is is
of of
its its
he he
be be
an an
11 11
e.g. e.g.
the the
the the
the the
but but
had had
laid laid
that that
per
cen
con
con
after after
adopt adopt
of of
added added
entity. entity.
credit. credit.
entity; entity;
on on
liability liability
descend descend
emerged emerged
to to and and
time time
of of
be be
an an
This This
an an
money money
would would
liability liability
conflicting conflicting
place place
perhaps perhaps
those those
Indeed, Indeed,
closely closely
statutes statutes
not not
to to
liability, liability,
liability liability
is is
as as
economics, economics,
of of
unanimity unanimity
economist economist
of of
that that
or, or,
them them
pace, pace,
eighteenth eighteenth
limited limited
on on
did did
reflected reflected
and and
took took
from from
more more
the the
exist. exist.
granting granting
limited limited
others others
such such
the the
the the
evil, evil, limited limited
limited limited
controversy controversy
texts texts
legally, legally,
rapid rapid
eddies eddies
that that
during during
amount amount
acquisition acquisition
To To
sure, sure,
of of
cases cases
the the
Calm Calm
corporations. corporations.
PERSPECTIVE PERSPECTIVE
a a
as as
inducing inducing
that that
creditors. creditors.
corporation corporation
to to
that that
until until
than than
be be
with with
always always
the the
lawyer lawyer
and and
was was
separate separate
at at
a a
after after
its its
to to
debts. debts.
standard standard
power power us us
well well investor investor
It It
today. today.
capital capital
JR. JR.
corporation corporation
necessary necessary
the the
not not
liability liability
(1957). (1957).
of of
of of
that that
states, states,
kept kept
its its as as
business business
record record
a a
solely solely
us us
the the
public, public,
are, are,
left left
. .
century century
whirls whirls
28 28
To To
purposes purposes
did did
condition condition
in in
years. years.
slowly, slowly,
to to
are are
for for
of of
fact fact
a a
proceeded proceeded
writers writers
that that
liability liability
worst worst
Creditors Creditors
business business
50 50
economic economic
KEMPIN, KEMPIN,
personal personal
as as
the the
interests interests
System System
only only
fortune fortune
general general
the the
unscathed. unscathed.
at at
strict strict
v. v.
view view
industrial industrial
of of
historical historical
HISTORICAL HISTORICAL
G. G.
however, however,
liability liability
the the
business business
financially, financially,
of of
is is
of of
the the
nineteenth nineteenth
of of
nation nation
but but
the the
all all
stockholders stockholders
of of
from from
limited limited
to to
it it
corporation. corporation.
modern modern
seem seem
responsible responsible
corporation corporation
IN IN
shareholders shareholders
are are
of of
of of
survive survive
instances instances
Economic Economic
this this
the the
early early
growth growth
is is
compromise compromise
point point
the the
the the
of of
so so viewed viewed
scene, scene,
limited limited
the the
that that
to to
vagaries vagaries
of of
drawn drawn
requiring requiring
approximately approximately
of of
matter matter
assumption assumption
the the
in in
of of
the the
Stockholders Stockholders
FREDERICK FREDERICK
be be
of of
of of
creditor creditor
adapted adapted
without without
and and
a a
alone alone
be be
of of
by by
half-century, half-century,
the the
specific specific
thinking thinking
American American
it it
basic basic
can can
the the
not not
to to
is is
liability liability
for for
until until
in in
to to
concept concept
From From
a a
Case: Case:
legislatures legislatures
invest invest
corporate corporate
the the
interests interests
appropriate appropriate
it it
tremendous tremendous
sheet, sheet,
The The
To To
the the
attribute attribute
be be
period period
LIABILITY LIABILITY
not not
was was
to to
question question
liabilities liabilities
shareholders shareholders
the the
1 1
in in
that that
the the
the the
an an
a a
entity, entity,
to to
by-passed by-passed
development development
of of
the the
no no
The The
submit submit
significant significant
of of
it, it,
liability liability
was was
the the
an an
and and
essential, essential,
is is
for for
be be
out out
Martin, Martin,
conclusion conclusion
chose chose
War. War.
balance balance
it it
device device
for for
to to
corporation corporation
upon upon
is is
indeed.
shook shook
on on
is is
permit permit
to to
toward toward
this this
appears appears
extent extent
with with
and and
it it
shareholders. shareholders.
and and
assets assets
him him
Nature Nature
raged raged
The The
In In
Nevertheless Nevertheless
There There
not not
Civil Civil
economic economic
basis basis
if if
LIMITED LIMITED
the the
its its
corporate corporate
lThis lThis
rational rational
stockholders. stockholders.
The The
corporate corporate the the
did did The The
suddenly suddenly
on on hammered hammered
policies policies Weiler Weiler
to to
doctrine doctrine the the
difficult difficult
for for
a a tury, tury, mits mits flict flict
originally originally
obstacle obstacle
nected nected
the the
corporate corporate of of
opinion opinion
concept concept · ·
.liability
creditors
12 learning
the only which
tribute disposition creditors back can prior interests
over
stockholders stock. sidered with be limited unlimitedly to company of the put solely England cal tal, to discussion The tween Certain did
2According
3An
emergence
the
transfer
the
conflict other,
claims
arise
had
have
Modern
at
Essentially
as
From
The Equitable The It It
at
English
cost,
great
.
excellent
to
.
These,
for
theoretically
these of
far
is
risk disposition
the
source is
liability
things,
in
of of
that
only
alike
did concerning
concerning
and
joint-stock
at
its the
end
that corporate
as neither
of and
private actions a
of
another of
dissolution
stockholders
in
shares.
lia:ble their
the
hand to
be
Naylor
two
Heritage
the philosophical not the
accounting
dissolution,
purpose
of
one
of essay the
made outside of
of
as
American surplus
trusts
the
Cooke,
however,
the
liable
has
corporation
course,
the
long
.
shareholders
grant
personal
liabilities.
satisfaction interests,
the necessary ' equitable
some
attribute
by
on of
profit.
purchase
v.
arises
It
light.
existence
question
company, the
now
the the
modern
used
corporate
this
Brown
of
for
Corporation,
history
currently
18th
was corporate
of
attributable
charters
English
and
modern
appropriateness
must are
disposition
law,
practice this
development the
found
when
many
The corporate
The
for
fortunes?
point
not
of of
trust.
nor
century
It
(1673),
creditors.
by
problems
to
depends
industrial
article whether
corporation
for
of
and
originally
be are
the
shareholders
must
business
question
creditors
closest
a
a
existing
to
experience expedient
theory
the
firm
the creditors
conflicts stockholders
of'
mentioned
creditors
Trust
treats
corporation
recognized
entitled AMERICAN to
modern
to
limited
Rep
debts?
of
marks, to
corporate
par
view,
be
is
ascertain
ground,
on
During
the
or
cast
trace of
developments
Cooke,
.
community
the and
purposes,
of
stated developed
the Temp then
corporate against
value
and
the
not limited
have
can
for
rise to
of
corporation, liability
however,
with Should
in dividends,
assets
for
Company
on
the by
BUSINESS
interests
.
supra relative
entity,
share
after
the becomes:
comes
of
the
form
the
limited
a this and
Finch.
at
arise
in
of
way
the
been
all
shareholders.
development
the
modern
its
liability
'
.
the
of
running
however,
nature
business, market
capital
as assets, n.
only
therefore
payment
purpose
business
Even
in
of pr
one
of
problem.
78
own 83 the
and
between
the
LAW
2.
to into
weight
!l
met,
a
the outset,
of
liability
organization
ctical
assets
.
preface
and
means
(1950)
To
their
it
hand
problem
of by
mold.
corporation.
the
an
the
and ASSOCIATION
outstanding disposition
value stock
of
existence
for
were
to
had,
or
of
what that
corporations
the
that
actuality.
limits to
purposes, of
of
a
however,
contributed
·
shareholders
,
,
stockholders stockholders
of
is
and
enter
should is
corporate
it corporation,
be
th
for
The
the compromise
is
this
of
was
time,
in
the
is
amassing not
extent
to is
must
given
reduced,
the
in
creditors
our
fixed
concept
corporation
addition
only
philosophi into
elementary
concept
of
be
the
joint-stock
concerned Questions
England.s shares
they
BULLETIN
however,
the
that
problem
forbears
be
surplu:
debts.2
created
an
should
to
capital
ability
a
assets
after
were capi
dates
time
and con
and
and
also
full the
the
the
be
at
on
of of
to
is is
9 9
of of 7 7
be be
the the
"
or or
on on
519 519
and and
or or
. .
ions ions
as
be be
it it
by by
· ·
13 13
was was on on
was was
was was
of of
they they
with with
were were
Lords Lords
limited limited
. . .
party party
(1950). (1950).
bute bute
which which
bene (1935). (1935).
oldest oldest
given, given,
neces
directly directly
509, 509,
. . stitut market market
century century
6 6
to to
Duty Duty
nessmen nessmen
held held
end end
of of
-
In
This This
debts. debts.
thought.
where where 77 77
attri
privilege privilege
existence, existence,
5
si
probably probably
would would
the the
time time
a a
nineteenth nineteenth . .
or or the the
joint-stock joint-stock
theory theory
members, members,
u The The
al al
), ),
1, 1,
third third
company company
Rev. Rev.
trustees trustees
the the
b
liable
e e
14418 14418
rarely rarely
was was
voluntary voluntary
liable liable
claim claim
. .
by by
can can
assessments assessments
th of of
Leg
the the
the the
950
This This
legal legal (sic) (sic)
however, however, L
as as
the the
they they
1
House House "for "for
law. law.
corporation corporation
accordance accordance
not not
the the
( (
of of
the the
of of
Econ. Econ.
a a
the the
corporate corporate
at at
not not
Company Company
freeing freeing
. .
is is
from from
nineteenth nineteenth
members
toward toward
levy levy
into into in in
case case
assets assets
name name
corporate corporate
the the
77 77
by by
that that
case case
as as
long long
for for
Harv. Harv.
that that
Pol charter, charter,
and and
debts debts
Court, Court,
to to
its its
was was
the the
joint-stock joint-stock
public public
English English
J. J. by by
the the only only
were were
merchandise merchandise
so so
36 36
English English
well well
trust trust
clause clause
a a
of of
only only
that that
of of not not
Chancery. Chancery.
dating dating
liability liability
43 43
chartered chartered liable liable thereof thereof
encumbered encumbered
in in
threat threat
a a
In In
to to
of of
Trust Trust
was was
to to
right right
into into
as as
liability liability because, because,
company company
in in
, ,
stating stating
In In
Company Company
Development Development
incurred incurred
not not
second second
it it
a a
were were
dealing dealing
25," 25,"
Inns Inns
not not
the the
case case
debts debts o o
corporate corporate
. .
eighteenth-century eighteenth-century
5 5
the the
1
from from
decision decision
it it
· ·
by by
.
title title
the the
purpose purpose
class class
and and
a a
the the
y
Well Well
the the England, England,
known known
the the
either either ..
members members
had had
member member
liability liability
the the not not
debts debts
parties. parties.
limited limited
was was
" "
on on
corporation corporation
debts debts
is is
constant constant
to to
our our
the the
liability liability
1719.
in in the the
1800-18
after after
with with
agreement agreement
Corporations," Corporations,"
a a
as as
since since
privileges privileges
Corporation
or or
Trust Trust
is is
and and
held held
not not
tion tion
granted
that that
of of
the the
for for
trade trade
a
sued sued
of of
usage. usage.
London London
for for
of of Compan
course, course,
rporate rporate regard regard
gave gave
There There
restricted restricted
limited limited
are are
trust trust
exemption exemption
ever ever
co "Ltd." "Ltd."
be be
Act Act
Materials Materials
of of
indicated indicated
particular particular
limited limited
was was
of of to to
a a
Cooke, Cooke, England, England,
carried carried
monopoly; monopoly;
joint joint
of of
holders holders
corpor
it it
the the church, church,
thought thought guarded guarded
in in
whether whether
that that
in in continued, continued,
addition, addition,
of of parties parties
and and
in in
and and
court court
ancient ancient
however, however,
to to
formally formally
of of
City City
Creditors Creditors
PERSPECTIVE PERSPECTIVE
was, was,
for for
Corporation, Corporation,
in in
every every
effective effective
the the
boro11gh boro11gh
there there
the the
began began members members
In In
the the
number. number.
Tho11ght Tho11ght claimed claimed
Bubble Bubble or or
cited cited
sue sue
precedent precedent
the the
if if
charter charter
the the
am
Cases Cases
ke, ke,
the the
third third
contraction contraction
nts nts
concept concept
traCle traCle
in in
corporation corporation
o
the the
was was
H
a a
the the to to
·
English English
the the
se dispute dispute
Company Company
80, 80,
jealously jealously
a a
certificate certificate
Co
concept concept
privilege privilege
of of
to to
established established
was was
trust.4 trust.4
the the agreeing agreeing
of of
the the
pre
of of
English English
no no
principle, principle,
authority, authority,
connection connection
of of
few few
of of
of of
English English
and and
VI, VI, 1671). 1671).
however, however,
The The
of of
Goebel, Goebel,
( (
the the
HISTORICAL HISTORICAL
the the
the the
he he
corporation corporation English English
the the
were were
case case
ability ability
the the
that that
first first
in in
Corporation, Corporation,
theory, theory,
are are
universities, universities,
v. v.
firmly firmly
(1680). (1680).
incorporating incorporating
IN IN Hy. Hy.
with with
prescription prescription
cited cited
use use
all all to to although although
a a
204 204
18. 18.
debts debts
Compare Compare
nevertheless nevertheless
aware aware
liability liability
Joint-Stock Joint-Stock
trust, trust,
least, least,
"Safeguarding "Safeguarding
the the
B. B.
the the
matter matter
said said with with
that that
equitable equitable
by by
the the was was
trust. trust.
where where
c. c.
but but
by by
351 351 violation violation
investors, investors,
their their
and and
monopoly monopoly
: :
shares, shares,
instance, instance,
result, result,
at at
the the
a a
Cas. Cas.
it it
a a
Y. Y.
that that
in in 1, 1,
conceptual conceptual
most most
the the
charters charters
of of
"The "The a a
chartered chartered
this this
credit credit
who who
were were
a a
Liability Liability
Salmon Salmon
from from
English English
debts, debts,
is is
for for against against
joining joining
6 6
LIABILITY LIABILITY
Ch. Ch.
that that
of of
exist, exist,
to to
that that
Ventr. Ventr.
century century
associated associated
usage usage
Geo. Geo.
Warren, Warren,
The The
This This
(1946), (1946),
It It
coupled coupled
its its
models
As As
The The
also also
of of
ed ed achieved achieved
Dr. Dr.
trustees, trustees,
equitable equitable
9t 9t 101 101
8Anon., 8Anon.,
7See, 7See,
56 56
6Hunt, 6Hunt,
4The 4The
1923), 1923),
( (
18th 18th
also also
stat
corporateness." corporateness."
428 428
liability. liability.
traced traced
for for
advanced advanced
in in
states states
Charge Charge
Cases Cases reiterated reiterated
fully fully
Limited Limited
an an
and and
sociation sociation
two two
area. area.
century. but but
prior prior
corporate corporate
corporations corporations
considered considered
corporations, corporations, sity sity
companies, companies, the the extended extended
behalf behalf
ficiaries ficiaries
creditors creditors
was was
transferable transferable LIMITED. LIMITED. corporation 14 members its monopolies. problem ferred
ernment quired the pikes tions 1776, result
that corporations
had rived through can body minor discussion of doctrine
panies experience
in before American
colonies
adventure, half
of case
stitutions work
11Smith,
12Prindples
14Davis, 15Goebel, 1325
16Davis,
limited members,
England.
concern.
common
Philosophical
experience
approved
time. Limited
This,
The
Material
Limited
of of
formed
appeared
or and
in
from
castigated
to
American
or
and
Act
1800.14
could
to
of
of
loss the
entity, some of
may
is as
where
truth
The
Doctrine of
op. Eighte
water
then,
liability
26
which
the
were
Cases
leviation to limited
of economic
the
He the
scanty. One
in
weal
liability
1700's
of limited the
to
for
Viet., liability
cit.
in
be
not
. on
the
Wealth
do public
time
1862,1
early
e
The
of
In theory
properly
Political
reasoned trading
there
nth was
economist, creditors
the 1848.
and
systems,
the
supra
authority
proceeded
the creditors
provided
conveniently required
thought
the
so
attribute
c. in
liability. his the
Prior
There
of Century
organization, and, when
Materials
device corporation
United usual
remained
3 liability our
89.
for
of
benefit,
purposes
Chancery
was
On
in
n nature
of
John
which
Principles
.
matter
Economy
Nat
companies;
14,
chartered;
to
chartered
English
that
the and
their
in
of
"leviation."
a
in associated
ascribes
modes their
are
of
io of
Henry Business the
was
at
Adam
1800 against
States necessity
Stuart
ns general,
failure
business
on
referred,
of
England,
and
permitted
the corporations
294.
limited
beyond the
handle
is
of
benefit,
apparently model
in
(Mod
see
the
formation
547-548
not
as
the
that neritage.
of
of
AMERICAN
C.
banking,
like. that
the
history
this Smith, corporation
Mill
of Corporations companies
D
Schumpeter,
he in
the
. the
with
used eve business
Poli
corporation Carey.12 for
the Lib
economists the
corporations
the liability,
for
case 11
in it
their it
to .
likewise,
knew
lopment and
concept
(7th the
. idea
By
t
spreading finally
The
significant might
ical matter.
ed.,
partnership the
who articulated the
does
the
for
no because
The should of
then,
BUSINESS
creation
if
individual
ed.,
chartered 1937) of
organization.15 it
fact
Economy, seems the
ultimate
high
History
decisions
business
in
could
published and
of much
these
in
concept
be
because
of
did
was
1911).
Therefore
limited
the
before
however, Leg
equitable
this
be
that
of before
used
risk;
Bk. Mill
transferability
incidence
part,
Un
concern al not
not LAW of
levies
to
force the
of
used and
the
period
the
i English
there Institutions
form, V,
capacities. The purposes
ted
of
the bear concerning
Economic
it in
of
that
1800
could
liability to
touch his
to ASSOCIATION
example
amount
Ch.
1800.16
construction
its
S
might
the he only American
cases
the trust.
were
original
t its
have
modern
to
ates the
of was,
famous
out
the
and
of
1
approved
brother,
in ,
comment
draw
corporation association result,
much
English officers
p
309 writings in
until
in these
charter Analysis
his
418 .
subject
not
been
the apparently, be
of
the This of
On
713
of
edition
cases
which corporations
(
corporation
volume on
capital analysis
experience noted,
shares 1917)
(
equivalent
paid,
upon
the BULLETIN
American
American 1946). et
the the
the
types of
on
corpora
was
a
thought
of
Ameri
should
seq.
of where to (1954).
matter
of
the
Com
turn
with
.
latter gov
other
joint as
the the
the
re
de the re
his
the
this
in
of
no at
in-
a
. .
to
15
in
by
of
the
lia
In-
fic was and
this
cen
free
law,
con
with
view
1789
there
Penn
would
of
organi
legisla
various
Loss
instance its
granting
of in
division attribute corpora
form
privilege
charters
and
however,
he
formation these
refused
instance,
conditions,
the
abandoned.
innovation,
an
the
the
charter
for
of
575,
Limited
the
the
from
contact
charter
only
between
the
wide
for
p.
Thought:
be
wager
of
an
nineteenth
accomplish
crucible
new
monopoly.22
1784,
were
business
nation,
paid
2,
that
from
of
into
to
been
against
refused,
manufactures,
of
of
To
the
Houses
with
in
the
.
or
of
colonial
consideration
granting
found, however,
and
were
formed
was Vol.
legislatures,
criticism.
granted
new
in
of
in
is
without
favor
survive
that
been
of
corporation
be
creatures
Democratic
group.
free
derived claims
who,
coming
a
the
the
in
to
assumed
as
were
price
nature concept
out
economy
domestic
earliest
be
and
the
a
century,
serious
historically,
industrial
tested
on
Insuring
been
liability
therefore
and their
having
the
1780-1807,
York
liability
been
should
such
organization
the
liability.U
manufactures.
denied but may
the
and
anachronous,
not,
manufacture
in
infant unique
was
principle
Policy
charters pull
1950).
managed
of
and
with
(
Leaving
against
Mass.
New
be First,
have
for
spurring
this
always
unincorporated
limited
charter
had
the
industrialize
limited
of
purposes,
which
93
to
to
nineteenth
of
of
of
British,
an
jury,
rather
of
form
to
of
of
Century
Probably
wanting,
ancient
unlimited
to
principles,
encourage
have
creditors
like
the
Economic
forces.
contrary
Laws
corporations
principle,
the the
admiration
Bank
to
influence of
found
desired
found
associated an
hope
corporation
of
Privilege
continued.
some
enterprises,
as
PERSPECTIVE
Company and
desire
is
found
The
that
318.
generally
growth
of
1793,
doctrine
the
the
Hartz,
indication
states.1s
the
granting
corporations
ancient offset
risks
protect
order
been
at
Contributionship
and
particularly
have
and
country,
ancient
17,
in
strong
not
such
the
the
Nineteenth
deep
divergent
manufacture
to idea in
to
the
a
grudging
14,
business
to
the
that
charter
literary
with
Some
long of
conditions,
this
beginning
Corporate
appears
and
n.
of
Some
Trust
the
to
the
example
stock
because,
but, two
(1948).
glass
existence.
HISTORICAL
250
indicated.
fact
been
both
of June
in
One o
needed,
American
had
the
for
in era
2
desire
seems to
to
in
new
IN
37
assisting
form.
European,
was
supra
manufacturing
19
monopoly
Philadelphia
of
apparently
Act
317.
260.
The
was
institutions,
the
of
was
liability have
on
instance
still
of
cit.
of
charitable,
at
the
at
their
From
an authorized
.
instances
excellent
in
1768.
liability
submitted is
Doctrine-The
subject
benefit
Corporation,
conditions.
development
op
id.
aim
id.
meeting
monopoly
one
Pressure
subscription
objects
was
LIABILITY
in
all industrial
itself
an
grant
1776-1860
with
subscriber
corporate
also
ancient
entities.
capital
limited
were
from
on
corporations
been
the
reliance
in
1800 is
In
Approximately
year
The
Corporations, which
were
his
also are
the ownership
public
the
limited
corporations,
Massachusetts
of
22The
20Davis,
19Tbis
21Davis,
17Davis, 18Cooke,
ten
of of
hand pay
American
and LIMITED
of
granted different of tions zations have
tury
was
Political
with Other
were, but bility,
modern tinuance.
it
tors
result
of
of came
legislatures.
titious
Fire,
Also,
the
a organization sylvania,
must 686 fields
on
to
also
definition,
that
ganization.
holding although towns.
were extremely munity. trade such rated latures that sidered deed, in
answer with but argument the sure
developed, 16 Atlantic risk?
Legisl11tive
to two instance, 1820
27Livermore,
2!lJd. 25The
26Chi!d
23Hartz,
this
the
".
manufacturing
(1935).
of
importunity before
2
In
Another
In In
was
On
forms. The
the
that
for
"'
of
a
some
where
or
businessman
26
the
.
side
at
importance
were
stony
development
in
any
to
New
addition,
possible
.
lesser
of
the
and
v.
product,
256. desired
vast
to
op. incorporation so-called
their
reactions
those
ran,
granting
desirable
25
of
a
be
essential
Boston
Response
corporations
that
and
event
In
the
private
significant
couple
not
other
the
cit
It
"Unlim soil
England
factor
Southern
Raymond,
returns
a
status why
.
inhabitants
most
was
other
Atlantic
groups time
supra
type
privilege
without
of
public
by
in
business,
and of
it
that
hand
companies
was
of
of
of
"limping
ite
this
ga as
the
may
business
appears
should
only
the
in
of
New
to
as
of the
the
d Fairhaven
n
could
i
business
legislative
the
corporate
Thoughts
ns
.
was
an
states,
in subject
number
became
Liability
the
connection.
had
which grant
benefit
19,
the
the
investing
a agricultural
have monopoly,
precedent,
limited
when
seemed
corporate
1822.
of
attribute
means
were
England.
various
for
at
anti-democratic
the
earlier to
be
Desire
then
reached
for
limited
charters,"
69
with
been
however,
of
Iron
be
opportunities
appeared
a
to
Laws
had
on
in
capital
corporate
partnership, of
overwhelming
.
to
individually
privilege,
response
the
to
of time,
corporate
existing
generally
or,
Early
New
total
Political
legislatures
AMERICAN
instances.
Works,
be
of
the stages
for
form
by
for
a
outweigh
in opportunities
It
of
livelihood·.
the
corporate
more
liability.
niggardly
corporate
derived requirements
N.Y.
way
Y
classical
Americ was
agriculture,
could
the
Incorporation
financial
in
with
point
o
to
was,
stockholder
rk
to
137
states
Economy
of
copied
with
which
in
,
structure
particularly,
agreed
status
there,
of
be
liable
1822,
adopted
existed.
the
BUSINESS
a
.
the
be
Mass
industrialization
n
nature.
unlimited
of
to
it
In
legal
from
One
seeking form
association
limited Corporati
corporate
existence,
after hand.
pressure
handled
appears,
ruin
potential
large
these
were
Ch.
manufacturing
with
.
this
and
that
427
for
while
516
the
became
of
might
23
privilege
In
its
the
244 first
be
LAW
in
the
(1820).
limited
in
the
not
numbers
New
(1884)
If
the
first
These
divergent
license the
o
liability,
the
,
gr
French
exempt n
liability,
manufacture a
took
by
p.
s
not
New
charters
the
pub
of
unpaid
ASSOCIATION
was
,"
found
a
particularly
New
say
elimination
business
entrepreneurial
nt.
limited
enormous
259.
Southern
England
some
43
,
corporate
l
entirely
if
were
when
small,
liability,
another
ic
di
"commandite,"
for
not,
that
It
York
J
of
ct
from was
was
not
.
benefit.
England
pressures
a
um.
debts
were
P
n
voluntary
is
partnership
were
shareholders,
operation
o
virtually
the
l.
failure,
roughly
the
by
affirmative
unincorpo
itself
towns interesting
as
states,
state,
that
and
necessary
Eron.
tack, the
abundant
although
BULLETIN
privilege
or
of
granted
granted
way
Middle
yet
...
capital
legis·
with
pres trade same
com
their
con
took
674
that
was
and
was
un
the
"27
for
or
act
by
by
of
in
,
,
it it
to to
32 32
and and
by by
of of
all all
the the
the the
"
17 17
dis
the the
only only
and and the the
that that
is is
Di
ques
find find
same same
order order
cases cases
if if alone. alone.
that that
it it
second, second,
of of
banking banking
pay pay
agreed, agreed, against against reasons. reasons.
In In
In In
wording wording
liability liability
land land
that that to to
charters charters
corporate corporate
that that
question question
......
arrested, arrested,
this this
obtained obtained
point point Furniss Furniss
if if
the the
personally personally
own, own,
in in
to to
but but
said said
three three of of
investment investment
court court
the the
a a
be be
d, d,
the the
corporation. corporation.
and, and,
two two
on on
the the
. .
In In
road road
take take
was was
held held
held held
action action
point. point.
1809. 1809.
be be
by by
of of
warrant warrant
on on
their their
the the
road road failing failing
"President, "President,
liable liable
for for
say say
to to
liable liable
the the
case case
corporation's corporation's
an an
their their
involved involved
a a
corporation corporation
town town could could
liability, liability,
of of
broad broad
Fairchil
was was
was was
the the
(1809)
engaged engaged
to to
676. 676.
individually individually
be be
attribute attribute are are
the the
On On
the the
involve involve
for for
was was
matter. matter. and and
the the
It It
it it
that that
for for
at at
· ·
the the
to to
them them
inapt inapt the the
act act
who who
420 420
Because Because
cases cases
of of
logically logically
power power
judgment judgment
had had
indicated indicated
not not
in in
liability.2s liability.2s id. id.
1954); 1954);
but but
this this
on on
be be
shall shall
brought brought
pay, pay, land land
( ( a a
months, months,
is is
done done
the the
to to
made made
against against
unlimited unlimited
to to closer closer
had had cost cost
did did
appeal appeal
on on
Mass. Mass.
but but
they they
his his necessary necessary
against against
something something
six six
sufficiently sufficiently
436 436
who who
5 5
of of
associations associations
cannot cannot liability liability
a a
seal. seal.
case, case,
inhabitants inhabitants
debts, debts,
. .
bit bit
the the
for for
corporation corporation
limited limited
On On
that that
members. members.
in in
individual individual
work work case case
A A
liability liability
is is
used used
it
had had
legislature.33 legislature.33
a a
Corporation." Corporation."
Livermore, Livermore,
liability liability
All All
refuse refuse
1860 1860
which which
imprisonment. imprisonment.
taking taking
analogy analogy
of of
Corp., Corp.,
for for
the the
the the
recover recover
1808 1808 for for
corporation corporation
any any
town town
decided, decided,
idea idea
the the authority authority
paid paid
clear, clear,
low. low.
was was
seals seals case, case,
by by
they they
until until the the
of of
1816, 1816,
an an
Corporation Corporation
corporate corporate
false false
1 1
individual individual
by by 1939); 1939);
without without
the the
an an
liability liability
unlimited unlimited
the the
3 was was
corporate corporate
that that
turn turn
limited limited
matter. matter.
not not
stockholder, stockholder,
was was
Since Since
. .
the the
29 29 liable liable
this this
in in
and and
non-paying non-paying
as as
Turnpike Turnpike
a a
against against
. .
the the
corporators. corporators. in in
tions tions
371. 371.
ed., ed.,
Turnpike Turnpike
its its
and and
on on
for for
a
name name
person person
for for
the the
of of
be be
in in
found found
1809,
imposition imposition
at at
". ".
corporation, corporation,
of of
were were
inhabitants inhabitants
the the
relatively relatively
later later
limited limited
the the
PERSPECTIVE PERSPECTIVE
. .
Hill Hill
to to
(4th (4th
Liability Liability the the
on on
in in
any any
provided provided
obtained obtained
28, 28,
Turnpike Turnpike
analogy: analogy:
of of the the could could
Thomas,
involved involved
Corpor
Union Union
Walkef!O Walkef!O
its its
that that
form form
in in
Apparently Apparently
arrested arrested
court court
battery battery
before before
80 80
n. n.
recovered. recovered.
to to
that that
years years
be be
Blue Blue
v. v.
were were
1816)
v. v.
thinking thinking
judgment judgment
an an
authority authority
( (
light light
the the
ness ness
stockholders stockholders
debt debt
i the the
against against
stock stock
turnpike turnpike
and and
s
The The
affixation affixation
Union Union
judgment judgment
supra supra
unsatisfactory unsatisfactory assess assess
u
Limited Limited
The The arise arise
decided decided
of of
a a
its its
368 368
shareholders shareholders fair fair
B
expressly expressly
sheriff sheriff
seven seven
the the
HISTORICAL HISTORICAL
incorporation incorporation
is is
v. v.
the the
while, while,
lrwin.s4 lrwin.s4
an an
contractors, contractors,
law law
obtained obtained
cit. cit.
n n
warranted warranted
1808). 1808).
1808). 1808). plaintiff plaintiff
provided provided on on
the the is is
the the
judicial judicial
of of
Nichols Nichols
inhabitants inhabitants Economics Economics
a
Tippets Tippets
( (
be be
( (
of of
IN IN
may may
industry industry
a a
may may
the the
issued issued of of
v. v.
for for
case, case,
op op
assault assault
it it
ric
proposition proposition
sell sell
if if
recovered recovered
(Pa.) (Pa.)
attempted attempted
ry ry
the the
uncertain uncertain
not not of of
of of
e
case case
the the
of of
a
. .
of of
232 232
595 595
be be
assesses assesses
Massachusetts Massachusetts
to to
for for
R
must must town town
for for
the the
Am
but but
an an
421. 421.
these, these,
Company Company
town town
that that
next next
the the
was was
which which assessments. assessments.
& & is is
assets, assets,
charter charter
Dodd, Dodd,
state state
with with
Myers Myers
case case
domain, domain,
at at
constitute constitute statute statute
by by
Thought Thought
provision provision
liability liability
for for of of
& &
LIABILITY LIABILITY
S. S.
Mass. Mass.
Mass. Mass.
Element
directors directors
that that
cast cast
in in
could could
the the
Pennsylvania, Pennsylvania,
creditor creditor
plaintiff plaintiff
plaintiff plaintiff
the the
the the
The The
could, could,
road road
not not therefore therefore
The The
the the
found, found,
Massachusetts Massachusetts sheriff sheriff
the the
33See, 33See,
342 342
deed deed
32Jd. 32Jd.
31Commonwealth 31Commonwealth
304 304
294 294
a a
28Dodd, 28Dodd,
the the
Buck, Buck,
tion tion
existence, existence,
be be
of of
recourse recourse
stands stands
that that
corporation corporation for for
First, First,
tress tress
charter charter
The The
damages, damages, provided provided
The The
case case
did did
eminent eminent
By By
by by of of
judgment judgment year year
pleading, pleading,
of of
and and the the
rectors rectors
corporate corporate
by by
earliest earliest
which which
granted granted
Judicial Judicial
base base
requirements requirements LIMITED LIMITED
published published
shares, shares,
posing posing
arose arose
Problems Problems
pression pression
Three Three
thus thus Second, Second,
rate rate expressly expressly
sideration. sideration.
Statutory Statutory
viewed viewed application application
property property
bility bility general, general,
clear clear
on on
the the
gate,as gate,as
concept concept
published published
thirds thirds
Rather, Rather,
provision provision
had had
of of
sponsibility sponsibility
liquidating liquidating rate."35 rate."35
that that
their their
individual individual corporating corporating
in in
18 18
40Act 40Act
37At 37At
36At 36At
39The 39The 35Id. 35Id.
38Angell 38Angell
corporation corporation
law. law.
that that
debts, debts,
The The
charter. charter.
Unlimited Unlimited
We We
obviating obviating
not not
If If
claim claim
in in
statement statement
was was
219. 219. associations. associations.
224. 224.
at at
of of
unlimited unlimited
strictly strictly
and and
of of
most most
did did
with with
one one
Massachusetts, Massachusetts,
he he
work work
of of
in in
procedure procedure
state state
the the
Chancellor Chancellor
which which
371. 371.
1809, 1809,
yet yet
may may
in in
included included
imposition imposition
Experiments Experiments
and and
each each
of of
a a
in in
whether whether
two two
the the
members members
devoted devoted
the the
to to
to to
not not
dividends, dividends,
leaves leaves
complete complete
of of
the the
part part
act. act.
individual individual
of of
been been
approval approval
1827, 1827,
Ames, Ames,
the the
had had
c. c.
say, say,
the the
the the
legal legal
business business
separate separate
law, law,
Dodd, Dodd,
they they
constitutional constitutional
different different
the the liability, liability,
branch branch that that
consider consider
65 65
Application Application
liability liability
The The
of of
1821 1821
It It
a a
held held
need need
out out
world. world.
attempted attempted
and and
then, then,
§6. §6.
The The
in in
stockholder stockholder
his his
although although
Kent, Kent,
have have
Angell Angell
exposition exposition the the
problems problems
"No "No
of of
provision provision
of of
American American
was was
court court
with with
their their
in in
of of
in in
it it
of of pleading, pleading,
time, time,
members members
ventures ventures
entity.37 entity.37
Law Law
to to
Constitution Constitution
unlimited unlimited
for for
banking banking
corporate corporate
as as
ways. ways.
on on
that that
limited limited
in in
1809, 1809,
account account
appears appears
contended contended
rule rule
all all An An
in in
the the
be be
and and
it it
persons persons
Unlimited Unlimited
express express
of of
the the
the the
of of
did did
objections objections
deeming deeming
to to
in in
his his
jurisdictions--and jurisdictions--and
by by
Business Business
of of
act act a a
first first
for for
First, First, will will
of of
Private Private
legislature legislature
is is
Unlimited Unlimited
was was
stock.''38 stock.''38
stockholders stockholders
discussing discussing
Ames, Ames, Only Only
achieve achieve
necessary necessary
these these
incorporated incorporated
liability liability
not not
associations associations
the the
of of
1830 1830
famous famous for for
law law
of of
inconsistent inconsistent
that that
scheme. scheme.
liability, liability,
unlimited unlimited
AMERICAN AMERICAN
emerged emerged
be be
or or
inclusion inclusion
the the
most most
a a
that that
of of
question question
agree, agree,
1808 1808
the the
Corporations Corporations experiments experiments
Corporations Corporations
when when
corporations corporations
we we
private private
Liability39 Liability39
prior prior
which which
it it
in in
discussed. discussed.
raised raised
New New
first first
limited limited
moment moment
this this
a a
Commentaries Commentaries
of of
was was
for for
attribute attribute
believe believe
their their
Liability Liability
However However the the
provided, provided,
however, however,
matter matter
we we
stating stating
of of
the the
liability liability
in in
were were
state state
to to
BUSINESS BUSINESS
of of
statute statute appeared appeared
for for
York, York,
incorporation, incorporation,
of of
with with
to to
corporate corporate
generally generally
attributes attributes
all all
get get
property, property,
early early
the the
liability liability
that that
is is
early early
such such
until until
Aggregate Aggregate
the the
the the
the the
is is
purely purely
to to
They They
to to
to to
worthy worthy
manufacturing manufacturing
to to
of of
to to the the
that that
it it
late late
better better
requiring requiring
adopt adopt
was, was,
policy. policy. in in
created created
liability liability
be be
leads leads
to to
1860 1860 question question
be be
be be
nineteenth-century nineteenth-century
New New
a a
LAW LAW
a a
the the
is is
in in
nature nature
found found
on on
the the
provision provision
body body of of
agreed agreed
counter counter
are are
corporation corporation
by by
". ".
an an
liable liable
private private
1820's 1820's
distinctly distinctly
beyond beyond
by by
1832, 1832,
earliest earliest
349 349
( (
of of
ASSOCIATION ASSOCIATION
settled, settled,
a a
us us
a a
1954), 1954),
American American
England, England,
. .
generally generally
charters charters
evil evil
had had
the the
its its general general
corporation, corporation,
of of
implication, implication,
extended extended
in in
. .
are are
of of
(1832). (1832).
to to
of of
approval approval
for for
that that
the the
the the
a a do do
own own
limited limited
which which
that that
profit profit
questions questions
the the
failed failed
cases cases
corporations, corporations,
our our
Parts Parts
American American
a a
not not
in in
transferor transferor
than than
clear clear
the the
posthumously posthumously
we we
personal personal
body body
as as
limited limited
themselves. themselves.
statute statute
each each
amount amount
claim, claim,
found found
problems. problems.
publishing publishing
Law, Law,
next next
liable liable
V V
involving involving
even even
mention. mention.
a a
was was
BULLETIN BULLETIN
find find
debts debts
charters charters
to to
of of
that, that,
that that
liability liability
and and
matter matter
to to
corpo
an an
sepa
miti
con
thatl thatl
two
first first
im
text text
VI. VI.
that that
not not
lia
ex
for for
the the
the the
the the
of of
its its
in
re
of of
4
in in
of of 0 0
47 47
to to
of of
be be
be be
be be all all
19 19
on on
the the
the the
the the
the the
and and
this this
that that
pay pay
posi
liable liable
were were
been been
sepa
at at
to to
if if
holder holder
to to
relying relying
against against
within within any any
can can
Hamp
a a
be be
the the
original original
. .
levy levy
that that payment payment
directly, directly,
case case
is is
provided provided
provided provided
judgment judgment
. .
liability.
had had
to to
might might
a a
the the
transferred transferred
corporation corporation
It It
not not
against against
pay pay
a a
corporation, corporation,
shall, shall,
statute, statute,
courts courts
the the
that that
corporation. corporation.
improper improper
". ".
New New
make make
of of
that that
time time
ability ability
held held
to to
and and
stated, stated,
involving involving
to to
that that
a a
the the
on on
had had
1810, 1810,
stockholder stockholder
be be
recourse recourse did did
the the
the the
action action
and and
said said
In In
that that
the the
1809 1809
him him
members members
was was
it it
in in
to to
jurisdictions jurisdictions
case case
show show
42 42
an an
court court
at at
charters charters
who who
shareholder shareholder
liable liable
the the
execution execution
manner, manner,
terms, terms,
It It
facias facias
execution execution
the the
the the
a a
against against
neglect neglect
free free
and and
not not
corporation. corporation.
of of
against against
corporation, corporation,
original original
involved involved
held held
its its
Rllss.
412. 412.
indicated indicated
be be
The The
the the
such such
after after
other other
the the
or or
incurred, incurred,
usual usual scire scire
provided provided
at at
granted granted
It It
levy levy
v. v.
procedure, procedure,
the the
an an
in in
stockholder stockholder
in in
be be
that that
it, it,
a a
said said
was was
was was
would would
must must
severally severally
could could
bill. bill.
for for
against against
39, 39,
was was
of of
Connecticut Connecticut
the the
applying applying
the the
to to
not not
it it
as as
It It
of of
stockholder stockholder
of of
the the
it it
and and
refuse refuse
n. n.
members members
in in
1812. 1812.
one one
his his
a a
in in
Massachusetts Massachusetts
of of
charter charter
and and
members members
cover cover
debt debt
general general
had had
corporation, corporation,
was was
shares shares
case, case,
and and
in in
corporation."43 corporation."43
levy levy
action action
of of
the the
gave gave
Company, Company,
used used
a a
supra supra
Southmays Southmays
to to
means means
the the
held held
when when
statute statute
time time
member member
differently differently
The The
the the
should should
his his
an an
important, important,
members members
said said
quite quite
cit. cit.
pleading pleading
. .
and and
of of
jointly jointly
earliest earliest
by by
as as
also also
same same
the the
payment payment
required.« required.«
of of
any any
1809 1809
liability liability
decided decided by by
the the
op. op.
of of
be be
at at
was was
Bank. Bank.
against against
language language
was was
against against
the the
question question
defendant defendant
case case
of of
liable
for for
applied applied
The The
soon soon
plaintiff plaintiff
was was
of of
property property
(1820). (1820).
stockholders stockholders
corporation corporation
the the
the the
of of
PERSPECTIVE PERSPECTIVE
due due
assigns, assigns,
the the
on on
act act
charter charter
authorize authorize
thereafter thereafter
Massachusetts Massachusetts
as as
Dodd, Dodd,
The The
transfer transfer
was was
of of
held held
389 389
the the
the the
Stock Stock
Manufacturing Manufacturing
on on
levied levied
time time
41. 41.
arose. arose.
stockholder stockholder
member member
the the
forms forms
not not
problems problems
be be
See, See,
under under
"46 "46
capacities capacities
n. n.
property property debts debts
time time
of of
a a
a a
1820 1820
made made
execution execution
member member
that that
property property
of of
improper.n improper.n
the the
Appleton,45 Appleton,45
presented presented
prior prior
Mass. Mass.
to to
accrued accrued
sufficient sufficient
or or
were were
courts courts
be be
Connecticut Connecticut
did did
procedurally, procedurally,
that that
the the
all all
debt debt
Hillsborough Hillsborough
be be
an an
an an
against against liability liability
v. v.
any any
HISTORICAL HISTORICAL
16 16
by by
question question
supra supra
the the
successors, successors,
......
and and
to to
was was
from from
that that
unclear. unclear.
to to
in in
to to
arising arising
act act
at at
IN IN
private private
variety variety
for for
when when
the the
the the
fact fact
order order
(1812). (1812).
the the
Massachusetts Massachusetts
1819 1819
(1819). (1819).
bills bills
show show
This, This,
Middletown Middletown
Pleading Pleading
had had
person person
Bond Bond
stock stock
their their
to to
liability liability
and and
the the
in in
Marsh, Marsh,
Marsh, Marsh,
the the
had had
debts debts
case case
Transferors Transferors
members," members,"
52 52
corporation. corporation.
the the
or or
brought brought
472 472
. .
against against
collect collect
execution execution
their their
the the
bills, bills,
v
Connecticut Connecticut
the the
persons persons
v. v.
after after
with with
liable liable
unlimited unlimited
and and 55. 55.
the the
his his
472. 472.
1809 1809
authorized authorized days days
of of
was was
execution execution
addition addition
to to on on
that that
the the
in in
appeared appeared
LIABILITY LIABILITY
bill bill
an an
at at
of of
at at
the the
be be
the the
1820 1820
liable, liable,
on on
Mass. Mass.
Conn. Conn.
said said
charter charter
from from
It It
corporation corporation
refused refused
sold sold
In In
action action
of of if if
That That
The The
stock stock
judgment. judgment.
only only
corporate corporate
any any
be be
alias alias
an an
458 458
47LeJand 47LeJand
41Leland 41Leland
«However, «However,
423 423
43Jd. 43Jd.
46Jd. 46Jd.
stockholder stockholder
tion tion
for for
a a
"remaining "remaining
was was
to to
had had
heavily heavily
their their
stockholders, stockholders,
of of
should should
Liability Liability
shire shire
attempt attempt
problem problem
concerned concerned
his his
"That "That stockholder's stockholder's an an
rate rate said said
against against
times, times,
In In
seen seen
shareholders shareholders
successfully successfully
the the noticed noticed
that that
but but levied levied
charter charter
Procedure Procedure
fourteen fourteen LIMITED LIMITED
members members
The The
act act was was
opportunity opportunity
was was
liability liability
fide fide
was was
levy, levy, Constitution
shareholders shareholders
who, who,
automatic automatic
town
problem problem
a a
Another Another
purchase purchase
involving involving
cision, cision,
debt debt
hindsight of of avoid avoid
of of
stockholders. stockholders. of of
transferor transferor
possibility possibility
fore fore
membership membership
absolve absolve 20 20
54Jd. 54Jd.
53Marcy 53Marcy
49Mass. 49Mass.
52Jd. 52Jd.
51 51
50Marcy 50Marcy
48Child 48Child
debt debt
Middletown Middletown
the the
a a
inhabitants inhabitants
was was
brought brought
After After
Another Another
These These
countered, countered,
Doctrine Doctrine
transferee
A A
refused, refused,
This This
. .
On On
the the
was was
accrued accrued
dictum dictum
stated stated
at at
at at
personal personal
accrued accrued
that that
legislature legislature
Massachusetts Massachusetts
the the
of of
v
Law that that
335
67. 67.
, ,
of of
of of
the the
1820 1820
v. v.
v. v.
action action
a a
complicated complicated
. .
a a
harsh harsh
from from
panacea panacea
for for
another another
of of
Coffin, Coffin,
their their
a
to to
Clark, Clark,
single single
Oark conflicting conflicting
special special
transferor transferor
the the
. .
a a
the the
the the
s
l l
against against
who who
at at
which which
, ,
or or
other other
objection objection
were were
. .
the the
Bank Bank
of of
Object
be be
bona bona
a a
May May
of of
an an
was was
case
time time
in in
liability, liability,
liability liability
commenced commenced
liability. liability.
corporation corporation
, ,
dictum, dictum,
1821 1821
shareholder shareholder
opportunity opportunity
the the
heard heard
Unlimited Unlimited
that that
held held
17 17
supra supra
17 17
towns towns
stockholders stockholders
1821 1821
share, share,
4
Sess. Sess.
charter charter
act, act,
v. v.
Marcy Marcy
for for
liable liable
liable liable
s s
hand hand
stated stated
fide fide
the the
i
Mass
Mass. Mass.
time time
ons ons
of of
Magill
held held
by by
act act
of of
Massachusetts Massachusetts
a a
stock stock
n. n.
that that
in in
apparently apparently
the the
decisions decisions
.
1817, 1817,
corporation, corporation,
case50 case50
man man
of of
the the
however, however,
transfer transfer
arose, arose,
. .
provided provided
the the
liability. liability.
to to
in in
for for
for for
it it
of of
50, 50,
64 64
that that
the the
330 330
of of
of of
v. v.
, ,
that that
a a
financial financial
5 5
are are
Liability Liability
Unlimited Unlimited
arose arose
was was
the the
appears appears
commencement commencement
to to
transferring transferring at at
factor factor
c. c.
(1820). (1820).
should should
prior prior
at at
1818,
incorporation.
Clark, Clark,
the the
it. it.
town town Conn. Conn.
form form
(1821). (1821).
held held
even even
for for
were were
183, 183,
the the
be be
336. 336.
the the
virtually virtually
stock stock
This, This,
not not
and and
indic
The The
commencement commencement
was was
to to
still still
4
AMERICAN AMERICAN
that that
heard, heard,
debts, debts,
the the
9 9
of of
28 28
they they
time time
inhabitant inhabitant
p. p.
that that
estate estate
not not
court, court,
a a
be be
by by
that that
the the
liable liable
deprived deprived
apparently apparently
ills ills
the the
a
a a
618
( (
not not
bona bona
case, case,
of of
Liability Liability
however, however,
te te
further further
court court
1823)
in in
shareholders shareholders
against against
possible possible
the the
have have
a a
the the
defendants defendants
his his
liability liability
, ,
again again
majority majority
of of
one one
this this
and and
of of
51 51
that that
jeopardy jeopardy
adopted adopted
February February
"are "are
transfer transfer
under under
however, however,
of of
fide fide
argument argument
. .
BUSINESS BUSINESS
debt debt
The The
stock stock
pointed pointed
creditors. creditors.
chosen chosen
a a
ceased ceased
of of
who who
company company
by by
increasing increasing
the the
on on
the the
unlimited unlimited
in in
"
may may
proposed proposed
transfer transfer
transfer transfer
corporator" corporator"
of of
imposed imposed
trial trial
court court
accrued, accrued,
the the
asked: asked:
the the
the the
24, 24,
the the
in in
to to
under under
action action stockholders. stockholders.
all all
became became
in in
by by
who who
the the
when when
went went
out, out,
LAW LAW
have have
an an
1818
an an
1809 1809
analogy analogy
by by
that that
his his
imposition imposition
same same
?"
the the
Whether Whether
was was
joining joining
of of
5
action action
would would
1823 1823
"Was "Was the the
insolvent insolvent
the the
2 2
jury, jury,
were were
ASSOCIATION ASSOCIATION
in in
. .
liability liability
fixed fixed
in in
by by
lifetime lifetime
or or
a a
been been
action, action,
he he
confronted confronted
" "
the the
Again, Again,
a a
act, act,
predicament."
bit bit
......
who who
support support
order order
liability liability
the the the the
1809 1809
shareholder shareholder
of of
moved moved
Connecticut Connecticut
the the
since since
stock stock
or or
such such
it it
not not
the the
further further
unnecessary unnecessary
indicating indicating
This This
to to
town town
time time
Massachusetts Massachusetts
had had
of of
and and
the the
was was
if if
all all
company. company.
the the
in in
the the
to to
act act
pu
protect protect
liability liability
the the
of of
to to
he he
when when
unlimited unlimited
of of
from from
objection objection
who who
intention intention
BULLETIN BULLETIN
order order
r
with with died died
stop stop
payment payment
have have
dweller
time time
sue sue
did did
analogy analogy
by by
not not
a a
its its
should should
stock-
action action
5
bona bona
3 3
afte
case case
way way
that that
not not
"
are are
the the
the the
the the
the the
the the
de
be
the the
an an
an an
by by
of of
of of
54 54
to to
s s r r of
to
of
by
21
no
in
act
ex
the af
in
cor
pre
pro
most
1823.
been
1830.
argu
stock.
How
banks'
an
finaJly
policy.
special
share
alone,
for limited
the
in
Massa
between
5,
well
liability
349.
however,
and
pressure
the
The
unlimited
23,
ordinarily
by
in
for
flight
of
act
of
indicated.
liability.5S
American
policies
The
p.
(1884),
difficulties
culminated have
1152.
liability
be
have
capital
experimented
purportedly,
development
and
financial
from
of
general
last
p.
to
§9,
noted,
viewed
stockholders.59
directly
516
liability Banking,
a
the
and
from
accounting
forms
February
Hampshire,
their
the probably
common
repealed
February be
not
alleged constant
duration
to 48,
be
imposing The
that,
as
liability
liability
385,
would
always
contained
56 of
unlimited
creditors.
of
liability.
1850's,
is
.
c.
or
only.
c
history
it
two
929,
for
in,
the
Mass.
was
act
the
296,
the
procedural
were
New
the
320.
corporate
.
corporation.
it
separated
liability
p.
and
should
corporations,so Pennsylvania
with p
unlimited
the
the
value
set
and
sounder
1857,
p.
cannot
137
to
liability
double,
.
way
1828,
liability
It
was protection
first
was
his and
liability
in
whether limited
53
were
duration
provisions
221,
the
of
had or
corporate
of
the
200,
1830's
took
c.
and
because
c.
corporation
jurisdictions
however,
of
handle
Maine
Sess.
The
by
rule.
1854.
corporations
Maine,
the
c.
limited
point
of
time
Works,
only
unlimited
twice
the
liability
Island as
to
greater limited
of
corporations,
mentioned;
. the
to
question
Jan.
and
no
1823,
by
the
unlimited
after
those
1857.
not
experiments
policy,
which,
manufactures, cleared
for
forth
Iron
for
legislature
perhaps
1836,
of
as
unlimited, well
1822
the
Hampshire
liability,
manufacturing
At general
been
in to
(Metcalf),
in
privilege
1853
for
Rhode
Sess.
as
and
between
the
limited
Statutes
on
interests
with
development
the
that
Maine,
28,
Sess.
liable
all
investors
granting
the
with
counter-movement
setting
New
the
assets
permitted
shortly have
state
of
manufacturing
of
measured
Jan.
liability,
the
More
the
England
requisites
that
1836
double
Jan.
Fairhaven
question
provision
Jan.
picture.
liability.
5 a
on
from
be liability
between
the
5
Revised that
manufacturing
occurred
PERSPECTIVE
&
that
State
1828-1831
or
positions
been
for
378.
statute
to
619,
plus
became
the
the
of
experience
in
New
creditors,
the
double
nature
Maine,
afforded
granted
year
debts.
a
covering
paper all
certain
at
corporations,
pressures.
the
p.
shareholder
legislation
a
Connecticut,
cumbersome,
Maine,
in
result
between
to
of
note
of
limited
a
to
experiments
broader
notes
of
imposed
experimented
was
all
39,
Boston
one
the is
as
as
act
of
this
changed
limited
a
to
of
of
at
n.
v.
Liability
which
this
include
which
liability
stockholder
for
passed
held
State
was
disregard
experiments
times
also
earliest
toward
of
HISTORICAL
of
of
corporations,
political creditors
Laws
subject
importance
one
proved
such
Acts
there
Maine
57
to
Massachusetts
it
corporate
stockholders
of
liability
of
issue
1818-1822,
IN
community,
the
liability
or
the
ever
supra
Massachusetts
of
the
Child
states
protection
liability,
part
theory
.
the
obtain
of
on
states
had
1828,
directed
for
1830
legislature
also
thesis
liability
a
general
to
Limited
limited liability
policy
to
cit
considered
Public
the
have
case
1820,
directed
the
status
to
significant
business
Mass.,
12, limited
of
complete
Laws
limited
of
commonly
methods
corporate
other in
the
number
but Acts
limit
due op.
the
1846;
in
other
probably
of
economic in
LIABILITY
be
after Maine
for
the
These
a
investing
is
apparently,
is
to
act
statutes
modern
charters.
of
.
merely
was
used
jurisdictions,
with
and
at
policy
Unlimited
unlimited
Price the
Both
Having
was
It
unlimited
is
Although
the
the
the
may
a
February
subjected
stockholder
59Public
60
58According
55Laws 56Dodd. 57General
in
It
chusetts,
ment
capital
LIMITED holders 1842
a authorized
other that
of Massachusetts of porate reflected with
ferred,
involved, The of periment, liability stance, cedures liability
general as significant charters look
followed It
ever,
fairs establishing
holders but
This
terests
Massachusetts
corporations
- 22 price, afforded
Accounting Arabic deed practice. Double tween obtained century a. day. surance nineteenth creditors
integrity
collected at contingent. a
chusetts reorganization connection. limited, to of ing of shareholders each
account, possible
velopment
mitted the
1830.
high
proportional
This
61Cooke, 63Goebel, 62Goebel, this
65Id. 64General
66Mass.
assessments, our the
First,
It
that
Assuming
United
the
Professor
and Under
share
investors
system
appears degree
unlimited entry
were assessment
time. is companies ears,
at .
legal If and information
Corporations
of Roman
the that
modern by
it
To however,
Revised
borne §5. "
century
Practice
Corpora/ion, States
of 63 we
Cases is
ibid. shall the
The
Laws
a
amount divided assessment
in for but bookkeeping,
Professor a
protection now of
the participation
of adequate
practice of that and Goebel,
that for delve
capital
large
assessment a system
For
out
and
Statutes (microfilm), original
noting
necessary procedures be apparently of ignorance
nature
the
power
primitive alone few
company,
the exist, it a
Massachusetts, accounting instance, of
indicating
into Materials originally
to
word
extent, also Act into
prior Trust
stock
which
statement companies
such
was accounting for Goebel
some against
of
in
numbers
of had
was shares
which
1830
of
provided by
1836, so
in
the
money.
one
must
concerning that
and instance,
used
act,
the state.
assessments of was
May account,
is shares.
on therefore,
shares
the extent
the stated. essential sets
that
limited."66
inconceivable matter
shareholders continues creditor Ch practices
Company charter at act form the price
depend made
is
enterprise in be as AMERICAN
1793-Jan 1828-1831
65 impeded
1836
. had
Although
its devices. no
38,
Development usages Mass.
true,
that
provided
of late
need by
said
In
The
were has
that first
or
definite
§13,
of
we
to
a
one their
creditor fixed
the act.
protection should this
46 the
as . it
largely
in another. specific
the Acts
about
with said the
1836
of
we
1794, were meeting. pp
find hardly
the
(Metcalf) and must
BUSINESS
( change the
additions
The corporation the
Newbury-Port 1950) exact it . latter as in
some
that par must
327, keeping
and
end
that
development
of not must the
was, that Act
need sixteenth hardly the
p.
protection that
earlier
upon follow
later
stock,
Legal . imaginable, Limited
Resolves,
value. 329-30.
"6 nature, are 1,
stock provision,
clarification
now exceed
which to
assertion
practicalities
"At clarified cumbersome LAW
4 in
c.
Mass be the
made arose.
This
made of act, the
the the
Institu 53, the
62
part
had that and
examine.
admitted
should ASSOCIATION
the century
Woollen .
late
separate
certain
liability " is
R
§3, B. depended
possible same which circumstances,
maintenance
the has
to
ecor
of A
the tion
the the difficult
of the
that
significant
beginning however,
2a:b, let
p. adoption
the
ds
amount 'share' a accounting.
on
s
the
power
protections as mode.
"be of 296 banks
matter alone in
Manufactory 432
modern scholars
was
of that "Funds
accounts
Reel has
1830
the they
capital
,
accounting
England.
nineteenth
the on
fixed Februar
( 1 BULLETIN
if
largely
signified
had there
feasible, to at 4, no
9 question and
of
by of
are 46). not of
in States
Massa the
highly
sound Unit
which
assess have
were
stock limit
the
be In stat
y this its and the for the
to in
im 6
per- de
is
1
23,
a
of
1.
- LIMITED LIABILITY IN HISTORICAL PERSPECTIVE 23 Creditors' Rights on Dissolution The question of creditors' rights against shareholders naturally does not arise until the creditors find themselves unpaid and without corporate assets from which to obtain satisfaction of their claims. Normally such a situation presages the dissolution of the corporation. Consequently it is not surprising to find that the first type of protection for corporate creditors came exactly at this point in time of corporate existence-the time of dissolution.
The English Background Ancient dogma from the English cases held that on the dissolution of a corporation there were three results to its rights and liabilities. First, it was stated that its real property reverted to the party who had originally granted the realty to the corporation. Second, it was believed that its personal property went to the state. Last, and most important from the point of view of this discussion, it was stated that its debts, whether due to or from the corporation, were extinguished by dissolution. Although some courts by way of dicta con tinued to repeat this trilogy of consequences until the 1850's, it appears to have met its effective end by 1834, at the latest.67 In any event, those horrible consequences were largely moot, for such ac tions against shareholders as would arise, would arise in that frustrating interval between insolvency and actual legal dissolution.
American Treatment of Dissolution Problems It may have been the echo of such sentiments that inspired the Massa chusetts General Aquaduct Act of 1799.68 In that act it was provided that on dissolution the "last proprietors" were to carry out contracts, but that if no corporate property could be discovered, and the creditors' judgments were not satisfied for six months, those same proprietors were to be liable for debts of the corporation. Another example of the express continuation of liability after dissolution is to be found in an act dissolving rather than creating a corporation. The Union Marine and Fire Insurance company was dissolved in 1815, and the act effecting the dissolution provided that the shareholders were to be respon sible for all the outstanding corporate debts.69 Such legislation was not uncom- The most famous general incorporation act of this era was the New York Act of 1811.71 It provided for the incorporation of companies which proposed to manufacture certain specified types of goods, for a period of only twenty
67Mumma v. Potomac Company, 33 U.S. 280 (1834) . 68Laws of Mass. 1780-1807, Vol. 2, p. 843, February 21, 1799. This may, according to Dodd, op. cit. supra n. 39, at 264-265, "probably be regarded as the earliest general act of incorporation for business enterprise in Anglo-American law." 69Mass. Laws, Oct. 1814-Jan. 1815, c. 123, p. 626, February 25, 1815. mon in the case of baitk:s.7o 70According to Dodd, op. cit. supra n. 39, at 376-377, from 1811 onward those who owned shares of bank stock at the time the charter expired (usually twenty years after in corporation) were liable in proportion to their holdings for outstanding bills of the bank. This was in addition to the double liability imposed on them in the event of insolvency caused by mismanagement by the officers. This liability was determined, in Crease v. Bab cock, 10 Mete. 525 (Mass. 1846), to be several in nature. 71Laws of N.Y., 1811, Ch. 67, p. 111, March 22, 1811. years, 24
solution, sponsible all
Bloom.n and
cent calls. a sheriff to held
a gave case, and creditors' shareholders.
doctrine mitted paid
in liability tors to standard
signed Maintaining New corporat the Rev charter cr acts of supra charters to corporations
capital e
bill
7319
7 74Dr. 77Supra 75Whether
78The 72Id.
ditors
surrender debts
the
6 the
the
Slee
.
purview
8
no
Litigation
of 79Double
pursued
that
Today Five
York 509,
the the
that The for of
Co and
n
in
extent
common
John
provision e
.
incorporation,
to 1930's.79 then
granted to further
Salmon
illt
we
v of
rationale a
of
62,
privilege The
which
creditor's
the equity stock
full
the w , the
of to
519
the
n. . bill
.
shareholders
the
maintain years
direct n with
§7.
collect,
.
of Blo
the
that
from
creditors'
hich
73
this the at
387 456
of liability
sold
the
their
court The them
persons
liability Dutchess
( par
in statutory
subscriptions,
the ..
.
A corporation
v.
by 1923) Jaw
om
of arose
434;
the
shall
shareholders
against a so
right
case (N
view
later, extent requir
(N.Y. equity
The
Integrity of
w
tendency
that 1816
.. 11
. value
1811
capital opinion
600
all
heir
a shares
apparently . empowering at
indicated unpaid
Y
s
the
W
.
which "72
the
and
under
had like . Hamborough
was
be
aga is indicated
state
e
the
oprt property, corporate then rights
a
d
1826).
in were
to act
shares
rren, Cotton
1821).
liability rights
some of under
opinion integrity
correct
of
i
two·thirds
due
nst
. .
not
also
the
on was
to subscriptions that dissolution
1819,
1826,
type,
appeared, of
Dodd
was their
their
composing
this
"Safeguarding
then
sh
but depend
retr
that under
and
of
paying
corporation
Corporate
in
at to
by
imposed,
a the
Manufactory
to
is the
in
imposed
rehold
of ,
was
effectively
.
e
and
then
respective
stock
the $100 e op.
at act
of Art the exceeed
a
Company,
permitted,
most quity
owing relief the
approval
double
course,
1811
creditors
AMERICAN
matter
from
the
that .
the
cit.
even
e
also, shareholders
in
almost
thirty
VII, of rs case
came
of
extent
to
each.
at
since
such
supr
on un 1811 w of statute.
capital 1821
Capital
a
the
the
by
this
continued the
the
of
thereafter $100,000.
not , ould dis
to
the
§9
d
of and
contrary
1 of
shares
dissolved
a
er
the
had
into stockholders
per
the
by so exclusively the no
shareholders, Ch.
corporation.
Four
n
adopt
Creditors BUSINESS of each there company
corporation.
liberal
of
been
.
lution, the
act Briggs
amount in
have English
39, the a
small
stock
the In
cent been company
Cas.
before
effect.
shareholders
the
by-law
branch theory the
under
was
of
calls
decision,
at
for had
was
that
dissolved, the
1821
unsatisfied
policy
The
be
on 204
doubt.
388.
when
of
stock
formed account.
unpaid
v.
of LAW
celebrated
corporate
greater
court
e of
shall
b
principle
gen
Dissolution were
on case
n
o
The
shareholders of
ee
the would
passed Con
their
Corpor in
f (1671).
Penniman
It
act
at
Nevertheless
forthcoming
a n
e their
ASSOCIATI
levi
the tow
imposing s
rally
It legislat
in
its
s national was
the 1811
titution the
did be
provided
creditors made
under
but
appea assessments
a
a
Restrictions legislature
subscriptions.
dissolution. than the
merely
a
ti never
rd
creditors
purpose
assets
tions,"
by
o
subscription7B_a
imposed
shareholders
individually dec
time
of not case
n.
that
i the
act.
1
r
ve
said
the
for
s
6
Goebel
i
in of
that liability the
this
O
ded
give
banks
that,
be
N
arose
grant paid
of s
were devices of
36
the
the The
managers, New
were
"that under
the
BULLETIN
company fifty
not Salmon
for
declarative
act
in
imposed brought
that
7 Slee its
corporate
Harv. ,
absent
of
5
St
on
statute
op
of special
credi special merely
within down
court
their sold, a on
Jersey
with
The
dis
per t
. for
per had
e
re
the
the
the
the de
cit. the v
1
of
L.
.
a 4
a
of of
of of
be be
act act
25 25
in
for for
the the
un
the the
the the
the the
was was
that that
The The
1814, 1814,
like
debts debts
exist, exist,
to to
"shall "shall
main
.
theory theory
in in
capital capital
capital capital
remain remain
the the
by by
the the
80 80
Marine Marine
.
type type
21, 21,
directors directors
nia nia
that that
dividend dividend
provided provided
managers managers
good good
the the
the the
of of
in in
the the
of of
va
policy policy
diminution diminution
Society Society
a a
corporation corporation
l
was was
principle principle
corporations corporations
y
the the
this this
corporation's corporation's
shall shall
idends idends
ng ng
all all
the the provided provided
on on
actually actually
i
v
manufacturing manufacturing
of of
olution
Boston Boston
March March
company company
the the
make make
such such
v
value value
which which
di
the the
contracted," contracted,"
impaired impaired
of of
a a
This This
the the
that that
for for
profits profits
Penns
cases, cases,
Re
to to
the the
of of
to to
of of
be be
requir
. .
examination examination
par par
charter.84 charter.84
least, least,
in in
corporation corporation
banking banking
such such
that that
charter charter
of of
04
8 8
enacted enacted
reliance reliance
1816. 1816.
the the
possibly, possibly,
corporations corporations
estates estates
at at
an an
its its
18
the the
to to
impaired, impaired,
Philadelphia Philadelphia
of of
equal equal
actual actual
corporation corporation
later, later,
insurance insurance
dividend. dividend.
, ,
the the
example example
ability ability
29, 29,
5
1814.86 1814.86
held held
thereof." thereof."
This This
167, 167,
capital. capital.
decided decided
in in
of of
that that
recognized recognized
provided provided
capacities capacities
the the
sum sum
of of
the the
the the
charter charter
the the
case case
in in
p. p.
based, based,
before before
be be
the the
thereafter thereafter
Jan. Jan.
Section Section
otherwise, otherwise,
a a
years years
dividends dividends
of of
was was
is is
566-567. 566-567.
consent consent
7, 7,
to to
without without
thereby thereby
personal personal
March March
second second
creditors creditors
the the
of of
to to
or or
85 85
the the
24, 24,
earliest earliest
, ,
absent absent
than than
it it
clearly clearly
r r
from from
1799.81 1799.81
, , §
require require
i
ho ho
shall shall
for for
pp. pp.
. .
47
be be
p. p.
of of
in in
"until "until
the the
2
2
98
reduction reduction
This This
, ,
-
Company, Company,
twelve twelve
manufacturing manufacturing
6
the the
the
doubt. doubt.
6
contributed contributed
creditors creditors
13, 13,
accounts accounts
s s w
individual individual
c. c.
· ·
14
. .
consequence consequence
stock stock
not not
17, 17,
charter charter
of of
This This
statute statute
p
24
that that
when when
the the
to to
of of
tor
c. c.
view view
liable liable
corporations corporations
the the
appear, appear,
in in
82 82
of of
the the
themelves themelves by by
ec
50, 50,
the the some some
capital capital
dividend dividend
pp. pp.
all all
dissented dissented
on on
from from
corporation corporation
does does
their their
stock stock
of of
stockholders stockholders
be be
of of
company company
to to
c. c.
Section Section
dir
principle principle
satisfied. satisfied.
Manufactures, Manufactures,
Perhaps Perhaps
17, 17,
Dividends Dividends
, ,
charter charter
1812-13, 1812-13,
Massachusetts, Massachusetts,
regard regard
the the
in in
February February
516. 516.
72. 72.
the the
and and
the the
PERSPECTIVE PERSPECTIVE
99
be be
the the
have have
1815-16, 1815-16,
assure assure
shall shall
assure assure
notice notice
of of
of of
capital."
at at
policy, policy,
368, 368,
that that
this this
8-
banking banking
p. p.
the the
Art. Art.
point point
on on
greater greater
to to
9
dogma dogma
capital capital
by by
sustained sustained
of of
1803-1804, 1803-1804,
by by
and and
should should
d d
benefit benefit
Manufacturing Manufacturing
to to
to to
purchases purchases
distribution distribution
with with
can can 0, 0,
a a extended, extended,
17
75, 75,
no no
e
in in
Illegal Illegal
the the 5
all all
. .
51, 51,
liable liable
shall shall
No. No.
Sess. Sess.
restrictions restrictions
may may
the the
of of
of of
id
s, s,
n. n.
has has
c. c.
Domestic Domestic
c. c.
v
Sess. Sess.
the the
on on
paid paid
restrictions restrictions
to to
to to
This This
existing, existing,
ve
was was
they they
for for
was was
Act Act
time time
Bank Bank
ol
granted granted
made, made,
one one
dividend, dividend,
policy policy
pro
be be
s
of of
HISTORICAL HISTORICAL
partial partial
corporations. corporations.
-04, -04,
found found
from from
extended extended
3
supra supra
governor
recognized recognized
accounts accounts
Re
a a
it it
such such
designed designed
then then
IN IN
any any
session session
1812-14, 1812-14,
be be
involved involved
1849, 1849,
of of
there there
added added severally severally
capital capital
be be
this this
contributed contributed integrity integrity
180
1806-07, 1806-07,
which which
1814-17, 1814-17,
tended tended
cit. cit.
the the
re re
creditor creditor
such such
not not
Whitestown Whitestown
, ,
dividends, dividends,
Commonwealth Commonwealth
x
and and
at at
, ,
e
. .
.
all all
.
for for
e
to to
should should
a
h
principle principle
Pa., Pa.,
of of
s s
these these
interim interim
Directors Directors
Pa., Pa.,
t
the the
op
P
restrictions restrictions
to to
is is
Pa
the the
and and
Pa., Pa., if if
of of
c
w
the the
been been
obligations. obligations.
is is
the the
the the
Company, Company,
from from
A
of of
of of
n, n,
are are
should should
of of of of
of of
of of
of of
e
87 87
. . capital capital
director director
Philadelphia Philadelphia
veto veto of of
the the
way way
The The
,
in in
LIABILITY LIABILITY
charters charters
company company
. .
its its
9
and and
constituted constituted
legislative legislative
......
4
have have
continued continued
" "
which which
credit credit
the the
In In
Pennsylvania Pennsylvania
Apparently Apparently
fund fund
the the
Encouragement Encouragement
undesirability, undesirability,
Acts Acts
Acts Acts
Laws Laws
grants grants
jointly jointly
the the
4 5
The The 3 18
dividends dividends
its its
pay pay
a a
86Laws 86Laws
8
87Laws 87Laws
82Jbid
81Mass
8 80Warr
8
over over
be be
of of
of of
wise wise
less less
that that
stitution stitution
loss loss
Liability Liability consenting consenting
natural natural
the the
the the
restriction restriction subsequently subsequently
stock.83 stock.83 but but
in in
Insurance Insurance
company, company,
special special as as tenance tenance
formed formed
that that
of of which which
to to
stock, stock,
treasury, treasury,
creditors creditors
shall shall
declaration declaration
no no
original original LIMITED LIMITED were
should
insolvent, ever,
dividually was
case to burse
wise capital imposed above. Augusta was cases creditors, holder sufficient concern admitted Liability ponderable tion 26
plaintiff and several. the
in trespass but that
against
and
judges of
1813,
C.
provision
89Vose
9016
91Ibid.
88General
a
J
shareholders
the
.
corporation
,
that
unsuccessful.
passed
the
the
Three
court
Massachusetts
This
In
based among
in
unsuccessful,
to
and
"
to
him
the
Mass.
could be
prior
.. stock
wondered
shareholders
the
action
prevail,
on
October
the
Second,
shareholders,
v.
Bank.
reach of
to
on
in
·
hope
that
was
type
liable
funds
.
or
shareholders
of
for in
for
Grant,
on
Laws
has
celebrated in
next the the
problems
9
Shareholders
that
joint
shareholders.
shareholders
be
case
Chancery,
which
of
this
(
the
for
their
1830
would
directed
the
of
a
no
1819)
the
contrary.
proved
The
among
case,
for
sued
there
of
would
$200,000,
case,
promise
such
case
15
The
1813,
obligations
authority
liability,
who whole
tort-feasors,
the
of
although
also
division
.
Mass.,
highest
88 proportion
declaring
Mass.
.
rendered
bank
appeared
and
alone,
This
Vose
not
court
because that
would
became Spear
This act
cases
a
received
the
was
to
where
solely
remain
One
believed
they
amount
shareholder
lie
1828-31
for
since
505
implied
case,
did
Nevertheless
on
had who
be although
various
might
court
divided
v.
act
went
for
this
of
of
the
arose
authority,
v.
because
which
be
or
received
Returned
(1819).
the
the
·
of
at
the
he
unfounded.
not
of Grant,
in
of
the
been
to did
he
Grant,
capital
a
a
had
time
assenting
three
promisee
there
of
course,
on
the
(Metcalf)
the
of
tort
could
dividend
cases
the
corporation
equities
accompany
protect
in
out
holder
corporation
could
shareholders
differ
AMERICAN
to
not
damages.
into
it
to
the
chartered
91
Massachusetts
received
law
managers 90
Statute Goebel
re
would,
obligation.
the
was
undesirable
was
another evidences
of
point
s
was
indicate
Capital-Case concern
establ
the
involving
t
not
decided
note
not
2000
his
from
basis
of
the
rather
to
the
could
of
alleged
c.
The
merit
of
,
court
made
i require
iied while dividends
belief
op.
53, shed
in
out of
prove
bills
BUSINESS
Third,
had
since
the
a
holders
insolvent.
such
fifty
dissolution
by
shares
25
of
the
prior
of
the
whether
plaintiff's
for
recovery
be
Frauds,
§9,
a
cit.
in
than
The
that
in
the
been
promise
went
the
Massachusetts
consequences
in
and
the
of
concern
in
per
the
was
absence
taken
per
the
it
1819,
Pennsylvania
p.
liquidating
his
supra
the
providing
since
limited
principle
if to
court
the
of
LAW the
of
on
Law
division
was
suit
2
the
issued
corporation
99,
cent.
alleged
cent
on
the
decided
co-shareholders
A
dissolution.
could position
liability
outstanding
$100
for
into
fraud.
n.
bank of
there
the
bona
of
liability
alleged
March
ASSOCIATION
with
was
case
statute
then
a
liability.
to
plaintiff's
of
62,
the
o
The
the
a
by
tort,
the
f
plaintiff
account.
.
set
that
not
of
each.
statutory
fr
the
an
the
was
in
dividends,
First,
was
the
states
in
fide
suggested
corporation
was in
The
the
1,
a
of
acts
Hallowell
ud,
plaintiff.
the
"
forth
first
to
was to
action
limited
1816. be
be
capital
and
1804
the
1830.
1819.89
problems
no
corporation,
creditors
brought
or
In
bank
that
belief
court
that
mentioned
have
contention any
the
liable.
capital
liable
was
therefore
contribu
BULLETIN
or
of
directors
to
was
did
the
January
with
on
It liability
Parker,
share action
charter
effect
stock,
resort
reim
how
these
bills,
been
like
held
The
The
was
that and
was
not
not
im
the
in As
of
of
in
as
a LIMITED LIABILITY IN HISTORICAL PERSPECTIVE 27 made by the shareholders, and whether the shareholders' responsibilities were limited to their interests. They were intrigued with the question of which credi tor could sue-for instance, could a purchaser of bank notes, who had picked them up for a pittance, sue for their full face value? Also the plaintiff's theory raised the problem whether a single shareholder, owning one share, might be liable to all the creditors. The court, however, did recognize that stock should be considered as a pledge, and that when shareholders took money from the corporate coffers before the creditors were satisfied, they should be required to return it to creditors who, subsequently, were not fully satisfied. However, the court asserted that the action was not enforceable at common law, but only in equity, where all claimants could be considered. An action at law would lie, so said the court, only in the event of a fraudulent withdrawal of capital intended to harm the creditors. Finally a suit in equity was brought in the federal courts and the decision in the Circuit Court for the District of Maine (which had separated from Massachusetts in 1820) was made in the case of Wood v. Dummer,92 in 1824. There the statement was flatly made, in deciding for the plaintiffs, holders of the bank's notes, that " ... the capital stock of banks is to be deemed a pledge or trust fund for the payment of the debts contracted by the bank."93 The charter, it was stated, relieved the shareholders from liability, but substituted for them the capital stock of the corporation. The shareholders had a right to the capital account only after the debts were paid. Since there were 2000 shares outstand ing, and the defendants owned 320 of them, they were to pay 320/2000ths of the amount received by them to satisfy the plaintiff's claims, because it was this amount that they held in trust. Subsequent courts have wrestled with the problems posed by the "trust fund theory" created by this case, and it may be that the doctrine has been rejected more than it has been used. Critical approval of the theory, however, has not been lacking for, as was maintained by Professor Dodd, ". . . it is apparent today that Justice Story's analysis of the situation was more realistic than that of those of his critics who have sought to assimilate the rights of corporate creditors completely to the rights of creditors of an individual."94 These three cases, therefore, appear to have oriented judicial thinking toward corporate balance sheets and, particularly, the capital stock account. . It must be kept in mind, however, that this development depended on the adoption of par value stock for its further development. This leads us to the next step- that of the statutory implementation of the theory.
Liability of Shareholders for Returned Capital-St atutory Provisions In the case of manufacturing corporations the General Court of Massa chusetts, perhaps impressed by the cases of Vose v. Granf95 and Spear v. Grant,96 took time in 1830 to pass a statute making shareholders liable for amounts
923 Mason 308 (C.C.D. Me., 1824). 93Jd. at 311. 94Qp. cit. supra n. 39, at 92. 95Supra n. 89. 96Supra n. 90. these withdrawn 28
for act result this protect
any with subjected
to capital
requirement,
saving
manufacturing capital shareholders Clelsea holders,101 consented duced tion Connecticut seeing provided the limited
vision unlimitedly continued making liability
674,
?1, (
1831)
102Jbid. 103Jbid. 97General 100The 98Public 99Supra 101Live 104Pub!ic 105N.
1 106Rhode lOSVt.
the J.une,
also,
the
residual
extent
7Vt.
northeastern
At
The
682 Ne
of this
provisions
of
capital. of
however
the
stock,
stock. corporation,
to first ch
w Manufacturing
H. about
Acts Acts r liability,
in
as
shareholders
capital,l0
1847. (1935).
the entire
mo
problem
the . n. capital
that
problem.
Acts
this
Hampshire to
Statute of the
385, Laws claims
and
Laws
Island
we such rather
r
59.
liability liable.
e,
charters,
time
and a
among
were action
limited
nd or the
the
. .
the
if
The
of
long
Company,
extent satisfaction have "Unlimited
p
paid
the
1837,
of
.
Re was Resolves, were
cases a
any
3
legislature Laws
the
Act
amount
234, nevertheless ,''100 of since
same
105
of
action,1o2
than
to s
corporation
Mass.,
liability
list The
olves,
was
In
right
until
others, of
seen,
State
creditors
accomplished
liability to
part reduction
c
entitled
be
liable of
from
A
of Feb
provided combined .
"to
of
Company,
its
shareholders
1809
time
322,
creditors
them
to
Connecticut
Conn.,
liability 1853,
1828-31 like 1870, liable
.
requirements of to to
Liability
received
thereof, adopted
all
the
12, Laws
of
render
ran
that
1826
adopting
Maine,
§19,
unlimitedly and,
shareholders
make
the
"An
of
in
provision
than
Public the
on
18 Public
,
distributed amount corporate
May subjected
of
for
a
. however,
2 shareholders
Massachusetts
(Metcalf)
p.
the
in
newly
of
8.
in
. . to
Act
in
104 reduction 106 in This capital onward,
more
AMERICAN the
debts dividends
or of or Jan
preliminarily
300.
1836-May was
the
one
was Act an
Act
1823, a
corporation
E
act the for
Vermont,
Relating
the
.
a
corporation liability
of
rl
. 1823
emerged
was
1870 the
amount
No
was
drastic
y
No
limited for intended
statute
creditors, of
limited
due
any
also
who
1834
9
to
the capital c
principle
8
. American .
made
.
old
71,
Session, or
53,
1837
6 altered,
1837,
which then all BUSINESS
of enacted
for
statute.1os
,
to
other
sum
intrigued
therefrom
manufacturing received imposed
§
§20,
division liability in
§7, charter sanction
unlimited
18,
of
the
appears
Manufacturing the
State
debts
"shall
Session,
to
debts
liability
directors
to existing
1853,
bankrupt
so
p.
the
p. creating p. capital
c.
of
was
property
its
Corp
net
doctrine
be
in
298,
in LAW
65, 221, 26,
refunded
of
was
contracted
limited
of
shareholders
make
shareholde
to
distributions
other
on
a
o
of
an profits c.
limited in
the clearly
Rhode
r shall
70.
31.
Maine
March
a
more liability
to the p.
63, ASSOCIATION
and
ti
the
rep refunded
liable
the
capital
1837
o
1833
or
a
92
n first
or
of
no
e the
states.
corporations.
§19,
Corporations,"
s,"
corporation
aled
9 general
liability,
have subsequent Connecticut
shareholders
insolvent.
equitable
, to arising
1
the to
debts Island
concerned
. limited
,
division
February
4
r when
before
charter
pp. condition act
1830.
rule.
By
s
3
in
them,"107
stock,
indicate
shareholders' without
For
on
were f. to
been
Laws
52-53.
that passed
belonging
99
policy
BULLETIN
from
P
in
them,
a
they
liability
97
o instance
way
the
5, l.
of
if Maine
to
to
reduc
share of
to
paid; 1847, act itself
That
This
§s,
Soap
Ec 1823.
who that
first
that
the
and
the the
the
Me
the
by
re
di
on to
be
of
to
p. it
. . a
a
it
is
of
of to
29
be
the
532 the
this
acts
was
pre
it
they
con
19th
of
been
New
other
stock
debts
given
Com·
return
corpo
it
of matter
a
of
capital
limited further
such
be
time
liability,
509,
question
property
a
the
could
the
in
had
is
its that
and
be
The
concerning
stock
maintained
to
treasury
earlier
which
in
that
in
place
reliance
testifying
when
well-and
adopted
of
this
The was
make Rev.
security
fact
of
fact
stock
He
not
on
corporate
in
the
given
as
integrity them
(1933).
limited
rules
L.
to
on
life
might or
shares,
This
filed
then
the
that
for
that
permitting
whole
agreed
the
158
of
cost
manufacturing
up
were
187ons
shares
corporate
1836111
after
by
while unknown
Harv.
1912.109
capital
ruling
the
in which
Behind
property
modern
of
fact
this
creditors.
proposed
the
Mill
36
liable
noting
paid
1875,
of
treasury
was
and
issue
Corporations.n4
problem
movement
creditors.
Property
after
vexed
the
act
certificate
until
liability:
from
shortly
in
of
was
to
into
have
of
aspect
1911).
of
The
Stuart
various
stock
cash,
was
account.
to
business
shareholders
instances, until
actually
Massachusetts,
Private
amount ed.,
Massachusetts
severally
corporate
115
in
a
certificate
330.
the
of
limited
1830's,
in
corporate
business in be
a
legislative
of
use
enacted,
John practice and
removed
few
stock
as
(7th Corporations,"
modern
stock
purchase
and
payment
authority,
"the
of
327,
No-par
appropriate 162. corporation
the
valuation
than
the
of
.
Stock
and
the
542
was
p
into
received.
the
Notes
begin
later
either
by
one
considered
these
an
in
Commissioner
more
the
of
154,
pay.
in,
capital
price
adopted,
jointly
capital
to
developed
to
disavow.
on 769.
capital,
§16,
law
if
rather p.
a
parties,
to
the
was
PERSPECTIVE
Corporation
protection
was
and
apparently
come
p.
a
sheet
for
years
from recognized
to
on a
shareholders
became
Creditors
of
coterminous
office.
38,
paid
was the
as
was
Economy
should
actually
by
have
§32, Shares
a
the
§2,
c. it
stock
or
of
be
not
was
third
us
the
cash,
depend
took
agreed
manufacturing
been
Modern
for
to
224,
liability
according
for
for
177,
property
return
twenty
was
public
balance
these
437.
did
in
payment
Political
protect
payment
1836)
c.
shareholders
when
c.
prove
with
HISTORICAL
(
business
The
c.
in
had
had
property
provision
Pay
liability
requirement
of
the
approved
of
protect
to
come
to
corporation
IN
This,
or there
on
paid
to
Some
From
cash
that
1870,
for
limited
the
1875,
on
principle
certain
to
Stats.
they
1903,
this
payment
no
.
was
a indeed,
necessary
Means,
had
a
Corporations
""Safeguarding
making
capital
remains
shareholders
cash
in
either
of
that
been
carry
value
Duty
The
Stats.
paid
Rev.
apparent, therefore,
in
Stats
of
distribution,
Massachusetts
and
Principles
problem
by
that
states.
when
Stats.
in
unlimited
was
order the
of
value
intended
and,
LIABILITY
stock
to
payment.
appears
is
account.
that
110
reliance
be
par
used
had
in
all
for
It
It
The The fact.
par it."
the
1903,
principle,
be
one
112Warren,
113Mass. 1115Miss 114Mass.
109Berle 110Mil!, 111Mass.
1923).
devices
(
impossible
sumed
expanded, is
capital dividend
Members'
the liability fixed
century in emergence that,
LIMITED
rations.112 profess deposited measure in England that might until to for previous stock missioner paid contemplated provided
for
sidered principle
- of statute 30 have
which, by
responded to "should sachusetts at
payment
to type
privilege quent Creditors' that in
ing discussing portedly a capable out.
limited managed quired petition" quence
century,123 advertising turing
June,
the spur the
the guaranteeing
that 116Ballentine, 117Mass. 118Pa 119N. 120Vt. 1848, 124Supra 1220p. 121Rhode 123Dodd,
"122 Pennsylvania,
charters New
This
the Another of Once been
Although
time
amount cases of 1847.
in
application
to
. corporations
effect
that policy,12o the to
liability,
corporation of
H.
in
Laws,
Acts
As England of
for a 1920
cit.
by
Hampshire, solution, with this investment.
IUghts the
to
again
Stats. this
of n.
be full very
Laws
op. taking
apparently had Island
said
limited to
containing such
supra
a providing
and
97. the
experiment
this
of filed said
1833-34,
subject
fact
cit published. Massachusetts
Corporations
those
the problem, consequence
in the
of
1920,
real to
1837,
we
bank that Resolves, the .
to
unskilfully
as in benefit
Act still n.
supra of
care movement failure
the the
would solve, of
contribution general with
give appeared liability.
Financial
can an 110,
did balance way,
c. that
the c. accounts He entitled in
Act. of
lagged
fail
entire the course,
case
the 349, that
of n act
322,
at
.
refer publicity
Rhode its and the
with 1853,
decisions
understood of
but
shall were so-called
made Then, 39, No.
be 789
themselves earliest to
542 privilege to
§1,
public
of general limited
he §14, managed unpaid
was creditors, capital
town "An
in at
behind
in recommended
apparent meet was recharter
Statements 9. .
et to
Public posed
be
p a
be
skilfully fire
219.
nugatory ; of urged
Island the
p. seq.
he an
means
John 361. willing AMERICAN
Act
accessible to
individually
one
general
as
clerk.
during a 299.
"good
its
liability on stock
act 1830 insurance
of
At.
( claimed, its affirmative
the
quite certain many
companies Relating
1946).
early "provided
engagements,
that more but Stuart
the in
to the
limited
No. of
financial
managed. to
American
the
to Vermont,
of
Massachusetts
prospective 1847.121 faith"
the well advertising Bank
1837, stock maintained
protect
problems BUSINESS 71,
as the to it authorize
of
amount
the price
prior
Mill. to ·companies
if
liable
be past
the individuals
§16 liability.
the
that
adoption
Manufacturing 119 could
corporation, of
no way. of
the affairs. or
,
required,
paid
states
attempts
creditors
beginning
p.
At in shareholders
Pittsburgh,
such
seventy-five
followed
false LAW
unlimited of each
for "fair
company of the 65,
creditors,
requirement
not That
1853,
that
the
cash by
act.124
Mill
the
in
68. stockholder."
ASSOCIATION its
Massachusetts
of
issue
person
representation
value"
maintain and,
shareholders
time
the
to
they
in
debts
act is own or
limited
and
spent
adopted
the
Corporations,"
of
This liability
protect
in
of
were the matter
connection property.117 if
with
years.
of was
provided
holding
were
a the
lead
1834,1 rules, which
of no-par
necessary,
for
a
certification
his requirement act
"equal
liability
subject
few
unskilfully the 116
the BULLETIN
nineteenth the
creditors
of
of was
manufac perfectly
provided
writing,
required for 1
which is
8
subse
bank,
grant By stock
stock conse
Mas pages
same
also that
p.
com
held with pur
the
to
re
a
as
30,
-
a a
in in
in in
as as
of of
30, 30,
31 31
on on
re
the the
the the
the the
and and
The The
1823. 1823.
This This
p. p. of of
other other
debts debts
state
infor
initial initial
exten
share
which which
public public
among among
(1948). (1948).
special special
of of
of of
5, 5,
amount amount
well well
128 128
corpora
§9, §9,
treasurer treasurer
.
condition condition
meet meet
in in
for for
of of
Island, Island,
capital capital
as as
established established
263 263
resulted resulted
publication publication
on, on,
publication, publication,
a a
the the
give give
treasurer treasurer
imposed imposed
to to
the the
which which
annual annual
is is
1854
act-in act-in
such such
so so
for for
formed formed
February February
recording recording
November, November,
those those
financial financial
liable liable
in in
on on
and and
in in
1851. 1851.
an an
data data
statement statement
act,l26 act,l26
statement statement
year, year,
do do
by by
·
Rhode Rhode
amount amount
shareholders. shareholders.
annual annual
of of being being
annual annual
vote vote
' '
the the
929, 929,
1836 1836
a a
requirements requirements
15, 15,
failure failure
and and
1776-1860 1776-1860
to to
in in
newly newly
a a
Corporations," Corporations,"
cases cases
p. p.
the the
the the
filed filed
day day
certain certain
and
1836 1836
to to
file file
subscribed, subscribed,
in in
every every
1854. 1854.
conditioned conditioned
the the
altered altered
to to
liability liability
May May
annual annual
7 7
corporation corporation
Maine Maine
with with
of of
the the
with with
1857. 1857.
secretary secretary
of of
to to
financial financial
personally personally
221, 221,
paid paid
the the
last last
29, 29,
of of
1849. 1849.
99. 99.
required required
Failure Failure
of of
an an
paid paid
c. c.
was was
635, 635,
. .
prior prior
stock stock
once once
30, 30,
nsylvania, nsylvania,
which which
1857129 1857129
be be
7, 7,
1841. 1841.
in in
p
n
part part
it it
such such
the the
limit limit
and and
183713
133 133
of of
publication publication
slightly slightly
Pe
6 6
filing filing
April April
of of
in in
16, 16,
633, 633,
§1, §1,
criminal criminal
pursuant pursuant
failure failure
May May to to
State State
13
been been
the the
corporation corporation
on on
Manufacturing Manufacturing
together together
shall shall
April April
in in
a a
p. p.
act act
Session, Session,
pertinent pertinent
president, president,
connected connected
the the
capital capital
346, 346,
to to
was was
should should
debts.
4-
liability liability
109, 109,
for for
the the
on on
with with
voted voted
623, 623,
3
in, in,
not not
the the
April April
1849
repeated repeated
§9, §9,
p. p.
an an
wherein wherein
566, 566,
of of
"was "was
c. c.
of of
contracted contracted
and and
the the
debts debts
for for
of of
requirements requirements
p. p.
1823 1823
of of
, ,
Thought: Thought:
and and
p. p.
of of
By By
situations situations
777, 777,
had had
133, 133,
was was of of
438, 438,
by by
longer longer
paid paid
publication publication this this
. .
. .
act, act,
act act
Relating Relating
the the
and and
1844
299. 299.
276, 276,
Jan. Jan.
p
unless unless
c. c.
c. c.
act act
penalty penalty
to to
liability liability
debts debts
§11, §11,
Limited Limited
. .
liability.1
county, county,
shareholders, shareholders,
of of
no no
c
p. p.
Hampshire, Hampshire,
in in
"corporation "corporation
of of
the the
Act Act
act,127 act,127
and and
This This
its its
PERSPECTIVE PERSPECTIVE
321. 321.
filing
192, 192,
corporations corporations
the the
all all
1841 1841
1844 1844
assessments assessments
368, 368,
the the
signed signed
the the
publication publication
December, December,
Democratic Democratic
amount amount
Maine, Maine, at at
Maine, Maine,
meeting meeting
civil civil
§14, §14,
c. c.
In In
was was
experimented experimented
the the
"An "An
1857, 1857,
requirement requirement
paid paid
the the
result result
1854-55, 1854-55,
1849-51, 1849-51,
of of
an an
New New
327, 327, 331.
its its
in in
to to
limited limited
liability liability
of of
freed freed
be be
all all
in in
of of
No. No.
39, 39,
a a
and and
voted voted
the the
voted.131 voted.131
p. p.
322, 322,
in in
by by
of of
first first
for for
to to
that that
n. n.
made made
required required
of of
debts.125 debts.125
operatives) operatives)
officer, officer,
The The
Act Act
c. c.
State State
(1841) (1841)
in, in,
State State
companies companies
entitled entitled were were
were were
capital capital
HISTORICAL HISTORICAL
§22, §22,
liability liability
Policy Policy
the the
weeks weeks
to to
Resolves, Resolves,
likewise likewise
added added
Resolves, Resolves, was was
Resolves, Resolves,
fact fact
the the
that that
"130 "130
the the
supra supra
payment payment
at at
Me. Me.
IN IN
refunded refunded
Act Act
of of
charters.135 charters.135
1849, 1849,
at at
1837, 1837,
paid paid
1823, 1823,
298. 298.
manufacturing manufacturing
of of
newspaper newspaper
of of
public public
and and
..ghareholders' ..ghareholders' and and
dropped dropped
of of
and and
cit. cit.
shareholder shareholder
amount amount
existing existing
the the
also also
privilege privilege
Likewise, Likewise,
p. p.
vote. vote.
. .
assessments assessments
. . a a
111, 111,
debts debts
in in
Pa., Pa.,
assessments assessments
liability liability
responsible responsible
been been
states states
for for
Laws Laws
its its
Island Island
Acts Acts
op
new new
Laws Laws
Economic Economic
made made
stock stock
Acts Acts
n. n.
§7, §7,
fixed fixed
Acts Acts
Acts Acts
of of
joint-stock joint-stock
was was
the the
the the
some some
special special
had had
all all
requirement. requirement.
"132 "132
without without
successive successive
that that
of of
1847. 1847.
H. H.
in in
of of
at at
LIABILITY LIABILITY
corporations corporations
with with
be be
shareholder shareholder
than than
as as
had had
of of
in in
in in
things, things,
of of
of of
act act
of of
Other Other
Pennsylvania Pennsylvania
Maine, Maine,
to to
advertisement advertisement
. .
corporation. corporation.
two two
1851 1851
unlimited unlimited
......
limited limited
officers officers
June June
capital capital
, , 133Rev.Stats
137N. 137N.
130Dodd, 130Dodd,
138Rbode 138Rbode
136Laws 136Laws 131Public 131Public
135Hartz, 135Hartz,
134-Public 134-Public 129Mass. 129Mass.
loss loss
128Mass. 128Mass.
127Mass. 127Mass.
126Supra 126Supra
. . 125Jd. 125Jd.
132Jbid. 132Jbid.
33
1847.138 1847.138
of of . . (other (other
the the
a a sively sively
tion tion
provision provision
of of
the the
for for notice notice
substituted substituted
was was
other other
duction, duction,
amount amount
copy copy 1851 1851
publicity publicity
capital capital
capital capital
holders holders
the the
mation mation
words, words, amount amount
the the
charter charter
ment ment
for for LIMITED LIMITED were had
being ments difficult.
ditioned
making
officers.
Responsibility
32
banking liable liability have for Feb.
them
management receive pensation statute Lehigh lent stock charter instance bility imp over were was, its
ministered, management rectors
also jured
"fraudulent
142Laws
141Mass
140Mass.
l4
139Hartz,
affairs
3
a
what
The
28,
contained
Laws
The
irment Not
Pennsylvania
In
some
the
insolvency."
common."139
apparently,
been to
if
held on
to
mor
m
have
regulating
and
shareholders
the
a
1829.
addition
County
the
of
they
be
creditors
This
.
on
acts
was
de
law
It
the
of
of too
acts
determination
e
they
Revised
Laws
for
shall
op.
justification. satisfied.
by
the
liable
not
has
and
than
officers
P
Pa
return
of
responsibl reports.
compliance
insolvency,"
causing
of
determine
directors
a
of
in
many
of the
liability
cit. their
.
.
for
such
,
reqmnng
,
shareholders
cannot
1809-12,
come
c
been
,
18
Bank,
1850
the
with
the appear,
banks,
orporate
142
imposed
the
Laws
1836,1
supra the
banks
is
to
44,
charter
Mismanagement
also
As
of
shareholder.
services,
examples
evidenced
18 directors
at
,
were
shareholder
It
The
creditors
impairment
Act
noted
down
shareholders
Act
the
e
2
a
of
for
is,
n. directly
granted
least any
9
c
4
attempted
is
that
but
defined
for
. 1 price
with of
Where
upon
No.
publicity
1836,
No.
banking
135,
82,
but
essentially,
of
c liable
in
same
law the
well
which
a
that
of
to
ninete
pit
its
for
the
as
there
are
276, p.
Massachusetts
is
322,
the
exist
the
at
of
this
are
mismanagement
by
c.
a
us.
investigation
failed their
much
control.
494.
in
l
approach
that
s
after
care
mismanagement
264
to
a
"(S)triking the
the
This
36,
bound
limited
of
code
§15
c
another
and
due
Art
e
also
Merchants
injured, has
reporting
t
to
are
nth-
1844,
AMERICAN
s were
deficiency
the
of
.
insolvency §30
capital.
,
.
in
and
limited of
,
invested
unfair,
the
as
do
p
1
provision
to
been credito
harmed
to
the
ce
Law
.
imposed
5,
e
,
The
this
415
by
ot x
are
ntu p.
liability
decidedly
fact-that
tent
something
§
unusual
diligence
sect
w
define
mism
he
s
41,
imposition
for
,
.
308,
as
law
only
mismanagment.
ry
of
requirements, r
the
to
form
for
r
breakdowns
only
i
s
Bank,
B
liability
s
on
p.
,
of
was
capital
more USINESS
of
they
by
Mass of
legislatures
a
312 for
have
for
nagement
492
to
double
eventually
creditors
of
it
in
the
the
what
15
the type
any
the
control
.
at
cleared
makes
observe."14
that
.
.
unpopula
losses
do ,
the
the
is,
In
the
granted
rational,
about
par
Jan.
provided
been
resistance
least
bank.
of
until
LAW
of
bank mismanage
the
of
they
not,
was
(i
office
liabil
case
agents,
.
this
v
of
rm
liability,
shareholders
occasioned
1829,
int
the
They
a
shareholders
the
up
ASSOCIATI
fairly
to
up
became
the
liability
lue
the
as can
In
almost
the
e
r
meant
in
i
by
of
rim
,
rs
for ty
S type
shareholders
m
to
shareholders fraudulent
in
the
that
o
publicity
of
and
c
receiving
a
refuse
1811
outside had may
reporting
.
f
b
it
in
m
this
k
and
a
the
it s
96
1850,
which
their
e
the
ent
nks.
of
charter
a
by
directors
for
by
case
,
the
O
imposed
enforcement
shareholders
provision
the
by .
even
part
140
p.
N
liability.
amount
legally
companies
definition
of
to
was
The can
BULLETIN
the
stock
the
149,
"fraudu
creditors
directors
require
when
was duty
of
In
re-elect
"unless
a
the
system
of
of
be
liable
were
com
have
con
term
mis
mis first
that
and
150,
was
the
ad
lia
the
the
for
di
in
of
of
It
a
,
·
to to
in in
be be
the the
but but
of of
33 33
and and
the the
for for
the the
sur
deter
."150 ."150
price price
with with
protect protect
1851 1851
coun
article article
wives wives
to to
some
which which
rding rding
o o
of of
en en
liability liability
for for
t
laborers laborers
e
has has
persons. persons. a a
century. century.
irectors' irectors'
with with
. . .
creditors creditors
the the
cco informa b
e e
power power
extended, extended,
d
149 149
a
s the the
group group
), ),
r r
ere ere
,
this this
t t
a
y y
of of
e
7
in in
their their
y. y.
th th
w
a, a,
ndise, ndise,
l
of of
vidually vidually
as as
n n
e
, ,
are are
corporations, corporations,
i
creditors, creditors,
a
reholders reholders
i
of of
e e c
entl
the the
195
oth
949). 949).
smanagement, smanagement, w
a
ve
or or
one one
ani
rs rs
c
i
1854
i
1
nti
limited limited
ining ining
t
ty ty
v
th
e
liability liability
ind
accordance accordance
e
i sh
re
of of
c
a
m
on on ., .,
coupled coupled
e
of of
1831
i
classes classes
of of
they they
rg
tw
the the
p
in in
employees employees
of of
and and
sufficien
merch
ed
197 197 (
in in
nature nature
a
This This
of of
on on
has has
for for
i
b
forth, forth, e e
liabil
res
act act
2d 2d
Pennsyl
of of
two two
was was
liable liable
on on
purpose purpose
ture ture
(2d (2d
be be
tes, tes,
th
had had
since since
a
s s
the the
a
so so
C. C.
in in
to to
n
sharehold
an an
recognit
ie
This This
st
to to
to to
unlimited unlimited their their
n
not not
the the
& &
840 840
protect
concept concept
a
although although
equities equities
they they
ims ims
limited limited
and and
a
of of
D. D.
that that
show show
provisions, provisions,
Law. Law.
are are
for for
ons ons
devices devices
with with
cl
if if
quarrymen, quarrymen,
not not
exact exact
. .
charter charter
most most
demand.146 demand.146
the the
imposed imposed
ti
the the
6
the the
responsible responsible
14 14
comp
a
protection protection
for for
down down 3
to to
appear appear
n n
e e
is is
i
6
is is
., .,
received received
age age
ded ded
tion tion
nonexistent. nonexistent.
liability. liability.
of of d d
. .
th
i
. .
for for be be
a
w
ntices, ntices,
able, able,
r
these these
p
It It
the the
it it
e
Inc
orpor
ended ended that that
shareholders shareholders
sai
s s
however, however,
ay, ay,
Mill Mill
or or
. . C
749
, ,
special special
e
in in
5, 5,
principle principle
come come
for for
E E
c
position, position,
prov
rd rd
of of
e e
to to
"miners, "miners,
would would
t
V
p. p.
tod §1
a
appr
t t
o Corp
machinery, machinery,
preceding preceding
s s by by
were were
37. 37.
for for
, ,
Plan
measure measure
, ,
a
TI va
since since
6
limited limited
2
should should
the the
shareholders shareholders
to to
devi
215. 215.
C
5 ha
th
en en
tow
Stuart Stuart
nce nce
exists exists
Pri
2
133
assured assured
p. p.
e
ed ed
liability
for for
meager meager
This This
p. p.
of of
individuals individuals
ev
which which
h
d d
Food Food
in in c. c.
c. c.
of of
s
rd rd
the the
that that
e
liability liability
some some
who who
is is
4, 4,
development development
a , ,
56, 56,
44 44
, ,
experiment experiment
PERSPE formed formed
Business Business Employees, Employees,
months months 3
alterations alterations
John John
and and
18
servants, servants,
51
51
creditors creditors
on on
true true in in
emerg
8
a a
rational, rational,
8
adopted adopted
liability liability
Law Law
tand
o. o.
furni
1
these these
1
the the
s
of of
direct
to to
became became
stand stand
six six
limited limited 145 145
The The
N
statute statute
ani
, ,
No. No.
is is es es
he he
v
Employees Employees
t
ty ty ponsibility ponsibility
privilege privilege
not not
v
f f
the the
l
t t
wages.1
es law law it it
scheme scheme
s
ct ct als als
of of
c
y
v o
i
. .
us us
lves, lves,
the the
l
not not
s s
such such
.
r
A
company company
re
A
unlimited unlimited
e e to to
i
on on
ser
outside outside
1853, 1853,
directors. directors.
e
t
abili
, ,
rn rn
, ,
Cosmopolitan Cosmopolitan
110. 110.
t
desire desire
laborers, laborers,
i
for for
policy policy
eso
k k
e
l
tion
a
protect protect
. .
that that
HISTORICAL HISTORICAL
do do
53
Reso
subject subject
R
for for
of of
Penns
in in
companies, companies,
v for for
the the
n. n.
8
when when m
147 147
corporations corporations understanding understanding
the the
.
that that
liability liability
, ,
1
1854
desired desired
the the
firm firm
survey survey
to to
IN IN
the the
te te
themselves. due due
history
mod
, ,
of of
a
States States
and and
is is
and and
the the .
to to
corpora
nd nd
corporation corporation
privilege privilege
s s
a corpor
double double
type type
such such
Liability Liability the the a
t
Pa., Pa.,
Pa
its its
was was ania, ania,
the the supra supra
form
the the
only only
Handboo
form, form,
c
of of
continued continued
v
the the
a a
. .
, ,
, ,
only only
§2. §2.
that that Acts Acts
indic
short short
of of
of of
the the
the the
e
by by
debts debts
in in
Bernstein Bernstein
rs' rs'
employees employees
the the
of of
desire desire
of of
. . A
children . .
ns
year, year,
behind behind
cit
e
provided provided
common common
s
e
this this
group group at at
protect protect
514 514
was was
of of
to to
. .
United United
this this
to to
in in
in in
form form
LIABILITY LIABILITY
as
ass
claim claim
corporation, corporation,
of of
aws aws
for for
n n
for for
altered altered
M
It It
0p
to to
act act
This This
o
time time
Pennsyl
6
8L
5
The The
The The
In In
that that
produc same same
debts debts
spirit spirit
the the explore explore
his his
ned, ned,
151Today 151Today
149Laws 149Laws
150Jd. 150Jd.
minor minor
the the
14
147M
14
14
this this
i
144Stev
m Secti
officers officers
rather rather
granting granting to to
paid paid in in
Conclusion Conclusion
vived.151 vived.151
Obviously, Obviously,
nevertheless nevertheless employed employed
The The
first first try try
the the
what what
liable liable
or or relation relation
Massachusetts Massachusetts of of
tion, tion, for for
the the
claims claims
and and
the the
Sharehold
liability, liability,
persons persons In In LIMITED LIMITED
the the
integrity integrity
matter matter
sponsibilities sponsibilities
was was
corporation corporation tion tion century, century,
face. face.
become become
since since
interests,
manufacturing manufacturing the the
teenth teenth came came
toward toward
creditors creditors
34 34
capital capital
other other
a a
was was
Limited Limited
The The
that that
to to
logical logical
century. century.
of of
this this
. .
an an
however, however,
of of
be be
but but
were were
made made
states, states,
over-concern over-concern
protective protective
and and
time, time,
law. law.
actuality
the the
conditional conditional
freely freely
to to
the the
liability liability
conclusion conclusion
in in
by by
corporations corporations
When When
just just
capital capital
has has
The The the the
creditors-for creditors-for
groundwork groundwork
a a
paying paying
are are
granted. granted.
state state
. .
and and
experience experience
had had
devices devices
basic basic
Limited Limited
is is
the the
the the
stock stock
only only
grant grant
now now
of of
from from
equitable. equitable.
to to
in in
pressure pressure
things things
conflict, conflict,
The The
were were
relative relative
refine refine
full full
originally originally
because because
account account
had had
of of
firmly firmly
liability liability
the the
of of
the the
New New
for for
limited limited
formed formed
that that
been been
New New
for for
entity entity
AMERICAN AMERICAN
these these
The The
however, however,
balance balance
wages wages
their their
fixed fixed
the the
by by
England England
made made incorporation incorporation
was was
fashioned fashioned
laid laid
England England
conflict conflict
liability, liability,
devices devices
avoiding avoiding
theory, theory,
shareholders shareholders
in in
shares shares
of of
in in
that that
by by
not not
greatest greatest
still still
it it
BUSINESS BUSINESS
employees, employees,
the the
the the
states states
possible possible
the the
applied applied
of of
for for
still still
was was
but but
for for
in in
exists-latent exists-latent
illegal illegal
legal legal
1850's. 1850's.
stock. stock.
privilege privilege
was was
the the
the the
number number
rather rather
led led at at
it it
is is
LAW LAW
have have
was was
hand hand
kept kept
for for
constellation constellation
protection protection
to to
finally finally
first first
dividends dividends
the the
and and
ASSOCIATION ASSOCIATION
because because
certain certain
business business
in in
limited limited
of of
in in
rest rest
from from
to to
half half
to to
beneath beneath that that
felt felt
the the limited limited
copy. copy.
of of
maintain maintain
of of
of of
residual residual
becoming becoming
or or
section section
its its and and
liability liability
early early
because because
the the
known known
The The
the the
creditors' creditors'
dividing dividing
BULLETIN BULLETIN
the the
applica
liability liability
met met
nation nation
nine
19th 19th
law, law,
sur
that that
the the
re
to to
as as
in in
it it a a