Although a contract made by the directors to sell the stock of the corporation at less than its par value would be binding upon the corporation, it is not binding upon the creditors of the corporation except in one class of cases. If the corporation has been so unsuccessful in its business that the price of the stock has fallen below par, and it is necessary to increase the capital stock of the corporation in order to get additional capital to carry on the work of the corporation, they will be allowed to sell the new stock at the best market price that can be obtained. With this exception, the stockholders in a company are liable in case of the insolvency of the company to creditors of the company for all unpaid balances due on their stock.

"A doctrine of the American courts, slowly becoming obsolete, invented by Mr. Justice Story, is that the assets of a corporation are a trust fund for the payment of its creditors, who have an equitable lien or charge upon it, superior to that of the shareholders, and that the directors of a corporation are consequently in a sense trustees for its creditors.5

"The capital stock of a corporation, which is subject to the operation of this principle, consists of all the stock which the members have subscribed.6 This is deemed to consist of three funds: (1) Money which has been subscribed and paid in. (2) Money thus subscribed but not paid in.7 (3) Money thus subscribed, but afterward improperly divided among the members, leaving the debts of the corporation unpaid.8 Stated in another way the capital stock of a corporation in the eye of an American court of equity is the stake or pledge upon which the company obtains credit. If any member has not paid his share of it into the common treasury he is deemed to hold so much of a fund in his pocket, upon which the creditors of the concern have an equitable charge or lien, and a court of equity will lay hold of him, and compel him to surrender up this fund for the benefit of such creditors." 9

5 Leffman vs. Flanigan, 5 Phila.

(Pa.), 155, 20 Leg. Int. (Pa.), 148.

6 Mann vs. Pentz, 3 N. Y., 415;

Spear vs. Grant, 16 Mass., 9. 7 Ward vs. Griswoldville Mfg. Co., 16 Conn., 593.

8 Reid vs. Eatonton Mfg. Co., 40

Ga., 98; 2 Am. Rap., 563;

Wood vs. Drummer, 30 Fed.

Cas. No. 17, 944; 3 Mason, 308. 9 Adler vs. Milwaukee Patent Brick Mfg. Co., 13 Wis., 57.