Broadway Nat. Bank v. Baker

• Decision Date: 09 June 1900
• Parties: BROADWAY NAT. BANK SAME v. BAKER (two cases). SAME v. LEWIS. SAME v. SMALL.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

176 Mass. 294

57 N.E. 603

BROADWAY NAT. BANK SAME v. BAKER (two cases). SAME v. LEWIS. SAME v. SMALL.

Supreme Judicial Court of Massachusetts, Suffolk.

June 9, 1900

COUNSEL

W. R. Bigelow and H. J. Jaquith, for plaintiff.

Frank T. Benner, for defendants.

OPINION

KNOWLTON, J.

The principal questions in these cases have lately been considered by this court, and by several other courts, state and federal. The case of Bank v. Ellis, 166 Mass 414, 44 N.E. 349, and 172 Mass. 39, 51 N.E. 207, 42 L. R. A 396, was brought under the same statute as the present cases and is like them in its facts. Howarth v. Lombard, 175 Mass. 570, 56 N.E. 888, was brought under a statute in the state of Washington, which is different in its provisions, and is differently construed by the supreme court of that state; but the principles stated in the opinion in that case are, for the most part, equally applicable to the cases now before us. In Whitman v. Bank, 20 S.Ct 477, Adv. S. U.S. 477, 44 L.Ed. 587, the first-mentioned statute was carefully considered, many cases were referred to, and a conclusion was reached in entire accord with the other cases above cited. It is settled by these decisions that stockholders in corporations organized under the laws of Kansas are liable severally, and not jointly, to the judgment creditors of the corporation who pursue the remedy provided by paragraph 1192 of the General Statutes of Kansas of 1889. The liability of stockholders under this paragraph, although statutory in its origin, is contractual in its nature. It arises under the contract of subscription to the capital stock, made in becoming a stockholder. This liability is transitory, and may be enforced in any court of general jurisdiction in a state where personal service can be made upon a stockholder. These doctrines are laid down by the supreme court of Kansas, and are followed by this court. Howell v. Manglesdorf, 33 Kan. 194, 5 P. 759; Abbey v. Dry-Goods Co., 44 Kan. 415, 24 P. 426; Bank v. Magnuson, 57 Kan. 573, 47 P. 518; Ball v. Reese, 58 Kan. 614, 50 P. 875. In Bank v. Farnum, 20 S.Ct. 507, Adv. S. U.S. 507, 44 L.Ed. 619, it was held (reversing the decision of the same case in 20 R.I. 466, 40 A. 341) that, upon the facts proved, the plaintiff had a right to recover under section 1 of article 4 of the constitution of the United States, and under Rev. St. U.S. § 950, passed in pursuance thereof. The language of this part of the constitution is as follows: 'Full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state. And the congress may by general laws, prescribe the manner in which such acts, records and proceedings shall be proved, and the effect thereof.' This decision, on constitutional grounds, is controlling upon state courts, in favor of creditors who seek to enforce against nonresident stockholders the liability declared by the supreme court of Kansas to exist under the constitution and laws of that state. Referring to this liability, this court, in Howarth v. Lombard, 175 Mass. 570, 56 N.E. 888, used language as follows: 'In Bank v. Ellis, 166 Mass. 414, 44 N.E. 349, and 172 Mass. 39, 51 N.E. 207, 42 L. R. A. 396, the plaintiff was allowed to recover because a substantive right had grown up, which had been held by the court of Kansas to be contractual, and because the preliminary proceedings in Kansas had been taken which were necessary under the statute to the enforcement of the right in other jurisdictions. These proceedings, which were merely the recovery of a judgment against the corporation, with proof that it could not be collected in the ordinary way, removed the only limitation upon the right to proceed by action against any stockholder, wherever he might be found.' These authorities dispose of the defendants' argument that the failure of the plaintiff to recover judgment in this commonwealth, and to have the execution returned nulla bona here, is fatal to these actions, as well as their argument as to the general nature of the liability.

It remains to consider the contention of the defendants that the actions are barred by the statute of limitations or by laches. It is not contended that, in any view of the case, the statute of limitations of this commonwealth is a bar to the actions, but the contention is that the statutes of Kansas on this subject relieve the defendants from all liability in these suits. It is agreed that, by the terms of the statute of limitations in that state, if a person is out of the state when a cause of action against him accrues, the period limited for the commencement of the action does not begin to run until he comes into the state. It is also agreed that, by the decisions of the courts of Kansas, this provision applies to nonresidents. The auditor has found that the defendants are all residents of Massachusetts, and it does not appear that they ever could have been sued in Kansas. The statute of limitations in Kansas is of general application. In the statute on which the plaintiff's rights rest, there is no limitation of the right, founded on a requirement that the right be enforced within a specified period of time. Nor is there any ground for the contention that there has been laches which affects the plaintiff's rights. These are actions at law, in reference to which there is an express statute of limitations, and the doctrine of laches does not apply. Even if the doctrine did apply, it does not appear that there has been unreasonable delay on the part of the plaintiff in enforcing its rights.

In the case against George F. Baker there is a defense which does not appear in the other cases. This defendant holds claims against the corporation in which his liability as a stockholder is sought to be enforced. These claims he seeks to set off or to use as an equitable defense against the claim of the plaintiff. It is clear that, under the statutes relating to...