The remedy against stockholders may be in some states by garnishment under the judg ment against the company ; but more com monly it is by bill in equity and a receiver. It is held that the remedy of a creditor against a stockholder is in equity alone; Smith v. Huckabee, 53 Ala. 191; Terry v. Little, 101 U. S. 216, 25 L. Ed. 864. In equity the court decrees a call and the receiver collects the amount. The court may decree payment in full, leaving the stockholders to seek contribution among themselves ; Cook, St. & Stockh. § 211.
In an action to enforce the payment of an assessment on unpaid stock, on behalf of creditors, a stockholder cannot set off a claim against the corporation ; Handley v. Stutz, 139 U. S. 417, 11 Sup. Ct. 530, 35 L. Ed. 227; L. R. 1 Ch. 528.; Thebus v. Smiley, 110 Ill. 316 ; otherwise, if the corporation itself sues ; L. R. 19 Eq. 449. In New York there is a right of set-off at law against a corporation creditor, but not in equity ; Christensen v. Colby, 43 Hun (N. Y.) 362.
A subscriber cannot set up against an action for calls that the corporation was not lawfully organized, if he is a director and was one of the original incorporators ; United Growers Co. v. Eisner, 22 App. Div. 1, 47 N. Y. Supp. 906.
The better opinion is said to be that the statute of limitation begins to run only when a call has been made and payment thereunder is due ; Cook, St. & Stockh. § 195 ; or from the order of court making the assessment ; Glenn v. Marbury, 145 U. S. 507, 12 Sup. Ct. 914, 36 L. Ed. 790. It is held to run from the date of an assignment for creditors by the company ; Franklin Say. Bk. v. Bridges (Pa.) 8 Atl. 611; and in Great Western Tel. Co. v. Purdy, 83 Ia. 430, 50 N. W. 45, when the subscription is made; so also Williams v. Meyer, 41 Hun (N. Y.) 545 ; though where a creditor sues it does not run till he secures judgment ; Christensen v. Quintard, 36 Hun (N. Y.) 334.
Statutes in various states provide for a forfeiture of stock for non-payment of sub scriptions, and a sale. This right does not exist without a statute ; nor can it be cre ated by a mere by-law ; but it may be by the consent of the stockholder if expressed on the face of his certificate; Cook, St. & Stockh. § 122; the remedy by forfeiture, when given, is in addition to the ordinary common-law remedies; id. § 124.
See Thomp. Liab. of Stockh.; McCarthy v. Lavasche, 89 I11.270, 31 Am. Rep. 88; 15 Am. L. Reg. N. S. 648.
In order to constitute one a shareholder, it is not necessary that a certificate should have been issued to him; Beckett v. Houston, 32 Ind. 393; Schaeffer v. Ins. Co., 46 Mo. 248.
The right to vote on his stock is a property right, in which he will be protected as against the doubtful claim of another to such stock; Lucas v. Milliken, 139 Fed. 816; Talbot J. Taylor & Co. v. Southern Pac. Co., 122 Fed. 147.
Where a director is required to be the hold er of a certain number of shares as a qualifi cation, he is presumed, on winding up, to have been the holder of that number of shares; [1892] 2 Ch. 158.
_It-is said that a stockholder may deal with his company at arm's length as a stranger might; Russell v. Gas Co., 184 Pa. 102, 39 Atl. 21. See PREFERENCE.
The rights of a stockholder are to attend stockholders' meetings, to participate in the profits of the business, and to require that the corporate property and funds shall not be diveited from their original purposes, and if the company becomes insolvent, to have its property applied to the payment of its debts.
For the invasion of these rights by the offi cers of a company, a stockholder may sue at law or in equity, according to the nature of the case. All remedies for injury to the prop erty or rights of such a corporate body must be prosecuted in the name of the company; all demands against the company must be prosecuted against it by name. But where the officers and managers of a company, by fraud and collusion with third persons, are sacrificing, or are about to betray or sacrifice, the interests of the corporation, a stockholder may, for such breaches of trust and conspire cy, call the guilty parties to an account in a court of equity; Forbes v. R. Co., 2 Woods 323, Fed. Cas. No. 4,926, per Bradley, J.
Wherever a cause of action exists primari ly in behalf of the corporation against di rectors, officers and others for wrongful deal ing with corporate property, or wrongful ex ercise of corporate franchises, so that the remedy should regularly' be obtained through a suit by and in the name of the corporation, and the corporation, either actually or virtu ally refuses to institute or prosecute such a suit, then, in order to prevent a failure of justice, an action may be brought and main tained by a stockholder or stockholders, ei ther individually or suing on behalf of them selves and all others similarly situated, against the wrongdoing directors, officers, and other persons; but it is absolutely indispens able that the corporation itself should be joined as a party, usually as a co-defendant. The rationale of this rule should not be mis apprehended, The stockholder does not bring such a suit because his rights have been di rectly violated or because the action is his, or because he is entitled to the relief sought; he is permitted to sue in this manner simply in order to set in motion the judicial ma chinery of the court. The stockholder, either individually, or as the representative of the class, may commence the suit and may prose cute it to judgment; but in every other re spect, the action is the ordinary brought by the corporation. It is maintained directly for the benefit of the corporation and the final relief, when obtained, belongs to the corpora tion, and not to the stockholder-plaintiff. The corporation is, therefore, an indispens ably necessary party, not simply on the gen eral principles of equity pleading, in order that it may be found by the decree; but in order that the relief, when granted, may be awarded to it, as a party to the record by the decree; 3 Pom. Eq. Jur. § 1095. It is said this view completely answers the objec tions which are sometimes raised in suits of this class that the plaintiff has no interest in the subject matter of the controversy nor in the relief. In fact the plaintiff has no direct interest ; the defendant corporation, alone, has any direct interest; the plaintiff is per mitted, notwithstanding his want of interest, to maintain the action solely to prevent an otherwise complete' failure of justice; Slat tery v. Transp. Co., 91 Mo. 217, 4 S. W. 79, 60 Am. Rep. 245; Estate of Seiter v. Mowe, 182 Ill. 351, 55 N. E. 526; Grant v. Mountain Co., 93 Tenn. 700, 28 S. W. 90, 27 L. R. A. 98; Graham v. Mach. Works, 138 Iowa, 456, 114 N. W. 619, 15 L. R. A. (N. S.) 729.