LIABILITY OF STOCKHOLDERS.

New Zealand Times, Volume XXXII, Issue 5209, 1 December 1877, Page 1 (Supplement)

LIABILITY OF STOCKHOLDERS.

An American exchange says : —“ Ibis about to become necessary for stockholders to be reasonably prudent and honest. Hereafter, if they take shares in a company, it will he well for them to inquire if it is solvent, and if it is, then to keep sufficient watch over its management to preserve it so. Every holder of .-t iuk is in fact, as weli as in law, a partner in the concern, ami as lie would, of course, insist upon reaping his duo share of the profits, if any,,it is but equitable that he should bear his - proportion of the losses, and pay them promptly, as an honest man would any othei just debt. The law has d -oided iu accordance with tho equity aud morality involved iu the stockholder’s obligation to pay. It is well that so much has been determined. Heretofore there has been a most discreditable laxity in regard to this just principle, so well established elsewhere. Many a man who would scorn the idea of evading liability as to his share of partnership debts incurred hy his commercial firm, yet would specially glory in litigation that would enable him to escape payment of bis share of the debts of a company of which he wasapartner. The dishonesty in the oue case is quite as clear in the other. If the man can, but won’t, piy ids shire of the firm’s debts is rightly avoided on ’Ehange, then it follows, as a logical sequence, that the partner in a stock company who litigates an i disputable claim is justly amenable to similar treatment. T 1 is may stem strange doctrine to preach to such a community as ours, bat that only shows how far, in relation to everything connected with co porations, we have travelled from those principles of strict integrity upon which all trails etions, and especially trading ones, should ever be based. No association of men, in their corporate capacity, should for one moment bo tolerated iu doing a moral wrong, which as private in dividuals tli-y dare not do. Swindling is swindling, whether it he attempted by many acting together, or only by only hy one acting for himself. If there is a difference, it is altogether against the many, because they are, by reason of their association together, so much more dangerous to individual rights. It is really amazing that the citizens of a Republic, .of all men, should need to be reminded of these obvious truths. It is marvellous, considering who and whac our people are, that among them should be found a sort of lurking sympathy with members of corporations who seek to evade jn-t liabilities. This is sympathising with tho strongest as against the weakest; it is hoping that might and not right will prevail. It no doubt arises from the fact that so many of our people are interested as stock owners, but that only shows how dangerous and demoralising the whole business has become, and how wise it will bo for Courts and Legislatures to see well to it that individual stockholders are held firmly to their obligations. That is expedient and safe ; it is more, it is right. vVhen stockholders are well assured that they cannot possibly escape liability, they will take such "oo I cave to look into the management of companies with which they are connected that the swindling of creditors will be reduced to a minimum. Besides, in the end the rea interests of the stockowner will be better served. If it is worth bis while to secure an interest in an undertaking, it will certainly pay him to look well after it. Anything wliich impels him to do that is an advantage to himself, as well as to others. On every ground, then, it is a fact to be welcomed that stockowners are being at last held to au accountability which, in the interests of good morals, might never to h ive been denied.