I agree with the learned vice chancellor that, as against creditors, the transfer of the property, owned by the stockholders of the corporation on the 17th of April, 1834, to the corporation, could only be regarded as a payment upon the stock subscribed, to the extent of its value. The resolution of the directors to accept the property in full payment of the stock subscribed, was illegal and void as to the *388creditors of the corporation. They had no power to exempt themselves, or the other stockholders, from the payment of the whole amount of the stock subscribed. I should have been better satisfied with the decree, in this respect, if, instead of fixing the value of the property thus transferred by the unincorporated association to the corporation at $20,000, it had directed a reference to ascertain the actual value of the property at the time of the transfer. But the defendants have no right to complain of this part of the decree. It is quite as favorable to them as the proofs in the case warranted.
I also concur with the vice chancellor in the principle by which it is to be determined whether the statute, which restricts the indebtedness of an incorporated company to three times the amount of its capital stock actually paid in, has been violated. The evils, against which this statute was intended to operate, are equally great, whether the indebtedness is to the directors themselves, or to other persons. The proper inquiry, therefore, is not to whom the debts are due, but what is the amount of indebtedness. The language of the statute, (1 R. S. 604, § 3,) is, “ the total amount of the debts which any incorporated company shall at any time owe, shall not at any time exceed,” die. If it shall be ascertained that, “ at any time,” such debts have exceeded the limit of “ three times the amount of the capital stock actually paid in,” then the next inquiry is “under whose administration such excess has happened.” This being ascertained, the liability is determined. Having determined who is liable, we are next to inquire who may enforce the liability. The section provides that the corporation itself, so long as it remains undissolved, shall have the ’power to enforce this liability. The amount of the excess becomes at once a debt due from the directors, who are declared to be liable to the corporation. To maintain an action for such debt, it is only necessary to show the fact that such excess “ at any time” existed, and that it happened “ under the administration” of the defendant as a director. He can only defend himself against such liability by showing his dissent entered at large on the minutes of the directors, at the time, or that he was not present when the excess *389of indebtedness was incurred. If the liability has been incurred but has not been enforced before the dissolution of the corporation, then it may be enforced by “ any creditor” of the corporation. No lapse of time, no statute of limitations, will avail to bar the liability. Upon the dissolution of the corporation, if there be a debt unpaid, its transactions through its entire history, however extensive the period of that history, may be investigated, and if, upon such investigation, it shall appear that “ at any time” there has been an excess of indebtedness beyond the limit within which the legislature has confined it, the directors under whose administration such excess happened, remain liable for the amount, with interest. It is a debt due to the corporation, and, as much as any other debt, is applicable to the payment of any debt against the corporation. I think, therefore, the vice chancellor too much restricts the meaning of the term “ any creditors” as used in the section of the statute under consideration, when he confines it to those creditors whose debts were contracted or re-" mained unpaid while the excess of indebtedness existed. I can see nothing either in the language of the statute itself, or in the object which the legislature evidently designed to effect by the provisions of this section, which requires such a limitation to the term “ any creditors.” It is certain that if an action were brought by the corporation itself, to enforce the liability, it would be no defence to the action, to show that all the debts which ■were contracted or remained unpaid when the liability was incurred, had subsequently been extinguished. The corporation w7ould still have the right to collect the amount, and apply it to the payment of any of its debts. I can see no reason why any creditor who might, before the dissolution of the corporation, have participated in the benefit to be derived from such an action, may not, after the dissolution of the corporation, maintain the action himself, to enforce the same liability.
Another question arises in this case, of more importance to the parlies. It appears that some of the defendants, at the time the company suspended its business, were themselves creditors, to a large amount, and that others of the defendants were personally liable for its debts, on account of which they have *390since been obliged to make large advances. Assuming that the defendants are liable under the provisions of the statute already noticed, for an excess of indebtedness beyond the limit prescribed, should they be compelled to pay the whole amount of such liability, without reference to the advances they have made for the company ? I think not. If they have, as directors, incurred individual liabilities to the company, under the provision of the statute referred to, I can see no reason why they should not be allowed upon those liabilities for any advances made by them for the benefit of the company. Suppose an action had been brought, as it might have been, before the dissolution of the corporation, by the corporation itself, for the same excess which the plaintiffs now seek to recover. Would any one doubt the right of the defendants to have their debts against the company allowed against the amount of their statutory liability? Would it be pretended that the excess for which they had become liable must be paid to the corporation, only to be recovered back by a suit against the corporation for its indebtedness to the defendants? The liability of the defendants was in no respect changed by the dissolution of the corporation. Its creditors could only enforce the liabilities which the defendants had already incurred. If, therefore, the defendants, who had made advances for the benefit of the company, were entitled to have those advances considered as payments on account of their individual liability, as against the corporation, they are equally entitled to such allowance as against the creditors of the corporation, since its dissolution.
This view of the question is sustained by the court for the correction of errors, in Briggs v. Penniman, (8 Cowen, 387.) In that case, the defendants were stockholders in the Cambridge Farmers’ Woollen Manufactory, a corporation for manufacturing purposes, formed under the act of the 22d of March, 1811. Upon its dissolution, being insolvent, its stockholders became liable for its debts to the extent of their respective shares of stock. Penniman, a creditor of the company, filed his bill to enforce that liability, The defendants set up, in defence, that they had severally made advances for the company, for *391which it was indebted to them. One of them claimed that the company owed him a debt of $1500, besides what was due for advances. The chancellor directed a reference to ascertain the amount of the defendants’ liability, and directed the master, upon the reference, to allow the defendants respectively such sums as they had paid on account of the debts of the company after its dissolution. Upon the appeal from this decree, Spencer, senator, says, “ I confess I can see no reason why the credits for sums advanced by the appellants, should be restricted to a period since the dissolution of the company. The members of the company might bona fide advance money, as they allege they have done, to carry on the business of the corporation, and they are equally entitled with any other creditors, to be indemnified from the funds of the company, or from the individual liability of the stockholders.” In this case, the liability of the stockholders,' like that, of the directors in the case under consideration, was created by statute, and was limited. It could only be enforced after the dissolution of the corporation, and, of course, only by the creditors of the corporation, while in the case before the court, the liability is primarily to tbe corporation. If then in such a case, the stockholders, when called upon by creditors to pay the amount with which they are chargeable by statute, may have deducted from their liability, the amount of their advances for the company, I think the defendants, who have incurred a similar liability, should also be entitled to have credited against that liability, the amount of their advances for the company. In either case, the law, for the protection of creditors, and to induce greater carefulness in the management of the affairs of the corporation, adds the limited personal liability of the stockholders or directors to the effects of the corporation itself. In either case, such limited personal liability is at an end, when the stockholder or director has paid or been charged with debts to an equal amount. He can be required to pay the amount of his liability but once, and whether he pays that amount voluntarily, in the discharge of the debts of the corporation, or whether he is compelled to pay it upon suit brought by the corporation *392or any of its creditors, having paid it, he may set up such pay> ment as a defence against any further liability.
But the defendants are also liable for a portion of their stock, not paid in. As against the amount for which they are severally liable on this account, they have a right to set off any indebtedness of the company to them. According to the view of the vice chancellor, from which I do not dissent, the plaintiffs are not entitled to recover in this suit, from the defendants, any thing on account of their liability for unpaid stock. Under such circumstances, it seems but just, that the defendants’ set-off should first be applied to that part of their liability which the plaintiffs do not reach by the decree in this suit. I understand the rule on this subject to be, that where a debtor has a set-off equally applicable to two demands against him, it is not for him to elect which of the demands he wall satisfy by his set-off, but the court will direct the application according to the equities between the parties. (Collins v. Allen, 12 Wend. 356.)
1 think the decree appealed from should be so modified, as to direct a reference to ascertain the amount due from the defendants severally, on account of their stock, and also the amount due from them jointly and severally for any excess of indebtedness incurred by the corporation, under their administration, beyond the limit prescribed by the statute. The referee should also be directed to ascertain the amount of credits to which each of the defendants is entitled on account of any indebtedness of the corporation to him for advances or liabilities made or incurred for its benefit, whether before or after the dissolution. That part of the decree which declares the liability of the defendants for the payment of the plaintiffs’ debts, to the amount of the excess for which they shall be found liable as directors, should either be omitted entirely, or so modified as to declare the defendants only liable to the extent of the balance which may be found against them upon the principles above stated. As the decree is only interlocutory, it seems to be unnecessary to declare such liability at all. If they elect, I think the defendants should also be permitted to have the report of the referee upon the actual value of the property transferred by the unin*393corporated association to the corporation, with a view to ascertain, more satisfactorily, the amount with which they are yet justly chargeable on account of their stock, as well as the amount of excess for which they are liable as directors. A provision should be inserted in the decree, allowing the pleadings and proofs in the cause to be used upon the reference.
It may not be improper to add, that while I concur with the vice chancellor, that the bill is properly filed by the plaintiffs as creditors of the corporation, I do not think the plaintiffs have thereby, necessarily, acquired a preference over other creditors. Any other creditor would, I apprehend, be entitled to come in and insist upon a ratable distribution of all the funds liable for the payment of the debts of the company, upon a bill framed for that purpose. (Bank of Poughkeepsie v. Ibbotson, 24 Wend. 479. Briggs v. Penniman, 8 Cowen, 392.) I am inclined to think too, that the defendants may, by a cross-bill, bring all the necessary parties before the court, for the purpose of having a final determination of the rights of the parties, directors, stockholders and creditors, in respect to the affairs of the corporation. But these are. questions which itis not necessary now to consider.
Neither party having succeeded entirely upon this appeal, it is not a proper case to give costs to either, as against the other.