When this case was before me as vice chancellor, it was disposed of on the hearing without any formal argument, upon a statement of the facts by the counsel for the complainants, which was assented to by the counsel for the de*118fendants other than Mr. Shepard, and mainly agreed to by his counsel. It was, however, insisted that Mr. Shepard was not liable as a stockholder, he having transferred his stock before the dissolution of the company to Edward Shepard, his son; and the evidence to prove such assignment was adverted to. But as in my judgment it failed to prove a delivery of the assignment to the assignee, I held the defendant, Shepard, liable, as well as the other defendants, and directed a decree to be entered in favor of the complainants, containing substantially such provisions as are stated in the minutes of the clerk. I cannot think that my attention was called to the fact that the answer of the defendant Shepard responsively denied that he was a stockholder at the time of the alleged dissolution of the company.
The decree was entered, it seems, without ever having been legally settled, and in violation of the express directions which the clerk’s minutes show were given by the court in relation to the provisions to be inserted in it. No motion, however, was made to correct the decree, or to set it aside as irregularly entered ; and it must now be regarded as regular and as the decree of the court; and by consequence, if it be found to be erroneous, it must be modified or reversed.
That it is erroneous in the particulars in which it departed from the directions given on the hearing, is, I think, quite clear. There should have been a reference to ascertain the debts due by the company—the stockholders who were liable—and if any of them had paid, on. the debts due by the company, over and above the amount of their stock paid in, so. as to reduce the sum in which they would respectively be liable on this bill, to ascertain such sum in each case—and to apportion among the late stockholders who are liable the amounts respectively chargeable on each, &c. (Fisk v. The Keeseville Manuf. Company, 10 Paige, 592. Penniman v. Briggs, Hopkins, 305. Same case in error, 8 Cowen, 387. 19 John. 450, 472. 20 Id. 183.) If the relief is sought against such defendants as were members of the company at the time of its dissolution, by lapse of time, then the decree should not have embraced either the $184,11, *119sworn to by the witness Smith, (there being no such assignment of this demand proved as would authorize a recovery in the name of the complainants alone, even in a court of equity,) or the costs of the suit at law; for the suit was against the new company, and for their costs the stockholders of the old were not liable. (10 Paige, 592. 5 Hill, 461. 3 Id. 188.) The decree should have first required the payment of all unpaid instalments of stock which were collectable, in analogy to the course directed to be taken by the act entitled “ of proceedings against corporations in equity,” (2 R. 465, §§ 49, 50,) and then duly apportioned the residue among the parties liable according to the principles of the court of equity, whose appropriate office it is to settle all the rights and liabilities of the respective parties in one suit; and to provide for the apportionment of the burden among the several parties liable, and to enforce contribution upon equitable principles in one suit, so as to save the necessity of separate suits for contribution—and to prevent a useless circuity of actions.
But I think that the imperfect manner in which the rights of the defendant Shepard were presented at the hearing in the court below, occasioned a fatal error in the decree in relation to Shepard’s liability upon this bill. It appears by the pleadings and proofs in the cause that the Phoenix Company expired by its own limitation on the 26th December, 1841, and that a new company was formed by the stockholders of the old one, or a part of them, on or about the 23d of the same month. And that all the property and effects of the old corporation were transferred to and received by the new company, which continued the business without any apparent change of interest, until on or about the 1st of March, 1843, when the corporation was dissolved by a sheriff’s sale of all the property of the company, both real and personal. Now the liability of Shepard will depend on the fact whether he was a stockholder at the time of the dissolution of the corporation. (3 R. S. 222, § 7.)
I. Under this viewr of the facts it seems to me an undeniable proposition that the relief sought must be granted against him, -if at all, on the ground that he was a member of the new com*120pany at the time of its dissolution in March, 1843, for several reasons.
I think that this is, upon a fair construction, the true scope and object of the complainants’ bill. And that the bill cannot justly be regarded as claiming relief upon any other ground. It is true-that the bill sets out the time of the organization of the first company, and the expiration of the 20 years’ limitation ; but this statement is merely introductory to and connected with the statement of the formation of the new company, which at once succeeded to all the property and rights of the old one : and the pleader obviously regards the latter as merged in the new association in such a manner as to survive in its new organization, and thus to enjoy a continued life—never having lost, so far as respects its rights and liabilities, its personal identity. If this be not. the object and scope of the bill, why did it contain any allegation concerning the suit at law; the recovery of the judgment against the new corporation, or the formation of the new association, the transfer of the property of the old to the new, or the names of its stockholders ? And why does the bill speak of the Phoenix Company, from beginning to end, as one continuing corporation, without any distinction between the old and the new? And unless it was the intention of the complainants to seek relief against the defendants as members of the new corporation, (who were such at the time of its dissolution,) why did they prove and take a decree for the costs of the suit against the new company, and for the demand of $184,11, which was unlawfully included in this judgment long after the old company had ceased to exist ? A bill may be drawn with a double aspect, and if properly framed, may claim any relief which is appropriate under the prayer, and under the state of facts set forth in it. But this bill does not on its face profess to be a bill with a double aspect. On the contrary, the obvious scope of the bill is to seek relief against the defendants as stockholders of the Phoenix Company at the time of its dissolution in March, 1843; treating it as the same company with that which was its original debtor, preserving its legal identity under its new organization.
*121The counsel for the defendant Shepard has insisted that by commencing a suit against the new corporation, and by the recovery of a judgment against it upon a promise to pay their demand against the old company, the complainants have elected to make the new corporation their debtor, and are estopped from asserting their claims against the old company, or against those who were its members at the time it was dissolved. Many authorities have been cited in support of this position, among which are 6 N. Hamp. Rep. 164; 2 Lord Raymond, 613, 614; 4 Stark. Ev. 1508; 5 Cowen, 545, 554; 3 Coke, 64; 19 John. 456, 477; 20 Id. 683, 684; Angell & Ames on Corp. 668.
But without holding that the complainants have made such an election as will estop them absolutely from resorting to the stockholders of the old company, I cannot doubt, upon the facts of this case, that the new company and the personal liability of its stockholders, constitute the primary fund for the payment of the complainants’ demand, which must be exhausted before they can resort to the personal liability of the stockholders of the old company. The demand of the complainants was originally the proper debt of the Phoenix Company; and the property of that company was the primary and legitimate fund for its payment. And after that should be exhausted, and the company dissolved, the personal liability of the stockholders constituted (if I may be allowed the expression) an additional fund in reserve destined for the same object. But a new company was formed when the old one was about expiring, with the same capital stock, and the same stockholders—which company continued the business of the old one—received a transfer of the entire estate, real and personal, of the old company, and which we cannot doubt was intended by all the parties to it as a virtual continuation of the old corporation, with all its responsibilities and obligations. I do not say that the law will regard it as one continuous corporation: for if it will, there is an end of all individual liability of the stockholders, except of those who were such at the dissolution of the corporation, in March, 1843. But I maintain that this was the view *122of those stockholders of the company who organized the new one by a transfer of their stock in the old one, and who, as corporators of the newly organized association, appropriated to the use of the latter all the property of the company. I insist also, that when the new association received the property of the old, it is to be regarded as having received it under a trust and obligation to pay the debts of the latter ; at least as to the debt of the complainants, who have recovered a judgment for the amount of their debt against the new corporation, upon a promise to pay it—as is shown by the record of judgment, as well as by the allegations in the bill itself. It is impossible to deny that the new corporation assumed the burden of discharging this particular debt; and that the complainants, by receiving the new promise and prosecuting upon it, became parties to the newr arrangement by which the burden of paying that debt was transferred from the stockholders of the old to the new company. And it is equally clear that the promise of the new corporation, to the complainants, was made on the condition of the transfer to the new company of the property of the old one, for there is not the slightest evidence of any other consideration in the case.
Now upon this state of facts it will be difficult to maintain that the old company, or its stockholders, are liable at all, or in any event, for the payment of the complainants’ debt. But there can be no doubt that the new company, so long as it has any property, and when that is exhausted, and the company for that reason is dissolved, the personal liability of its stockholders, constitute the primary fund for the payment of this debt. It is like the case of A., the owner of lands, executing to B., his creditor, a bond and mortgage upon the premises, and then conveying the equity of redemption to C., not only subject to the payment of the bond and mortgage, but also accompanied with a covenant, which B. accepts, to pay the mortgage debt. By this means the land in the hands of 0., and the personal liability of 0., become the primary fund for the payment of this debt. That primary fund represents the principal debtor, and the personal liability of A. represents the surety. Just so *123does the new corporation and the personal liability of its stockholders represent the principal debtor in the case at bar; while the stockholders of the old company, if liable at all, represent the surety, and the court of chancery will never enforce payment . against the surety till the primary fund is exhausted. And besides, the bill in this case is not framed with the view of reaching such secondary and contingent liability of the stockholders of the old company, on the failure of a primary fund for the payment of the debt.
II. In the next place, if I am right in the position that the stockholders of the new company, who were such at the time of its dissolution, are alone liable on this bill, the next inquiry is whether the defendant Shepard was then a member of that corporation. I am still of the opinion, as I was on the hearing in the court below, that from the careless and unskilful manner in which the witness, Selden, was examined, the defendant has failed to show a delivery to, and acceptance by, Edward Shepard, or his agent, of the written assignment of the stock which was made an exhibit in the cause. But I am constrained to say that the answer, which is on oath, responsively denies that Shepard was a stockholder of the new company at the time of its dissolution. The fact had been distinctly charged in the bill, and in the answer at folio 8, is found this denial: “ And this defendant denies that he was, at the time of the dissolution of said company, as is stated in said bill of complaint, the owner of any of the stock of said company.” And after admitting that at one time he did hold 83£ shares of said stock, which he received from his son as collateral security for a debt, he proceeds in folio 10 to allege as follows: “ And this defendant further says, that on or about the 6th day of October, 1842, he, this defendant, did re-assign and transfer to said Edward Shepard the said 83| shares of said stock of said company,” <fcc. This denial is direct and positive, and the averment of the transfer of the stock to Edward is also positive ; and both the denial in folio 8, and the averment which amounts to a denial in folio 10, are responsive, and are conclusive as to the fact, until overthrown by more than one witness. In Hart v. Ten *124Eyck, (2 John. Ch. Rep. 85,) it was held that the answer of a defendant, (who was interrogated as to a payment,) alleging that he did make such payment, was responsive, as though it were a mere formal denial of a fact averred in the bill. (See also Woodcock v. Bennett, 1 Cowen, 744, 742, 711.) In this case the bill prayed for the specific performance of articles of agreement that had come to the defendant’s hands, and inquired how they 'were disposed of, and when, where, and under what pretences he got hold of them. He answered that the articles were by consent of parties rescinded and the seals torn off. This was held by the court for the correction of errors, to be responsive. These cases are cited by Messrs. Cowen & Hill, (1 Cowen & Hill's Notes, 285,) where many other cases are collected confirming this doctrine, to wh'ich I will do no more than refer generally. And I will only add that the rule as stated above is the settled doctrine in our own state and in England, while only two cases are cited by Messrs. Cowen & Hill, (the first from 1 Wash. Rep. 224, and the other from 6 Monroe, 620,) holding a different rule.
Now there is nothing in the evidence to contradict these averments in the answer. The complainant might have called Edward Shepard for that purpose ;• but he did not. It was said on the argument that the answer was impeached by evidence, which seems to contradict the idea that Mr. Shepard held this stock merely as collateral security, and that he received it of his son. But I do not think that the credit of the answer is destroyed by this criticism. As between the defendant Shepard and his son, it may well be that it was assigned as collateral security. And it may be that Mr. Edward Shepard held a mere executory contract for this stock of Mr. Turner, without any actual assignment having been made, though the interest in the stock had passed to him. Such an error cannot overthrow the credit of the answer so as to destroy the effect of a responsive and direct denial.
I am, therefore, of the opinion that the defendant Shepard was not liable upon the bill filed in this cause.
Decree appealed from reversed.