Strout, J.
The Southern Loan & Trust Company was chartered by an act of the Legislature in 1889, c. 443.
Among other powers it was authorized “to borrow money, to loan money on credits or real estate or personal security, and to [449]*449negotiate loans and sales for others ... to hold by grant, assignment, transfer, devise or bequest any real or personal property . . . and to hold and enjoy all such estates, real, personal and mixed, as may be obtained by the investment of its capital stock or any other money or funds that may come into its possession in the course of its business and dealings, and the same sell, grant, mortgage and dispose of ”, except property or money held in trust; and “ to do in general all the business that may lawfully be done by a trust or banking company.”
The capital stock was fifty thousand dollars, in shares of one hundred dollars each. It was provided in section 5, that the corporation should not commence business until stock to the amount of twenty-five thousand dollars had been subscribed for and paid in, in cash.
Section 6 provided an individual liability of stockholders for debts of the corporation.
On the twenty-second of August, 1889, defendant company borrowed of plaintiff eighteen hundred dollars, for which it gave a note, and as collateral a mortgage upon certain real estate in Denver, Colorado. At this time, only thirteen thousand dollars of stock had been subscribed and paid for. On August twenty-fifth, 1890, defendant company borrowed of plaintiff another sum of sixty-five hundred dollars, for which it gave its note and a mortgage on certain lots in “Wyman’s addition to the city of Denver”, and on October first, 1890, it borrowed another sum of six thousand dollars of plaintiff, for which it gave its note and a mortgage on other lots in Wyman’s addition.
At the time of the two last loans, it appears that defendant company’s capital stock had been taken to the amount of twenty-five thousand dollars.
All the mortgages contained warranties of title. They were represented to be first claims upon the property, and taken as such by plaintiff, without examination of the records. An abstract of title to these lots in Wyman’s addition, down to March fifth, 1890, was shown plaintiff, by which it appeared that the title at that date was in Wilbur S. Raymond. On that day Raymond' eon[450]*450veyed them to defendant company. At the time the mortgages-on these Wyman lots were given plaintiff, there was an existing mortgage upon them and other lots for $12,500, given by defendant company to Raymond for part of the purchase money, the entire price being about $18,000. The existence of this mortgage was unknown to plaintiff, and it did not acquire knowledge of the fact till February, 1894.
To protect its interest in the Wyman lots, plaintiff paid eight thousand seven hundred dollars on June second, 1894, in satisfaction and discharge of that mortgage then existing on those lots. It is admitted that plaintiff has legally sold all the real estate covered by its three mortgages, and that the sum realized therefrom failed to satisfy the three mortgage debts, by the sum of $11,863.15, for which it obtained judgment against the Loan Company on March twenty-seventh, 1896. The execution thereon was returned wholly unsatisfied. It is admitted that defendant corporation has no assets.
This is a creditors’ bill, to compel the stockholders ratably to contribute to the corporate debts, under the liability provided in section 6, of the charter. It is resisted upon several grounds.
There is no merit in the suggestion that the remedy is not in equity. On the contrary, the most appropriate, if not the exclusive, remedy is in equity. In that forum, the rights of all creditors can be ascertained and adjusted, and the ratable liability of stockholders determined in one suit, without the vexation and expense of multiplied suits at law. Pollard v. Bailey, 20 Wall. 521; Hatch v. Dana, 101 U. S. 205; Crease v. Babcock, 10 Met. 525; Mills v. Scott, 99 U. S. 25.
So the objection that defendant corporation commenced business, and made the first loan before twenty-five thousand dollars was subscribed to its capital stock, cannot avail the stockholders. They had control of the corporation, and are responsible for its acts. They cannot set up the illegal acts of the directors, their agents, to defeat an executed contract of the corporation, within its chartered powers, made with an innocent party, nor to relieve themselves from legal liability as stockholders to such party. New-[451]*451comb v. Reed, 12 Allen, 362; Wiswell v. Starr, 48 Maine, 405; Perkins v. P. S. & P. R. R. 47 Maine, 573; Walworth v. Brackett, 98 Mass. 100.
Although the Loan Company never exercised all the powers granted by the charter, they did buy real estate, borrow money and execute mortgages, all of which were authorized by it. The stockholder’s liability, provided by section 6 of the charter applied to all “contracts, debts and engagements” of the corporation, and cannot be limited to its banking features. But it is strenuously urged that the complainant’s debts were mortgage debts, and that as to them, no liability attached to the stockholders; and reliance is placed upon II. S., c. 46, § 47.
Equity treats the capital stock of a corporation as a fund for the security of creditors. If the stock is not fully paid to par value, and there is a failure of assets of the corporation to pay its creditors, the stockholder may be compelled to make payment upon his stock to its par, if so much is necessary to pay the debts. This liability may be enforced by the corporation, or by the creditors, but it applies only to parties taking the stock directly from the corporation; a purchaser in the market for less than par value is not liable. Libby v. Tobey, 82 Maine, 405.
This equitable doctrine is now statute law in this state. II. S., c. 46, § 45: Section 47 of the same chapter provides a method for enforcing payment to par, by the subscriber for stock wbo has paid the corporation less than par; and in the same section makes the exception that “ no stockholder is liable for the debts of the corporation not contracted during his ownership of such unpaid stock, nor for any mortgage debt of said corporation.”
It may be conceded that this general statute applies to corporations subsequently chartered, unless the charter contains provisions inconsistent therewith. But this section is dealing with unpaid stock only. It applies to the subscriber for stock, and limits the liability to him. The purchaser of stock in the market is not affected. The exemption of mortgage debts cannot be eliminated from the subject matter of the section, and made to do duty as an independent statute to relieve all stockholders, when disaster over [452]*452takes the corporation, from the other and different liability imposed by section 6 of defendant’s charter. That' liability attaches to all stockholders when judgment has been obtained and the' assets of the corporation are exhausted, having no reference to the date of the debt. The purchaser of stock takes the risk of the business. If unsuccessful, he must pay its debts to the' amount of his stock, in addition to its par value.
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Strout, J.
The Southern Loan & Trust Company was chartered by an act of the Legislature in 1889, c. 443.
Among other powers it was authorized “to borrow money, to loan money on credits or real estate or personal security, and to [449]*449negotiate loans and sales for others ... to hold by grant, assignment, transfer, devise or bequest any real or personal property . . . and to hold and enjoy all such estates, real, personal and mixed, as may be obtained by the investment of its capital stock or any other money or funds that may come into its possession in the course of its business and dealings, and the same sell, grant, mortgage and dispose of ”, except property or money held in trust; and “ to do in general all the business that may lawfully be done by a trust or banking company.”
The capital stock was fifty thousand dollars, in shares of one hundred dollars each. It was provided in section 5, that the corporation should not commence business until stock to the amount of twenty-five thousand dollars had been subscribed for and paid in, in cash.
Section 6 provided an individual liability of stockholders for debts of the corporation.
On the twenty-second of August, 1889, defendant company borrowed of plaintiff eighteen hundred dollars, for which it gave a note, and as collateral a mortgage upon certain real estate in Denver, Colorado. At this time, only thirteen thousand dollars of stock had been subscribed and paid for. On August twenty-fifth, 1890, defendant company borrowed of plaintiff another sum of sixty-five hundred dollars, for which it gave its note and a mortgage on certain lots in “Wyman’s addition to the city of Denver”, and on October first, 1890, it borrowed another sum of six thousand dollars of plaintiff, for which it gave its note and a mortgage on other lots in Wyman’s addition.
At the time of the two last loans, it appears that defendant company’s capital stock had been taken to the amount of twenty-five thousand dollars.
All the mortgages contained warranties of title. They were represented to be first claims upon the property, and taken as such by plaintiff, without examination of the records. An abstract of title to these lots in Wyman’s addition, down to March fifth, 1890, was shown plaintiff, by which it appeared that the title at that date was in Wilbur S. Raymond. On that day Raymond' eon[450]*450veyed them to defendant company. At the time the mortgages-on these Wyman lots were given plaintiff, there was an existing mortgage upon them and other lots for $12,500, given by defendant company to Raymond for part of the purchase money, the entire price being about $18,000. The existence of this mortgage was unknown to plaintiff, and it did not acquire knowledge of the fact till February, 1894.
To protect its interest in the Wyman lots, plaintiff paid eight thousand seven hundred dollars on June second, 1894, in satisfaction and discharge of that mortgage then existing on those lots. It is admitted that plaintiff has legally sold all the real estate covered by its three mortgages, and that the sum realized therefrom failed to satisfy the three mortgage debts, by the sum of $11,863.15, for which it obtained judgment against the Loan Company on March twenty-seventh, 1896. The execution thereon was returned wholly unsatisfied. It is admitted that defendant corporation has no assets.
This is a creditors’ bill, to compel the stockholders ratably to contribute to the corporate debts, under the liability provided in section 6, of the charter. It is resisted upon several grounds.
There is no merit in the suggestion that the remedy is not in equity. On the contrary, the most appropriate, if not the exclusive, remedy is in equity. In that forum, the rights of all creditors can be ascertained and adjusted, and the ratable liability of stockholders determined in one suit, without the vexation and expense of multiplied suits at law. Pollard v. Bailey, 20 Wall. 521; Hatch v. Dana, 101 U. S. 205; Crease v. Babcock, 10 Met. 525; Mills v. Scott, 99 U. S. 25.
So the objection that defendant corporation commenced business, and made the first loan before twenty-five thousand dollars was subscribed to its capital stock, cannot avail the stockholders. They had control of the corporation, and are responsible for its acts. They cannot set up the illegal acts of the directors, their agents, to defeat an executed contract of the corporation, within its chartered powers, made with an innocent party, nor to relieve themselves from legal liability as stockholders to such party. New-[451]*451comb v. Reed, 12 Allen, 362; Wiswell v. Starr, 48 Maine, 405; Perkins v. P. S. & P. R. R. 47 Maine, 573; Walworth v. Brackett, 98 Mass. 100.
Although the Loan Company never exercised all the powers granted by the charter, they did buy real estate, borrow money and execute mortgages, all of which were authorized by it. The stockholder’s liability, provided by section 6 of the charter applied to all “contracts, debts and engagements” of the corporation, and cannot be limited to its banking features. But it is strenuously urged that the complainant’s debts were mortgage debts, and that as to them, no liability attached to the stockholders; and reliance is placed upon II. S., c. 46, § 47.
Equity treats the capital stock of a corporation as a fund for the security of creditors. If the stock is not fully paid to par value, and there is a failure of assets of the corporation to pay its creditors, the stockholder may be compelled to make payment upon his stock to its par, if so much is necessary to pay the debts. This liability may be enforced by the corporation, or by the creditors, but it applies only to parties taking the stock directly from the corporation; a purchaser in the market for less than par value is not liable. Libby v. Tobey, 82 Maine, 405.
This equitable doctrine is now statute law in this state. II. S., c. 46, § 45: Section 47 of the same chapter provides a method for enforcing payment to par, by the subscriber for stock wbo has paid the corporation less than par; and in the same section makes the exception that “ no stockholder is liable for the debts of the corporation not contracted during his ownership of such unpaid stock, nor for any mortgage debt of said corporation.”
It may be conceded that this general statute applies to corporations subsequently chartered, unless the charter contains provisions inconsistent therewith. But this section is dealing with unpaid stock only. It applies to the subscriber for stock, and limits the liability to him. The purchaser of stock in the market is not affected. The exemption of mortgage debts cannot be eliminated from the subject matter of the section, and made to do duty as an independent statute to relieve all stockholders, when disaster over [452]*452takes the corporation, from the other and different liability imposed by section 6 of defendant’s charter. That' liability attaches to all stockholders when judgment has been obtained and the' assets of the corporation are exhausted, having no reference to the date of the debt. The purchaser of stock takes the risk of the business. If unsuccessful, he must pay its debts to the' amount of his stock, in addition to its par value. The corporation might be in debt, and yet perfectly solvent, when stock is bought. Subsequent mismanagement or a bad market may render it insolvent. The then holder of stock, becomes liable, even if the debt existed before he became a stockholder. Curtis v. Harlow, 12 Met. 3. Not so with the subscribers referred to in R. S., c. 46, § 47. There he is only liable to make his payment up to par, as to debts contracted while he was owner. Longley v. Little, 26 Maine, 165; Marcy v. Clark, 17 Mass. 330.
But if this were not so, it is clear that the charter provision excludes, as to this corporation, the exemption referred to. Section 6, of the charter is, “the share «holders of this corporation shall be individually responsible, equally and ratably, and not one for the other, for all contracts, debts and engagements of said corporation to a sum equal to the amount of the par value of the shares owned by each, in addition to the amount invested in said shares.”
This language is too plain to be misunderstood. A mortgage debt is as much a debt as any other. It is true, the mortgage security must be applied to the debt, and the stockholders are liable only for the excess of debt over the collateral. So must the assets ■ of the corporation be exhausted before this liability is incurred. It can be enforced by creditors oníy, and not by the corporation as in case of unpaid subscriptions.
The complainant recovered judgment upon the notes for the excess above the amount realized from the security; but it had paid eight thousand seven hundred dollars to relieve the mortgaged property from a prior incumbrance to Raymond, given by the Loan Company. If complainant had sued upon the Loan Company’s warranty, it would have recovered this amount. That was not a [453]*453mortgage debt within the exception in R. S., c. 46, § 47. Barron v. Paine, 83 Maine, 323. It has recovered the same amount in its suit upon the notes. Equity looks to substance. As to this amount, it is immaterial whether the suit was upon the notes or warranty.
The first loan was a mortgage debt of the Loan Compauy, but the loss upon the other two loans was not.
To the argument that because subscribers for stock, when called upon to make their payments up to par, for the benefit of creditors, mortgage debts áre excepted, it is a sufficient answer to say, that this charter made stockholders liable for all debts and contracts, and the promoters accepted that charter, and took their stock under its provisions, and must be bound by them.
The Maine Trust Company accepted the mortgages without examination of the title. They relied upon the representation of the Loan Company that they were first incumbrances, and received the warranty of that company that the title was perfect. Upon that warranty complainant had a right to rely. For its breach the Loan Company was responsible, and in case of failure of its assets, the stockholders became responsible. They are not released by the negligence of the Trust Company, nor would they be, if that Company had had knowledge of the Raymond mortgage, which the Loan Company was under obligation to satisfy, to avoid breach of its warranty to the Trust Company.
It follows that all the stockholders of the Southern Loan & Trust Company, at the time of the judgment and failure of assets, are ratably responsible for the debts of the Company. That liability will not be increased if any stockholder shall prove insolvent or beyond the reach of process. The cause must go to a master, to ascertain and report all debts and liabilities of the Loan Company, and the names of all stockholders, and the number of shares held by each, and make a ratable apportionment upon each stockholder for his proportion of the debt due to each creditor, and report whether there are any and what assets of the corporation.
The bill must be dismissed as to Charles W. Jordan, administra[454]*454tor of Rachel J. Milliken, the claim against that estate being barred by limitation of statute. As to all other defendants, bill sustained.
It also appearing that certain defendants have paid complainant their ratable proportion of its debt, no decree against them is to be entered; but as there may be other creditors to whom they may be responsible, the bill is retained as against them to meet that contingency.
Bill dismissed as to Charles W. Jordan, Adm’r, and sustained as to all other defendants with costs. Master to be appointed.
Decree accordingly.