CHAP. XIIII.] SHAREHOLDERS AND CREDITORS. [§ 749. Transfers in fraud of credit- ors. submitted the shareholder did not do all he could to have his name removed, for he could have appealed to the courts ; and if in the mean time any one acted on the faith of his being a shareholder, the loss should fall on the shareholder whom the corporation represents, rather than on an innocent outsider. 1 § 749. When shares are not fully paid up and the corpora- tion is in failing circumstances, it is the general rule throughout the United States, that the holder cannot validly transfer them to an irresponsible per- son for the purpose of avoiding further liability in regard to them. The right of transfer cannot be exercised in defraud of creditors of the corporation. 2 A similar rule applies to transfers of shares in the stock of a corporation whose shareholders are by statute rendered personally liable to creditors. 3 The English cases, on the other hand, hold that a share- holder may transfer his shares to an irresponsible person for the sole purpose of freeing himself from further liability on them ; and, provided the transfer be absolute, so that, as be- tween transferrer and transferee, the latter does not hold the 118 U. S. 655; Matteson v. Dent, 176 U. S. 521; Cox v. Elmendorf, 97 Tenn. 518; Nation's Case, L. R. 3 Eq. 77; Fyfe's Case, L. R. 4 Ch. 768; Ward & Garfit's Case, L. R. 4 Eq. 188. 1 See § 525. 2 Dauchy v. Brown, 24 Vt. 197; Nathan v. Whitlock, 9 Paige (N. Y.), 152; Marcy v. Clark, 17 Mass. 330; Rider v. Morrison, 54 Md. 429; Gaff v. Flesher, 33 Ohio St. 107; Nat. Car- riage Mfg. Co. v. Story, etc., Co., Ill Cal. 531; Burt v. Real Est. Exch., 175 Pa. St. 619. See Angell and Ames on Corp., § 535; 2 N. Y. Rev. Stat., 7th ed. 1482. 3 Bowden v. Johnson, 107 U. S. 251; Richmond v. Irons, 121 U. S. 27; Stuart v. Hayden, 169 U. S. 1; Aultmann's Appeal, 98 Pa. St. 505; McLaren v. Franciscus, 43 Mo. 452; Provideut Saviugs Ins. v. Jackson Place Skating, etc., Rink, 52 Mo. 557; Bowden v. Santos, 1 Hughes, 158; Magruder v. Colston, 44 Md. 349; Central Agricultural, etc., Ass'n v. Alabama Gold Life Ins. Co., 70 Ala. 120. See Miller v. Great Repub- lic Insurance Company, 50 Mo. 55. Where a general banking law im- posed on shareholders individual liability while they continued such, and for one year thereafter; and a creditor of a bank made demand on a shareholder for payment, and the latter requested delay, promising not to transfer his shares, but did secretly and fraudulently transfer them, it was held that the transfer was void as against such creditor, although his suit was brought more than one year after it had taken place. Paine v. Stewart, 33 Conn. 516. Compare also Marr ». Bank of West Tennessee, 4 Lea (Tenn.), 578. 743
