Pittsburg Steel Company v. Baltimore Equitable Society

• Decision Date: 06 January 1913
• Docket Number: No. 103,103
• Parties: PITTSBURG STEEL COMPANY, Plff. in Err., v. BALTIMORE EQUITABLE SOCIETY
• Court: U.S. Supreme Court

226 U.S. 455

33 S.Ct. 167

57 L.Ed. 297

PITTSBURG STEEL COMPANY, Plff. in Err.,

v BALTIMORE EQUITABLE SOCIETY.

No. 103.

Argued December 18 and 19, 1912.

Decided January 6, 1913.

Messrs. Edgar Allan Poe, J. Kemp Bartlett, L. B. Keene Claggett, and R. Howard Bland for plaintiff in error.

[Argument of Counsel from page 456 intentionally omitted] Messrs. Wilton Snowden, Jr., and Vernon Cook for defendant in error.

Mr. Justice Holmes delivered the opinion of the court:

This is an action brought by the plaintiff in error as a creditor of the South Baltimore Steel Car & Foundry Company to recover its claim from the defendant, a holder of stock in that company, the subscription for which had not been fully paid. The action was begun on February 26, 1908, and at that date it could be maintained. But in April a statute was enacted (act of 1908, chap. 305) making the stockholder's liability assets of the corporation, saving the rights of creditors at the date of the act, but providing that the exclusive remedy for such rights, as against Maryland stockholders, should be by bill in equity on behalf of such creditors as might come in. This provision was made operative as of July 1, 1907, and was to cause all actions at law of this kind brought since then to abate, saving the right to become party to a bill. On this statute the defendant moved to dismiss the suit. The motion was granted and the judgment was affirmed by the court of appeals, which sustained the constitutionality of the act as so applied. 113 Md. 77, 77 Atl. 255.

Of course the objection is that the law impairs the obligation of the plaintiff's contract. If the stockholder's liability were purely local, and no more than matter of remedy for the collection of the principal debt, still this objection would have to be considered. See Hawthorne v. Calef, 2 Wall. 10, 17 L. ed. 776; Brown v. Eastern Slate Co. 134 Mass. 590, 592. But the case was argued on the footing of a contract between the creditor and the stockholder; and as the statute seems to assume that the stockholder's liability may follow him into other jurisdictions, and the court of appeals affirmed that a contract between the parties is presumed, we in turn assume that view to be correct. Bernheimer v. Converse, 206 U. S. 516, 529, 51 L. ed. 1163, 1174, 27 Sup. Ct. Rep. 755. In either view the question put in the form most favorable for the plaintiff is the same; whether the remedy against the defendant is impaired so materially as to affect the plaintiff's rights. McGahey v. Virginia, 135 U. S. 662, 693, 34 L. ed. 304, 314, 10 Sup. Ct. Rep. 972.

The plaintiff's supposed contract was subject to peculiar infirmities. His right was shared equally by all other creditors of the corporation, and not only might some other creditor by diligence have got in ahead of the plaintiff and have exhausted the fund for which the defendant could be held, but the right depended on the stockholder's wi...