and out, transfer would not be adequate to relieve the seller from his liability as a stockholder if the sale was made by him to escape his impending liability, and to a person whom he knew, or had reason to know, was financially irresponsible. As the views hitherto expressed are conclusive of the meaning of the act of Congress, we deem it unnecessary to refer to the many cases from state courts of last resort construing state statutes referred to in the argument. Affirmed.

[56]*WILLIAM E. HALE, as Receiver, etc., Pe
titioner.
บ.

EDWARD P. ALLINSON et al.

(See S. C. Reporter's ed. 56-81.)

Courts―jurisdiction-suit by receiver in

foreign jurisdiction-equity-multiplicity

2.

3.

was appointed have held that such an action cannot be maintained by him in the courts of that state.

Equity is without jurisdiction, on the ground of the prevention of a multiplicity of suits, of a suit to enforce the statutory liability of the stockholders of a foreign corporation, in which the amount demanded is the fuli amount of the par value of the shares held by each defendant.

A suit to enforce the statutory liability of stockholders in a foreign corporation cannot be maintained in a court of equity on the theory that it is an ancillary or auxiliary proceeding brought in aid of and to enforce an equitable decree of a court of the state where the corporation resides in a suit to enforce the liability of its stockholders, where the nonresident stockholders were merely nominal parties in that suit, and no judgment was rendered against them becauseof a want of jurisdiction over them.

[No. 77.]

of suits ancillary remedy-suit to en- Argued November 6, 7, 1902. Decided Janforce stockholder's liability.

1. A receiver appointed by a court of equity in the exercise of its general jurisdiction cannot, by virtue of his appointment and the di

uary 19, 1903.

N WRIT of Certiorari to the United

0 States Circuit Court of Appeals for the rection to sue contained therein, maintain a Third Circuit to review a judgment which sult in equity in a foreign jurisdiction to enforce the statutory liability of stockholders affirmed a judgment of the Circuit Court in an Insolvent corporation, especially where for the Eastern District of Pennsylvania the courts of the state where the receiver sustaining a demurrer to a bill to enforce

NOTE. On the rights of receiver as to prop- | erty outside of the jurisdiction in which he is appointed--see note to Gilman v. Hudson River Boot & Shoe Mfg. Co. (Wis.) 23 L. R. A. 52. On the right to enforce stockholder's liability outside of the state of incorporation-see note to Cushing v. Perot (Pa.) 34 L. R. A. 737. On the jurisdiction of equity where the rem edy at law exists-see notes to Meldrum v. Meldrum (Colo.) 11 L. R. A. 65; Delaware, L. & W. R. Co. v. Central Stock Yards & Transit Co. (N. J. Eq.) 6 L. R. A. 855; and Tyler v. Savage, 36 L. ed. U. S. 83.

Right of receiver to enforce liability of carporate stockholder outside of the state of his appointment.

While the foreign appointment of a receiver of a corporation does not create an absolute right to sue in another state, the privilege of maintaining such suit is quite generally extended to him on principles of comity, where this will not defeat the remedies of resident creditors. See note to Gilman v. Hudson River Boot & Shoe Mfg. Co. (Wis.) 23 L. R. A. 52, on the rights of receiver as to property outside of the jurisdiction in which he is appointed.

cases

This principle has been applied to where the foreign receiver of a corporation attempts to enforce the liability of a stockholder outside of the state of his appointment. And it has been held that an action to collect the

amount found due and payable may be maintained by him in a Federal court sitting in another state, where it will not violate the policy of the state or interfere with the interests of domestic creditors. Burr v. Smith, 113 Fed. 858.

And that the enforcement by a foreign receiver of the payment of subscriptions to the capital stock of the corporation, where there are no resident creditors or other persons terested in the distribution of its assets, does not injuriously affect the interests of the citi

zens of the state in which the sult is brought, or violate its policy or laws, and that the suit may therefore be maintained on principles of comity. Castleman v. Templeman, 87 Md. 546, 41 L. R. A. 367, 40 Atl. 275.

"When an action by a foreign receiver to collect assets, under the authority of the court which appointed him, works no detriment to any citizen of this state, and is not repugnant to its policy, it would be a provincial and narrow view," says Vann, J., in Howarth v. Angle, 162 N. Y. 179, 47 L. R. A. 725, 56 N. E. 489. "for our courts to refuse to extend the usual state comity. There is a close business connection between the citizens of the different states of the Union. Investments are freely made in other states by the citizens of this state, who need the aid of the courts of the jurisdiction where the investments are made. The comity which we expect to have extended to citizens of our state we cannot, in justice, refuse to citizens of other states. State lines should not prevent justice from being done. Our courts should not close their doors to a receiver from another state, who comes here armed with the title to a just claim against a citizen of this state, and offers to establish by common-law evidence the ability of that citIzen. While we should keep control of the subject, so as to see that no discrimination is practised against our citizens, or injustice done them either as to the substance of the liability or the method of procedure, when the same result is attained in practically the same way as, under similar circumstances, would be attained in the case of a domestic corporation, there is no reason for withholding that aid which is now afforded by the courts of almost all enlightened countries." Here the amount of the stockholder's liability had been definitely ascertained, and was only his proportion of the ascertained deficiency of assets, and it did not appear that there was any other stockholder or any creditor of the corporation in New York, or that injury would be done to

the liability of stockholders of a foreign corporation. Affirmed.

See same case below, 45 C. C. A. 270, 106 Fed. 258.

proceedings instituted, under the Minnesota statute, in the district court of Hennepin county, which court had jurisdiction, and the Minneapolis Trust Company was ap pointed a receiver of the corporate assets, Statement by Mr. Justice Peckham: and took possession thereof, and proceeded This case comes here by virtue of a writ to the discharge of its duties. In Novemof certiorari directed to the circuit court ber, 1893, one Arthur R. Rogers, who was of appeals for the third circuit. It is a suit the assignee of a judgment creditor of the in equity brought by a foreign receiver, in corporation, whose execution against it had [57]the United States *circuit court for the east been returned wholly unsatisfied, filed a bill ern district of Pennsylvania, to enforce the in equity in the Minnesota state court, in liability of stockholders, residing in Penn behalf of himself and all other creditors of sylvania, of the Northewestern Guaranty the loan company, against that company Loan Company, a corporation of Minnesota. and all its stockholders, for the purpose of Demurrers were filed, setting up, among enforcing the stockholders' liability to the other grounds, that the receiver appointed creditors, provided for by the statutes of under proceedings in Minnesota had no right Minnesota. Out of about five hundred to sue in any court of a foreign jurisdic- stockholders, some twenty-three only resided tion; also that, even if the receiver had the in the state of Minnesota and were served right to sue, there was an adequate remedy with process. at law for whatever rights might exist in the receiver or any other person, and that no ground of equitable jurisdiction was stated. The circuit court sustained the demurrer on the ground that the remedy, if any the complainant had, was at law. 102 Fed. 790. The judgment was affirmed by the circuit court of appeals for the third circuit. 45 C. C. A. 270, 106 Fed. 258.

The facts are these: In May, 1893, the loan company was adjudged insolvent in any citizen of the state, or any established policy of the state interfered with.

So, in Pugh v. Hurtt, 52 How. Pr. 22, it was held that a receiver appointed in another state may be allowed by comity to bring suit against a resident to enforce his liability as stockholder in an insolvent corporation.

And a receiver of a foreign corporation was allowed to recover on a bill in chancery against an executrix of a deceased stockholder, in the case of Mann v. Cooke, 20 Conn. 178. In this case the shares had been surrendered by the subscriber to the company after its insolvency, and, besides this, he had paid 50 per cent of his subscription, which by his agreement was all that the company required of him.

The creditors of the loan company, as required by the court, came in and proved their debts against the company, but none of the nonresident stockholders had been served with process in the action, and not one of them appeared therein. It was adjudged that the defendants who were named as resident stockholders of the loan company, and over whom the court had acquired jurisdiction by the service of process upon them, *were liable, to the extent of the[58] claim being that such a proceeding can only be had as a result of comity between the states, and that the basis of such an exercise is that the citizens of the state granting It shall not be thereby prejudiced or injured. Admitting, for the sake of argument, the rule that comity controls as to the authority of plaintiff to sue in this state, and, as we have in effect said, the record leaves us without doubt that its exercise should be denied, because it would be in contravention of the rights of our citizens, and operate to their injury."

It would seem that the principles of comity should not require a state to extend greater consideration to a foreign receiver than he is accorded at home, and that, therefore, unless a similar action might be maintained by him in the state of his appointment, he has no standing in a foreign jurisdiction. And in a number of cases where his right to maintain such a suit has been sustained (Cuykendall v. Miles, 10 Fed. 342; Sheafe v. Larimer, 79 Fed. 921; Howarth Howarth v. Lombard, 175 Mass. 570, 49 L. R. A. 301, 56 N. E. 888; Howarth v. Angle, 162 N. Y. 179, 47 L. R. A. 725, 56 N. E. 489, Affirming 39 App. Div. 151, 57 N. Y. Supp. 187; Wigton v. Kenney, 51 App. Div. 215, 64 N. Y. Supp. 924), the court has been careful to refer to his power in the state of his appointment.

V. Ellwanger, 86 Fed. 54;

But a receiver of a corporation appointed in another state will not be allowed by the exercise of comity to sue to enforce the liability of stockholders, when it would be in contravention of the rights of the citizens of the state and operate to their injury. Wyman v. Eaton, 107 Iowa, 214, 43 L. R. A. 695, 75 N. W. 865. Here the obligation sought to be enforced was a subscription to the capital stock of an insurance company which was to be formed in two separate states and thereafter consolidated. The consolidation was never effected, but each company, having changed its name, continued to do business in the state of its incorporation. The court said: "There is not, In view of the entire record Thus, in Howarth v. Ellwanger, 86 Fed. 54, in this case, an equitable consideration favor- supra, the court says that a receiver of a corable to a recovery against these defendants.poration is the only person who, under the The present liabilities of the Nebraska corpolaws of the state of his appointment, can ration cannot truthfully be said to have accrued force, under the direction of the court, the In consequence of, or with reliance upon, the individual liability of the stockholders. former connection of these defendants with the enterprise from which sprang the present company. These facts are important as aiding in the solution of a legal proposition, urged by appellees, to the effect that this action cannot be maintained in Iowa, because it is brought by a receiver of a Nebraska corporation to enforce a provision of the law of that state; the

en

And in Howarth v. Lombard, 175 Mass. 570, 49 L. R. A. 301, 56 N. E. 888. supra, the receiver was said to have, under the laws of the state of his appointment, the legal title to the fund as trustee for creditors, and to be the only person who could legally demand and collect the money.

And in Howarth v. Angle, 162 N. Y. 179,

par value of their stock, for the debts of the company. The decree also found a list of the creditors who had intervened, and the amounts due to each of them from the loan company.

In addition to giving judgments against the resident stockholders of the loan company in favor of its ascertained creditors, the court also decreed as follows:

end said receiver be and hereby is authorized, empowered, and directed to institute and prosecute all such actions or proceedings in foreign jurisdictions as may be necessary or appropriate to this end."

The decree also provided that jurisdiction of the cause should be retained until the adjustment of the several rights and liabilities of the respective parties.

"Tenth. That for the purpose of enforc ing and collecting said judgments and all thereof and any and all liability thereon or in anywise incident thereto, and any and all liability upon the part of nonresident stockholders of said Northwestern Guaranty Loan Company, against whom no personal judgment for the ascertained liability is herein rendered, and disbursing the amounts so collected as hereinafter provided, W. E. Hale, Esq., has been by the order of this court appointed receiver, and has given bond in the sum of $25,000 and qualified as such receiver. That by the terms of said order of appointment said receiver was and hereby is authorized, empowered, and directed to take any and all appropriate or necessary steps or proceedings for the purpose of collecting the judgments herein rendered, and was and hereby is authorized, empowered, and directed to take any and The statutory stock-liability imposed by all necessary or appropriate steps or pro- the laws of corporate domicil is contractual ceedings against the nonresident stockhold-in character, and enforceable in any court ers of said defendant Northwestern Guaran- where jurisdiction of the parties may be obty Loan Company against whom no per- tained. sonal judgment herein has been ordered, for the enforcement and realization upon their aforesaid stockholders' liability, and to that 47 L. R. A. 725, 56 N. E. 489, supra, the court was careful to point out that the receiver, by the law of the state where he was appointed, had title to the right of action against stockholders to enforce their liability.

Thereupon the receiver thus appointed commenced this suit in equity to recover from the resident stockholders in Pennsylvania the full amount of the par value of the shares of stock held by them. Rogers, the assignee of the judgment creditor in the Minnesota action, was joined as complainant in this *suit with the receiver, and a de-[59] murrer having been interposed on the ground, among others, of this joinder, the circuit court, upon the trial and upon the application of complainant, granted leave to dismiss the assignee as a party, and the case proceeded thereafter in the name of the receiver alone.

So, in Sheafe v. Larimer, 79 Fed. 921, supra, a decision of the state of the receiver's appointment was referred to as showing that the statutory liability imposed by the statutes of that state on corporate stockholders could be -enforced by the receiver.

Likewise, in Cuykendall v. Miles, 10 Fed. 342, supra, It appeared that the receiver could maintain such an action in the state of his appointment.

In Burr v. Smith, 113 Fed. 858, supra, It appeared that the statutes of the state of the receiver's appointment provided that stockholders' liabilities should be enforced by a receiver in his own name, both within and without the state.

And in Wigton v. Kenney, 51 App. Div. 215. 64 N. Y. Supp. 924, supra, which sustained an order overruling a demurrer to the receiver's complaint, such complaint contained an allegation that the receiver was authorized to maintain and bring the action.

And because a Kansas receiver of the assets of a corporation was without power to maintain a suit to enforce the statutory liability of a stockholder in that state, by reason of his failure to take the steps which the statutes of that state make a prerequisite to such enforcement, the court in Evans v. Nellis, 187 U. S. 271, ante, 173, 23 Sup. Ct. Rep. 74, held that he could maintain no such action in a Federal court sitting in another state. "It is manifest," says Mr. Justice White, in deliver ing the opinion of the court, "that the r

Mr. M. H. Boutelle argued the cause, and, with Messrs. William E. Hale, Charles C. Lister, and A. L. Pincoffs, filed a brief for petitioner:

Hawthorne v. Calef, 2 Wall. 10, 17 L. ed. 776; Carrol v. Green, 92 U. S. 509, 23 L. ed. 738; Flash v. Conn, 109 U. S. 371, 27 L. ceiver had no authority to bring this suit, even in the courts of the state of Kansas, and he clearly, therefore, had no power to prosecute such action in the courts of another jurisdiction."

The decision in HALE v. ALLINSON likewise rests upon the facts that the appointment of the receiver was not authorized by any statute, but was merely in the exercise of the general powers of a court of equity, and that he had no title to the fund, and could not maintain such an action in the courts of the state where he was appointed.. And the diverse conclusions reached by the lower Federal courts as to the right of such a receiver to maintain an action to enforce a stockholder's liability outside the state of his appointment seem to have proceeded from different views with respect to the nature of such appointment.

Thus, in Hale v. Hardon, 37 C. C. A. 240, 95 Fed. 747, it was held, Reversing 89 Fed. 283, that the appointment of a receiver by a Minnesota court in a proceeding by creditors to wind up the affairs of a domestic corporation and enforce the liability of stockholders for its debts, being contemplated by the Minnesota statutes and in the general course of equity or legal procedure in that state, such a receiver might, on principles of comity, be permitted to maintain an action at law to enforce such liability in the courts of another jurisdiction. This ruling was followed in Hale v. Tyler, 104 Fed. 757.

But in Hilliker v. Hale, 54 C. C. A. 252, 117 Fed. 220. It was held, Reversing 109 Fed. 273, that such a receiver, not being appointed, under the authority of any statute, but simply under the general equity powers of the court, with instructions to proceed against nonresi

1902.

ed. 966, 3 Sup. Ct. Rep. 263; Whitman v. National Bank, 176 U. S. 559, 44 L. ed. 587, 20 Sup. Ct. Rep. 477; Hancock Nat. Bank v. Farnum, 176 U. S. 640, 44 L. ed. 619. 20 Sup. Ct. Rep. 506; Pinney v. Nelson, 183 U. S. 144, 46 L. ed. 125, 22 Sup. Ct. Rep. 52. Where such liability contemplates the creation of a fund, the purposes in this regard may be best accomplished through the medium of a receiver.

2 Morawetz, Priv. Corp. § 902.

the now thoroughly established doctrines of
comity sustained by nearly every state in
the Union, as to deprive the conclusions
there announced of the force otherwise at-
tributable thereto.

The modern rule sustained by the great weight of authority, and applicable, in this regard, indiscriminately to statutory as well as receivers of courts of equity, is that a receiver will be permitted to sue and defend, as foreign receiver, in all courts of other In some jurisdictions the administration states than that in which he is appointed, of this quasi-asset is conferred upon the gen- on the principles of comity, except where the eral receiver of the corporation, but, by the rights of citizens of the state of the forum clear weight of authority, unless power in are prejudiced thereby, or where it would be this respect be conferred by special enact-in contravention of the policy of such state. ment, the general receiver has no interest in the right in question.

Ochiltree v. Iowa Railroad Contracting Co. 21 Wall. 249, 22 L. ed. 546; 2 Cook, Stock & Stockholders, § 218; 2 Morawetz, Priv. Corp. § 849; Gluck & B. Receivers, 2d ed. 266; Hancock Nat. Bank v. Ellis, 172 Mass. 47, 42 L. R. A. 396, 51 N. E. 207.

Smith, Receiverships, 167 (f). See also 2 Beach Modern Eq. Pr. § 747; Beach, Receivers, § 682; High, Receivers, 2d ed. § 241; Gluck & B. Receivers 2d ed. 34 et seq., 222; 20 Am. & Eng. Enc. Law, p. 244.

The general rule of comity prevails in Pennsylvania.

Bagby v. Atlantic, M. & O. R. Co. 86 Pa. 291. The demand asserted is not opposed to any re-policy of the local law of that commonwealth. re

The laws of Minnesota provide in such cases for the appointment of a special ceiver as representative of creditors in spect to this special liability.

Hale v. Hardon, 37 C. C. A. 240, 95 Fed. 747; Childs v. Cleaves, 95 Me. 498, 50 Atl. 714; Hanson v. Davison, 73 Minn. 454, 76 N. W. 254.

The basis of decision in Booth v. Clark, 17 How. 322, 15 L. ed. 164, predicated, as was that case, of a denial of all comity between the states, has been so far removed by dent stockholders and hold the moneys col- | lected, subject to the further orders of the court, could not maintain an action at law on such liability in a foreign jurisdiction, as he was vested with no title, but was merely acting as the agent of the court.

In Hale v. Coffin, 114 Fed. 567, the court was necessary to the conheld that since clusions of the circult court of appeals in Hale v. Hardon, 37 C. C. A. 240, 95 Fed. 747, supra, that under the laws of Minnesota there was something which vested in the receiver, sufficient to enable him to maintain a suit at common law, such a receiver might maintain a suit in equity to enforce the stockholder's liability, in a Federal court sitting in a state where the common-law rule prevails, which requires plain tiff to have title, although no action at law could be sustained.

And it has been held that a receiver appointed in a suit to enforce the statutory llability of stockholders in a corporation for the benefit of all creditors may, although appointed without specific legislative authority, but in accordance with the usages of equity, maintain name in another jurisdica suit in his own tion. Kirtley v. Holmes, 52 L. R. A. 738, 46 C. C. A. 102, 107 Fed. 1.

And the right of the receiver of a foreign corporation to collect an unpaid subscription to its stock was sustained in Dayton v. Borst, 31 N. Y. 435, without showing that any statute of the state in which he was appointed authorized such proceeding.

A suit by a receiver of an Iowa corporation to enforce the individual liability of stockholders to the creditors of the corporation under Iowa Acts 18th Gen. Assem.. chap. 208. was dismissed in Steinke v. Loofbourow, 17

Aultman's Appeal, 98 Pa. 505; Cushing v. Perot, 175 Pa. 66, 34 L. R. A. 737, 34 Atl. 447.

Neither local creditors nor any other creditors may avail themselves of this liability, or assert any rights whatsoever therein, otherwise than on full compliance with the several conditions of the law of the domicil.

Terry v. Little, 101 U. S. 216, 25 L. ed. 864. Utah, 252, 54 Pac. 120, on the ground that the the suit. No question of comity appears to receiver was not the proper person to bring court's attention does not seem to have been have been considered in this case, and the called to State ex rel. Stone v. Union Stock Yards State Bank, 103 Iowa, 549, 70 N. W. 752, 72 N. W. 1076, in which the receiver was held to be the proper party to bring suit under this statute.

In Wigton v. Bosler, 102 Fed. 70, It was an action in the also held that a receiver appointed by an Iowa court could not maintain The court courts of another jurisdiction to enforce the statutory liability of stockholders. refers to the fact that the liability under the Iowa statute, as stated in the declaration, is to the creditors of the corporation, but does not seem to regard this as essential to justify its refusal to entertain the suit, and it assumes that the effect of the Iowa statutes is

in fact to make the liability which they create an asset of the corporation.

Assessments on members of a foreign benefit society which had become insolvent were collected in Baldwin v. Hosmer, 101 Mich. 119, 25 L. R. A. 739, 59 N. W. 432, by an ancillary recelver.

The statute of limitations of the state in

which a corporation was domiciled governs an
to enforce the liability of a stock-
company
action in another state by a receiver of the
holder under the statute of the former state.
Andrews v. Bacon, 38 Fed. 777.

On the general question of the right to en-
stockholder's liability outside of the
force a
state of incorporation, see the exhaustive note
383
appended to the case of Cushing v. Perot (Pa.)
34 L. R. A. 737.

Local creditors have no other or different | though the original decree was for the payrights than any others, and all are referable ment of money. in this regard to the laws of the domicil prescribing equality for creditors in common. Childs v. Cleaves, 95 Me. 498, 50 Atl. 714. The power of appointment may be referred both to the express provisions of the Minnesota statutes and the general equity powers exercised by courts of chancery in analogous