CHAP. XIII.] SHAREHOLDERS AND CREDITORS. [§ 7026. quently they alone would have a valid claim against those shareholders who had received " bonus " stock, or stock issued for less than its par value. 1 In connection with that case the decision and reasoning in Hospes v. Northwestern Manu- facturing Co. 2 are of interest. There the court held that where it is explicitly agreed between the corporation and the person to whom stock is issued that it shall be " bonus " stock, no implied promise to pay for it can arise in favor of the corporation, and hence not in favor of any creditor of the corporation ; the creditor's right can rest only on a fraud done him ; no equity exists in favor of a creditor whose debt was contracted before the issue, nor in favor of a subsequent creditor who knew of the agreement under which the " bonus" stock was issued. The court then refers to the recent cases in the Federal Supreme Court and continues : " It is difficult if not impossible to explain or reconcile these cases upon the ' trust fund ' doctrine, or, in the light of them, to predi- cate the liability of the stockholder upon that doctrine. But by putting it upon the ground of fraud, and applying the old and familiar rules of law on that subject to the peculiar nature of a corporation and the relation which its stockholders bear to it and the public, we have at once a rational and logical ground on which to stand. The capital of a corporation is the basis of its credit. It is a substitute for the individual lia- bility of those who own its stock. People deal with it and give it credit on the faith of it. They have a right to assume that it has paid-in capital to the amount which it represents itself as having ; and if they give it credit on the faith of that representation, and if the representation is false, it is a fraud upon them ; and, in case the corporation becomes insolvent, the law, upon the plainest principles of common justice, says to the delinquent stockholder : ' Make that representation good by paying for your stock.' It certainly cannot require the U. S. 630, opinion of court per Brown, J. See Fouche v. Merchants 1 Nat. Bank, 110 Ga. 827; Van Cleve v. Berkey, 143 Mo. 109. i Handley v. Stutz, 139 U. S. 417; ace. First Nat. B'k v. Mining Co., 42 Minn. 327; Gil man v. Gross, 97 Wis. 224. Cf. Palmer v. Bank, 72 Minu. 266. Those are " subsequent cred- itors" whose claims arise after the resolution to issue the stock has been passed, although it may not have been distributed till after their debts accrued. Handley v. Stutz, supra. 2 48 Minn. 174. 699
