COIT v. NORTH omomiu GOLD AMALGAMATING 00. I3
the owner by which the land was converted into capital of the company, and the
‘ capital was increased to $1,000,000, or 10,000 shares of $100 each, of which the
personal property of the corporation was to represent 4,000 shares, the land
2,000 shares, and the residue held for sale to procure money to carry on the oper-
ations of the company. This arrangement was carried out, and 4,000 of the new .
shares were issued to the stockholders upon the surrender of their old certifi-
cates. The complainant, Colt, was the holder of a second mortgage on the land
purchased. and under an arrangement with the company he surrendered his old
mortgage and took obligations of the company secured by a new mortgage.
Some time after the purchase the title to the land was disputed by new
claimants, and a new arrangement was made, by which the stockholders sur-
rendered the new stock which had been issued to them, and retained only the
$100,000 originally issued. ' .
It was claimed on behalf of complainant that both the original
valuation of the property of the association and thevaluation of the
` land purchased were fraudulent, and that only a small part of the
$100,000 original capital had ever been actually contributed. On
the other hand, the respondents claimed that the valuation of the com. _
pany’s property had been made bona. fide, and that the arrangement
for the purchase of the real estate and increase of stockhad been
made with the knowledge and acquiescence of complainant. ` *
George Biddle, Edward F. Hojman, and C'ha.rlesrHaxrt, for com-
plainant. A
‘ Pierce Archer and Richard O. McMwrtrie, for the gold company
and certain stockholders. V \
' · H. T. Fenton, L. R. Fletcher, William A. Husband, Thomas H.
Neilson, W. H. Smith, George Bull, W. C. Bullitt, and George Junkin,
for stockholders. · g 1
` Bnknnnv, Justice, (orally.) - The case of Coit v. North Carolina Gold
Aimalgrtmdting Co. et al. has received our consideration, andwe are now
prepared to announce anopinion. Complainant’s counsel have, by
a very fair presentation or authorities, based the claim againstthe
stockholders upon the doctrine that the capital stock of a corporation
is a trust fund which is liable for the claims of creditors,. and the gen- A
eral proposition cannotof coursebe controverted; thatis to.say,»it
is liable after a corporation becomesinsolvent. Prior to»its.inso1v-
ency a corporation holds its property as any otherdperson, not in
trust, but absolutely in the exercise of. direct dominion-and supreme
control. But when a corporation becomes insolvent,·then,(according
to thelholding of courts of equity, its property becomes atrust-fund
for the payment of creditors. This is true, at all events, rin cases-
where the- property has not been subjected to execution, or disposed