, law actions were brought against the stockholders by the assignee in bankruptcy, upon promissory notes given by each - stockholder for the payment at a definite time of the full amount of
The ease of Scovill v. Thayer, 15 Otto, 143, puts the whole subject at rest. There a corporation was adjudicated a bankrupt. The assignees presented a petition for an assessment upon the unpaid capital stock for payment of debts. The subscribers to the stock had made an agreement with the company that no more than twenty per cent, of the par of the stock should be paid. The petition of the assignees asked for an assessment of seventy-six per cent, for payment of debts. The defendant, Thayer, having failed to pay his assessment, the assignees brought an action at law against him upon the assessment, and to the declaration filed the defendant filed two pleas, the first of which was a general denial of the allegations in the narr., and the second set up the limitation of two years prescribed by section 2 of the Act of March 2,1867, c. 176, the general bankrupt law of the United States. The
■ “In fact it has been held in recent English cases that not only is the company, but its creditors also are bound by such a contract. ..... But the doctrine of this court is that such a contract, though binding on the company, is a fraud in law on its creditors which they can set aside; that when their rights intervene ami their claims are to be satisfied, the stockholders can be required to pay their stock in full. .... The reason is that the stock subscribed is considered in equity as a trust fund for the payment of creditors......The question for solution is, therefore, when, under the facts of this case, did the cause of action accrue against the defendant in error ? Certainly not until. it became his duty to pay according to the terms'of.his contract or according to law.
“It is well' settled that when the stock is subscribed to be paid upon call of the company, and the company refuses or neglects to make the call, a court of equity may itself make the cal-1 if the interests of the creditors require it. The court
In Patterson v. Lynde, 16 Otto, 519, a judgment creditor of the corporation brought an action against one stockholder to enforce the payment of his unpaid capital stock, in satisfaction of his judgment. It was held this could not be done. Waite, C. J., says on p. 520: “ Since this case was decided below, the Supreme Court of Oregon has passed on the same question, and in Ladd v. Cartwright, 7 Oreg., 329, determined that the individual liability of stockholders for the indebtedness of the corporation is limited to the amount of their stock subscribed and unpaid, and that the remedy of the creditor to enforce this liability is in equity where the rights of the corporation, the stockholder and all the creditors can be adjusted in one suit. Of the correctness of this decision we have no doubt.
Against all these doctrines and express decisions we are referred by the learned counsel for the appellant to one case in which a contrary decision was made. It is the ease In re Glen Iron Works Bankrupt, 13 W. N. C., 387. A careful examination of that case compels ns to say that we cannot agree with the learned Judge of the District Court who decided it. The case of Scovil v. Thayer does not appear to have been called to his attention.. Had it been, it seems to us his conclusion must have been different. The reasoning of that case is in clear hostility with any theory of the least degree of obligation on the part of the stockholders in the state of facts which existed in the case of the Glen Iron Works, until after the agreement of the stockholders bad been declared void, and an assessment had been made. When the attachment in the latter case was issued and served, there was no obligation or duty to pay anything on the part of the stockholders, except the subscription contract itself. On that contract there was no right of action whatever in favor of the company and against the stockholder. There was no cause of action. Not a penny could have been recovered if the company.'had, at the date of the attachment, brought an action on the contract. Even the assignee, as was held in his actions, had no cause of action whatever after his appointment, and after his much larger right of action on behalf of creditors had accrued. Two things were required to be done first, before the slightest cause of action arose. One was an assessment, and the other, a decree setting aside the fraudulent condition of the subscription contract. Neither of these had been done. The learned Judge thought the attachment might be used as equity process, to take alL the steps, and enforce all the-rights. We cannot think so. The machinery of an attachment would not admit of it, and if it did, the result would be, not an application of the proceeds to the payment of the attaching creditor alone, but an equitable distribution to all. An attachment in execution is a strictly statutory remedy for the sole benefit of the attaching creditor. We cannot regard it as equity process in any point of view. It has no machinery by which other creditors can be introduced as plaintiffs or other stockholders as defendants. Nor do we understand how it would be possible under a mere system of interrogatories to, and answers by, the garnishees named in the proceeding, and of jury trial, on the truth of the answers, to marshal the entire assets of the corporation, to take an account of all its debts and all its assets, to ascertain the amount of unpaid capital
- Entertaining these views we are unable to regard the decision in the case In Re Glen Iron Works as authority in Pennsylvania for the doctrine it announces, and we cannot but regard it as in plain hostility with the decisions of the Supreme Court of the United States, and other eases to which we have referred.
V^So far as the case at bar is concerned, it is only necessary to add that the assignment for the benefit of creditors was made in 1876, and the creditor Maxwell did not obtain his judgment until 1879. He was therefore in no position to issue an attachment until long after the insolvency of the company was ascertained, and its unpaid capital stock had become vested in the assignees for the benefit of all the creditors, to be administered as a trust fund belonging to them. Macungie Savings Bank v. Bastian, 10 W. N. C., 71. An attachment would- be no more available to him then, than would be a ii. fa, levied upon goods or lands which had passed by the assignment.
The decree of the court below is affirmed, and the appeals therefrom are dismissed at the cost of the appellants.
