The Rights of Corporate Creditors Upon Unpaid and Watered Stock Subscriptions

There is a marked distinction between the purpose of an action instituted by a corporation while it is a going concern to recover unpaid subscriptions, and such an action instituted by a creditor or receiver after insolvency. In the former, the primary object is to collect money to further the business and purposes of the corporation and to continue it as a going concern. The corporation, but not a creditor, may proceed against any shareholder who has not paid for his stock in full, to recover the balance, whether or not such balance is necessary to pay the obligations of the corporation, and independent suits may be begun against different shareholders. The corporation may sue part of the shareholders only, and it is no defense to such actions that there has been no marshalling of assets and liabilities, or that all of the delinquent shareholders have not been proceeded against. But when the corporation becomes insolvent, the positive legal liability existing while the corporation was a going concern is transferred into an equitable liability5on the theory that these unpaid claims, on the corporation\u27s insolvency, become part of a trust fund, and that it would be inequitable to collect more from the shareholders on their obligations than is necessary to satisfy the corporation\u27s debts