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this conclusion, and the Southern Company which gave $4,750,000 of its full paid stock, which it was readily selling for $10 cash per share, and Gulf stock of equal amount, for the inferior stock of the Belt Company, cannot be heard to say that the superior equity of the creditors therein was worthless. Northern Pacific Ry. Co. v. Boyd, 228 U. S. 508, 33 Sup. Ct. 554, 57 L. Ed. 931.

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Deliberate consideration has been given to the earnest objection to the consideration by this court of the question of the value of this equitable interest of the creditors in the Belt property on the ground that the master found that there was no direct evidence that the property of the Belt Company was worth more than $1,000,000, and hence that this was its fair value, that no exception was taken to that finding, and that the evidence is not here. But because the finding of the fair market value of the mortgaged property is not conclusive of the value of the creditors' equity therein, and because other facts and findings contained in the master's report, all of which are available to this court for the determination of that issue, have convinced that the value of that equity was more than $475,000, the objection of counsel has not been thought fatal to the consideration and determination of this question. * * *

It is another contention of counsel for the Southern Company that the remedy of the Trust Company in this court of equity is limited to the subjection of the property of the Belt Company in the possession of the Southern Company to the payment of its claim and that it may not have a decree that the Southern Company pay it. This court does not concede the soundness of this position. * *

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The question, however, is not material in the case at bar because the transaction was a conveyance of the property of the Belt Company in fraud of creditors and a breach of trust by the Southern Company, which company, with full knowledge of all the facts, actively participated in the entire transaction and thereby acquired the property of the Belt Company, so that that property and the improvements the Southern Company has made thereon, free from the $1,000,000 Belt mortgage and free from any charge for the expenses which the Southern Company has made thereon, stands in its hands charged with a trust to pay the claim of the Trust Company against the Belt Company which the court may execute by a seizure and sale by its master or receiver.

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And if the Southern Company has disposed of the property or destroyed it, or placed it beyond the reach of the Trust Company or the court, or given a mortgage or incumbrance upon it to a party without notice, the court has plenary power, and it is its duty to require the Southern Company to account for and pay over the proceeds of the property or the value of it, or the proceeds of the mortgage, or the amount of it, to the extent of the Trust Company's claim, and to so conduct its proceedings and mold its decrees that full relief may be secured by the Trust Company. And as the property of the Belt Company was worth many times the amount of the claim of the Trust Company at the time of its transfer to the Southern Company, the ultimate result will be the same whether the decree be for the seizure and sale of the Belt property or for the payment of the claim of the Trust Company by the Southern Company, for it must ultimately be paid either out of the property in its hands or by the Southern Company itself.

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that the South

And the conclusion of the whole matter is ern Company is indebted to and should pay to the Trust Company the amount of the indebtedness of the Belt Company to the Trust Company, that is to say, the sum of $639,658.86 and interest from the date of the former decree on $473,723.59 at 6 per cent. per annum, on $46,565.76 at 7 per cent. per annum, and on $119,369.51 at 8 per cent. per annum, and the costs of this suit; that the Trust Company's right to and equity in the property of the Belt Company which was transferred to the Southern Company by means of the exchange of the stock of the Belt Company for the stock of the Southern Company and by the foreclosure proceedings, sale, and conveyance, and otherwise, was and is prior in time and superior in equity and right, to the extent necessary to pay that debt, to the right, title, and equity of the Southern Company therein.

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Let the decree be reversed, and let the cases be remanded to the District Court, with directions to render a decree for the Trust Company in accord with the views expressed in this opinion.1

SECTION 5.-RIGHTS OF CREDITORS AGAINST
STOCKHOLDERS

CLARK V. BEVER.

(Supreme Court of the United States. 1891. 139 U. S. 96, 11 Sup. Ct. 468, 35 L. Ed. 88.)

In the year 1872, the Burlington, Cedar Rapids & Minnesota Railway Company-of which at the time the intestate, George Greene, was president, as well as a stockholder, and of which he continued to be president until February, 1875-had a settlement with the Northwestern Construction Company, of which also Greene was a member, for work done in building a part of its road. This settlement showed the sum of $70,000 to be due the construction company. The railway company, being unable to pay this claim in money, delivered to the construction company 3,500 shares of its stock, at 20 cents on the dollar, each share being for $100, and the same was accepted in full satisfaction of the debt. The stock, which was not worth anything in the market, was issued directly to the members of the construction company, the intestate Greene receiving 910 shares as his portion. No other payment than this 20 per cent. was made for or on account of the stock. The good faith of the parties in making this arrangement is not impugned by allegation or proof. The construction company was reluctant to take the stock, and insisted upon payment in cash. What the original stockholders paid for their shares does not appear; nor does the record show whether or not Greene exercised any of the privileges of a stockholder. * *

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Clark, the plaintiff below, a citizen of Ohio, being the holder of 50 gold bonds of $1,000 each of the Burlington, Cedar Rapids & Minnesota Railway Company, dated June 1, 1874, payable in the year 1914,

1 See the collection of papers, Some Legal Phases of Corporate Financing, Reorganization and Regulation by Stetson, Lynde, Cravath et al., and the article by Samuel Spring, on Upset Prices in Corporate Reorganization, in 32 Harvard Law Review, 489.

and bearing interest at 7 per cent. per annum,-which bonds were part of a series of 2,000 each for $1,000, secured by mortgage upon the company's net income, rolling stock, and additions, and convertible at the option of the holder into capital stock,-brought suit to recover the amount due thereon, and on the 4th of June, 1878, recovered judgment against the railroad company for the sum of $65,517, to bear interest from that date. We infer, though the record contains no distinct statement or proof on the subject, that the bonds became due and payable prior to this suit, on account of default in the payment of interest. Execution was issued upon the judgment, and was returned August 10, 1880, "No property found."

The present suit was commenced July 5, 1881, by Clark against the administrator of Greene, a citizen of Iowa, in the circuit court for Linn county in that state. The petition, after setting out the foregoing judgment, the return of the execution thereon unsatisfied, and the ownership of the 910 shares of stock by Greene up to his death, and by his estate since, alleged "that of the value of said shares of stock owned by said decedent there has been paid only the sum of eighteen thousand two hundrd dollars, or about twenty per centum of the full value of said stock, and there is still due upon said shares a balance of eighty per centum of their full value, amounting to the sum of seventy-two thousand and eight hundred dollars; that the said balance due upon said shares was a trust fund in the hands of said decedent for the payment of said judgment, and is still a trust fund for the purpose in the hands of decedent's administrator. * * *

The court below * * * held, as matter of law, that upon the evidence the intestate, Greene, by taking the 910 shares of stock upon which the 20 per cent. was paid, did not become liable to pay anything further on account thereof to creditors of the railway company; and, pursuant to its direction, the jury returned a verdict for the defendant.

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Mr. Justice HARLAN, after stating the facts in the foregoing language, delivered the opinion of the court.

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We come now to consider the principal questions in the case. They relate to the liability of the defendant for the difference between the face value of the stock issued to Greene in 1872, and the value at which it was rated in the settlement of that year with the Burlington, Cedar Rapids & Minnesota Railway Company. The general proposition advanced by the plaintiff is that it was not competent for the railway company to issue to Greene and his associates in discharge of its debt to them, amounting to $70,000, 3,500 shares of stock of the par value of $350,000, although the settlement upon that basis may have been demanded by the best interests of the company, and was made in good faith, without intention to harm the corporation or to defraud its creditors, existing or subsequent, and although the stock at the time "was not worth anything in the market;" and that Greene took the 910 shares issued to him for 20 per cent. of its face value, subject to the implied condition that he should be liable for any unpaid debts of the corporation to the extent of the difference between the face value of the stock and the amount at which it was taken by him. It is not contended that such liability arises from the relations Green held to the two companies making the settlement of 1872, but from the obligations the law imposed for the benefit of creditors both upon the corporation issuing the stock and its stockholders. *

The statutory provisions that are supposed by the plaintiff to sustain his position, which were in force when the stock in question was issued, are found in title 10, c. 52, of the Revision of the Statutes of Iowa of 1860. * * *

The argument in behalf of the plaintiff assumes that, consistently with these statutory provisions, no one can, under any circumstances whatever, become the owner of the stock of an Iowa corporation, except subject to the condition that, where property of the corporation cannot be found, the private property of the stockholder may be seized under execution in favor of a judgment creditor to the extent of the difference between what he actually paid for the stock, whether in money or in property, and its face value. And it is further insisted that, independently of the statute, such is the doctrine of general law relating to subscriptions to the stock of corporations, as announced by this court in several cases. We are of opinion that neither of these positions can be maintained.

The local statute undoubtedly proceeds upon the ground that unpaid installments of stock subscribed constitute-no other rule being prescribed by legislative enactment—a trust fund for the benefit of creditors. But it does not declare that a corporation is without power, under any circumstances whatever, to dispose of its stock at less than par, or that stock purporting to be full paid shall, in all cases, and without reference to the circumstances under which it was acquired, be deemed unpaid to the extent that the amount given for it by the owner, whether in money or in property, was less than its face value. On the contrary, the statute itself imposes no express restriction upon the disposition by a corporation of its stock except such as is imposed upon individuals, and prescribes no rule in respect to the liability of a stockholder to creditors except that when corporate property cannot be found to pay a judgment creditor his private property may be seized under the execution to the extent of any unpaid installments on the stock owned by him. Whether any such indebtedness really exists upon the part of a particular stockholder, and whether he in law or in fact owes any sum on the stock held by him, was left by the statute to be determined in each case, upon its own circumstances, and in accordance with the principles of general law touching the rights and liabilities of creditors and stockholders. If the legislature had intended that the acquisition of stock at less than its face value should be conclusive evidence in every case that the stock, as between creditors and stockholders, is "unpaid," it would have been easy to so declare, as has been done in some of the states. If such a rule be demanded by considerations of public policy, the remedy is with the legislative depart ment of the government creating the corporation. A rule so explicit and unbending could be enforced without injustice to any one, for all would have notice from the statute of the will of the legislature. It is not for the courts, by mere interpretation of a statute, not justified by its language, to accomplish objects that are within the exclusive province of legislation. *

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Do the decisions of this court require us to hold, in such a case, that a creditor taking stock in payment of his claim is bound to other creditors for the face value of the stock? The plaintiff contends that our decisions are to that effect. Let us see. In Sawyer v. Hoag, 17 Wall. 610, 620, 21 L. Ed. 731, it was held that the capital stock of a corporation, especially its unpaid subscriptions, is a trust fund sub

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There is no

modo for the benefit of its general creditors. dispute here as to the soundness of this general principle. The dispute is as to its application to a case like the present one. We can be aided in solving this inquiry by ascertaining the character of the particular cases in which it has been applied by this court. In Sawyer v. Hoag, a subscription of $5,000 to the stock of an insurance company for which the subscriber paid in full, but received in return the check of the corporation for $4,250 under an agreement that the debt for the stock should be extinguished, and the amount of the check should be treated simply as a loan of money to the stockholder, was held to be a mere device to evade the rule that unpaid subscriptions of stock constitute a trust fund for the benefit of the creditors of the corporation; consequently, that the stock there in question was to be regarded, as between the corporation and creditors, to be unpaid to the extent of the amount received back from the corporation under the pretense of a loan. * In Webster v. Upton, 91 U. S. 65, 23 L. Ed. 384, a person holding certificates of stock by transfer from the original subscriber, and standing upon the books of the corporation as a stockholder, was held liable for the balance due upon the stock, without proof of an "express" promise upon his part to pay, * * and in Pullman v. Upton, 96 U. S. 328, 24 L. Ed. 818, that a transferee of stock who caused the transfer to be made to himself, as collateral security for a debt of the transferrer, was liable for the balance due on such stock. * * In Scovill v. Thayer, 105 U. S. 143, 26 L. Ed. 968, it was declared, among other things, that a contract between a corporation and its stockholders, that they should never be called upon to pay any other assessment than that paid at the outset, while good as between the corporation and the stockholders, was a fraud in law upon creditors, which they could have set aside whenever their rights intervened and their claims were unsatisfied. In Richardson v. Green, 133 U. S. 30, 10 Sup. Ct. 280, 33 L. Ed. 516, it was held that the issuing by a corporation of bonus stock was in violation of a statute of the state declaring it to be unlawful to issue certificates of stock until the shares were fully paid, and that one exercising the privileges and powers of a stockholder in a corporation was not exempt from the liabilities attaching to a bona fide stockholder who took shares purporting to be, but which in fact were not, fully paid.

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This detailed statement of the above cases has been made because of the confident assertion that they rest upon doctrines necessarily requiring the reversal of the judgment. We do not concur in this view. In all of these cases, except one, there was an actual subscription of a given amount. They were cases of promises to pay the company the amount subscribed, not of sales by it. According to those cases, a stockholder, becoming such by formal subscription or by transfer upon the books of the corporation, cannot be discharged to the injury of creditors by any agreement, arrangement, or device to which creditors do not give their assent, and by which the stockholder is to pay less than the amount due upon such stock. * * *

The present case presents features that are not to be found in the others. It is not the case of an ordinary subscription of stock in a given amount. Nor is it, strictly, one of an ordinary purchase of stock for purposes of investment. It is the case of a creditor of an insolvent railroad corporation which, in consequence of its inability to pay creditors in money, was threatened with bankruptcy, and which re

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