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defendant to reimburse plaintiff for moneys | ion, among other authorities, referred to expended in performing the duty which the this case as decided below, saying: statute imposed on defendant. In Carrol v. “Such, in effect, was the decision in SarGreen it was said: “According to the stat- gent v. Tacoma, 10 Wash. 212, 215, 38 ute, the liability of each stockholder' arose Pac. 1048. The same statute was construed upon 'the failure of the bank.' The liability by the United States circuit court, district gave at once the right to sue; and, by of Washington, in Aldrich v. Skinner, 98 necessary consequence, the period of limita-Fed. 375, and also in Aldrich v. McClaine, tion began at the same time.”
98 Fed. 378. The last-named case was, on But here the right to sue did not obtain appeal to the United States circuit court of until the Comptroller of the Currency had appeals, reversed. Aldrich v. McClaine, 45 acted, and his order was the basis of the C. C. A. 631, 106 Fed. 791. The reversal suit. The statute of limitations did not was, however, upon the ground that the commence to run until assessment made, and liability involved was a contractual one, then it ran as against an action to enforce the lower court having held otherwise. The the statutory liability, and not an action appellate court construed the statute itself for breach of contract.
as did the lower court." We think that subd. 3 of $ 4800 did not It might well be considered that the suapply, and that § 4805 did.
preme court of Washington regarded the The judgment of the Circuit Court of Ap- interpretation of the court of appeals as peals is reversed; the judgment of the Cir- harmonizing with its own views of the cuit Court is also reversed, and the cause meaning of the provision in question. But remanded to that court with a direction to be this as it may, the prior decisions of sustain the demurrer and enter judgment this court to me seem conclusive, since, in for defendant.
deciding various questions concerning the Mr. Justice White, with whom concur liability of stockholders in national banks to Mr. Justice Brown and Mr. Justice Mc- pay the double liability, this court has exKenna, dissenting:
pressly held that such liability is contracThe statutes of the state of Washington 526. 44 L. ed. 571, 573, 574, 20 Sup. Ct. Rep.
tual. Jatteson v. Dent, 176 U. S. 521, 525, limit to three years the right to bring an 526, 44 L. ed. 571, 573, 574, 20 Sup. Ct. Rep. action upon a contract or liability, express
419; First Nat. Bank v. Hawkins, 174 U. or implied, which is not in writing, and S. 364, 372, 43 L. ed. 1007, 1011, 19 Sup. Ct. does not arise out of any written instru- Rep. 739 ; Richmond v. Irons, 121 U. S. ment.” The cause of action here involved 27, 55, 56, 30 L. ed. 864, 873, 7 Sup. Ct. is now held not to be embraced within this Rep. 788. In Richmond v. Irons the court statute, and therefore barred by the follow said (pp. 55, 56, L. ed. p. 873, Sup. Ct. ing provision: “An action for relief, not
Rep. p. 801): hereinbefore provided for, shall be com
“Under that [the national banking] act menced within two years after the cause of the individual liability of the stockholders
is an essential element in the contract by action shall have accrued.”
The liability sought to be enforced is the which the stockholders became members of obligation of a shareholder of a national the corporation. It is voluntarily entered
into by subscribing for and accepting shares bank to pay an amount equal to the par of his shares of stock. The circuit court of stock. Its obligation becomes a part of
a held the action not to be one upon contract, every contract, debt, and engagement of the but to enforce a conditional liability im- bank itself; as much so as if they were posed by the law as an incident to owner
made directly by the stockholder, instead of ship of bank stock, and therefore barred by by the corporation. There is nothing in the two years. 98 Fed. 378. The circuit court statute to indicate that the obligation arisof appeals reversed this judgment, and de- / ing upon these undertakings and promises cided that the period of limitation was three should not have the same force and effect, years, because the liability was contractual. and be as binding in all respects, as any
other contracts of the individual stockhold45 C. C. A. 631, 106 Fed. 791. In Suter y. IV'enatchee Water Power Com
We hold, therefore, that the obligation pany, decided April 18, 1904, 35 Wash. 1, of the stockholder survives as against his 76 Pac. 298, the supreme court of Wash- personal representatives. Flash v. Conn, ington construed the provision of the stat- 109 U. S. 371, 27 L. ed. 966, 3 Sup. Ct. Rep. utes of limitation here involved, providing 221; Hobart v. Johnson, 19 Blatchf. 359, that an action might be brought within 8 Fed. 493. In Massachusetts it was held, three years "upon a contract or liability, in Grew v. Breed, 10 Met. 569, that adminexpress or implied, which is not in writing," istrators of deceased stockholders were and held that it did not embrace torts, "but chargeable in equity, as for other debts of was evidently intended to refer to a con- their intestate, in their representative catractual liability.” The court, in its opin- pacity.”
In Matteson v. Dent the evidence showed | Bank, 176 U. S. 559, 44 L. ed. 587, 20 Sup. that at the time of the death of Matteson Ct. Rep. 477; Flash v. Conn, 109 U. S. 371, he was the owner of ten shares of stock in 27 L. ed. 966, 3 Sup. Ct. Rep. 263. a national bank,-a going concern. His In Whitman V. National Bank, discusswidow and heirs, by the decree of a pro- ing a statute of the state of Kansas, the bate court of Minnesota, became the joint court, through Mr. Justice Brewer, said and undivided owners of the stock, which (p. 563, L. ed. p. 590, Sup. Ct. Rep. p. continued, however, to stand in the name 478): of Matteson. Thereafter the bank failed, “The liability which, by the Constitution and, on the ground that they had received and statutes, is thus declared to rest upon assets of the estate, a suit was brought the stockholder, though statutory in its against the widow and heirs for the amount origin, is contractual in its nature. It of an assessment made by the Comptroller would not be doubted that, if the stockholdagainst the stock. The suit was defended ers in this corporation had formed a parton two grounds; first, that the assessment nership, the obligations of each partner to was not binding, because the bank had not the others and to creditors would be confailed at the time of Matteson's death, and tractual, and determined by the general comat the time when, by the decree of the pro- mon law in respect to partnerships. If bate court, the widow and heirs had be- Kansas had provided for partnerships with come the owners in indivision of the stock; limited liability, and these parties, complyand, second, that under the national banking with the provisions of the statute, had ing law they could only be made liable, in formed such a partnership, it would also any event, each in proportion to his or her be true that their obligations to one another interest in the stock. In considering the and to creditors would be contractual, alfirst ground the court, approvingly citing though only in the statute was to be found the passage from Richmond v. Irons above the authority for the creation of such obliquoted, said (p. 524, L. ed. p. 573, Sup. Ct. gations. And it is none the less so when Rep. p. 420):
these same stockholders organized a corpo"Because the insolvency of the bank took ration under a law of Kansas which preplace after the death of Matteson, did it scribed the nature of the obligations which result that the assessment, which was pre-each thereby assumed to the others and to dicated upon the insolvency, was not a debt the creditors. While the statute of Kanof his estate? To so decide the statute sas permitted the forming of the corporation must be construed as imposing the liability under certain conditions, the action of these on the shareholder for the amount of his parties was purely voluntary. In other subscription when necessary to pay debts words, they entered into a contract authoronly in case insolvency arises during the ized by statute." lifetime of the shareholder. In other words, And the principle sustained by the prethat all liability of shareholders to contrib- vious decisions of this court is also supute to pay debts ceases by death. This con- ported by the decisions of state courts of struction, however, would be manifestly un- last resort. Thus, the supreme judicial sound. The obligation of a subscriber to court of Maine in Pulsifer v. Greene, 96 Me. stock to contribute to the amount of his 438, 52 Atl. 921, held the doctrine to be subscription for the purpose of the pay- consonant with reason and natural justice ment of debts is contractual, and arises and sustained by the weight of authority, from the subscription to the stock. True, the court citing not only the decisions of
, whether there is to be a call for the per- this court previously referred to, but also formance of this obligation depends on
on decisions of the courts of California, Conwhether it becomes necessary to do so in necticut, Illinois, Kansas, Massachusetts, consequence of the happening of insolvency. and Michigan. And the decisions of the But the obligation to respond is engendered state courts of last resort thus referred to by, and relates to, the contract from which were, in many cases, in part rested upon the it arises. This contract obligation, exist- previous adjudications of this court to ing during life, is not extinguished by death, which I have referred, those decisions bebut, like other contract obligations, suring considered as conclusive on the subject vives, and is enforceable against the estate of the contract nature of the liability. My of the stockholder."
mind sees no reason for saying that the docAnd the same principle has been applied trine thus settled is not applicable to a to similar liabilities imposed upon stock statute of limitations, for if the liability holders in state corporations, the court uni- of the stockholder be contractual, for the formly holding that the liability, although purpose of enforcing the obligation, it is statutory in its origin, was contractual in not by me perceived upon what principle it its nature, and therefore the cause of action can be held that it is not contractual, but
transitory. Whitman National purely statutory, for the purpose of deter
mining whether an action to enforce the effect, in my opinion, to overrule the cases liability is barred by a statute of limita- | in this court determining that the liability tions. But the unsoundness of the distinc- of a stockholder in a national bank is contion as an original question in my opinion tractual. This becomes apparent when the does not require to be demonstrated, since ground of the alleged distinction is conit is absolutely foreclosed by previous de- sidered. That ground is this, that, as the cisions of this court. Thus, in Carrol v. national banking act empowers the Comp Green, 92 U. S. 509, 23 L. ed. 738,--an ac-troller to determine the necessity for an astion against stockholders of a South Caro- sessment on the stockholders of national lina bank to enforce a double liability pro- banks, and to make a call for such assessvided for in the act of incorporation,-it ment, thereby the obligation of the stockwas expressly held that, as the liability was holder becomes secondary and contingent, contractual, it was barred by a statute of and hence statutory, and not contractual. limitations applicable to simple contract To me it seems that this interpretation, indebtedness. Reference was made to de- whilst overruling the previous cases also cisions of the courts of New York and Mas-originally considered, gives to the national sachusetts, holding the same doctrine in an- banking act an erroneous construction. The alugous cases (pp. 514, 515, L. ed. p. 740), mere fact that the act gives to the Compand, in concluding the opinion, the court ex- troller the power of making a call on stockpressly noticed and overruled the conten- holders for the purpose of enforcing their tion “that the liability here in question, be-contract liability, in my judgment lends no ing created by a statute, is to be regarded support to the proposition that the minisas a debt by specialty.”
terial duty created to better enforce the Carrol v. Green was subsequently ap- contract must be considered as destroying proved and followed in Metropolitan R. Co. the contract itself. The consequences which v. District of Columbia, 132 U. S. 1, 23 L. must arise from the new construction now ed. 231, 10 Sup. Ct. Rep. 19. The action placed upon the national banking act, it was to recover the cost of certain street seems to me, will be of the most serious napaving the liability being recited in the ture; and being unable to agree with such act of incorporation. The trial court over-construction, I cannot concur in the opinion ruled demurrers to pleas of the statute of and judgment of the court. limitations, among other reasons, upon the I am authorized to say that Mr. Jusground that the action was founded on a tice Brown and Mr. Justice McKenna statute, and that the statute of limitations join this dissent. did no apply to actions founded on statutes or other records or specialties. This ruling was held to be erroneous, the court say.
(197 U. S. 183)
WINFIELD S. GREGG, Petitioner, ing (p. 12, L. ed. p. 235, Sup. Ct. Rep.
V. "It is an action on the case upon an im- METROPOLITAN TRUST COMPANY et al. plied assumpsit arising out of the defendant's breach of a duty imposed by statute, Railroad mortgages-preference for supand the required performance of that duty
plies over lien of mortgage. by the plaintiff in consequence. This raised an implied obligation on the part of the A claim for the ties necessary to the preserdefendant to reimburse and pay to the plain
vation of a railroad, furnished within six
months of the appointment of a receiver, is tiff the moneys expended in that behalf. not, in the absence of any special circumThe action is founded on this implied obli- stances other than the receiver's use of those gation, and not on the statute, and is really
ties on hand at the time of his appointment,
in the maintenance of the railroad as a going an action of assumpsit. The fact that the
concern, entitled to preference over a lien duty which the defendant failed to perform
expressly created by a mortgage of the rail. was a statutory one does not make the ac
road property, recorded before the contract tion one upon the statute. The action is under which the ties were furnished was clearly one of those described in the stat
made. ute of limitations."
[No. 141.] To avoid the controlling effect of these rulings upon this case, on the theory that, Argued January 20, 23, 1905. Decided March by virtue of the statutes which were con
6, 1905. sidered in Carrol v. Green, and the Metropolitan Railroad Case, the right to recover
States Circuit Court of Appeals for the case at bar, in consequence of provisions of Sixth Circuit to review a decree affirming a the national banking act, the right to re- decree of the Circuit Court for the Southern cover is secondary and contingent, is, in District of Ohio, denying preference of a
was direct and immediate, whilst in the OS WRIT of Certiorari to the United
claim for supplies over the lien of a rail. | cation of it in New England R. Co. v. Carroad mortgage. Affirmed.
negie Steel Co. 21 C. C. A. 219, 33 V. S. See same case below, 59 C. C. A. 637, App. 491, 75 Fed. 54, 58, and perhaps in 124 Fed. 721.
other cases. But we are of opinion, for The facts are stated in the opinion. reasons that need no further statement Ar. Harlan Cleveland for petitioner. (Kneeland v. American Loan & T. Co. 136
Messrs. Herbert Parsons and Law-U. S. 89, 97, 34 L. ed. 379, 383, 10 Sup. Ct. rence W. Maxwell, Jr., for respondents. Rep. 950) that the general rule is the other
way, and has been recognized as being the Mr. Justice Holmes delivered the opin other way by this court. ion of the court:
The case principally relied on for giving This is a petition against a receiver ap- priority to the claim for supplies is Milpointed in proceedings for the foreclosure tenberger v. Logansport, C. & S. W. R. Co. of two railroad mortgages. The petitioner, 106 U. S. 286, 27 L. ed. 117, 1 Sup. Ct. in pursuance of a contract made on Decem- Rep. 140. But, while the payment of some ber 1, 1896, with the Columbus, Sandusky, pre-existing claims was sanctioned in that & Hocking Railroad Company, the mort-case, it was expressly stated that “the paygagor, delivered railroad ties to the value ment of such debts stands, prima facie, on of $4,709.53 in May and on June 1, 2, and 3, a different basis from the payment of claims 1897. The receiver was appointed on June arising under the receivership." The 1, 1897. After his appointment there was ground of such allowance as was made was found on hand a part of the above ties, to not merely that the supplies were necesthe value of $3,200, and these ties were sary for the preservation of the road, but used in the maintenance of the railroad as that the payment was necessary to the a going concern. The petitioner makes a business of the road,-a very different claim on the body of the fund in the re- proposition. In the later cases the wholly ceiver's hands, for these and other necessary exceptional character of the allowance is supplies furnished within six months, observed and marked. Kneeland v. Ameriamounting in all to $6,804.49. The claim can Loan & T. Co. 136 U. S. 89, 97, 98, 34 for the ties, at least, is admitted to have L. ed. 379, 383, 10 Sup. Ct. Rep. 950; Thombeen "a necessary operating expense in keep-as v. Western Car Co. 149 U. S. 95, 110, ing and using said railroad, and preserving 111, 37 L. ed. 663, 668, 669, 13 Sup. Ct. said property in a fit and safe condition as Rep. 824; Virginia & A. Coal Co. v. Censuch." The petitioner waives a special claim tral R. Blg. Co. 170 U. S. 355, 370, 42 against the receiver for $863.39 for the ties L. ed. 1068, 1073, 18 Sup. Ct. Rep. 657. received June 2 and 3, but does claim a lien In Union Trust Co. v. Illinois Midland R. for $3,200 for ties on hand and not re- Co. 117 U. S. 434, 465, 29 L. ed. 963, 973, turned to him after the receiver's appoint- 16 Sup. Ct. Rep. 809, labor claims accrument, in case his whole claim is not allowed. ing within six months before the appointThe circuit court of appeals affirmed a de- ment of the receiver were allowed without cree of the circuit court establishing this special discussion, but the principles laid claim as a six months' claim, but denying down in the Miltenberger Case had been rethe right to go against the body of the fund, peated in the judgment of the court, and whereupon a certiorari was allowed by this the allowance was said to be in accordance court. 48 C. C. A. 318, 109 Fed. 220, 59 with them. It would seem from St. Louis, C. C. A. 637, 124 Fed. 721.
A. & T. 1. R. Co. v. Cleveland, O. C. & I. The case stands as one in which there R. Co. 125 U. S. 658, 673, 674, 31 L. ed. has been no diversion of income by which 832, 837, 8 Sup. Ct. Rep. 1011, that in both the mortgagees have profited, or otherwise, those cases there was a diversion of earnand the main question is the general one, ings. But the payment of the employees of whether, in such a case, a claim for neces- the road is more certain to be necessary in sary supplies furnished within six months order to keep it running than the payment before the receiver was appointed should be of any other class of previously incurred charged on the corpus of the fund. There debts. are no special circumstances affecting the Cases like Union Trust Co. v. Souther, claim as a whole, and if it is charged on 107 U. S. 591, 27 L. ed. 488, 2 Sup. Ct. Rep. the corpus it can be only by laying down 295, where the order appointing the receiva general rule that such claims for supplies er authorized him to pay debts for labor or are entitled to precedence over a lien ex- supplies furnished within six months out pressly created by a mortgage recorded be- of income, stand on the special theory which fore the contracts for supplies were made. has been developed with regard to income, An impression that such a general rule was and afford no authority for a charge on to be deduced from the decisions of this the body of the fund. Fosdick v. Schall,
the body of the fund. Fosdick v. Schall
, court led to an evidently unwilling appli-99 U. S. 235, 25 L. ed. 339; Burnham v. Bowen, 111 U. S. 776, 28 L. ed. 596, 4 Sup. dry other obligations created in and about Ct. Rep. 675; Morgan's Louisiana & T. R. the maintenance and operation of said rail& 8. 8. Co. v. Texas C. R. Co. 137 U. S. road within six months next preceding and 171, 34 L. ed. 625, 11 Sup. Ct. Rep. 61; following the appointment of a receiver Virginia & A. Coal Co. v. Central R. & Bkg. herein.” By a further decree on July 7, Co. 170 U. S. 355, 42 L. ed. 1068, 18 Sup. $30,000 of these certificates were applied to Ct. Rep. 857; Southern R. Co. v. Carnegie payment for land bought by the company, Steel Co. 176 U. S. 257, 44 L. ed. 458, 20 $135,000 to car trust obligations, current Sup. Ct. Rep. 347. It is agreed that the pay rolls, necessary repairs, and expenses of petitioner may have a claim against sur- operating the road, and $35,000 to the pay plus earnings, if any, in the hands of the rolls for the previous April and May. The receiver, but that question is not before us petitioner suggested that the latter decree here.
was a diversion of funds in which, by the The order appointing the receiver did not terms of the order authorizing the certifigo beyond the distinction which we have cates, he was entitled to share, and that mentioned, and gave the petitioner no new the payment of the $35,000 for the April or higher right than he had before. After and May labor entitles him to come in on directing him to do certain things, it gave principles of equality. It is not necessary him authority, but did not direct him, to to answer this contention at length. The make various payments. It gave him au- original order gave the petitioner no such thority, among other things, “to pay the rights as he asserts. It would have been a employees, officials, and other persons hav- stretch of authority for the receiver, in his ing claims for wages, services, materials, discretion, to apply the borrowed money to and supplies due and to become due, and this debt. At least, he was not bound to do unpaid, growing out of the operation of the so. The petition on which the original orrailroad of the defendant, including cur- der was made stated that the money was rent and unpaid vouchers; to settle ac- wanted to pay certain obligations, “or so counts incurred in the operation of the much thereof as may be necessary,” emrailroad of the defendant company; to pay bodying the distinction which we have drawn any and all obligations accrued or accru- from the cases. We already have intimated ing upon any equipment trust made by that the payment of railroad hands might the defendant railroad company; and for stand on stronger grounds than the payment such purpose, as well as for the purpose of for past supplies; and, if the payment was meeting the obligations of the pay rolls," wrong, it would not be righted by making he was authorized, "in his discretion, to another, less obviously within the scope of borrow such sums of money as may be nec- the decree. essary for such purpose, not exceeding $35,- We are of opinion, finally, that there is 000. But said receiver will pay no claims no special equity with regard to the $3,200 against the said railroad company which worth of ties on hand and used by the rehave accrued due more than six monthsceiver after his appointment. It is said prior to the date of this order.” It is that the purchase by the railroad company questionable whether the purposes for which after it had defaulted, as it. had, in the the $35,000 might be borrowed were other interest of its bonds, was fraudulent, and than paying equipment trust debts and pay that the petitioner would have been entirolls. But even if any words in the order tled to take back the ties but for the apauthorized a charge on the corpus in order pointment of the receiver. The answers to pay claims like that of the petitioner, to the contention again are numerous. It or a payment of them except from income, does not appear that the purchase of the certainly there are none requiring it, or go-ties was fraudulent. Donaldson V. Faring beyond giving authority to the receiver well, 93 U. S. 631, 23 L. ed. 993. It does if, for instance, he thought payments of pre- not appear, and is not likely, that the vious debts necessary to the continued oper. company bought with the intention not to ation of the road. A strict construction pay the price. It does not appear that it of the decree is warranted by the previous concealed its insolvency. The default in the decision of the same circuit court of appeals interest of the bonds was a public fact. in International Trust Co. v. T. B. Townsend Again, it is a mere speculation whether the Brick & Contracting Co. 37 C. C. A. 396, petitioner, if he had had the right, would 95 Fed. 850.
have demanded back the ties. He did not deA few days later, on June 7, 1897, the re- mand them of the receiver. It is quite as ceiver applied for and received leave to likely that, if he had known the whole truth, issue certificates up to $200,000, "for the he would have taken his chances. The thing purpose of paying car trusts, maturing and that he is least likely to have known is the matured, pay rolls, interest on terminal form of the appointment of the receiver, and, property, traffic balances, taxes, and sun-' therefore, it is probably a fiction that that
25 S. C.-27.