Wyman in 1851, it was void, because it contained over 200 acres, while a reservation for the purpose of a "post" was limited to 20 acres; and (3) it is certainly void as to the lands entered by Meservey and Tichenor,-239.35 acres, and of the quantity in controversy,-because they were purchased before the order was made. Congress alone has the power to dispose of the publio lands, and by its 'authority the premises in controversy were lawfully sold to the grantees on these patents, unless before such sale they were legally designated under the authority conferred upon the president by section 14 of the donation act, and section 9 of the act amendatory thereof, (9 St. 500; 10 St. 159,) as a reservation for some of the "publicuses" mentioned in said sections, and in conformity with the restrictions imposed upon said authority by said section 9. To entitle the plaintiff to the relief sought it must prove that this authority has been exercised so as to take these lands out of the general provision made by congress for their sale and disposition to private persons and uses. Upon the facts stated, and all legal and reasonable inferences that may be drawn from them, it does not appear that there ever was a valid reservation at Port Orford, or that there ever was an attempt to designate one by the authority of the president. The plaintiff has also been guilty of laches in the assertion of these claims, and an equitable defence of lapse of time may well be allowed in these suits. The demurrers are sustained, and the claims of the plaintiff being stale and the bills without equity they are each dismissed.
See Same parties, ante, 415. and note. See. also. U. S. v. Mullan, 10 FED. REp. 785; Leavenw01'th, etc., R. 00. v. U. S., 92 U. S. 788.
Exr., etc., and others.
(Oircuit Court, S. D; New York. June 20,1882.)
ACTION-AGAINST STOCKHOLDERS-REcEIVER-CAPACITY TO SUE.
Where the right of action sought to be enforced does not exist in favor of the complainant, on demurrer the bill will be held bad. So held in an action brought by the receiver of an insolvent corporation seeking to charge stockholders with a liability imposed by a section of the incorporating act. 2.
STOCKHOLDEHS-STATUTORY OF CORPORATION.
The liability of the stockholders of a corporation is a collateral statutory obligation for the benefit of the creditors, of which the former become sureties to the latter for the debts of the corporation.
JACOBSON 'V. ALLEN.
SUnt-COLLATERAL OBLIGATION-RIGHTS OF CREDITORS.
Neither a receiver, an assignee in bankruptcy, nor an assignee under a voluntary general assignment for the benefit of creditors, each of whom representa creditors as well as the insolvent, acquires any right to enforce a collateral obligation given to a creditor or to a body of creditors bya third person for the payment of the debts of the insolvent.
Howard Mansfield, for defendant. Johnson, Oantine cI: Dening, E. Patterson,Martin cI: Smith, and Reynolds cI: Lowrey, for defenda.nts. WALLACE, C. J. Withont passing upon subordinate questions raised by the demurrer, the bill must be held bad because the right of action sought to be enforced does not exist in favor of the complainant. The defendants are sued as stockholders of the bank of' Chicago, an insolvent corporation of the state of Illinois, and the bill seeks to charge them with a liability imposed by one of the sections of the incorporating act, which provides that "each stockholder shall be liable to double the amount of stock held or owned by him, and for three months after giving notice of transfer." The bill alleges that in a suit brought by a creditor of the bank in the superior court of Cook county, illinois, the complainant was duly appointed by that ,court "receiver of all the estate, property, and equitable interests of said bank," and duly qualified and haserer since acted as such receiver. Unless the right of action to recovel' the statutory liability of stock· holders was part of the "estate property or equitable interests" of the bank, it did not pass to the, receiver under his appointment. Not only because of the allegation of the bill, but also from the inherent nature of a receiver's title, the complainant did not acquire the right to enforce the statutory liability, if it existed, only in favor of creditors of the bank and not in favor of the corporation. It is not contended that the corporation could have enforced this liability against the stockholders, but the position is taken that upon the insolvency of the corporation a fund arises by force of the statutory provision for the benefit of the creditors of the corporation, which is to be deemed part of the equitable assets of the corporation. Undoubtedly snch provisions are intended to create a fund for the benefit of creditors in case of the insolvency of the corporation; but whether the creditors can resort to the fund jointly or only severally, and whether the right of the creditor is one at law or one to be enforced in equity and in subordination to the rights of the whole body of creditors, depends in each case upon the terms of the particular statute. Obviously the fund resembles an asset of the corporation more nearly when by the .terms of its creation it constitutes an equitable fund for the common
benefit of all the creditors, than it does when it is secured to the creditors severally and at law. Under this particular statute it has been determined by the courts of Illinois that a creditor of the corporation may sue individually and at law, (McCarthy v. Lavasche, 89 Ill. 270; )and under a similar statute it was held by the same court that the creditor's right of action was not divested by the appointment of a receiver of the corporation. Arenz v. Weir, 89 Ill. 25. Undoubtedly, if the liability were merely a several one in favor of the creditors, no one creditor could be divested of his right of action by any proceeding or judicial decree to which he was not a party, and therefore a receiver appointed in a suit brpught by one creditor against the corporation could not acquire the rights of the other creditors. Wincock v. Turpin, 96 Ill. 135. It has not been definitely determined by the courts of Illinois that a suit might not be maintained in equity by all the creditors, or one in behalf of all, to recover of the stockholders when the liability is imposed in the terms employed in the present statute. If the question were to be determined irrespective of the adjudication of that state, it would hardly be deemed doubtful that the act creates a fund which may be pursued in equity for the common benefit of all the creditors. Briggs v. Penniman, 8 Cow. 387; Mathez v. "Neidig, 72 N. Y. 100; Ter'ry v. Little, 101 U. S. 216. Assuming that such is the character of the fund, it still remains for the complainant to maintain that it is property or assets of the corporation, and passed to him by virtue of his appointment as receiver. No case is cited to support this contention. In Weeks v. Love, 50 N. Y. 571, it is said obiter that the stockholder's liability may be treated as corporate property. That was an action at law by a creditor against the stockholder, in which it was sought to be maintained that the creditor must resort to equity; but the action was sustained. Numerous authorities recognize the right of a receiver or assignee in bankruptcy to sue for the recovery of unpaid stock, but in these cases the corporation could have maintained the action. So, also, the right of such an officer is maintained to recover assets of the corporation which t,he corporation could not have recovered, because it would have been estopped from asserting its own fraudulent or illegal conduct in the disposition of the assets. These authorities fall short of the present point. The receiver of an insolvent corporation makes his title through the corporation. He cannot through his appointment acquire that which the corporation never had. He represents the creditors of the
MERRIAM V. LAPSLEY.
corporation in the administration of his trust, but hIs trust relates only to the corporate assets. As trustee for creditors he represents them in following the assets of the corporation, and can assert their rights in cases where the corporation could not have been heard. He is not a trustee for creditors in relation to assets which belong to them individually, or as a body. Bristol v; Sanford, 12 Blatchf.341. As is said in Curtis. v. Leavitt, 15 N. Y. 44:
"He is by law vested with the estate of the corporate body, and takes his title under and through it, It is true, indeed, that he is declared to be atrustee for creditors and stockholders; but this only proves that thllY are the beneficiaries of the fund in his hands, without indicating the sources of his title · or the extent of his powers."
The liability of the stockholders to creditors may be regarded I\.S a collateral statutory obligation of the stockholders for the benefit of the creditors, by which the former become sureties to the latter for the debts of the corporation. Hicks v. Burrts, 38 N. H. 145. It matters not whether it is an obligation to each creditor severally or to all jointly; in either case the oharacter of the obligation is the same. Neither a receiver, an assignee in bankruptcy, nor an assignee under a voluntary general assignment for the benefit or creditors, each of whom represents creditors as well as the insolvent, acquires any right to enforce a collateral obligation given to a creditor or to a body of creditors by a third person for the payment Qf the debts of the insolvent. The demurrer is sustained.
NOTE. See, generally, Shaw v. Boylan, 16 Ind. 384; Todhunter v. Randall, 29 Ind. 275; Carne v. Brigham, 39 Me. 35; Ochiltree v. RaiZ,'oad Co. 21 Wall. 249; Carey v. Galli, 94 U. S. 672, .As to the rights of cr!lditors, sea Winter v. Baker, 34 How. Pr.183.
(Circuit Court, W. D. Missouri, W. D. Ootober, 1880.)
CoNTRACT FOR EXCHANGE OF
LANDS. Where plaintiff, one party to a contract, acts with full knowledge 8S to his own property, as well as the other property for which he is bargaining, while be said defendant, the other party, on account of non-residence, can to know his own property, and knows nothing whatever of the property he ia trading for, the plaintiff is held. to the strictest and fullest disclosures.