Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/627

CHAP. IX. J CORPORATION AND SHAREHOLDERS. [§ 604. as that would be against the spirit and policy of the act. 1 But a national bank may have a right to hold a cash dividend as pledged for a debt owing it from a shareholder. 2 § 603. When by statute a corporation has a lien on its shares for debts owing it from shareholders, its lien is binding as to shareholders, their creditors and ij en ec assignees in insolvency, and also as to persons who purchase shares from prior holders 3 or take them as collateral security ; 4 and every purchaser of a certificate is affected with notice of the lien. 5 Accordingly, if a corporation has a statu- tory lien on its shares for unpaid subscriptions, it may refuse a certificate to a purchaser for value from a prior holder until the subscription due on the shares purchased is paid. Under such circumstances the purchaser acquires as against the cor- poration only the rights of the prior holder. 6 § 604. Unless expressly restricted to a certain class of debts, a statutory lien covers all debts owing from the shareholder to the corporation. 7 A provision in the s ' cope ' articles of a bank that the shares of its stock should not be transferable until the shareholder should discharge all debts 1 Bullard v. Bank, 18 Wall. 589; Buffalo Germ. Ins. Co. v. Third Nat. B'k, 162 N. Y. 171; Delaware, L. & W. R. R. Co. v. Oxford Iron Co., 38 N. J. Eq. 340. But see Young v. Vougb, 23 N. J. Eq. 325. Compare Bank v. Lanier, 11 Wall. 369; Conk- lin v. Second Nat. B'k, 45 N. Y. 655. 2 Hager v. Union Nat. Bank, 63 Me. 509. A corporation may set off a debt due from a shareholder against his right to a dividend, but not as against the assignee (a pledgee) of the shares, if the divi- dend is declared after the assign- ment. Gemmell v. Davis, 75 Md. 546. 3 Union Bank v. Laird, 2 Wheaton, 390; McCready v. Rumsey, 6 Duer (N. Y.), 574; Tuttle v. Walton, 1 Ga. 43. See Dobbins v. Walton, 37 Ga. 614. Compare St. Louis Per- petual Ins. Co. v. Goodfellow, 9 Mo. 149; Bryon v. Carter, 22 La. Ann. 98. 4 Mount Holly Paper Co.'s Appeal, 99 Pa. St. 513; Piatt e. Birmingham Axle Co., 41 Conn. 255; Bradford Banking Co. v. Briggs, 31 Ch. Div. 19. Such a lien, given by statute, will be recognized and given effect to in another state. Bishop v. Globe Co., 135 Mass. 132. 5 Hammond v. Hastings, 134 U. S. 401. The same holds when the lien is given by the charter (i. e. by a special statute), Kenton Ins. Co. v. Bowman, 84 Ky. 430. 6 McCready v. Rumsey, 6 Duer, 574. See, also, Spurlock v. Pacific Railroad, 61 Mo. 319; cf. Dorr v. Life Ins. CI. Co., 71 Minn. 38. 7 Mobile Mut. Ins. Co. v. Cullom, 49 Ala. 558. See Schmidt v. Hen- nepin, etc., Co., 35 Minn. 511. But see Boyd v. Redd, 120 N. C. 335. 607