legislature to enforce that obligation . bility. It is obviously an act intended to exists in the nature of things. Without im- make effectual the liability which is inpairing the obligation of the contract, the curred by stockholders under the Constituremedy may certainly be modified as the tion of the state, and it ought not to be wisdom of the nation shall direct.”

rendered nugatory unless substantial obThe same rule is recognized in Hill v. jection exists against its enforcement. It Merchants' Mut. Ins. Co. 134 U. S. 515, 33 operates equally upon all stockholders, at L. ed. 994, 10 Sup. Ct. Rep. 589, wherein home and abroad, and assesses all by a a statute was sustained changing the char- uniform rule. acter of the remedy against stockholders in We shall proceed to notice some of the common to one giving a direct remedy specific objections which are urged against against an individual stockholder. The the validity of this legislation by stockprinciple was clearly enunciated in Waggon-holders who acquired stock before the act of er v. Flack, 188 U. S. 595–603, 47 L. ed. 1899 went into effect. 609-613, 23 Sup. Ct. Rep. 345-348, in which It is said that the stockholder is held Mr. Justice Peckham, speaking for the liable in a proceeding to which he is not a court, said:

party. Under the prior act he could only “To enact laws providing remedies for a be held where service could be had upon him violation of contracts, to alter or enlarge personally, but, if we are right in the propthose remedies from time to time as to the osition just announced, that additional remlegislature may seem appropriate, is an edies may be provided by legislation, then exercise of sovereignty, and it cannot be the validity of such additional enactments supposed that the state, in a case like this, depends not necessarily upon the personal contracts in a public act of its legislature service upon the stockholders, but upon the to limit its power in the future, even if it fact whether the remedy provided is a wellcould do so, with or without consideration, recognized means of enforcing such obligaunless the language of the act is so abso- tions, and not in violation of constitutional lutely plain and unambiguous as to leave rights. It is true that the stockholder is no room for doubt that its true meaning not necessarily served with process in the amounts to a contract by it to part with action wherein the assessment is made units power to increase the effectiveness of der the act of 1899, but no personal judgexisting remedies.”

ment is rendered against him in that proSee, also, Wilson v. Standefer, 184 U. S. ceeding, and it has reference to a corpora399, 46 L. ed. 612, 22 Sup. Ct. Rep. 384; tion of which he is a member by virtue of New Orleans City & Lake R. Co. v. Louis- his holding stock therein, and the proceediana, 157 U. S. 219, 39 L. ed. 679, 15 Sup. ing has for its purpose the liquidation of Ct. Rep. 581.

the affairs of the corporation, the collection The liability arising under the Constitu- and application of its assets and other liation of Minnesota was such that legislation bilities which may be administered for the was appropriate to make it effectual. We benefit of creditors. In such case it has can find nothing in the fact that one leg- been frequently held that the representation islature has passed an act which would con- which a stockholder has by virtue of his clude a subsequent law-making body of membership in the corporation is all that he equal power from passing new and addi- is entitled to. It was so held in a well-contional measures to make the remedy more sidered case in Massachusetts (Howarth v. effectual. That the first act did not accom- Lombard, 175 Mass. 570, 49 L.R.A. 301, 56 plish its purpose is evident. Under it stock- N. E. 888). And it has been held in cases holders in another state, who could not be in this court that when an assessment is reached by personal service, were immune necessary to be made upon unpaid stock from liability, and the entire burden was subscriptions for the benefit of creditors, the cast upon local stockholders. There was no court may make the assessment without the provision for a receiver or assignee begin- presence or personal service of stockholders. ning action outside the state, and it was Hawkins v. Glenn, 131 U. S. 319, 33 L. ed. held by this court in Hale v. Allinson, su- 184, 9 Sup. Ct. Rep. 739; Great Western pra, that a chancery receiver was powerless Teleg. Co. v. Purdy, 162 U. S. 329, 336, 40 to enforce the rights of creditors beyond L. ed. 986, 990, 16 Sup. Ct. Rep. 810. the borders of the state. In this condition Nor can we see any substantial differof affairs the state of Minnesota has un- ence in this respect between a liability to dertaken to provide a proceeding for the be ascertained for the benefit of creditors settlement of insolvent corporations which upon a stock subscription and the liability shall ascertain the assets of the corporation, for the same purpose which is entailed by the extent of the indebtedness of the corpo. becoming a member of a corporation ration, the amount to which it is necessary, through the purchase of stock, whereby a if at all, to call upon the stockholders' lia-contract is implied in favor of creditors.

The object of the enforcement of both lia- | of the original liability no legal right is bilities is for the benefit of creditors, and violated. League v. Texas, 184 U. S. 156, while it is true that one promise is directly 46 L. ed. 478, 22 Sup. Ct. Rep. 4755 Richto the corporation and the other does not mond v. Irons, 121 U. S. 27, 30 L. ed. 864, belong to the corporation, but is for the 7 Sup. Ct. Rep. 788; King v. Pomeroy, 58 benefit of its creditors, either liability may C. C. A. 209, 121 Fed. 287. be enforced through a receiver acting for It is objected that the receiver cannot the benefit of creditors, under the orders of bring this action, and Booth v. Clark, 17 e court in winding up the corporation in How. 322, 15 L. ed. 164; Hale v. Allinson, case of its insolvency.

188 U. S. 56, 47 L. ed. 380, 23 Sup. Ct. Rep. It is sought to distinguish between the 244; and Great Western Min. & Mfg. Co. Massachusetts case of Howarth v. Lombard, v. Harris, 198 U. S. 561, 49 L. ed. 1163, 25 supra, and kindred cases, and the one at Sup. Ct. Rep. 770, are cited and relied upon. bar, in the fact that when the stock was But in each and all of these cases it was acquired in that case a statutory provision held that a chancery receiver, having no was already in existence which made the other authority than that which would arise stockholder liable to an assessment in a from his appointment as such, could not proceeding in which the stockholder was maintain an action in another jurisdiction. represented by the corporation. But, as we | In this case the statute confers the right have said, keeping within the constitutional upon the receiver, as a quasi assignee, and measure of liability, it was within the pow. representative of the creditors, and, as such, er of the legislature of Minnesota to make vested with the authority to maintain an provisions, within the limits of due process action. In such case we think the receiver of law, for the liquidation of the affairs of may sue in a foreign jurisdiction. Relfe v. the corporation in a proceeding in the state Rundle (Life Asso. of America v. Rundle) of its origin, wherein members of the corpo- | 103 U. S. 222, 226, 26 L. ed. 337, 339; Howration should be sufficiently represented by arth v. Lombard, supra; Howarth v. Angle, the presence of the corporation itself. This 162 N. Y. 179, 182, 47 L.R.A. 725, 56 N. E. practice has the sanction of the courts, as 489. we have already shown. It is substantially It is also contended that the action is the procedure authorized by the national barred by the statute of the state of New banking act, except that the Comptroller York, limiting to two years the right to of the Currency takes the place of the bring an action for a debt of a corporation court, and, without the presence of the after the defendant ceased to be a stockstockholders, makes a conclusive assess- holder. We do not think the provision of the ment. We cannot find any constitutional statute (N. Y. Laws, 1892, chap. 688, $ 53) right belonging to the stockholder which relied upon covers these cases. It evidently is violated by this change in the character refers to domestic corporations provided and nature of the remedy against him. for in reference to the stockholder's liability

By becoming a member of a Minnesota created by the preceding section of the same corporation, and assuming the liability at- chapter. The cause of action did not accrue taching to such membership, he became sub- until the receiver could sue upon the assessject to such regulations as the state might ment after the stockholder had failed to lawfully make to render the liability ef- pay, as required by the order of the Minnefectual.

sota court of December 22, 1902. King v. It is further urged that in imposing upon Pomeroy, supra. Under the New York statthe stockholder the additional expense in a ute of limitations there was six years in proceeding where the expenses incident to which to bring the action after it accrued, the enforcement of the liability in other | under $ 382 of the Code, the Minnesota states, and against other parties, are taken Thresher Manufacturing Company not beinto consideration and included in the es-ing a “moneyed corporation or banking timate, there is an unwarranted increase in association” within § 394. Platt v. Wilmot, the amount which could be recovered | 193 U. S. 603, 48 L. ed. 809, 24 Sup. Ct. Rep. against the stockholder under the former 542. statute. But remembering at all times that The present suits were brought a little the obligation of the shareholder was the more than one year after the causes of accreature of the Constitution of Minnesota, tion accrued. we think the fact that the additional ex- Other objections are urged as to the napenses were included in the assessment can- ture of the proceedings in the court of not operate to defeat it. Such expenses are Washington county, Minnesota, in which incident to the ascertainment of the trust the original order was made. We have exfund, which it is necessary to realize from amined them and think none of them go to the liability of stockholders, and as long as the jurisdiction and authority of the court, these expenses are kept within the amount or are such as would invalidate the order of assessment made therein when sued upon tract obligations by interfering with the in another jurisdiction.

water rates charged to private consumers. In what we have said we have noticed Modified so as to enjoin the city from inthe principal objections made to the enterfering with the right to charge the rates forcement of the order of the Minnesota fixed by the contract, and, as so modified, court in another jurisdiction, and, finding no affirmed. error in the judgment of the court below, it is affirmed.

Statement by Mr. Justice Day:

Cases involving the rights of the VicksMr. Justice Holmes:

burg Waterworks Company, under the conI regret that the court has thought ittract made between the city of Vicksburg unnecessary to state specifically what con- and the company, for furnishing the water tract the stockholder is supposed to have supply of the city, have been before this made, as different difficulties beset the dif-court in two preceding actions, viz.: Vicksferent views that might be taken. It seems burg Waterworks Co. v. Vicksburg, 185 U. to me hard to reconcile the construction s. 65, 46 L. ed. 808, 22 Sup. Ct. Rep. 585, adopted with that given to the stronger and 202 U. S. 453, 50 L. ed. 1102, 26 Sup. words of $ 5151 of the national bank act ct. Rep. 660. (U. S. Rev. Stat. § 5151, U. S. Comp. Stat. 1901, p. 3465) in McClaine v. Rankin, 197 U. case, it is only necessary to set out enough

Owing to the previous statements of the S. 154, 161, 49 L. ed. 702, 705, 25 Sup. Ct. of the facts involved in the controversy now Rep. 410. But, under the circumstances, I before us to make plain the conclusions at shall say no more than that I doubt the

which we arrive. result.

*The city of Vicksburg, by act of the legis.

lature of Mississippi (Laws of 1886, chap. MAYOR AND ALDERMEN OF THE CITY 358, § 5, p. 695), was authorized “to proOF VICKSBURG, Appt.,

vide for the erection and maintenance of a V.

system of waterworks to supply said city VICKSBURG WATERWORKS COMPANY. with water, and to that end to contract

with a party or parties, who shall build and Judgment-res judicata.

operate waterworks.” 1. A decree enjoining a municipality, at

Acting under this authority conferred by the suit of a waterworks company, from building its own waterworks, or denying lia- the legislature, the city of Vicksburg made bility, or refusing to pay the water rentals a contract with Samuel R. Bullock & Comcontracted for, is not conclusive as to the pany, their associates and assigns, for the right of the municipality to regulate water supply of water to the city and its inhabitrates charged to private consumers under a ants, which was contained in the ordinance law passed long after the bill was filed, even of November 18, 1886, § 13 thereof providing if it could be said that the pleadings put in thatissue the reasonableness of the rates then

“The said Samuel R. Bullock & Company, charged. Constitutional law-contract exemptions- have the right to make all needful rules and

their associates, successors, or assigns, shall regulation of water rates.

2. A contract with a waterworks com regulations governing the consumption of pany, fixing maximum water rates to pri- water, the tapping of pipes, and general vate consumers for thirty years, which, un-operation of the works, and to make such less so grossly unreasonable as to suggest rates and charges for the use of said water fraud or corruption, is binding, and, as such, as they may determine, provided that such is protected against impairment by the con- rates and charges shall not exceed 50 cents tract clause of the Federal Constitution, for each thousand gallons of water.” could be made by the city of Vicksburg un

for der the authority of Miss. Laws 1886, chap.

The ordinance, by its terms, ran 358, § 5, empowering it to provide for the thirty years, and Bullock & Company, as erection and maintenance of a system of provided in § 5 of the ordinance, assigned waterworks to supply that city with water, the contract to the Vicksburg Water Supand, to that end, to contract with a party ply Company, and it was duly accepted by or parties who shall build and operate wa

that company. The supply company put terworks. [No. 275.]

in the works and operated until August,

1900, when the mortgage upon the property, Argued April 24, 1907. Decided May 27,

Decided May 27, including all the franchises and contract 1907.

rights, was foreclosed and purchased by a PPEAL from the Circuit Court of the A A

Court of the Mr. Crumpler, who assigned all his rights United States for the Southern Dis- and title to the Vicksburg Waterworks trict of Mississippi to review a decree en Company, the appellee herein, which comjoining a municipality from impairing con- 'pany has operated the works since.

own.

The contract contained an agreement to an act authorizing the cities and villages pay a stipulated rental for certain hydrants of the state to prescribe, by ordinance, maxfor public use.

imum rates and charges for the supply of The legislature of Mississippi, on March accordance with the motion of complainant 18, 1900, passed an act authorizing the city and defendant filed January 12th, 1904, upto issue bonds and build a waterworks sys-on the original bill, amended and suppletem of its own for the supply of the city mental bill, exhibits, answer of defendant, and its inhabitants, and on the 3d of July, proof, and exhibits, and the court, after 1900, an election was held in the city un hearing and attending the evidence and the der the statute, which resulted in a vote arguments of counsel, and being fully adto build or buy a waterworks plant of its vised in the premises, and being satisfied

that the complainant is entitled to the re

lief prayed for in its original and amended The city repudiated any contract rela- and supplemental bills, and for full relief, tions with the company. Thereupon the it is thereupon hereby ordered, adjudged, company filed its bill in the United States and decreed: circuit court for the district of Mississippi First. That the defendants, the Mayor and on the 14th day of February, 1901, the Aldermen of the city of Vicksburg, be and objects of which were thus stated by Mr. are hereby perpetually enjoined from abroJustice Shiras, in delivering the opinion of gating and taking away, or from assuming the court (185 U. S. 65, 46 L. ed. 808, 22 to abrogate or take away, the franchises or

contract rights of complainant under and Sup. Ct. Rep. 585):

by virtue of the ordinances, franchises, or The bill prays for an injunction to re-contract of said defendants entitled, “An strain the defendant from assuming to ab- Ordinance to Provide for a Supply of Water rogate and take away the franchises and to the City of Vicksburg, in Warren Councontrací rights of the complainant, and ty, Mississippi, and to Its Inhabitants, Confrom attempting to coerce the company to tracting with Samuel R. Bullock & Comsell its works to the defendant for an in-pany, their Associates, Successors, and Asadequate price, and that said act of the signs for a Supply of Water for Public Use,

and Giving the Said City of Vicksburg an legislature of Mississippi, adopted on March Option to Purchase the Said Works," or9, 1900, and said resolution and ordinance dained the 19th day of November, 1886, apadopted and passed by said city on the 7th proved by John W. Powell, mayor, Novemday of November, 1900, be declared to im- ber 19th, 1886, being the ordinance, contract, pair the obligations of said contract be and franchise marked exhibit B to the ortween said city and said Bullock & Com- iginal bill of complaint, and said ordinance, pany and their assigns, and to cast a cloud contract, and franchise being specifically upon the title, franchises, and rights of and accurately set out in words and figures upon the title, franchises, and rights of in the pleadings, which ordinance, contract, complainant, and said act, ordinance, and and franchise was acquired by and is the resolution, and each of them, are alleged to sole and exclusive property of said combe in contravention of the Constitution of plainant. the United States in this: that they im- Second. That said ordinance, contract, pair the obligations of said contract be- and franchise be and is hereby declared and tween said city and said Bullock & Com-held to be in every respect legal, valid, and pany and their assigns."

enforceable and binding upon said defendIn the court of original jurisdiction the ant, and said defendant is hereby perpetualbill was dismissed for want of jurisdiction. Scinding, or denying liability under said or

ly enjoined from infringing, ignoring, reOn appeal, 185 U. S. 65, 46 L. ed. 808, 22 dinance, contract, and franchise in any of Sup. Ct. Rep. 585, the judgment was re- its parts, or from in any manner disturbing versed, and this court held that there was or interfering with the rights, privileges, jurisdiction, and the cause was remanded. and benefits acquired by complainant thereThe case went to trial upon its merits, and under. on May 18, 1904, a final decree was ren

Third. That said defendant be, and he is dered, which was affirmed on appeal to this and ordinance adopted the 7th day of No

hereby, directed to rescind its resolution court in the case reported in 202 U. S. 453, vember, 1900, which is in words and figures 50 L. ed. 1102, 26 Sup. Ct. Rep. 660. The as follows:

as follows: “Resolved, that the mayor be decree in that case, known in the record as and is hereby instructed to notify the No. 41, is given in the margin.†

Vicksburg Waterworks Company that the During the pendency of the original ac- mayor and aldermen deny any liability uption the legislature of Mississippi passed on any contract for the use of the water

works hydrants. That from and after Au* Equity, No. 1.

gust, 1900, they will pay reasonable comVicksburg Waterworks Company

pensation for the use of said hydrants.

That the city attorney take such action as Mayor and Aldermen of the City

shall be necessary to determine the rights of Vicksburg, Mississippi.

of the city in the premises." This day this cause came to be heard in And also to rescind the ordinance or rese

water, electric light, and gas furnished to On April 20, 1904, about one month before cities and the inhabitants thereof. Laws of the rendition of the final decree in the origMississippi 1904, p. 231. Section 1 of this inal case, the city adopted two ordinances act is inserted in the margin.

fixing the maximum charge for the use of +Section 1. Be it enacted by the legisla- water, one by what is known as the “lat ture of the state of Mississippi, That the rate” and the other for water measured by corporate authorities of any city, town, or

meters. village now or hereafter incorporated under

On December 7, 1903, the city passed an any general or specific laws of this state, in ordinance prohibiting the water company which any individual, company, or corpora- and gas company from charging damages tion has been, or hereafter may be, author and other penalties for failure to pay bills, ized by said city, town, or village to supply until ten days after presenting the same, water, electric light, or gas to said city, and giving an opportunity for the payment town, or village, or the inhabitants thereof,

thereof. be, and they are hereby, empowered to prescribe by ordinance maximum rates and On the 7th of January, 1905, the water charges for the supply of water, electric company, in view of this action by the city, light, or gas furnished by such individual, filed another bill, which is the original bill company, or corporation to such city, town, in this case, and was numbered 79, in which or village or the inhabitants thereof, such it set forth the preceding history of the litirates and charges to be just and reasonable. gation, the decree of May 18, 1904, the city And in case the corporate authorities of ordinance of December 7, 1903, and the two any such city, town, or village shall fix unjust and unreasonable rates and charges, the of April 20, 1904, and in that bill alleged same may be reviewed and determined by its contract under the ordinance of 1886 the circuit court of the county in which and the former decree, and that the enforcesaid city, town, or village may be; provided, ment of the ordinances was in violation of that this act shall not be construed so as to that decree and the company's contract of impose (impair) the effect or obligation of 1886, and would be destructive of its busiany valid or binding contract with any wa-ness, and they prayed for an injunction. A terworks company, electric light company, temporary injunction was allowed, and or gas company, now existing, or heretofore afterwards, the case standing on the bill, made with any individual or water company, electric light or gas company.

answer, and exhibits attached thereto, a

final decree was rendered in the case, which lution of said defendant adopted the 7th final decree is set forth in the margin.I day of February, 1901, when said defendant adopted the report of the committee on This case coming on to be finally heard at waterworks, as set out in the pleadings. this January term, 1906, of this court, upon

Fourth. That the said defendant refrain the original bill of complaint and the anfrom in any manner accepting the benefits swer of the defendant thereto, and all the of or proceeding under the act of the legis exhibits which are made such, to said orig. lature of the state of Mississippi approved | inal bill of complaint and said answer, and March 9, 1900, and from issuing bonds under all of the other pleas and proceedings in and by virtue of said act, or any other act this cause, together with a certified copy of or ordinance, for the purpose of erecting the charter of the said Vicksburg Waterwaterworks of its own during the period works Company, which is filed in the record prescribed by ordinance, contract, and fran- as evidence in the cause, also the petition chise.

of the defendant for a modification of the Fifth. That the said defendant refrain temporary injunction granted in this cause, from constructing waterworks of its own so that the complainant shall not be authoruntil the expiration of the period prescribed ized to cut off water from its patrons who in said ordinance, contract, and franchise, refuse to pay the rates of complainant, dated the 16th day of November, 1886. claiming the right to have the injunction

Sixth. That the said defendant be, and is modified by virtue of the ordinances of the hereby, required to pay all moneys due or defendant, fixing water rates; and the moowing, or that may hereafter be due and tion of complainant to have said injunction owing to said complainant under and by granted heretofore made perpetual. And virtue of said ordinance, contract, and fran- the court having heard the arguments of chise.

counsel, and being fully advised in the Seventh. That the said defendant be, premises, and being satisfied that the comand is hereby, perpetually enjoined from plainant is entitled to the relief prayed for making or adopting any resolutions or ordi- in its bill of complaint for full relief, it is nance refusing to pay the contract price of thereupon finally ordered, adjudged, and dewater fixed by said ordinance, contract, and creed: franchise until the expiration of the period First. That the defendant, the mayor and prescribed in said ordinance, contract, and aldermen of the city of Vicksburg, is herefranchise.

by denied the relief prayed for in its petiEighth. (Relates to certain sewers.) tion, to wit, that the injunction be modiNinth. That said defendant pay the costs fied so that the mayor and aldermen of the of this cause to be taxed.

city of Vicksburg shall not be restrained