LEGAL PHASES OE COOPERATIVE ASSOCIATIONS. 17 
any indebtedness due it by a stockholder, such a provision, if in- 
cluded, is also valid against all the world. 53 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 stipulations contained in the articles 
of association." Although the plaintiff had no actual knowledge of 
the limitation on the transfer of stock, he was held bound by the 
provision in the articles of association. 54 
LIMITATION ON INDEBTEDNESS. 
The common law places no limit upon the amount which a corpo- 
ration may borrow. The amount borrowed may be greater than the 
capital stock. 55 The general rule is that a debt contracted by a cor- 
poration in excess of the limit fixed by statute or by the charter is 
valid and enforceable against the corporation. A national bank 
purchased furniture and executed three promissory notes in payment 
thereof at a time when the amount of its indebtedness exceeded that 
allowed by a Federal statute. In a suit brought on the notes it was 
held that the notes were enforceable against the bank. In this case 
it was said, " We hold, therefore, that an indebtedness which a na- 
tional bank incurs in the exercise of any of its authorized powers is 
not void from the fact that the amount of the debt surpasses the 
limit prescribed by the statute or is even incurred in violation of the 
positive prohibition of the law in that regard." 56 In an Iowa case 57 
it was said, "A corporation 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. 
53 Union Bank r. Laird, 2 Wheat. 390. 
^Gibbs r. Long Island Bank, 83 Hun. 92, 31 N. Y. S. 400. 
55 Cook on Corporations, Sec. 760. 
56 Weber v. Spokane Nat. Bank, 64 Fed. 20S ; see also H. Scberer & Co. v. Everest, 
168 Fed. 822 ; Grand Valley Water Users' Association v. Zunbrunn, 272 Fed. 943. 
w Juskin v. Plain Dealer Pub. Co., (Iowa) 165 N. W. 339. 
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