the approval of the necessary majority of the | par value. We held that by the issue of the shareholders, prior to the revision of our shares to the defendant "he became as much general incorporation laws in 1903. Section obligated to pay its full par value, when 47 of that revision authorized the defendant properly called upon to do so, as if he had to increase its capital by issuing additional been an original subscriber for it," and that shares, "under such limitations as to the his purchase of the shares, "it not being alamount issued and of every other nature as leged that they were ever issued before, was may exist either in its charter, or in any equivalent to an original subscription for statute affecting it." them." We are therefore of opinion that No limitations which militate against such section 12 of the act of 1903 does not forbid a stock dividend are imposed by the defend-stock dividends to those who have not made ant's charter or by any statute. The letter a technical subscription for the stock. Such of section 12 gives some support to the plaintiff's contention, but is controlled by its spirit and object. That object plainly was twofold: To preclude the issue of certificates for stock until the shares are fully paid for; and to prevent the acceptance of property other than cash in payment, at a valuation greater than the sum which it is actually worth. Read with reference to the mischief which it was designed to remedy, it extends to every case in which one claiming the po

sition of a shareholder seeks to obtain a cer

tificate of stock. Its controlling purpose is to prevent the issue of any certificate of stock for shares that have not been fully paid up, because such a certificate might mislead those dealing with the holder by inducing them to suppose that his stock was liable to no assessments. To give it this effect the word "subscriber" must and properly may be taken as used to include every shareholder, whether he might become such by signing a subscription paper, or by purchase from one who had so subscribed, or from his assigns, or by purchase from the corporation. In none of these cases can a certificate of stock be issued until the share has in some way been fully paid up. A later section of the act of 1903 expressly sanctions under certain circumstances the issue

and sale by a corporation of shares never made the subject of a formal subscription. Section 17 forbids the issue of certificates for fractions of shares, but provides that "whenever fractional rights result from an increase or reduction of capital stock and the stockholders fail to combine the same by purchase or sale, the directors shall, after due notice, sell such rights to the highest bidder and issue proper certificates therefor." This throws a strong light on the intent of sec tion 12.

Those who drafted the corporation act of 1903 had before them our decision, rendered

in 1901, in New Haven Trust Co. v. Gaffney,

73 Conn. 480, 47 Atl. 760. That was an action by the receiver of an insolvent corporation against one who had bought from it a hundred shares of its stock for 65 per cent. of their par value. They were issued to him accordingly, but he never signed any subscription paper. The receiver sued for the balance between the amount paid and the

dividends are fully recognized as a mode of separating the accumulated earnings of a corporation from the corpus of its assets and dividing them among the shareholders, by Gen. St. 1902, § 377.

In determining the equities between the parties it is also to be remembered that the defendant company, since 1882, has had the right to increase its capital stock to not exceeding $2,000,000 par value, and to use and dispose of new stock up to that limit, from time to time, "as the stockholders may direct." The stock issue now in question is within this limit. The fund of which the plaintiff is a trustee was constituted in 1901. As a shareholder in the defendant, it received the stock subject to all the provisions of its charter. The ordinary manner in which stockholders in a corporation give directions vision to the contrary, by the vote of a mais, in the absence of statutory or charter projority of the shares represented at a meettion the issue of the shares now in question ing of the corporation duly called. To sanca majority of two-thirds of the stock was required by the act of 1903 (section 47). Nothing either in the defendant's charter or in plaintiff therefore has made out no case for the general laws required unanimity. The

relief.

the temporary injunction, overrule the de

The superior court is advised to dissolve

plaint. The costs of this court will be taxmurrer to the answer, and dismiss the comed in favor of the defendants. The other Judges concurred.

(83 Conn. 75)

MATHEWSON v. WAKELEE et al. (Supreme Court of Errors of Connecticut. Feb. 3, 1910.)

1. TRUSTS (§ 358*)-FOLLOWING TRUST PROPERTY-IDENTIFICATION OF PROPERTY.

be identified as the property or the proceeds or

To impress a trust upon property, it must

trust could not be impressed upon the property representative of the property charged; and a in the hands of distributees on account of money held by the decedent, where it was not shown that any part of the trust funds or property representing the same went into the distributed estate.

[Ed. Note.-For other cases, see Trusts, Cent. Dig. § 553; Dec. Dig. § 358.*]

•For other cases see same topic and section NUMBER in Dec. & Am. Digs. 1907 to date, & Reporter Indexes

2. TRUSTS (8 371*)-ESTABLISHMENT-PLEADING.

Action by A. McClellan Mathewson, overseer of the Turkey Hill Indians, against In a suit to establish a trust, an allegation Eunice A. Wakelee and others. From a judgthat defendants' ancestor held the property in trust seven years before his death was not equiv-ment for defendants, plaintiff appeals.

alent to an averment that he held it when he error. died, or that it went into his estate.

[Ed. Note.-For other cases, see Trusts, Cent. Dig. 588; Dec. Dig. § 371.*] 3. EXECUTORS AND ADMINISTRATORS (§ 224*) CLAIMS AGAINST ESTATE-MANNER OF És

TABLISHING.

The proper method of reaching realty in the hands of distributees which was held in trust by decedent, or the proceeds of funds held in trust by him, is to procure an order of sale from the probate court after establishing the validity of the claim against the estate, and not by a suit in equity to impress the property with

No

The complaint alleges in substance that in 1871 one Wakelee was by the superior court in New Haven county, appointed overseer of the tribe of Turkey Hill Indians; that afterward, in May of that year, he, under authority of said court, sold certain lands belonging to said tribe; that he thereupon made return of said sale, in which he reported that he had received $960 net, and that he had deposited $720 of that sum in the Derby Savings Bank, and invested the remainder in undescribed real estate in New Haven; that said return was false, and that Wakelee "did not deposit any money in the Derby Sav4. DESCENT AND DISTRIBUTION (§ 140*)-OB-ings Bank in the name of said tribe, or in his

a trust.

[Ed. Note.-For other cases, see Executors and Administrators, Cent. Dig. § 777; Dec. Dig. 224.*]

LIGATIONS OF DECEDENT-ACTION AGAINST DISTRIBUTEES-CONDITIONS PRECEDENT. In order to recover from distributees upon an obligation of the decedent to account for personalty held by him in trust, claimants must first obtain a judgment allowing the claim, which is a finding that the estate is liable to pay it, and, the estate having been distributed, bring an equitable proceeding to reach sufficient of the estate to satisfy the claim; but, in view of the practice act, abolishing all distinction between law and equity procedure, the claim may be established, and the property in the hands of distributees reached, in the same proceeding.

own name as overseer, or in any manner for the benefit of said tribe," and that he "did not buy any land in New Haven in the name of said tribe, or in his own name as overseer of said tribe"; that Wakelee never made any other return of his doings as overseer or filed an account; that he died in March, 1878; that no overseer of said tribe was thereafter appointed until the plaintiff's appointment in May, 1909; that Wakelee's estate was settled, and distributed to his wldow and four sons; that the defendants are the widows and children of two of these sons, who have died; and that each of them has 5. EXECUTORS AND ADMINISTRATORS (§ 439*)— received, either directly of said Wakelee or ESTABLISHMENT OF CLAIMS-PROCEEDINGS-indirectly through his widow and heirs, porIn a proceeding against distributees to sub- tions of the property left by him at his deject property in their hands to the payment of cease. There are no other defendants. A dean obligation of the decedent to account for per-mand for an accounting to the extent of the sonalty held in trust by him, the executor or administrator must be made a party in order to establish the validity of the claim against the

[Ed. Note.-For other cases, see Descent and Distribution, Cent. Dig. 498; Dec. Dig. 140.*]

PARTIES-ADMINISTRAtor.

estate.

[Ed. Note.-For other cases, see Executors and Administrators, Cent. Dig. § 1775; Dec. Dig. § 439.*]

6. DESCENT AND DISTRIBUTION (§ 146*)
DEBTS OF DECEDENT ACTION AGAINST
HEIRS ALLEGATIONS OF COMPLAINT.
The complaint, in an action against dis-
tributees of an estate, alleged that decedent, as
overseer of a tribe of Indians, sold land belong-
ing to them, and did not deposit the proceeds
in bank, or invest the same in realty, as report-
ed by him to the court issuing the order of sale,
and never accounted therefor before his death,
seven years later, and that defendants received
property directly or indirectly from his estate,
and prayed an accounting to determine the
amount due from the estate, and a pro rata
judgment against defendants for the amount re-
ceived by each. Held, that the complaint did
not allege either a conversion or diversion of
the trust fund by decedent, so as to establish
a claim against the estate, and authorize a re-
covery therefor against the distributees.

[Ed. Note.-For other cases, see Descent and Distribution, Cent. Dig. §§ 508-510; Dec. Dig. § 146.*]

property received by each defendant, and the failure to make such an accounting, is alleged. The plaintiff asks for a decree ascertaining the amount due from Wakelee's estate to the plaintiff by reason of his failure to account for said net proceeds, that each of the defendants be required to account to the plaintiff for said sum to the extent that each has received, directly or indirectly, any portion of Wakelee's estate, and judgment against each for the amount found due upon such accounting.

Edward A. Harriman, for appellant. Milton C. Isbell, for appellees.

PRENTICE, J. (after stating the facts as above). It is claimed in support of this complaint that it seeks a recovery upon two grounds, to wit: First, that the estate of Wakelee is under a legal obligation to pay to the plaintiff a certain sum, and that the defendants, having received portions of the assets of that estate in its settlement, are in equity subject to the duty of refunding to the

Appeal from Superior Court, New Haven plaintiff so much thereof as may be necessary County; Howard J. Curtis, Judge.

to satisfy his claim; and, second, that the

defendants have, through the medium of the, Conn. 321, 324, 47 Atl. 334. The existence of settlement and distribution of said estate, come into the possession of property which equity will regard as impressed with the trust in favor of the plaintiff's wards, with which the money originally received by Wakelee from the sale of the Indian lands was charged.

The complaint, viewed in the latter aspect, must fail for the reason, apparent at the threshold of an inquiry as to its sufficiency, that the allegations fail to trace into the estate distributed either any portion of said proceeds, or any other property into which any portion thereof became converted, or which in the transition of investment represented it. It is an essential condition of the exercise of the right to impress a trust upon property that it either be identified as the particular property charged with the trust, or that it be shown that the property originally so charged has, in some form or other, gone into that upon which it is sought to impress the trust. State v. Osborne, 69 Conn. 257, 262, 37 Atl. 491; Skiff v. Stoddard, 63 Conn. 198, 232, 26 Atl. 874, 28 Atl. 104, 21 L. R. A. 102; National Bank v. Life Ins. Co., 104 U. S. 54, 26 L. Ed. 693; Matter of Cavin v. Gleason, 105 N. Y. 256, 262, 11 N. E. 504. The allegation that Wakelee, in 1871, had in his hands a sum of money held in trust is by no means an averment, even argumentatively, that he had that money, or other property representing it, when he died, seven years later. He might have long since squandered it, might have used it for the benefit of the cestuis que trust, or might have passed through an intervening period of penury.

such a claim and its amount having been thus determined, the next step, in the event that the assets of the estate have been distributed, is a proceeding in equity, whose purpose is to reach out for and reclaim these assets, or sufficient of them, to the end that they may be appropriated to the satisfaction of the established claim. Booth v. Starr, 5 Day, 419; Davis v. Weed, 44 Conn. 569, Fed. Cas. No. 3,658; Davis v. Vansands, 45 Conn. 600, Fed. Cas. No. 3,655. Most frequently these two successive steps, when necessary, have been taken in independent proceedings. In Booth v. Starr, however, we said that the proceedings incident to them both might be consolidated into a single equitable action, in which the debt might be established and the relief sought obtained against those ultimately liable. Certain of the objections then urged against this course are now removed by the abolition, through the adoption of the practice act, of all distinctions between procedure at law and in equity, and the conference upon courts of the authority to give both legal and equitable relief in a single action. We have held that this change in procedure has made it proper to make the establishment of the debt an incident of creditor's bills, thus dispensing with the former requirement that it be established by independent preliminary proceedings before the bill could be brought to secure equitable aid in reaching property beyond the reach of execution. Vail v. Hammond Co., 60 Conn. 374, 383, 22 Atl. 954, 25 Am. St. Rep. 330; Huntington v. Jones, 72 Conn. 45, 49, 43 Atl. 564. Whether or not a proceeding such as that approved in Booth v. Starr is in the strict sense a creditor's bill as sanctioned by our practice, the analogy between the two, at least, is perfect as respects both the end sought and the preliminary fact necessary to be established, and we see no reason why the two necessary steps to the attainment of the object sought may not as well be taken in one action in the one case as in the other.

As bearing upon the plaintiff's right of recovery in accordance with the theory first stated, the complaint is silent as to whether it is real or personal estate which he is seeking to pursue. If it is the former, he has mistaken his remedy, which is through the medium of an order of sale from the court of probate, after the validity of his claim has been established. Hawley v. Botsford, 27 Conn. 80, 83; Davis v. Weed, 44 Conn. 569, 577, Fed. Cas. No. 3,658; Griswold v. Bige- But the fact that the proceeding is single low, 6 Conn. 258, 265; Seymour v. Seymour, in form cannot be allowed to obliterate the 22 Conn. 272, 279. If it is the latter, a dif- fact that two successive independent steps ferent situation is presented. Here, as in are involved, and that the necessary parties the other case, the first step in the courts of for the taking of each of them must be beprocedure is to judicially establish that the fore the court. The consolidation affects plaintiff has a valid claim, now enforceable matters of procedure only. It does not jusagainst Wakelee's estate, and collectible out tify short cuts to the end sought which disof its assets, assuming that there were such pense with the taking of the required steps in the hands of an administrator or executor in the legal and proper way. This means undistributed. This the plaintiff's prayers that a necessary party to this action, in for relief plainly recognize. It is accom- order that the validity of the plaintiff's claim plished when the claim is allowed by a judg- may be adjudicated as a preliminary to furment in an action against the administrator ther action, is the proper representative of or executor. This judgment is a finding that the estate, be he administrator or executor. the estate is liable to pay the claim which is "Rights of action against a debtor, which sued upon. Bacon v. Thorp, 27 Conn. 251, the law continues in force after his death, 270; Davis v. Weed, 44 Conn. 569, 577, 579, are upon grant of administration, demands Fed. Cas. No. 3,658: Caulfield v. Green, 73 | against the administrator as the representa

tive of the deceased, and may be establish-, vent the plaintiff's recovery upon the case ed by suit against him as such representa- that he has attempted to set up. The demurtive. The suit is against the admin- rer, however, does not reach this defect. istrator as the representative of the deceasThe fact that the plaintiff, as a condition ed, and is mainly for the purpose of estab- precedent to recovery, must establish the lishing the claim of the plaintiff to be a claimed indebtedness of the estate to him creditor entitled to payment by the adminis- involves the necessity on his part of alleging This trator from assets in his hands." Caulfield facts which lead to that conclusion. v. Green, 73 Conn. 321, 324, 47 Atl. 334. A he has failed to do. Apparently he bases his distributee is not such a representative. His claim upon either a conversion by Wakelee presence as party cannot give jurisdiction to his own use of the net receipts of the for the rendition of a general judgment ad- land sale, or his diversion of them to uses judicating an obligation of the estate. It not justified by the terms of the trust with might be that without its proper representa- which they were charged. The allegations tive a qualified judgment might be rendered made are by no means the equivalent of elwhich would be conclusive as against the ther of these propositions. A variety of distributee, and sufficient for the purpose of things readily occur to one which would be reclaiming the res in his hands. But he is at once consistent with the allegations and entitled, for his possible future protection, inconsistent with such a conversion or diverto have such an adjudication as will not only sion. The complaint is therefore insufficient, conclude him, but all parties against whom and for a cause within the scope of the dehe might wish to proceed for contribution. murrer. In Booth v. Starr, supra, the administrators Other questions suggested by the demurrer were parties. See, also, Davis v. Vansands, do not require present consideration. 45 Conn 600, 605, Fed. Cas. No. 3,655. There There is no error. The other Judges conis a defect of parties here which would pre-curred.

[Ed. Note.-For other cases, see Appeal and and Stephen W. Ballou brings exceptions. Error, Dec. Dig. § 150.*]

Appeal from Superior Court, Kent Coun- tions to enter decree in conformity with the ty; Darius Baker, Judge. decision.

For other cases see same topic and section NUMBER in Dec. & Am. Digs. 1907 to date, & Reporter Indexes 75 A.-7