Smith vs. Dickinson. to be made, amounting in the aggregate to sixty-four per cent., but they were invalid, no by-law or regulation of the corporation, providing for calling in subscriptions to stock, having been made. (7) Plaintiff did not, by reason of the assessments mentioned, become liable to the corporation in any sum what ever. (8) Defendant's equitable defense is not sustained, and he is therefore liable to the plaintiff in this action in the sum of $32,978.41 and costs. Exceptions were filed on the part of defendant Dickinson to raise the question as to whether the finding that plaintiff did not become liable to the corporation on account of the assessments attempted to be made upon the corporation stock, and the question of whether, if he did become so indebted, the indebtedness should be applied to extinguish his claim for contribution. Judgment was rendered in favor of the plaintiff, and defendant appealed. For the appellant there was a brief by N. B. Neelen and Austin & Fehr, and oral argument by W. H. Austin. To the point that defendant was entitled to relief under his counterclaim they cited De Colyar, Guaranty, *315; Brandt, Suretyship & G. (1st ed.), § 228; Bezzell v. White, 13 Ala. 422; Morrison v. Taylor, 21 id. 781; Stallworth v. Preslar, 34 id. 509; Gillespie v. Torrance, 25 N. Y. 306; Coffin v. McLean, 80 id. 560; Hiner v. Newton, 30 Wis. 640; O'Blenis v. Karing, 57 N. Y. 619; Faurot v. Gates, 86 Wis. 574; Davis v. Toulmin, 77 N. Y. 280; Smith v. Felton, 43 id. 421; Wells v. Miller, 66 id. 255; McGehee v. McGehee, 12 Ala. 83; Dennis v. Gellespie, 24 Miss. 581; Mason v. Lord, 20 Pick. 447; Atkinson v. Stewart, 2 B. Mon. 348; Bachelder v. Fiske, 17 Mass. 464; Schulze v. Steiner, 100 Ala. 149; McDonald Mfg. Co. v. Moran, 52 Wis. 203; Dobie v. Fidelity & C. Co. 95 id. 540; Pendleton v. Beyer, 94 id. 33. For the respondent there was a brief by Miller, Noyes, Miller & Wahl, and oral argument by Geo. H. Noyes. Smith vs. Dickinson. MARSHALL, J. The principal contentions of appellant on this appeal are that the court should have found that assessments on stock subscriptions were due and payable to the maker of the note from plaintiff; that such maker was insolvent so that any sum paid by defendant as contributor could not subsequently be recovered of such maker by him; and that by reason of the facts defendant was entitled in equity to the use, as an equitable counterclaim to plaintiff's cause of action, of the latter's indebtedness to the corporation. The equitable doctrine invoked is well established. It permits claims, whether such as are the subjects of setoff or counterclaim under the statute or not, to be applied upon the principal claim in suit on equitable principles, where circumstances exist such as to render that course necessary in order to prevent injustice. The subject received a pretty full discussion in Pendleton v. Beyer, 94 Wis. 31, where many cases in this and other courts are cited. The doctrine may be properly stated thus: Where a person has a contract claim against another or several others to whom a third insolvent person is answerable over, and said third person has such a claim against the first person reducible to a money judgment, whether technically due or not, or where such first person is insolvent and has such a claim against several, either jointly or as partners, and they, or one or more of them, individually, have like claims against him, whether properly the subjects of counterclaim under the statute or not, they constitute equitable counterclaims or setoff's so far as necessary to adjust the ultimate rights of the parties and prevent injustice. Pendleton v. Beyer, supra, is an apt illustration of one phase of this rule. The plaintiff there sued the defendant for a settlement and accounting of partnership affairs, alleg. ing that on such settlement and accounting a considerable sum of money would be found justly due him. Defendants alleged the insolvency of plaintiff and counterclaimed for VOL. 100-37 Smith vs. Dickinson. demands due them in severalty, some connected with and some independent of the partnership transactions. Each defendant asked that any sum found due from him to plaintiff, or to the firm for plaintiff's use, might be diminished by the amount justly due him from the plaintiff. None of the claims was such as would satisfy the statutory requisites of a counterclaim, yet they were all held good as equitable counterclaims on account of plaintiff's insolvency. Again, in Linderman v. Disbrow, 31 Wis. 465, the action was at law for an unpaid balance for a bill of goods. Defendant answered, among other things, that the parties and a third person were copartners, and alleged facts sufficient to show that he was entitled in equity to a settlement of the partnership transactions, and that it would show a considerable indebtedness from the plaintiff to him, which he requested to be applied upon plaintiff's claim, and that the third member of the firm be brought in in order that a complete settlement and accounting of the partnership affairs might be had for that purpose. On appeal it was held, following Sprout v. Crowley, 30 Wis. 187, that the facts did not constitute an equitable defense or counterclaim, but only because of want of an allegation and proof of fraud, insolvency, or other special circumstances to call for the application of the equitable doctrine. The general doctrine running through all the cases on the subject is that equity will set off cross demands against each other, whether the subject of setoff or counterclaim under the statute or not, if, on account of the nature of the claim or the situation of the parties, justice cannot otherwise be done. When cross demands must be so offset in order to prevent the situation of one being obliged to pay and look to an insolvent person to reimburse him, or to pay while having a claim against the payee not the subject of a counterclaim under the statute, and which will be lost if not extinguished by the cross demand, equity will brush aside all Smith vs. Dickinson. forms in order to adjust the real equity between the parties by using one claim upon the other. A study of this case leads to the conclusion that the doctrine above discussed, and upon which appellant relies, cannot be successfully invoked here, even assuming that the court should have held that respondent was indebted to the corporation for unpaid subscriptions, as appellant claims, for several reasons. First, there is no finding that the maker of the note was insolvent, and no proof to sustain such a finding when the amounts of unpaid subscriptions are considered as a part of the corporate assets for the payment of liabilities, and they must be so considered in determining the question of the ability of defendant to collect of the corporation. True, the corporation was insolvent according to the ordinary acceptation of the term; that is, it was unable to pay its debts as they fell due; but insolvency to call into action the equitable doctrine discussed in this opinion means more: it means an insufficiency of assets to meet liabilities. That is manifest, because the doctrine applies only where, from the situation of the parties, justice cannot otherwise be done. That cannot be said to be the situation merely because of the insolvency of a corporation in that it is not presently of sufficient ability to meet the demands upon it, if there is a trust fund consisting of unpaid subscriptions for stock, owing by solvent stockholders, amply sufficient to meet all liabilities. Several of the parties interested, whose equities would be affected by the judgment, were not before the court. All solvent stockholders at least were interested parties. They were liable to contribute in proportion to their stock to a fund sufficient to pay all the corporate debts, unless they exceeded the amount due on the stock, but no one creditor had a right to take, for his sole benefit, the assessment, or any special part of it, against any portion of the stock in advance of a complete settlement of the corporate affairs Seymour and others vs. Cushway and others. and an adjustment of the rights of all stockholders on a basis of equality. No one stockholder could be compelled to pay more than his share by exhausting the calls against another for the benefit of a particular creditor. Otherwise, in the winding-up proceedings, the rights of some stockholders might be seriously impaired. So, before any specific application could be made, as was sought for by defendant here, the ultimate rights of all parties interested would necessarily have to be determined. That was not possible because the parties were not all before the court. So, as said, independent of whether the court found rightly on the subject of plaintiff's indebtedness to the corporation, the judgment appealed from cannot be disturbed. By the Court.-The judgment is affirmed. SEYMOUR and others, Appellants, vs. CUSHWAY and others, Respondents. September 22-October 11, 1898. Statute of frauds: Partnership to purchase standing timber: Breach: Fraud: Equity: Trusts: Sufficiency of writing: Remedy at law. 1. An agreement to form a partnership to purchase lands is within the statute of frauds and void unless in writing. 2. Fraud is not established by the mere breach of an oral contract, void under the statute of frauds, to enter into a partnership for the purchase of standing timber. 3. Plaintiffs and the defendants C. and H. entered into an oral agreement of copartnership, or to form a partnership, the main purpose of which was the purchase of certain standing timber. Before any interest in the timber had been acquired, and before plaintiffs had done anything in the way of performing the agreement, said defendants repudiated it and entered into partnership with the defendant S. to purchase the same timber, and the purchase was made by them without any fraud, concealment, or misrepresentation. The plaintiffs paid no part of the consideration for the timber, and contrib |