William Platt v. Osee Wilmot

• Citation: 193 U.S. 602,48 L.Ed. 809,24 S.Ct. 542
• Decision Date: 04 April 1904
• Docket Number: No. 167,167
• Parties: WILLIAM A. PLATT, as Receiver of the Commercial National Bank of Denver, Colorado, Plff. in Err. , v. OSEE W. WILMOT
• Court: United States Supreme Court

193 U.S. 602

24 S.Ct. 542

48 L.Ed. 809

WILLIAM A. PLATT, as Receiver of the Commercial National Bank of Denver, Colorado, Plff. in Err.,

v OSEE W. WILMOT.

No. 167.

Argued March 2, 1904.

Decided April 4, 1904.

Plaintiff in error brings the case here to review the judgment of the United States circuit court of appeals for the second circuit, which affirmed the judgment of the circuit court for the northern district of New York, dismissing the plaintiff's complaint upon the merits. The action was commenced in the last-named court by the service of a summons on the defendant on October 1, 1898, and was brought by the plaintiff as receiver of the Commercial National Bank of Denver, Colorado, to recover from the defendant the double liability imposed upon him as stockholder in the Western Farm Mortgage Trust Company of Lawrence, Kansas, herinafter called the trust company.

The defendant answered the complaint, and, among other things, set up the defense of the three years' statute of limitations of the state of New York.

The action was tried in the circuit court for the northern district of New York without a jury, and findings of fact were made by the court upon which the conclusion of law was based that the plaintiff's cause of action was barred by § 394 of the Code of Civil Procedure of the state of New York, being the three years' statute of limitations, and that his complaint should therefore be dismissed with costs.

The court found that the bank of which plaintiff was subsequently appointed receiver had commenced an action against the trust company, and on June 3, 1893, had recovered a personal judgment against it for the sum of $4,930.72, with interest thereon from the date of the recovery of the judgment. Execution had been issued upon said judgment on August 29, 1894, and returned unsatisfied on September 7, 1894.

At the time of the rendition of the judgment and the return of the execution unsatisfied, the defendant was the holder of, and has continued since that time to hold, twenty shares of the capital stock of the trust company.

By the terms of its articles of association the corporate powers of the trust company were, among others, as follows:

'Article II. The purposes for which it is formed are to receive deposits of money, bonds, and securities; to loan money on real estate and personal security; to negotiate loans on real estate and other securities; to purchase and sell bonds and notes secured by mortgages and deeds of trusts on real estate; to purchase and sell municipal bonds and the bonds, assets, and franchises and securities of other corporations; to issue and sell its debentures and secure the same by pledge of notes, bonds, and other securities, real or personal; to guarantee the payment of principal and interest of loans by it negotiated or made and sold; to act as financial agent of any state, municipality, corporation, association, company, or person; to purchase, hold, sell, and convey such real estate and personal property as it may require for its use; to purchase, hold, sell, and convey such real estate and personal property as may be necessary for the security or collection of claims due or owing it; to accept and execute any trust committed to it by any municipality, corporation, association, company, person, or other authority.'

Judgment dismissing the complaint having been entered, the plaintiff, by virtue of a writ of error, obtained a review of the judgment by the circuit court of appeals of the second circuit, where it was affirmed, without any opinion, upon the authority, as stated in a memorandum by the court, of the case of Hobbs v. National Bank of Commerce, 37 C. C. A. 513, 30 N. Y. Civ. Proc. Rep. 24, 96 Fed. 396.

The Constitution and statutes of Kansas provide for the individual liability of the stockholders in a corporation to an additional amount equal to the stock owned by each stockholder, but the provision does not apply to a railroad corporation, nor to corporations for religious or charitable purposes.

Messrs. Omar Powell and Elijah Robinson for plaintiff in error.

No counsel for defendant in error.

[Argument of Counsel from pages 604-606 intentionally omitted] Statement by Mr. Justice Peckham:

The only question which the plaintiff in error presents is whether or not this action was barred by the New York three years' statute of limitations, and that depends upon whether § 382 or § 394 of the Code of Civil Procedure of that state is applicable.

Section 382 provides that actions of the following nature shall be barred within six years.

'1. An action upon a contract, obligation, or liability, express or implied, except a judgment or sealed instrument.

'2. An action to recover upon a liability created by statute, except a penalty or forfeiture.'

Section 394, which the courts below have made applicable to plaintiff's cause of action, reads as follows:

'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 the common law or by statute; but such an action must be brought within three years after the cause of action has accrued.'

Several objections are made by the plaintiff in error to the application of § 394 to this case. They are (1) that the section does not apply to a director or stockholder of a foreign corporation; (2) that if it be held that it does extend to actions against directors and stockholders of foreign corporations of the class designated in the section, yet it does not apply to this case, because the trust company is neither a moneyed corporation nor a banking association; (3) that the stockholders' liability in this case is one based upon contract, and is not created either by the common law or by statute.

Taking up these objections in their order, we are brought to a consideration of the one which asserts that § 394 does not apply to directors or stockholders of foreign corporations. We think it does.

A history of the legislation upon this subject in the state of New York, which finally resulted in § 394 of the Civil Code, is given in the opinion in Hobbs v. National Bank of Commerce, 37 C. C. A. 513, 30 N. Y. Civ. Proc. Rep. 24, 96 Fed. 396, by Judge Shipman, and it is also referred to by Judge Earl, in Brinckerhoff v. Bostuick, 99 N. Y. 185, 1 N. E. 663.

The section as originally enacted was § 44, part 3, chap. 4, title 2, of the Revised Statutes, which chapter related to 'Actions, and the Times of Commencing Them.' These statutes took effect (as to the greater part) in 1830. The section in question then read as follows:

'None of the provisions of this chapter shall apply to suits against directors or stockholders of any moneyed corporations to recover any penalty or forfeiture imposed or to enforce any liability created by the second title of the eighteenth chapter of the first part of the Revised Statutes; but all such suits shall be brought within six years after the discovery, by the aggrieved party, of the facts upon which such penalty or forfeiture attached or by which such liability was created.'

Upon the adoption of the Code of Procedure of 1848 the section became § 89 of that Code. The second title of the first part of the Revised Statutes, referred to in the section, among other things, imposed liabilities upon the directors and stockholders of the moneyed corporations authorized by that title. If the statute of limitations above quoted had not been amended, it would have been limited to the liabilities mentioned in such title, and would not have included a case like this.

In 1849 § 89 of the Code of Procedure of 1848 became § 109, and read as follows:

'This title shall not affect actions against directors or stockholders of a moneyed corporation or banking associations to recover a penalty or forfeiture imposed, or to enforce a liability created by law; but such included a case like this. after the discovery, by the aggrieved party, of the facts upon which the penalty or forfeiture attached or the liability was created.'

The difference in the two sections is plainly seen, and consists in striking out the words as to a liability created by the Revised Statutes, and enlarging the operation of the section to a 'liability created by law.' The words 'liability created by law,' were held in Brinckerhoff v. Bostwick, 99 N. Y. 185, 1 N. E. 663, to mean statutory liabilities which, as stated by Judge Earl (page 192, N. E. p. 666), 'comprehend not only liabilities created by the title and chapter of the Revised Statutes referred to, but also those created by other statutes and the Constitution of 1846 (art. 8, § 7).'

In 1877 another amendment was made to the section by leaving out the words 'six years after the discovery, by the...