Hospelhorn v. Corbin

• Decision Date: 02 March 1942
• Docket Number: Record No. 2492.
• Citation: 179 Va. 348
• Parties: JOHN D. HOSPELHORN AND WILLIAM F. AYRES, ANCILLARY RECEIVERS, ETC. v. CHARLES S. CORBIN.
• Court: Virginia Supreme Court

Page 348

179 Va. 348

JOHN D. HOSPELHORN AND WILLIAM F. AYRES, ANCILLARY RECEIVERS, ETC. v. CHARLES S. CORBIN.

Record No. 2492.

Supreme Court of Virginia, Richmond.

March 2, 1942.

Present, All the Justices.

1. CONFLICT OF LAWS, DOMICILE AND RESIDENCE — Statute of Limitations — Law of Jurisdiction in which Action Brought Controls. — The general rule is that the statute of limitations of the jurisdiction in which the action is brought and the remedy is sought to be enforced controls, and not the statute of limitations in force in the jurisdiction in which the contract was made.

2. CONFLICT OF LAWS, DOMICILE AND RESIDENCE — Statute of Limitations — Law of State of Incorporation of Company Does Not Control — Case at Bar. — The instant case was a suit by ancillary receivers to enforce an assessment of $10 a share upon the stock of an insolvent foreign trust company under a statute of the foreign state. The receivers contended that a twelve-year statute of limitations of the state where the foreign trust company was incorporated applied.

Held: There was no merit in the contention of the receivers.

3. LIMITATION OF ACTIONS — Personal Actions — Code Section 5818 Applicable Only if Code Section 5810 Does Not Cover the Limitation. — The provisions of section 5818 of the Code of 1936 providing for the limitation of actions not otherwise specified are applicable to personal actions only in the event that such limitations are not covered by section 5810 of the Code of 1936, providing for the limitation of personal actions generally.

4. STOCK AND STOCKHOLDERS — Statutory Extraordinary Liability — Integral Part of Contract of Subscription and Is Co-Existent with Stock Ownership. — Superadded liability created by statute which makes stockholders of banks and trust companies individually responsible for contracts and debts to the extent of the amount of their stock at its par value becomes an integral part of every contract of subscription and adheres to the stock with every transfer of the ownership to third parties. So long as the statute remains in force, neither the liability created by it nor the ownership of the stock could exist without the other.

5. STOCK AND STOCKHOLDERS — Statutory Extraordinary Liability — Statute Creates Contractual Liability. — Superadded liability created by statute which makes stockholders of banks and trust companies individually responsible for contracts and debts to the extent of the amount of their stock at its par value creates a contractual liability.

6. STOCK AND STOCKHOLDERS — Statutory Extraordinary Liability — Action to Enforce Assessment upon Stock of Foreign Trust Company Barred by Three-Year Limitation — Case at Bar. — The instant case was an action by ancillary receivers to enforce an assessment of $10 a share upon the stock of an insolvent foreign trust company under a statute of the foreign state. Defendant contended that the action was barred under section 5810 of the Code of 1936 providing a three-year period for actions founded on contracts whether expressed or implied and also that the action was barred because it was not brought within five years under section 5818 of the Coe of 1936 providing for the limitation of actions not otherwise specified. The trial court sustained the plea of the three-year limitation and dismissed the action.

Held: No error.

Error to a judgment of the Circuit Court of Northampton county. Hon. John E. Nottingham, judge presiding.

The opinion states the case.

William F. Ayres and W. A. Dickinson, for the plaintiffs in error.

Benjamin W. Mears, L. H. Mears and Howard H. Adams, for the defendant in error.

HUDGINS, J., delivered the opinion of the court.

Charles S. Corbin, a resident of Baltimore in 1930, acquired 100 shares of stock in the Baltimore Trust Company. The statute law of Maryland rendered this stock liable to an assessment of $10 per share in the event the corporation became insolvent and its assets were insufficient to discharge its obligations to creditors. Later, Corbin became a citizen of Northampton county, Virginia.

On January 5, 1935, John D. Hospelhorn, a deputy bank commissioner, was duly appointed receiver to liquidate the assets of the then insolvent Baltimore Trust Company. On November 13, 1935, Circuit Court No. 2 of the city of Baltimore imposed an assessment of $10 per share on each share of stock in the company then outstanding. In the order making the assessment, the receiver was authorized "to take and institute such proceedings and suits against any and all parties liable as may be advisable and necessary."

The first notice of motion, instituted in the Circuit Court of Northampton county by the receiver against Charles S. Corbin to recover the amount of the stock assessment, was dismissed. This court declined to review the judgment of dismissal on the ground that a foreign receiver was not authorized to maintain an action in the courts of this State. Thereafter, the Circuit Court of Northampton county appointed ancillary receivers, who instituted this action.

The defendant filed two pleas. One alleged that the action was barred because it was not brought within three years, and the other alleged that the action was barred because it was not brought within five years. The trial court sustained the plea of the three-year limitation and dismissed the action. From that judgment this writ of error was awarded.

The question presented is — What period of limitation is applicable to actions brought to enforce stockholders' double liability created by the laws of the another State.

1, 2 The general rule is that the statute of limitations of the jurisdiction in which the action is brought and the remedy is sought to be enforced controls, and not the statute of limitations in force in the jurisdiction in which the contract was made. In other words, the lex fori determines the time in which a cause of action shall be enforced. See 34 Am.Jur. 51; Burks Pl. & Prac. (3 Ed.) 364. Hence, the twelve-year limitation, applied by the Maryland court to a similar action in Sterling Reecher, 176 Md. 567, 6 A.(2d) 237, cited and relied upon in plaintiffs' brief, is not applicable.

Code, sec. 5810, prescribes the periods of limitation for personal actions generally. It fixes the period of limitation for contracts under seal at 10 years, and for written awards and contracts not under seal at 5 years. The pertinent provision is: "Every action to recover money * * * shall be brought * * *; and if it be upon any other contract express or implied within three years," with certain exceptions not material to this case.

Section 5818 provides: "Every personal action, for which no limitation is otherwise prescribed, shall be brought within five years next after the right to bring the same shall have accrued, if it be for a matter of such nature that in case a party die it can be brought by or against his representative; and, if it be for a matter not of such nature, shall be brought within one year next after the right to bring the same shall have accrued."

Which of the two statutes controls this class of cases is an open question in Virginia. Two of the strongest reasons urged by plaintiffs for this court to apply the five-year period of limitation are: (1) That the statutes of West Virginia are very similar to the statutes of Virginia, and West Virginia applies statutes containing similar provisions to those found in section 5818; and (2) that Judge Paul, in the District Court for the Western District of Virginia, has so construed the Virginia statute.

An examination of the West Virginia statutes reveals that the periods of limitations, in its two statutes similar to Virginia Code, sections 5810 and 5818, are the same — that is, the period of limitation stated in each statute in West Virginia is five years.

In Pyles Carney, 85 W.Va. 159, 101 S.E. 174, the court applied the five-year period of limitation and, in support of that conclusion, cited sec. 12, ch. 104, of West Virginia Code, sec. 4425. It appears that the point now under consideration was not argued, because it was immaterial which statute the court applied. In either event the period of limitation was the same.

In Rinehart Wilfong, 121 W.Va. 24, 1 S.E.(2d) 174, it is said: "The one essential point decided in the Pyles case, therefore, was the nature of the liability, which, in turn, would determine the applicable statute of limitations. This court held that the obligation was contractual and consequently the five year statute of limitations applied." From this language it appears that the West Virginia court applied the West Virginia statute corresponding to section 5810 of the Virginia Code.

In Hall Ballard, 90 F.(2d) 939, District Judge Wyche, speaking for the Circuit Court of Appeals for the Fourth Circuit, in an action brought to enforce the stockholders' liability on stock in the Peoples National Bank of Abingdon, Virginia, stated that the Virginia and West Virginia statutes of limitation were identical and that the period of limitation was five years in each State. However, if a distinction had been necessary and had been pointed out to the court in that case, the period of limitation fixed by the West Virginia statute, and not the Virginia statute, would have been controlling. It was unnecessary to determine which statute of limitation applied, as it appeared that the action was instituted within less than three years from the date the cause of action arose.

It is true that Judge Paul, in Cable Commercial, etc., Bank, 31 F.Supp. 628, 629, said: "In the case of Bond, Receiver Williamson (September, 1937), this court held that the liability of a stockholder in a national bank was a statutory one and not contractual. McClaine Rankin, 197 U.S. 154, 25 S.Ct. 410, 49 L.Ed. 702, 3 Ann.Cas. 500. That the right of action on an assessment on such stock was not one as to which the Virginia law had fixed a specific period of limitation and that, therefore, it was...