Hobbs v. National Bank of Commerce of Kansas City, Mo.

• Decision Date: 18 July 1899
• Docket Number: 157.
• Court: U.S. Court of Appeals — Second Circuit
• Parties: HOBBS v. NATIONAL BANK OF COMMERCE OF KANSAS CITY, MO.

96 F. 396

HOBBS v. NATIONAL BANK OF COMMERCE OF KANSAS CITY, MO.

No. 157.

United States Court of Appeals, Second Circuit.

July 18, 1899

Charles Van Kirk, for plaintiff in error.

Omar Powell, for defendant in error.

Before WALLACE, LACOMBE, and SHIPMAN, Circuit Judges.

SHIPMAN Circuit Judge.

The provisions of the constitution and statutes of Kansas which relate to the liability of the stockholders of a Kansas corporation to pay its debts were quoted in the opinion of this court in Whitman v. Bank, 28 C.C.A. 404, 83 F 288. In that case it was held that a suit to enforce the liability was transitory in its character, and could be brought by an action at law in a court of another state against a single stockholder who was a resident of such state. It was further said that the liability was statutory because it did not exist at common law, and was contractual because 'every one who becomes a member of the company by subscribing to its stock assumes this liability. ' Flash v. Conn, 109 U.S. 371, 3 Sup.Ct. 263. The Whitman Case is now under review by the supreme court, and has not been decided.

The other question in the case which is of general importance is in regard to the defense of the statute of limitations. The suit was brought under the provisions of section 32 to be found in Whitman v. Bank, supra, and the right of action against the defendant accrued on April 17, 1893, the date of the return of the unsatisfied execution, and more than three years before the commencement of this suit. In the Kansas statutes which created the liability of a stockholder, no time limit was established within which an action must be brought to enforce it. By the general statute of limitations of Kansas, an action upon a liability created by statute other than a forfeiture or penalty, must be brought within three years after the cause of action accrued. This is the Kansas limitation upon a stockholder's liability, under section 32. Cottrell v. Manlove (Kan. Sup.) 49 P 520. The general rule in regard to statutes of limitation which do not extinguish the claim, but merely prevent the remedy, is that the limitation of action is governed by the lex fori, and is controlled by the legislation of the state in which the claim is brought. Telegraph Co. v Purdy, 162 U.S. 329-339, 16 Sup.Ct. 810; Scudder v. Bank, 91 U.S. 406; Pritchard v. Norton, 106 U.S. 124, 1 Sup.Ct. 102; Insurance Bank v. Eldred, 130 U.S. 693, 9 Sup.Ct. 690; Railway Co. v. Johnston, 26 U.S.App. 85, 9 C.C.A. 587, 61 F. 738. There is, however, force in the idea that, when an action is brought in another state to enforce this statutory liability, it is enforced with all the incidents which belong to it in the state of its creation, unless they are against the public policy of the forum. The statutory form of remedy is exclusive, and a conformity to the statutory bar against a remedy carries into complete effect the principle that the 'individual liability of stockholders in a corporation for the payment of its debts is always a creature of statute' (Pollard v. Bailey, 20 Wall. 520), and adds to it only the declaration that the state which created the liability and the remedy will control the extent of the remedy. It is claimed that this was stated in the opinion in Bank v. Francklyn, 120 U.S. 747, 7 Sup.Ct. 757, in which it was said that 'suits either at law or in equity, in the circuit court, to enforce the liability of stockholders under a state statute, are governed by the statute of limitations of the state. ' The defense of the statute of limitations did not exist in that case, and it is not certain that the remark was not simply applicable to suits in the circuit court in the state which created the liability. The citations which were given were cases of that class.

If the general rule in regard to the lex fori is applicable, the defendant urges that by the statute of limitations of New York this suit was barred. The statutes applicable to this liability are contained in the chapter of the Code of Civil Procedure relating to limitations, and are as follows:

'Sec. 382. Actions barred in six years are an action upon a contract obligation or liability, express or implied, except a judgment or sealed instrument. An action to recover upon a liability created by statute, except a penalty or forfeiture.'

'Sec. 394. This chapter does not affect an action against a director or stockholder of a moneyed corporation or banking association 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 cause of action accrued.'

'Sec. 414. The provisions of this chapter apply and constitute the only rules of limitation applicable to a civil action or special proceeding, except in one of the following cases.'

This case is not within the excepted provisions. A 'moneyed corporation,' spoken of in section 394, is defined in the statutes of New York to be 'every corporation having banking powers, or having the power to make loan upon pledges...