Chamberlain v. Piercy

Citations

• 82 Wash. 157
• 143 P. 977
• 1914 Wash. LEXIS 1486

Syllabus

<p>Corporations — Insolvency — Stock Subscriptions — Actions by Trustee — Conditions Precedent — Notice to Stockholders. A trustee in bankruptcy appointed for an insolvent corporation, represents the creditors, and before he can maintain an action against a stockholder on unpaid stock subscriptions, the stockholder must have notice and an opportunity to be heard upon the validity of the debts and the pro rata amount that it will be necessary to collect from each stockholder to meet the liabilities; and a complaint failing to state such facts as condition precedent to action does not state a cause of action.</p> <p>Same — Insolvency—Stock Subscriptions — Trust Fund. The unpaid subscriptions to the capital stock of an insolvent corporation are a trust fund for the benefit of creditors.</p> <p>Corporations — Stock Subscriptions — Actions — Substitution of Trustee as Plaintive — Effect. Where an action at law had been commenced by a corporation against stockholders to recover their unpaid stock subscriptions and thereafter a trustee in bankruptcy had been appointed and was substituted as plaintiff, the nature of the action is changed to an equitable proceeding to recover sufficient of the subscriptions, as a trust fund to pay creditors, and before the action could proceed, a stockholder must be given an opportunity to be heard on the validity of the claims and the amount necessary to meet his pro rata share of the debts, as though the action had been commenced by the trustee.</p>