Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/734

§ 719.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XIII. at the winding up of the corporation, is the person liable. 1 And, moreover, the chief argument in favor of holding liable the shareholders who are such when the debt is contracted, i. e., that persons contracting with the corporation rely on the credit of the then shareholders, loses its force in view of the prevail- ing American rule, according to which a transfer made to an irresponsible person when the corporation is in failing circum- stances is void as to creditors ; a rule which applies as fully in regard to the statutory liability of shareholders as in regard to their liability for unpaid subscriptions. 2 § 719. Let us test the analogy of partnership law in this respect. " As the firm is not liable for what is done by its members before the partnership between them commences, so upon the very same principle a person who is admitted as a partner into an existing firm does not by his entry become liable to the creditors of the firm for anything done before he became a partner. Each partner is, it is true, the agent of the firm, but .... the firm is not distinguishable from the persons from time to time composing it; and when a new member is admitted he becomes one of the firm for the future, but not as from the past, and his present connection with the firm is no evidence that he ever expressly or impliedly author- ized what may have been done prior to his admission. It may, perhaps, be said that his entry amounts to a ratification by him of what his now partners may have done before he joined them. But it must be borne in mind that no person can be rendered liable for the act of another on the ground that he has ratified, confirmed, or adopted it, unless at the time the act was done, it was done on his behalf." 3 These concise remarks of Baron Lindley are certainly true as to partnerships ; but their inapplicability to corporations shows the lameness of the analogy between corporations and partnerships. As the learned Baron says : "A person who is admitted as a partner into an existing firm, does not by his entry become liable to the creditors of the firm for anything i See § 720. 2 See dissenting opinion iu Brown v. Hitchcock, 36 Ohio St. 667. See § 749. As to Brown v. Hitchcock, supra, the same court followed it in 714 Mason v. Alexander, 44 Ohio St. 318, saying that they were not prepared to assume the responsibility of over- ruling it. a Lindley on Part., 389.