LEGAL PHASES OF COOPERATIVE ASSOCIATIONS 1? 
it was said, " A corporate debt contracted in excess of the maximum 
limitation in its articles of incorporation is not void because of such 
excess." In the case of a corporation there are no public records by 
which one about to extend credit to it can ascertain the amount of 
indebtedness already incurred at the time credit is extended, and this 
furnishes a sufficient reason for holding a corporation liable in cases 
like those just discussed. 
As pointed out elsewhere, officers and directors are liable to the 
corporation for all damages suffered by it where they exceed the 
limit of indebtedness fixed by the statute, charter, or by-laws. And 
directors and officers are made personally liable by statute in some 
States to third persons for debts in excess of the statutory amount. 
In a Nebraska case involving a cooperative association the di- 
rectors executed their accommodation notes therefor in an amount 
greatly in excess of the indebtednesss which the association was 
authorized to incur under its charter. Ultimately suit was brought 
against the association, and it was claimed that no recovery could be 
had because the amount of indebtedness exceeded that allowed by 
the charter. The court held, however, that the association was liable 
because the money had been used in the business for the benefit of 
the association and had not been returned, the court saying, "The 
right of recovery depends upon the receipt and retention of benefits 
under or by virtue of the ultra vires contract." 83 An association may 
be estopped from denying liability for debts created in excess of the 
amount fixed in its charter. 84 
LIEN ON STOCK 
If a statute under which a corporation is incorporated or the gen- 
eral law of the State gives a corporation a lien on the stock of a 
stockholder for debts due the corporation by him, strangers, even 
though without actual notice, and residents of other States, buy the 
stock subject to the lien. The Supreme Court of the United States 
has said : 85 " When, by general law, a lien is given to a corporation 
upon the stock of a stockholder in the corporation for any indebted- 
ness owing by him to it, that lien is valid and enforceable against all 
the world * * *." If the statute under which an association or 
corporation is to be incorporated authorizes the inclusion of a pro- 
vision in the articles of association or the certificate of incorporation 
giving the corporation a lien on its stock for any indebtedness due it 
by a stockholder, such a provision, if included, is also valid against 
all the world. 86 
In a New York case the articles of association provided 
that " No shareholder of the association shall be permitted to 
transfer his shares or receive a dividend or interest thereon, who 
shall owe to the association a debt which shall have become due, until 
such debt be paid, unless by and with the consent of the board of 
directors of the association." On the face of each certificate of stock 
involved was the statement, " Subject to the conditions and stipula- 
83 Simmons v. Farmers' Union Co-op. Ass'n of Bradshaw, 114 Neb. 463, 208 N. W. 144. 
84 New York Canning Crops Co-op. Ass'n, Inc., v. Slocum et al., 212 N. Y. S. 534. 
^Hammond v. Hastings, 134 U. S. 401. 
88 Union Bank of Georgetown v. Laird, 2 Wheat. 390, 4 L. Ed. 387. 
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