Andrew Davis v. Hiram Mills

• Decision Date: 16 May 1904
• Docket Number: No. 235,235
• Citation: 194 U.S. 451,24 S.Ct. 692,48 L.Ed. 1067
• Parties: ANDREW J. DAVIS v. HIRAM R. MILLS and Clarence C. Frost
• Court: U.S. Supreme Court

194 U.S. 451

24 S.Ct. 692

48 L.Ed. 1067

ANDREW J. DAVIS

v HIRAM R. MILLS and Clarence C. Frost.

No. 235.

Argued April 19, 20, 1904.

Decided May 16, 1904.

This case came here on a certificate of which the following is the material portion:

'The plaintiff is a citizen of Montans, and the owner by assignment of three causes of action (for goods sold and on a promissory note) against the Obelisk Mining & Concentrating Company, a Montana corporation. The indebtedness of the company upon these causes of action accrued July 31, 1892, July 1, 1892, and December 12, 1892, respectively. The defendants are and always have been citizens and residents of Connecticut, and at all the times mentioned in the complaint were trustees of the said Obelisk Mining Company. The statutes of Montana provide that within twenty days from the 1st day of September every such company shall annually file a specified report, and if it 'shall fail to do so, all the trustees of the company shall be jointly and severally liable for all of the debts of the company then existing, and for all that shall be contracted before such report shall be made.' Section 460 of chapter 25 of the 5th division, Compiled Statutes of Montana, which was in force when the cause of action arose. Re-enacted as § 451 of the Civil Code of Montana, which went into effect July 1, 1895.

'The Obelisk Company failed to file certain of the required reports, and the causes of action sued upon here, against the defendants as trustees, to recover debts of the company, accrued September 22, 1893, or prior thereto. This action was brought to enforce the joint and several liability of the defendants under the statute on July 30, 1897.

'When the cause of action accrued the Compiled Statutes of Montana contained these sections:

"Sec. 45. 1. In an action for a penalty or forfeiture, when the action is given to an individual, or to an individual and the territory, except where the statute imposing it prescribes a different limitation; 2, an action against a sheriff or other officer for the escape of a prisoner arrested or imprisoned on civil process shall be commenced within one year.'

"Sec. 50. If, when the cuase of action shall accrue against a person, he is out of the territory, the action may be commenced within the time herein limited, after his return to the territory; and if, after the cause of action shall have accrued, he depart from this territory, the time of his absence shall not be a part of the time limited for the commencement of the action.'

'Both of those sections were repealed by the Code of Civil Procedure, § 3482, which went into effect July 1, 1895. On the last-named date the Civil Code of Montana went into effect, containing § 451, above cited. The Code of Civil Procedure contains a separate title, numbered II., and containing four chapters (§§ 470 to 559), which deals exhaustively with 'the time of commencing actions.' It contains these sections:

"Sec. 515. Within two years:

"1. An action upon a statute for a penalty or forfeiture, 'when the action is given to an individual, or to an individual and the state, except when the sttute imposing and the state, except when the statute imposing

"Sec. 541. If, when the cause of action accrues against a person, he is out of the state, the action may be commenced within the term herein limited, after his return to the state, and if, after the cause of action accrues, he departs from the state, the time of his absence is not part of the time limited for the commencement of the action.'

"Sec. 554. This title does not affect actions against directors or stockholders of a corporation, to recover a penalty or forfeiture imposed, or to enforce a liability created by law; but such actions must be brought within three years after the discovery by the aggrieved party of the facts upon which the penalty of forfeiture attached or the liability created (sic).'

'Upon the facts above set forth, the question of law concerning which this court desires the instruction of the Supreme Court, for its proper decision, is:

"May a defendant, in an action of the kind specified in § 554 of the Code of Civil Procedure of Montana, avail of the limitation therein prescribed, when the action is brought against him in the court of another state?"

Mr. Justice Holmes delivered the opinion of the court:

The general theory on which an action is maintained upon a cause which accrued in another jurisdiction is that the liability is an obligatio, which, having been attached to the person by the law then having that person within its power, will be treated by other countries as accompanying the person when brought before their courts. But, as the source of the obligation is the foreign law, the defendant, generally speaking, is entitled to the benefit of whatever conditions and limitations the foreign law creates. Slater v. Mexican Nat. R. Co. 194 U. S. 120, ante, p. 581, 24 Sup. Ct. Rep. 581. It is true that this general proposition is qualified by the fact that the ordinary limitations of actions are treated as laws of procedure, and as belonging to the lex fori, as affecting the remedy only, and not the right. But in cases where it has been possible to escape from that qualification by a reasonable distinction, courts have been willing to treat limitations of time as standing like other limitations, and cutting down the defendant's liability wherever he is sued. The common case is where a statute creates a new liability, and in the same section or in the same act limits the time within which it can be enforced, whether using words of condition or not. The Harrisburg, 119 U. S. 199, 30 L. ed. 358.¹ But the fact that the limitation is contained in the same section or the same statute is material only as bearing on construction. It is merely a ground for saying that the limitation goes to the right created, and accompanies the obligation everywhere. The same conclusion would be reached if the limitation was in a different statute, provided it was directed to the newly created liability so specifically as to warrant saying that it qualified the right.

If, then, the only question were one of construction and as to liabilities subsequently incurred, it would be a comparatively easy matter to say that § 554 of the Montana Code of Civil Procedure qualifies the liability imposed upon directors by § 451 of the Civil Code, and creates a condition to the corresponding right of action against them, which goes with it into any jurisdiction where the action may be brought. But the question certified raises greater difficulties both as to construction and as to power. We have first to consider whether § 554 purports to qualify, or to impose a condition upon, liabilities already incurred under the earlier act taken up into § 451. In doing so we assume that the word 'directors' in the later act means the same as 'trustees' in the earlier one. The contrary was not suggested. At the argument we were pressed with § 3455 of the Code of Civil Procedure: 'No action or proceeding commenced before this Code takes effect, and no right accrued, is affected by...