Norman v. Baldwin

• Decision Date: 13 June 1929
• Citation: 152 Va. 800
• Parties: ZEBULON VANCE NORMAN, RECEIVER OF THE BANK OF ROPER v. ROBERT F. BALDWIN.
• Court: Virginia Supreme Court

Page 800

152 Va. 800

ZEBULON VANCE NORMAN, RECEIVER OF THE BANK OF ROPER v. ROBERT F. BALDWIN.

Supreme Court of Virginia, Wytheville.

June 13, 1929.

1. CONFLICT OF LAWS — Construction of Contract — Enforcement by Contract — General Rule. — The general rule is that while contracts are to be construed according to the lex loci contracties, they are to be enforced according to the lex fori.

2. CONFLICT OF LAWS — Limitation of Actions — Stockholders Individual Liability — When Law of the Forum Prevails. — Where a statute imposing the individual liability of a stockholder and creating the remedy does not itself limit the time within which an action to enforce it must be brought, but leaves the matter to be governed by the general statute of limitations, the laws of the forum will govern in determining whether an action brought in a State other than that by which the corporation was created is barred, since general statutes of limitations relate to the remedy and have no extraterritorial force.

3. CONFLICT OF LAWS — Limitation of Actions — Individual Liability of Stockholder — When Law of Forum does not Govern. — The rule that the statute of limitations of the State where a contract is sought to be enforced governs, does not apply, however, when the statutes of the State by which a corporation was created and the liability imposed prescribe a special limitation for actions to enforce the liability. In such a case the statutes of that State govern, and they will be given the construction which they have received by the highest court of that State.

4. LIMITATION OF ACTIONS — When Statute Creating the Liability Fixes Time in which it May be Enforced. — Where by statute a right of action is given which did not exist by the common law, and the statute giving the right fixes the time within which the right may be enforced, the time so fixed becomes a limitation or condition on such right, and will control, no matter in what forum the action is brought.

5. LIMITATION OF ACTIONS — Conflict of Laws — Individual Liability of Stockholder — Statute Creating Liability Fixing the Limitation — Section 5825, Code of 1919 — Case at Bar. — The instant case was an action to enforce the statutory liability of a resident of Virginia who was a stockholder in an insolvent North Carolina corporation. The statute creating the liability contained a limitation of ten years but it was claimed that this limitation could not be applied in this Virginia action because of section 5825 of the Code of 1919. This section applies only to contracts made or to be performed in another State "by a person who then resided there." As defendant was a resident of Virginia when the subscription contract was made, section 5825 has no application to the instant case, notwithstanding that a North Carolina subscriber, who afterwards moved to Virginia, would be better circumstanced than a Virginia subscriber who had always lived here.

6. LIMITATION OF ACTIONS — Conflict of Laws — Extra-territorial Effect of Statute. — No statute of limitations acts extra-territorially. It must inhere in and attach to the right sought to be asserted.

7. STATUTES — Foreign Laws — Following Construction of Courts of Another State. — In the construction of the statute of another State the court will follow the courts of that State, though their enforcement under the guarantees of the Federal Constitution may continue to present open questions.

8. LIMITATION OF ACTIONS — Individual Liability of Stockholder — Whether Limitation a Condition Attached to Subscription — Case at Bar. — In the instant case, an action to enforce the individual liability of plaintiff, a resident of Virginia, as a stockholder in a North Carolina corporation, it was claimed that the North Carolina statute, authorizing the receiver of an insolvent corporation to sue the stockholders within ten years after an assessment on the stock, had been twice construed in North Carolina to be simply one of limitation and not a condition attached to the contract of subscription, and that therefore the Virginia statute of limitation applied. An examination of these North Carolina cases shows that the court had no such distinction in mind as was called for in the instant case. Of course, broadly speaking, it is a statute of limitations; it is that and something more — not a general statute governing all implied contracts, but a special one intended to apply only to stockholders of insolvent banks into whose contract of subscription it is incorporated.

9. OPINIONS OF COURTS — Construction — Construed with Reference to the Particular Facts. — To apply any statement of the law intelligently, the facts to which it is addressed are to be always remembered.

10. LIMITATION OF ACTIONS — Individual Liability of Stockholders — Extension of Limitation — Case at Bar. — The instant case was an action to enforce the individual liability of a Virginia stockholder in an insolvent North Carolina corporation. The corporation was chartered in 1906, and the limitation at that time was three years. This continued to be the law until 1911, when the statute was changed and the time extended to ten years. There is no constitutional bar to the extension of statutes of limitation. These special statutes may be likewise extended, subject to this qualification only; they cannot be extended beyond the limitation fixed when the debts to be paid were incurred.

11. LIMITATION OF ACTIONS — Conflict of Laws — Individual Liability of Stockholder — Case at Bar. — The instant case was an action to enforce the individual liability of a Virginia stockholder in an insolvent North Carolina corporation. Defendant contended that the Virginia statute of limitations applied and not the North Carolina statute under which the corporation was created, which provided that suit might be brought within ten years.

Held: That neither the three year nor the five year Virginia statute applies, but the ten year period fixed by the North Carolina act.

12. STOCK AND STOCKHOLDERS — Individual Liability of Stockholders — Prerequisites to Suit for Enforcement — Case at Bar. — The instant case was an action to enforce the individual liability of a Virginia stockholder in an insolvent North Carolina corporation. Defendant claimed that certain conditions declared by the North Carolina statute to be prerequisite to the right to sue had not been met, and that he had never been made a party to the North Carolina proceedings under which the assessment was ordered. The Supreme Court of North Carolina had decided that the statute of limitations began to run in 1923. As a prerequisite to the running of the statute a valid assessment was necessary. The Superior Court in which the proceedings were instituted adjudged that the notice issued from that court in 1926, served by the process officer of the city of Norfolk, was in all respects sufficient to bring the defendant into court and make him properly a party to this motion.

Held: That if the preliminary proceedings necessary to the maintenance of this action were not taken in 1923, they were taken in 1927.

13. FOREIGN LAWS — Construction by Highest Court. — The construction of a State statute, given by the highest appellate court, is binding on all courts.

14. SUMMONS AND PROCESS — Conflict of Laws — Service out of the State — Publication. — Process from the tribunals of one State cannot run into another State and summon parties there domiciled to leave its territory and respond to proceedings against them. Publications of process or notice within the State where the tribunal sits cannot create any greater obligation upon the nonresident to appear. Process sent to him out of the State, and process published within it, are equally unavailing in proceedings to establish his personal liability.

15. STOCK AND STOCKHOLDERS — Individual Liability of Stockholders — Prerequisites to Suit for Enforcement — Case at Bar. — In the instant case, an action to enforce the individual liability of a Virginia stockholder in a North Carolina corporation, defendant contended that certain designated conditions declared by the North Carolina statute to be prerequisite to the right to sue had not been met, and that he had never been made a party to the North Carolina proceedings under which the assessment was ordered. The purpose of the proceeding was merely to assemble the stockholders that they might have an opportunity to protest against being sued at all if the facts warranted such a protest. While process from North Carolina does not run in Virginia, it was sufficient to give notice of what was proposed to be done, just as service by publication would be sufficient. This was the construction placed on the statute by the North Carolina courts and their construction of the North Carolina act must be followed in this case.

16. STOCK AND STOCKHOLDERS — Individual Liability of Stockholders — Receiver Failing to Sue Directors — Case at Bar. — The instant case was an action to enforce the individual liability of a Virginia stockholder in a North Carolina corporation. The court struck out a plea of defendant, that the first receiver failed to sue the directors of the corporation for negligence, etc., although ordered to do so by the court. Suit was promptly brought by the second receiver, but it was held that such rights as might have existed were barred by the statute of limitations. That is to say, this liability has been determined by final judgment of a competent court, and that is all that is necessary.

Held: That the plea was properly rejected.

Error to a judgment of the Circuit Court of the city of Norfolk, in a proceeding by motion for a judgment for money. Judgment for defendant. Plaintiff assigns error.

The opinion states the case.

Mann & Tyler and H. S. Ward, for the plaintiff in error.

Williams, Loyall & Taylor and W. L. Whitley, for the defendant in error.

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

This is a motion brought to...