A call by the proper authorities is ordi narily held to be necessary to fix the liability of a stockholder for unpaid instalments; Grosse Isle Hotel Co. v. I'Anson's Ex'rs, 43 N. J. L. 442; Spangler v. R. Co., 21 Ill. 276; L. R. 1 Ch. App. 535; but it is held that a suit may be brought without a call; Phoenix Warehousing Co. v. Badger, 67 N. Y. 300; and when a receivr has been appointed the call is made by a decree of the court; Scovill v. Thayer, 105 U. S. 143, 26 L. Ed. 968. The United States courts formerly looked upon the capital stock as a trust fund for the benefit of corporate creditors; Sawyer v. Hoag, 17 Wall. (U. S.) 610, 620, 21 L. Ed. 731. In Clark v. Bever, 139 U. S. 96, 11 Sup. Ct. 468, 35 L. Ed. 88, it was said, quoting from Sawyer v. Hoag, that the capital stock of a corporation is a trust fund only sub mods. In Hollins v. Iron Co., 150 U. S. 371, 14 Sup. Ct. 127, 37 L. Ed. 1113, the expression "trust fund" was qualified by a statement that it had not been intended "to convey the idea that there was any direct and express trust attached to the property." In Gottlieb v. Miller, 154 Ill. 44, 39 N. E. 992, it was called a quasi-trust fund, and Pomeroy [Eq. Jur. 1046] says that such assets do not in any true sense constitute a trust and are called so only through analogy or metaphor.
In an article in 34 Am. L. Reg. 448 [1895]; George Wharton Pepper strongly objects to the expression "trust fund" and considers that the trust theory is untenable. He quotes Mr. Justice Bradley in Graham v. R. Co., 102 U. S. 148, 26 L. Ed. 106, where he says that the, conception is at war with notions which we derive from English law with re gard to the nature of corporate bodies.
The same writer is of the opinion that the expression "trust fund" is one which is ap plied by American courts to the judicial recognition of the demand of the commercial world, which is in substance that the liability of a stockholder shall be unlimited up to the par value of his shares and he shall not be entitled to any legal principle which would entitle him to advantage against corporate creditors.
The trust fund doctrine as to the assets of an insolvent corporation appears to have been first announced by Judge Story in Wood v, Dummer, 3 Mas. 308, Fed. Cas. No. 17,944. The more recent decisions eliminate any trust feature from the capital stock ; McDonald v. Williams, 174 U. S. 397, 401, 19 Sup. Ct. 743, 43 L. Ed. 1022 ; Milliken v. Caniso, 205 N. Y. 559, 98 N. E. 493. It was repudiated in Henderson v. Trust Co., 143 Ind. 561, 40 N. E. 516; O'Bear Jewelry Co. v. Volfer, 106 Ala. 205, 17 South. 525, 28 L. R. A: 707, 54 Am. St. Rep. '31, but Judge Thompson considers it "the only doctrine worthy of respect"; 5 Thomp. Corp. § 5115.
A. Kansas statute gives a creditor of a corporation certain remedies against a stock holder, and gives such stockholders certain rights against other stockholders. Among
other rights of the creditor was that of suing an individual stockholder wherever he could be found to an amount equal to the amount of stock owned by him. Where such an ac tion was brought in Illinois, it was held that the courts of that state could not take jurisdiction of a question arising as to the respective relations of creditors and stock holders of a corporation of another state, where a special remedy is provided by stat ute, before there is a determination by the courts of such state of the just proportion of the corporate indebtedness to be borne by solvent stockholders of such corporation ; Tuttle v. Bank, 161 Ill. 497, 44 N. E. 984, 34 L. R. A. 750; and in New York, in a similar action, it was said the purpose of the Kansas law cannot be carried out except by a pro ceeding in equity for an accounting to which all stockholders are parties; Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419, 34 L. R. A. 757, 51 Am. St. Rep. 654; that a remedy under a foreign law where it is perfectly apparent that complete justice cannot be done, and where it is plain that an equitable result can be accomplished only by the courts of the jurisdiction where the corporation was created, could not be enforced in the New York courts ; Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419, 34 L. R. A. 757, 51 Am. St. Rep. 654.
In Pennsylvania the questions were con sidered whether the courts of that state would enforce the statutory liability under the laws of Kansas, and, if so, whether against separate stockholders or only in the form established by Pennsylvania practice in similar cases ; Cushing v. Perot, 175 Pa. 66, 34 Atl. 447, 34 L. R. A. 737, 52 Am. St. Rep. 835, but the case was decided on other grounds. In the supreme court of the United States the liability imposed on the stock holders under this statute was held con tractual in its nature, though statutory in its origin, and that an action could be main tained in any court of competent jurisdic tion; Whitman v. Bank, 176 U. S. 559, 20 Sup. Ct. 477, 44 L. Ed. 587, and to the same effect ; Ferguson v. Sherman, 116 Cal. 169, 47 Pac. 1023, 37 L R. A. 622 ; Hancock Nat. Bk. v. Ellis, 166 Mass. 414, 44 N. E. 349, 55 Am. St. Rep. 414 ; Howell v. A. Manglesdorf & Co., 33 Kan. 194, 5 Pac. 759.
A holder of stock in trust is subject to as sessment; Davis v. Baptist Soc., 44 Conn. 582, Fed. Cas. No. 3,633 ; L. R. 9 Eq. 175, 363 (but the cestui que trust is not ; id.; even if he is a trustee of the corporation itself ; U. S. Trust Co. v. Ins. Co., 18 N. Y. 226 ; Allibone v. Hager, 46 Pa. 48. As to national bank stock, see NATIONAL BANKS. It is held that a cestui que trust is bound to indemnify his trustee; L. R. 18 Eq. 16.