The engagement which a stockholder makes when subscribing for stock is to pay the amount of his stock subscription. This engagement is a contract with the corporation which becomes binding as soon as the corporation is formed. This capital fund must be paid to the corporation. If the statute requires payment in specie it must be so made.1 If the law of the particular jurisdiction permits a payment in something else than money, payment may be so made.2 The contract may be avoided, it is true, on the ground of fraud if the subscriber is not estopped from making that defense.3 But conceding a valid subscription, the subscribed capital becomes the security of the creditors, and the stockholders are powerless to make any arrangement among themselves relieving them from this liability.4 Nor can this capital stock be divided up among the stockholders to the prejudice of the creditors of the corporation.5 If a stockholder has given a note to the corporation in payment of his subscription, he cannot defend against it on the ground that the corporation had no power to take it.6 Nor can a stockholder escape this liability by showing that the bank was not properly organized;7 but it has been held that a violation of law in organizing the bank would be pleadable against this stock subscription.8 Even this decision is wrong unless it is explainable on the theory that it was a contract which the law forbade. The state can be compelled to meet this liability.9 It will not avail the stockholder to show that he has paid the notes of the bank up to the extent of his liability,10 nor that he has paid a judgment against himself as a partner responsible for the bank's debts.11 If the subscriber sells his stock to the bank he is still liable,12 but it has been held otherwise. But a valid transfer completed and assented to by the bank releases the original subscriber, unless a statute makes him liable.13 The authorities heretofore cited as to the effect of a transfer when not in good faith or for the purpose of avoiding liability are all in point here.14 The right to call in unpaid stock subscriptions, however, it has been held in a case of doubtful authority, may be taken away by statute as to debts contracted after the statute was passed.15 The ruling shows the result of foolish schemes for state banking.

1 See 3 Thompson on Corp., sees. 2925-3843, who must have made an extensive use of a learned note, 3 Am. St R. 806.

1 King v. Elliot, 5 Smedes & M. 428, on a statutory implication.

2 See Sec. 19, supra.

3 See 3 Am. St. R. 824 et seq., in note; Bissell v. Heath, 98 Mich. 472; In re Empire City Bank, 6 Abb. Pr. 385, and see Sec. 48, ante.

4Sagory v. Dubois, 3 Sandf. Ch. 466; Palmer v. Lawrence, 3 Sandf. 161; Dayton v. Borst, 7 Bosw. 115.

5 Wood v. Dummer, 3 Mason, 308; Bank of St. Mary's v. St. John, 25 Ala 566, a case where the directors and all who participated were held liable for the money and for profits.

6 Finnell v. Sandford, 17 B. Mon. 748; Farmers' Bank v." Jenks, 7 Mete. 592.

7 Palmer v. Lawrence, 3 Sandf. 161.

8 North Missouri Co. v. Winkler, 33 Mo, 354. If it had been the statutory liability, this defense would have been irrelevant beyond a doubt.

9Curran v. Arkansas, 15 How. 304. See note to Sec. 48, ante.

10 Marsh v. Burrows, 1 Woods, 463. See Sec. 315, notes 15 and 16, post.

Sec. 60. Statutory Modifications

Some instances occur where the statute makes the original subscriber a guarantor of the payment of the stock subscription by a transferee.1 Statutes which were works of supererogation have been passed declaring the stockholders liable for unpaid subscriptions. This is merely declaring the liability that the law already imposed. Courts have in some instances construed statutes making the stockholder liable for the amount of his stock to be declaratory of a liability to the amount of the original subscription, but not a double liability. These statutes have some bearing upon the matter of remedy.1