Great Western Tel Co v. Purdy

• Decision Date: 13 April 1896
• Docket Number: No. 105,105
• Parties: GREAT WESTERN TEL. CO. v. PURDY
• Court: U.S. Supreme Court

162 U.S. 329

16 S.Ct. 810

40 L.Ed. 986

GREAT WESTERN TEL. CO.

v PURDY.

No. 105.

April 13, 1896.

This was an action brought August 30, 1888, in the district court of Des Moines county, in the state of Iowa, by the Great Western Telegraph Company, a corporation of Illinois, by its receiver, Elias R. Bowen, against Hiram Purdy, a citizen of Iowa, to recover the sum of $437.50, with interest from July 10, 1886, alleged to be due from him to the company under his subscription to its stock, and under a decree of the circuit court of Cook county, in the state of Illinois, of that date, which ordered an assessment upon the stockholders of the company, and which was alleged to have been made in a suit to which he was a party, and to be binding upon him. Trial by jury was wai ed, and the case tried by the court. The material facts appeared by the record to have been as follows:

The company was incorporated under the laws of the state of Illinois in 1867. On February 16, 1869, Purdy subscribed for 50 shares of the par value of $25 each, by signing and delivering to the company's agent at Burlington, in the state of Iowa, the following writing:

'Capital, $3,000,000. Shares, $25. Assessments not to Exceed $10 on a Share.

'Subscription List for the Capital Stock of the Great Western Telegraph Company.

'We, the subscribers hereunto, for value received, severally, but not jointly, agree to take the number of shares in the capital stock of the Great Western Telegraph Company placed opposite our respective names, and pay for the same in installments, to wit, five per cent. on amount paid in, and the balance as the directors from time to time may order. In consideration thereof the Great Western Telegraph Company agree that when forty per cent. of the par value of the shares shall have been paid under such orders, and the installment receipts therefor surrendered to the company, the number of shares severally subscribed by the undersigned shall be issued to them as full-paid stock by the said company.

'T. C. Snow is appointed agent to solicit stock and receive only the first installment of five per cent. (fifty cents on a share) at the time of subscription.

'J. Snow, Secretary.'

Upon this subscription Purdy paid $275 before November, 1869.

On November 19, 1869, Jeremiah Terwilliger and others, including Purdy, subscribers to stock in the company, and who had paid money on their subscriptions, filed a bill in equity in the circuit court of Cook county, Ill., against the company, its president and secretary, and Selah Reeve, to compel the issue of certificates of stock to the plaintiffs and other subscribers, and to set aside as fraudulent a contract between the company and Reeve, by which Reeve agreed to build its telegraph lines, and the company agreed to transfer to him its entire capital stock. On November 16, 1872, a decree was entered in that suit, setting aside the contract between Reeve and the company, ordering an accounting between them, ordering the company to issue to the subscribers certificates for as may shares as they were entitled to by the money paid, directing the president and secretary to call a meeting of the company to choose a new board of directors, reserving leave to the plaintiffs at any time to apply for such further order or decree as should be necessary to carry out this decree or be necessary in the cause, and ordering the individual defendants to pay the costs of the suit.

On January 7, 1873, those costs were paid; and on January 29, 1873, a meeting of the company was held and a new board of directors chosen, and a certificate for 27 1/2 shares was issued to Purdy.

The following proceedings were afterwards had in that cause: 'On September 19, 1874, other stockholders, by leave of the court, intervened, and filed a 'supplemental bill' against the company and its officers, alleging mismanagement and fraud on the part of the new officers, and the insolvency of the company, and praying for the appointment of a receiver. On October 7, 1874, upon motion of the plaintiffs in the supplemental bill, and after notice to and with the consent of all the parties to that bill, the court appointed Oliver H. Horton receiver of the property of the company. Bowen was afterwards appointed receiver in place of Horton; and upon his petition, and upon the report of a master appointed to inquire into the amount of the debts and assets of the company, and the percentage of the par value of the shares necessary to be paid by the stockholders to satisfy those debts, the court, on July 10, 1886, adjudged that the company was insolvent, and had no means for paying its debts, except the sums remaining unpaid upon subscriptions for stock, and that there were more than 2,000 stockholders widely scattere through 12 states and territories, and it was impracticable to make all of them parties to the suit; and entered an order and decree 'that a call or assessment be, and the same is hereby, made upon the stock and stockholders of the said company (excepting those who have paid in full), their legal heirs, representatives, and assigns, of thirty-five per centum of the par value of the shares of said stock subscribed for or held by them, being eight dollars and seventy-five cents on each and every share thereof; and that the stockholders of said company, and each and every one of them (excepting those who have paid twenty-five dollars on each and every share subscribed for or held by them), and their heirs, legal representatives, and assigns, be, and they hereby are, severally ordered and required to pay to the receiver of said company, the said Elias R. Bowen, the several amounts by this decree called for and assessed and required to be paid, namely, eight dollars and seventy-five cents on each and every share subscribed for or held by them, respectively, and that the same be paid upon the demand of said receiver or his agent'; and 'that said receiver shall at once proceed to collect the said sums so ordered to be paid by this decree, and shall make all necessary demands for such payments, shall employ such assistance and counsel, take such action and institute such suits and proceedings, in the name of the said company, and in such jurisdictions, as he shall be advised or deem expedient and proper, and for the purpose of enforcing the payment of the sums hereby ordered paid.'

On August 29, 1888, the receiver accordingly demanded of Purdy the payment of the sum of $8.75 upon each share of his stock, amounting to $437.50, and on the next day brought this action.

The inferior court of Iowa in which this action was brought gave judgment for the defendant. The plaintiff appealed to the supreme court of Iowa, which affirmed the judgment, upon the ground that the action was barred by the statute of limitations. 83 Iowa, 430.

The plaintiff sued out this writ of error, and assigned for error that the supreme court of Iowa did not give full faith and credit to the decree of assessment of the court of Illinois, as required by article 4, § 1, of the constitution, and section 709 of the Revised Statutes of the United States.

Thomas J. Sutherland, for plaintiff in error.

S. L. Glasgow, for defendant in error.

Mr. Justice GRAY, after stating the case, delivered the opinion of the court.

By article 4, § 1, of the constitution of the United States 'full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state. And congress may, by general laws, prescribe the manner in which such acts, records and proceedings shall be proved and the effect thereof.' In the exercise of the power so conferred, congress, besides providing the manner in which the records and judicial proceedings of the courts of any state shall be authenticated, has enacted that 'the said records and judicial proceedings, so authenticated, shall have such faith and credit given to them in every court within the United States, that they have by law or usage in the courts of the state from which they were taken.' Act May 26, 1790, c. 11; 1 Stat. 122; Rev. St. § 905.

The plaintiff relied on the order of assessment made by a court of the state of Illinois, as a judgment of that court, entitled to the effect of being conclusive evidence of the plaintiff's right to maintain this action against the defendant. The supreme court of the state of Iowa denied it that effect. The question whether that court thereby declined to give full faith and credit to a judicial proceeding of a court of another state, as required by the constitution and laws of the United States, was necessarily involved in the decision.

This court therefore has jurisdiction of the case, but must judge for itself of the true nature and effect of the order relied on. Armstrong v. Treasurer of Athens Co., 16 Pet. 281, 285; Texas & Pac. Ry. v. Southern Pac. Co., 137 U. S. 48, 11 Sup. Ct. 10; Machine Co. v. Radcliffe, 137 U. S. 287, 11 Sup. Ct. 92; Carpenter v. Strange, 141 U. S....