Flash v. Conn
| Decision Date | 26 November 1883 |
| Citation | 27 L.Ed. 966,3 S.Ct. 263,109 U.S. 371 |
| Parties | FLASH and others v. CONN |
| Court | U.S. Supreme Court |
The plaintiffs in error, who were the plaintiffs below, brought this suit in the circuit court of Escambia county, in the state of Florida, on January 27, 1876. It was afterwards, on the petition of defendant, removed to the circuit court of the United States for the northern district of Florida. The declaration alleged that the defendant, on or before April 1, 1874, was a stockholder in the Pensacola Lumber Company, a corporation organized in the state of New York under the provisions of an act of the legislature of the state, passed February 17, 1848, entitled 'An act to authorize the formation of corporations for manufacturing, mining, etc., purposes,' and various amendments thereof; that the defendant was the holder of $75,000 of the stock of said company, the entire stock being $300,000; that the company carried on business, and had an office and an agent, in said county of Escambia, state of Florida; that the company, while the defendant was the holder of the stock aforesaid, became largely indebted to the plaintiffs, which indebtedness was evidenced by two promissory notes, one for $5,000, dated September 11, 1864, and one for $5,946.20, of like date, and an account stated for $2,646.47; that the plaintiffs, on February 16, 1875, instituted their suit in the circuit court of said Escambia county against the said company to recover the amount due on said notes and account, and on March 15, 1875, judgment was rendered by said court in favor of plaintiffs, for the sum of $14,120.50 and costs; that the company having been adjudged bankrupt by the United States district court for the southern district of New York in the year 1875, its property could not be taken in execution to satisfy said judgment, nevertheless an execution was issued thereon and returned wholly unsatisfied; that the property of the company had been sold by order of the bankrupt court, and its proceeds would not more than pay the costs of the bankrupt proceedings, leaving nothing to be applied to the payment of said judgment or claims of other creditors against the company; that by the provisions of the act under which the company was organized, all the stockholders were severally individually liable to the creditors of the company to an amount equal to the amount of stock held by them respectively for all debts and contracts made by such company until the whole amount of capital stock fixed and limited by such company should have been paid in, and a certificate thereof made, signed, and sworn to by the president of said company and a majority of its trustees, and recorded in the office of the clerk of the county where the business of the company was carried on. It is averred that the company failed to comply with the said provisions of the act, and did not, by its president and a majority of its trustees, make, sign, swear to, and record said certificate, either in the county of New York, the county in which the operations of said company were by its articles to be carried on, or in the said county of Escambia, in which the company carried on business, or in anywise as required by the act so as to exempt the defendant from his individual liability. Wherefore, the declaration alleged, the defendant became liable to the plaintiffs for the said debt and contract made by the company, and the plaintiffs claimed $28,000.
The defendant filed six pleas, to some of which the plaintiffs demurred and to others filed replications. The defendant filed a rejoinder to one of the replications, to which the plaintiffs demurred. The cause was heard upon the several demurrers, and the court rendered the following judgment:
'This cause came on to be heard upon the plaintiffs' demurrers to defendant's first, second, fifth, and sixth pleas, and to defendant's rejoinder to plaintiffs' replication to defendant's third plea, and the court having determined that the plaintiffs' declaration is insufficient in law, it is therefore considered by the court that plaintiffs take nothing by their said suit,' etc.
From this judgment this writ of error is prosecuted.
E. A. Perry, for plaintiffs in error.
C. W. Jones, R. L. Campbell, and Mike L. Woods, for defendants in error.
[Argument of Counsel from pages 373-375 intentionally omitted]
The only question arising upon the record is whether the declaration presents a cause which entitles the plaintiffs to recover in this action. This was the question considered by the court below, and upon what it deemed the insufficiency of that declaration its judgment was based. The sufficiency of the pleas and rejoinder were not considered, for, if the declaration was bad, the question whether the pleadings of the defendant were good was an immaterial one. If the pleas and rejoinder of the defendant had been adjudged good, that would not have been a final judgment to which a writ of error would lie, but the plaintiffs would have had leave to reply and surrejoin. We are therefore limited to the consideration of the sufficiency of the declaration.
The liability which this suit was brought to enforce arises, as the plaintiffs contend, on the tenth section of the act mentioned in the declaration, namely, the act of the legislature of New York passed February 17, 1848, entitled 'An act to authorize the formation of corporations for manufacturing, etc., purposes.' The tenth section of the act, and the eleventh and twenty-fourth, which also have reference to the liability of stockholders of the company, were as follows:
Section 12 of the act will also throw some light on the present controversy. It provided that within 20 days from January 1st in every year every company organized under the act should make a report, which should be published, which should state the amount of the capital of the company, the proportion paid in, and its existing debts, and which should be signed by the president and a majority of the trustees, and verified by the oath of the president, and filed in the office of the clerk of the county where the business of the company was carried on; and if any of said companies should fail to do so, all the trustees of the company so failing should be jointly and severally liable for its debts then existing.
The defendant contended on several grounds that the declaration set out no cause of action on which the suit could be maintained against him. The first ground was that the liability of the stockholders under section 10 of the act under which the company was organized, and which the suit was brought to enforce, was in the nature of a penalty, and could not be enforced in any court sitting beyond the limits of the state by which the law was passed.
It is well settled, and is not denied by plaintiff's counsel, that the penal laws of one state can have no operation in another. They are strictly local, and affect nothing more than they can reach. The Antelope, 10 Wheat. 66; Scoville v. Canfield, 14 Johns. 338; Western Transp. Co. v. Kilderhouse, 87 N. Y. 430; Lemmon v. People, 20, N. Y. 562; Henry v. Sargeant, 13 N. H. 321; Story, Confl. Laws, (8th Ed.) § 621.
Upon this branch of the case the question for solution is, therefore, whether the individual liability of stockholders provided for by section 10, above quoted, is in the nature of a penalty, or whether it is, as plaintiffs contend, based on a...
To continue reading
Request your trial
-
Marin v. Augedahl
...the decisions of a Supreme Court of a state, construing its own statutes, of the character such as we have here (Flash v. Conn, 109 U. S. 371, 378, 3 Sup. Ct. 263, 27 L. Ed. 966), are no longer of controlling influence on this court but may be ignored in its Believing, as I do, that upon th......
-
Harrison v. Remington Paper Co.
... ... an execution nulla bona or an equivalent exhaustion of the ... property of the corporation ( Flash v. Conn, 109 U.S ... 371, 380, 3 Sup.Ct. 263, 27 L.Ed. 966; Wright v ... McCormack, 17 Ohio St. 86, 95; Patterson v ... Wyomissing Mfg ... ...
-
Kardo Co. v. Adams
... ... States not being involved ( Secombe v. Railroad Co., ... 23 Wall. 108, 117, 23 L.Ed. 67; Flash v. Conn., 109 ... U.S. 371, 379, 3 Sup.Ct. 263, 27 L.Ed. 966; Jellenik v ... Huron Copper Min. Co., 177 U.S. 1, 12, 13, 20 Sup.Ct ... 559, 44 ... ...
-
Erickson v. Richardson, 7885.
...of the Constitution of the state by the highest court in existence under it is binding upon the federal courts. Flash v. Conn, 109 U.S. 371 377, 3 S.Ct. 263, 27 L.Ed. 966." In re Brown (C.C.A.) 164 F. 673, 679; Bryant v. Swofford Bros. Dry Goods Co., 214 U.S. 279, 290, 29 S.Ct. 614, 53 L.Ed......
-
Jurisdictional Discrimination and Full Faith and Credit
...law liability for unpaid subscriptions).53. See, e.g., Whitman v. Oxford Nat'l Bank, 176 U.S. 559, 562-63 (1900).54. Flash v. Connecticut, 109 U.S. 371, 379 (1883) (holding that a Florida federal court must entertain a creditor's suit against a stockholder under New York law). The Court, ho......