Mr. Justice Green
delivered the opinion of the court, January Bd, 1887.
Green, J.
The bill in this case was a creditor’s bill, originally filed by one creditor of a corporation alleged to be in- ' solvent, against several of the stockholders, for the purpose of compelling the payment of the unpaid capital stock in discharge of the claims of creditors. The bill set forth the debt of .the plaintiff and contained also a general allegation that there, were other debts to the amount of $30,000 without naming the creditors or the separate amounts due them. Subsequently certain other persons claiming to be creditors were allowed to intervene by petition. The Master without making any report as to these latter claims, found that the appellant, who was brought in by amendment, was indebted for unpaid capital upon one share to the extent of four thousand dollars, with interest from November 1st, 1875. He, however, did not report any form of decree, nor did he report as to any other debt except that of the plaintiff, which he found to be $3,169.81 with interest. The appellant resisted the plaintiff’s claim upon three grounds, one of which was the statute of limitations. It appears, however, that the amendment by which he was brought in was filed in February, 1879, which, as the date of incorporation was June, 1883, was within six years of the time when the cause of action arose. It is alleged that Bell filed no answer till April, 1880, which was seven years after the subscription, and that no notice of the amendment was served upon him. He, however, entered ail appearance and made defense, which was a waiver of notice. But the statute ceased to run from the time of the amendment, on the same principle as the bringing of an action stops the running of the statute. [91]*91Hemphill v. Climans, 12 Harr., 367; McClure v. McClure, 1 Grant, 222. The plea of"the statute, therefore, is no defence in tin's case. It was also urged that the corporation did not exist at the time of the subscription. But the subscription was made in view of, and for the purpose of, a subsequent organization which actually was had, and the appellant thereafter paid in full for one share and transferred other shares, and thereby recognized and affirmed his contract of subscription and can not now be heard to disaffirm it. It was further alleged that Bell had assigned the four shares which he did not pay for, and therefore was not liable. The Master found that as to three of these the assignee had paid the whole amount in full, and as to the fourth that there was no proof of assignment except an informal.ex parte transfer in writing, never entered or appearing on the books of the company, and a private agreement of the transferee that Bell should not be liable for anything due on the five shares. This of course could not relieve Bell from his liability if it existed otherwise. It does not appear that any certificate was ever issued' to the assignee for the share attempted to be transferred, or that the transfer was recognized by the company in any way.- As there does not seem to have been any actual, bona fide, completed assignment of this share, Bell’s liability as owner of it would not be discharged. These several defences therefore are inadequate.
There remains, however, the fifth assignment of error which raises the question whether upon the whole record a decree can be entered against the appellant. An examination of the Master’s report discloses imperfections and defects of so serious a character as that it is impossible to found any decree upon it. A part of these were corrected by the court below, but fatal defects still remain. Only one debt is ascertained by the Master, and that is the debt due the ajrpellee, which he fixes at $3,169.81. Yet a decree has been entered for the payment of various sums by different stockholders aggregating $35,324. The amount decreed to be paid by the appellant alone is $6,786, which is more than double the amount required to pay the only debt which is found by the Master. In the opinion of the court, attention is called to some of the defects in the report, and reference is made to certain agreements of facts by counsel as supplementary to the report. The agreements are not printed and we do not know what they contain except as recited in the opinion, and as so recited they seem to relate only to a question of set-off interposed by one of the defendants. The court also states some few additional facts in relation to the history of the company, the amount of its capital stock, the amount of bonds given, the subscription ■ of [92]*92Heath & Spear, the sale of the property, and incidentally jt is said there were $70,000 of unpaid bonds. But all these facts are introduced only to affect the question of the set-off of 'Heath & Speer. There is no ascertainment of any actual specific debts, no designation of creditors, no adjudication upon the claims of the intervening creditors, no determination that the whole unpaid capital is needed for the payment of debts, nor how much of the capital remained unpaid, nor by whom it was owing. Yet all these things are indispensable to the making of a correct and valid decree.
This is a proceeding tó enforce the equitable obligation of stockholders in an insolvent corporation to pay the unpaid portions of the capital stock due by them, in order that the debts, all the debts,of the corporation, may be paid to the extent of such unpaid capital. It is not a statutory obligation at all, but an obligation in equity arising out of the consideration that the capital stock of a corporation is a trust fund for the payment of its debts. Only so much of the unpaid capital as is necessary for the payment of the debts can be called in, and this can only be done when all the other assets are exhausted. It is manifest, therefore, that in a case of this kind there must be an account taken of the amount of debts, assets and .unpaid capital, and a decree for an assessment of the amount due by each stockholder. All of this is pointed out in the opinion of this court in the case of Lane’s Appeal, 9 Out., 49, and had the method of proceeding there indicated been followed in this case, there would have been no difficulty in reaching correct results. As it is, the present record is defective in nearly all material particulars, and the decree must be reversed, but, as the proceeding and parties are proper, only vjrith directions to the court below to refer the matter back to the former, or another, Master, to perfect the report and take such additional testimony as may be necessary for that purpose. The case of Messersmith v. Sharon Savings Bank, 15 Nor., 440, cited and relied upon in the Master’s report, must not be understood as a decision that the transferee of stock in a corporation which has become insolvent is not liable for the payment of the unpaid portion of the shares held by him when the unpaid capital is required for the payment of the debts of the corporation. That case did not involve that question. It was an oi’dinary common law action of debt directly upon the subscription contract and the original subscriber was held bound to pay, because he had contracted to pay, the whole subscription price of the stock. The court below held that a transferee in good faith and upon an agreement to pay subsequent calls was not bound to pay them, and a single remark in the opinion of this court seems to couute[93]*93nance that idea.
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Mr. Justice Green
delivered the opinion of the court, January Bd, 1887.
Green, J.
The bill in this case was a creditor’s bill, originally filed by one creditor of a corporation alleged to be in- ' solvent, against several of the stockholders, for the purpose of compelling the payment of the unpaid capital stock in discharge of the claims of creditors. The bill set forth the debt of .the plaintiff and contained also a general allegation that there, were other debts to the amount of $30,000 without naming the creditors or the separate amounts due them. Subsequently certain other persons claiming to be creditors were allowed to intervene by petition. The Master without making any report as to these latter claims, found that the appellant, who was brought in by amendment, was indebted for unpaid capital upon one share to the extent of four thousand dollars, with interest from November 1st, 1875. He, however, did not report any form of decree, nor did he report as to any other debt except that of the plaintiff, which he found to be $3,169.81 with interest. The appellant resisted the plaintiff’s claim upon three grounds, one of which was the statute of limitations. It appears, however, that the amendment by which he was brought in was filed in February, 1879, which, as the date of incorporation was June, 1883, was within six years of the time when the cause of action arose. It is alleged that Bell filed no answer till April, 1880, which was seven years after the subscription, and that no notice of the amendment was served upon him. He, however, entered ail appearance and made defense, which was a waiver of notice. But the statute ceased to run from the time of the amendment, on the same principle as the bringing of an action stops the running of the statute. [91]*91Hemphill v. Climans, 12 Harr., 367; McClure v. McClure, 1 Grant, 222. The plea of"the statute, therefore, is no defence in tin's case. It was also urged that the corporation did not exist at the time of the subscription. But the subscription was made in view of, and for the purpose of, a subsequent organization which actually was had, and the appellant thereafter paid in full for one share and transferred other shares, and thereby recognized and affirmed his contract of subscription and can not now be heard to disaffirm it. It was further alleged that Bell had assigned the four shares which he did not pay for, and therefore was not liable. The Master found that as to three of these the assignee had paid the whole amount in full, and as to the fourth that there was no proof of assignment except an informal.ex parte transfer in writing, never entered or appearing on the books of the company, and a private agreement of the transferee that Bell should not be liable for anything due on the five shares. This of course could not relieve Bell from his liability if it existed otherwise. It does not appear that any certificate was ever issued' to the assignee for the share attempted to be transferred, or that the transfer was recognized by the company in any way.- As there does not seem to have been any actual, bona fide, completed assignment of this share, Bell’s liability as owner of it would not be discharged. These several defences therefore are inadequate.
There remains, however, the fifth assignment of error which raises the question whether upon the whole record a decree can be entered against the appellant. An examination of the Master’s report discloses imperfections and defects of so serious a character as that it is impossible to found any decree upon it. A part of these were corrected by the court below, but fatal defects still remain. Only one debt is ascertained by the Master, and that is the debt due the ajrpellee, which he fixes at $3,169.81. Yet a decree has been entered for the payment of various sums by different stockholders aggregating $35,324. The amount decreed to be paid by the appellant alone is $6,786, which is more than double the amount required to pay the only debt which is found by the Master. In the opinion of the court, attention is called to some of the defects in the report, and reference is made to certain agreements of facts by counsel as supplementary to the report. The agreements are not printed and we do not know what they contain except as recited in the opinion, and as so recited they seem to relate only to a question of set-off interposed by one of the defendants. The court also states some few additional facts in relation to the history of the company, the amount of its capital stock, the amount of bonds given, the subscription ■ of [92]*92Heath & Spear, the sale of the property, and incidentally jt is said there were $70,000 of unpaid bonds. But all these facts are introduced only to affect the question of the set-off of 'Heath & Speer. There is no ascertainment of any actual specific debts, no designation of creditors, no adjudication upon the claims of the intervening creditors, no determination that the whole unpaid capital is needed for the payment of debts, nor how much of the capital remained unpaid, nor by whom it was owing. Yet all these things are indispensable to the making of a correct and valid decree.
This is a proceeding tó enforce the equitable obligation of stockholders in an insolvent corporation to pay the unpaid portions of the capital stock due by them, in order that the debts, all the debts,of the corporation, may be paid to the extent of such unpaid capital. It is not a statutory obligation at all, but an obligation in equity arising out of the consideration that the capital stock of a corporation is a trust fund for the payment of its debts. Only so much of the unpaid capital as is necessary for the payment of the debts can be called in, and this can only be done when all the other assets are exhausted. It is manifest, therefore, that in a case of this kind there must be an account taken of the amount of debts, assets and .unpaid capital, and a decree for an assessment of the amount due by each stockholder. All of this is pointed out in the opinion of this court in the case of Lane’s Appeal, 9 Out., 49, and had the method of proceeding there indicated been followed in this case, there would have been no difficulty in reaching correct results. As it is, the present record is defective in nearly all material particulars, and the decree must be reversed, but, as the proceeding and parties are proper, only vjrith directions to the court below to refer the matter back to the former, or another, Master, to perfect the report and take such additional testimony as may be necessary for that purpose. The case of Messersmith v. Sharon Savings Bank, 15 Nor., 440, cited and relied upon in the Master’s report, must not be understood as a decision that the transferee of stock in a corporation which has become insolvent is not liable for the payment of the unpaid portion of the shares held by him when the unpaid capital is required for the payment of the debts of the corporation. That case did not involve that question. It was an oi’dinary common law action of debt directly upon the subscription contract and the original subscriber was held bound to pay, because he had contracted to pay, the whole subscription price of the stock. The court below held that a transferee in good faith and upon an agreement to pay subsequent calls was not bound to pay them, and a single remark in the opinion of this court seems to couute[93]*93nance that idea. It is true that such is the law as declared in several decisions of this court, but'they were decisions arising upon charters, or by-laws, providing for only a particular remedy in case of non-payment of instalments, such as the forfeiture and sale of the stock itself in case of default, as was the case in Franks Oil Co. v. McCleary, 13 P. F. S., 317, and Palmer v. Ridge Mining Co., 10 Cas., 288, or that the company has no right of action against the transferee and no remedy against him except a forfeiture of the shares as was the case in the President, etc. v. Sansom, 1 Binn., 70, and 10 Cas., 288, supra.
There is also another class of cases in which the same rule as to liability of original stockholders is held notwithstanding they have transferred their shares. They are cases of subscriptions to the stock of railroad companies subject to the general railroad law of Feb. 19th, 1849, the seventh section of which provides that no transfer shall have the effect of discharging any'liabilities incurred by the owners thereof. Some of these cases are the following: Pittsb. & Connelsville R. R. Co. v. Clarke, 5 Cas., 146; Graff v. Pittsb. & Steubenville R. R. Co., 7 Cas., 489; Hays v. Same, 2 Nor., 81; Cass v. R. R. Co., 30 P. F. S., 31. Subject to such exceptional instances as these, it cannot be doubted that the obligation to make good the unpaid portions of capital stock when the necessities of creditors require it is a charge upon the stock which passes with it. to the holders of it. It is an equitable obligation founded upon no statute and rests upon those who are the owners of the stock at the time of insolvency. If this were not so, the creditors of a corporation, which had been in existence for many years and whose original subscribers were dead and gone long before the insolvency of the eompan3r occurred, would be deprived of all resource to the unpaid capital stock at the very time when alone they needed it. The doctrine is thus stated in Ang. & Ames on Corporations, § 534: “ When an original subscriber to the stock of an incorporated compan3r, who is bound to pay the instalments on his subscription from time to time as the3r are called in by the company, transfers his stock to another person, such other person is substituted not only to the rights but to the obligations of the original subscriber, and he is bound to pay up the instalments called for after the transfer to him. The liability to pay up instalments is shifted from the outgoing to the incoming shareholder,” citing numerous authorities. The same doctrine was held and enforced, in Webster v. Upton’s Assignee, 1 Otto, 65. The very question of that case was the liabilit3r of a transferee of stock for. calls made after his acceptance, as a stockholder by the company, upon an implied promise that he would pay calls made [94]*94during his ownership. Mr. Justice Strong in delivering the opinion of the court reviews the whole subject of the liability of both the original subscriber and the transferee. After showing the liability of the original subscriber by a promise which the law implies to pay calls which he has never expressly agreed to pay, he says: “ But if the law implies a promise by the original holders or subscribers to pay the full par value when it may be called, it follows that an assignee of the stock, when he has come into priority with the company by having stock transferred to him on the company’s books, is equally liable. The same reasons exist for implying a promise by him as exist for raising up a promise by his assignor. And such is the law as laid down by the text writers generally and by many decisions of the courts (citing several cases). There are a very few cases, it must be admitted, in which it has been held that the purchaser of stock, partially paid, is not liable for calls made. after his purchase. Those to which we have been referred are Canal Co. v. Sanson, 1 Binn., 70, where the question seems hardly to have been considered, the claim upon the transferee having been abandoned; and Palmer v. Ridge Mining Co., 34 Penn. St., 288, which is rested upon Sansom’s case, and upon the fact that by the charter the company was authorized to forfeit the stock for non-payment of calls. We are also referred to Seymour v. Sturgess, 26 N. Y., 134, the circumstances of which were very peculiar. In neither of these cases was it brought to the attention of the court that the stock was a trust fund for the protection of creditors in the first instance, a fund, no part of which either the company or its stockholders was at liberty to withhold. They do not, we think, assert the doctrine which is generally accepted. * * * We think, therefore, the transferee of stock in an incorporated company is liable for calls made after he has been accepted by the company as a stockholder and his name has been registered on the stock books as a corporator; and being thus liable there is an implied promise that he will pay calls made while he continues the owner.”
It must also not be forgotten that, as to all corporations formed under the general law of 1874, the seventh section of that Act expressly imposes upon transferees of stock all the liabilities and obligations of original subscribers. What is said upon this subject is cautionary only and intended to guard against any erroneous impressions which might arise out of the generality of expression in the Messersmith case.
We notice that the Master has charged interest upon the amount of unpaid capital found due by appellant from Nov. 1st, 1875. No such claim is made in the bill and there is no testimony printed and no distinct finding of any fact which [95]*95necessarily determines the liability for interest. An indistinct reference is made in the report to a last call for instalments on November 1st, 1875, but no facts or testimoujr appear in rela-* tion to the subject. As a large part of the decree is made up ofinterest the subject should receive a careful consideration.
The decree of the court below is reversed at the cost of the appellee, and the record is remitted with instructions that the case be referred to a Master to take such additional testimony and make such further report as may be necessary to perfect the proceedings.