Cushing v. Perot

• Court: United States State Supreme Court of Pennsylvania
• Writing for the Court: MITCHELL J.
• Citation: 34 A. 447,175 Pa.St. 66
• Decision Date: 13 April 1896
• Parties: CUSHING v. PEROT.

34 A. 447
175 Pa.St. 66

CUSHING
v.
PEROT.

Supreme Court of Pennsylvania.

April 13, 1896.

34 A. 448

Appeal from court of common pleas, Philadelphia county.

Action by Nathan Cushing against T. Morris Perot. Prom a judgment for plaintiff for want of a sufficient affidavit of defense, defendant appeals. Reversed.

A. W. Horton, for appellee.

MITCHELL J. The affidavit sets up three grounds of defense: First, that defendant is a citizen and resident of Pennsylvania, and is not bound by the laws of Kansas, under which the liability is claimed to arise; secondly, that he is a creditor of the Western Farm-Mortgage Trust Company, as well as a stockholder, and, presumably, that he claims a right of set-off against the liability, if it exists; and, thirdly, that suit has already been brought and judgment obtained against him in Kansas on his liability as a stockholder, and execution has been levied on his real estate there. The second defense is not averred with sufficient precision to be available to prevent judgment, even if it were good in substance, which is not entirely clear on the authorities. The third defense, though it is not averred with the precision, as to dates, amounts, etc., which it should have, nevertheless sets up a substantial bar to plaintiff's suit. A levy in execution is presumed to be satisfaction, and the affidavit avers that the levy on his real estate in Kansas was for an amount that exhausted his liability there. This would be a good defense, even in Kansas, for the constitution of that state limits the individual liability of stockholders to "an additional amount equal to the stock owned by each stockholder"; and it is expressly said in Howell v. Manglesdorf, 33 Kan. 194, 5 Pac. 759, that the defendant "may also set up as a defense that he is discharged, by having already paid the amount of his individual liability to other creditors of the corporation." On this point the defendant was entitled to go to a jury, and it was error to enter judgment against him.

The first point, though averred with the generality and looseness that pervade the whole affidavit, raises questions of great nicety; involving general principles of jurisprudence, the comity between states, and the conflict of laws with regard to both rights and remedies. The difficulty of these questions is shown by the conflicting views in a large number of courts of the last resort. The plaintiff asks us to enforce against a citizen of Pennsylvania a liability created solely by the local statutes of Kansas, and to enforce it in the form prescribed by those statutes, although that form is repugnant, not only to our own established mode of procedure in analogous cases, but also to strong considerations of convenience and natural justice. The first question that arises is the nature of the liability created by the statute. If it is penal, the authorities are all agreed that it will not be enforced outside of the jurisdiction of the state imposing it If, however, it is contractual, or, in the phrase preferred by some writers, statutory only, the authorities differ widely whether it should be enforced at all, and, if enforced, whether in the form directed by the statute, or in that of the lex fori. In regard to the Kansas statute under consideration, my individual opinion is that, by the weight both of reason and authority, the liability created by it is contractual, and should be enforced by any court having jurisdiction of the parties. And I understand our own case of Aultman's Appeal, 98 Pa. St 505, to tend towards that view. But, for reasons to be given presently, we are not required to enter into this discussion. The cases have been collected and cited in the argument, and the whole subject will be found ably treated in 23 Am. & Eng. Enc. Law, tit. "Stockholders," pp. 867, 890-894. As to the mode of enforcement the decisions of the supreme court of Kansas seem to have settled that the statute contemplates a separate action at law against each stockholder. Abbey v. Dry-Goods Co., 44 Kan. 415, 24 Pac. 426; Howell v. Bank, 52 Kan. 133, 34 Pac. 395. The courts of some other states, however,—notably, of Massachusetts, —have refused to sustain such actions, on the ground that the relations of the creditors, and of the stockholders among themselves, cannot be...