who was not actually before the foreign court may, however, show that the alleged debt was ultra vires.25

§ 446. No recovery if procedure of form unsuitable.

But where the liability created by the statute is a liability which can be enforced only by some particular form of procedure, the liability cannot be enforced in another State, at least unless the latter State can provide some process suitable for the purpose.26 For the particular result attained by the method provided in the State of charter must be attained in the foreign State, if the stockholder is to be held there at all. No one can or ought to be held on his stockholder's liability in any other way.27

It is often provided, for instance, in the State of charter (either by the statute itself or by the common law) that the stockholders shall be reached by a creditors' bill in equity, in which all creditors may join, and to which all the stockholders and the corporation itself must be parties. Where such is the law of the charter State, a stockholder in a foreign jurisdiction may be reached neither by an action at law there 28 nor even ordinarily by a creditors' bill there, since the corporation and the other stockholders cannot be reached.20 "We have no jurisdiction that will reach such corporation

S. Co., 80 Minn. 125, 83 N. W. 36; Elderkin v. Peterson, 8 Wash. 674, 36 Pac. 1089.

25 Ward v. Joslin, 186 U. S. 142, 46 L. ed. 1093.

26 Russell v. Pac. Ry., 113 Cal. 258, 45 Pac. 323; Patterson v. Lynde, 112 Ill. 196; Young v. Farwell, 139 Ill. 326, 28 N. E. 845; Tuttle v. Bank of Republic, 161 Ill. 497, 44 N. E. 984; Lowry v. Inman, 46 N. Y. 119; Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419, 51 A. S. R. 654, 34 L. R. A. 757; Cleveland, L. & W. Ry. v. Kent, 87 Hun (N. Y.), 329; Nimick v. Mingo Iron Works Co., 25 W. Va. 184; May v. Black, 77 Wis. 101, 45 N. W. 949; Finney v. Guy, 111 Wis. 296, 87 N. W. 255.

27 Pollard v. Bailey, 20 Wall. 520, 527, 22 L. ed. 376; Fowler v. Lamson, 146 Ill. 472, 34 N. E. 932; Remington v. Samana Bay Co., 140 Mass. 494; Rice v. Merrimac Hosiery Co., 56 N. H. 114; Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489; and cases cited in the preceding note.

28 Erickson v. Nesmith, 15 Gray (Mass.), 221.

29 Erickson v. Nesmith, 4 Allen (Mass), 233.

out of this commonwealth, and having no assets here, and the same is true of the stockholders residing in New Hampshire. A bill in equity in Massachusetts is therefore not the remedy intended to be prescribed by the statute of New Hampshire creating and regulating the liability of stockholders in a manufacturing corporation in New Hampshire. It is urged on the part of the plaintiffs that great practical evil may result from thus refusing to charge a party here who is an actual stockholder of a corporation in New Hampshire, but who resides without its limits. To this it may be replied, that it would be a much more serious evil to hold that the whole matter of winding up the concerns of a bankrupt corporation of New Hampshire, ascertaining who are its creditors, who its stockholders, what is the amount of its assets, and how are the same to be distributed, should be transferred to the jurisdiction of Massachusetts by reason of the residence here of a single member of such corporation. There seems to be no practical mode of dealing with such corporation and its members, when seeking to charge the latter upon their statute liability, but to proceed in the manner prescribed by the statute creating such liability, and in the local jurisdiction where the corporation was established and carries on its business, and by whose local statutes alone the liability exists." 30

In most cases it will be possible to obtain relief by proceeding in the State of charter, since the courts there have jurisdiction over the corporation and for this purpose, at least, over all the stockholders; and a judgment having been obtained in that State proceedings upon the judgment may then be brought in the stockholders' State.31 This is not always possible, as for instance, where the corporation has been dissolved.32 But the impossibility of obtaining relief is no hardship of which the creditor has a right to complain.

30 Dewey, J., in Erickson v. Nesmith, 4 Allen (Mass.), 233.

31 Broadway Nat. Bank v. Baker, 176 Mass. 294, 57 N. E. 603; Tompkins v. Blakey, 70 N. H. 584, 49 Atl. 111.

32 Remington v. Samana Bay Co., 140 Mass. 494.

Since his right is entirely dependent upon the statutes of the State of charter, he is entitled to claim no more than that State grants.

§ 447. Recovery on contingent liability.

A stockholder's contingent liability can therefore be enforced in another State, if at all, only when the remedy provided by the statute is such that it is capable of use in the other State. But it is doubtful whether such liability can be enforced by original action in a foreign State even if a suitable form of proceeding can there be found.

"This court does not take jurisdiction of a suit to enforce this liability of stockholders in a foreign corporation, not because it would be a suit to enforce a penalty or a suit opposed to the policy of our laws, but because it is a suit against a foreign corporation which involves the relation between it and its stockholders, and in which complete justice only can be done by the courts of the jurisdiction where the corporation was created." 33 If the enforcement of the liability involves a determination of the internal affairs of the foreign corporation, clearly no action will lie; and it may well be held that an action which requires the parcelling out of corporation debts among the stockholders does involve such determination. It is accordingly held in most jurisdictions that where there is no direct and absolute obligation from the stockholder to the corporation or the creditor no action will be allowed in a foreign State.3

34

33 Field, J., in Post v. Toledo, C. & S. L. R. R., 144 Mass. 341, 345.

34 Evans v. Nellis, 187 U. S. 271, 47 L. ed. 173; State Nat. Bank v. Sayward, 86 Fed. 45; Elkhart National Bank v. Northwestern G. L. Co., 87 Fed. 252; New Haven H. N. Co. v. Linden Spring Co., 142 Mass. 349, 7 N. E. 773; Bank of North America v. Rindge, 154 Mass. 203, 27 N. E. 1015, 26 A. S. R. 240, 13 L. R. A. 56; Coffing v. Dodge, 167 Mass. 231, 45 N. E. 928; Crippen v. Laighton, 69 N. H. 540, 44 Atl. 538, 76 A. S. R. 192, 46 L. R. A. 467; Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419, 51 A. S. R. 654, 34 L. R. A. 757; Barnes v. Wheaton, 80 Hun (N. Y.), 8; Bank of Virginia v. Adams, 1 Pars. Eq. (Pa.), 534; Bates v. Day, 198 Pa. 513, 48 Atl. 407; May v. Black, 77 Wis. 101; McLaughlin v. O'Neill, 7 Wyo. 187.

It is sometimes asserted that the views of the courts are changing, that the doctrine just stated is yielding to a more liberal view, and that today a creditor may pursue such a remedy in any State which can do justice between the parties.35 And there is indeed much ground for this opinion. In several jurisdictions successive suits founded upon the same statutory liability have been decided, the first against and the second in favor of the plaintiff.36 But the later case is in every case consistent with the former; a direct liability of the individual stockholder to each creditor was not alleged in the earlier case, but was alleged and proved in the later case. The distinction is clearly made in a leading case by the Supreme Court.37 "In the cases of Pollard v. Bailey,38 Terry v. Tubman,3 . . the liability of the stockholders was in proportion to the stock held by them. Each stockholder was, therefore, only liable for his proportion of its debts. This proportion could only be ascertained upon an account of the debts and stock, and a pro rata distribution of the indebtedness among the several stockholders. This, the court held, could only be done by a suit in equity. But in this case the statute makes every stockholder individually liable for the debts of the company for an amount equal to the amount of his stock.

39

35 See this view well and vigorously expressed in Pfaff v. Gruen, 92 Mo. App. 560. "An increasing tendency has been observable in both state and federal jurisdictions during the last decade to sanction the enforcement of these obligations extraterritorially in any court of competent jurisdiction, except where the rights of a citizen in the state of the forum are thereby prejudiced, or the public policy of such state is contravened." Whitehouse, J., in Childs v. Cleaves, 95 Me. 498, 50 Atl. 714.

36 State Nat. Bank v. Sayward, 91 Fed. 443, and Hale v. Hardon, 95 Fed. 747; Tuttle v. Nat. Bank of Republic, 161 Ill. 497, 44 N. E. 984, and Bell v. Farwell, 176 Ill. 489, 52 N. E. 346; Coffing v. Dodge, 167 Mass. 231, 45 N. E. 928, and Hancock Nat. Bank v. Ellis, 172 Mass. 39, 51 N. E. 207, 70 A. S. R. 232, 42 L. R. A. 396; Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419, 51 A. S. R. 654, 34 L. R. A. 757, and Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489.

37 Woods, J., in Flash v. Conn, 109 U. S. 371, 380, 27 L. ed. 966.

38 20 Wall. 520, 22 L. ed. 376.

39 92 U. S. 156, 23 L. ed. 537.

This liability is fixed and does not depend on the liability of other stockholders. There is no necessity for bringing in other stockholders or creditors."

In Howarth v. Angle,40 Judge Vann said: "He relies upon the case of Marshall v. Sherman. The action was founded upon a local statute, which not only created the liability, but also provided a peculiar and complicated remedy unknown to our courts, and which could not be entirely enforced in this state. The liability was neither contractual, in the general sense, nor penal, but the statute charged the property of the stockholder with the debts of the insolvent corporation to the extent of the stock held by him. It was the case so aptly described by Judge Allen in Lowry v. Inman, where the intent of the legislature 'was not to create a general, personal or property liability, but to charge the property of the stockholders, and that not generally, or by the usual and ordinary process, but conditionally, and by a peculiar and unusual procedure, only available in the courts of that State, not only limiting and prescribing the security and rights of the creditor, and the obligation and liability of the stockholder, but prescribing the remedy, going with it and as a part of the right.' The assets had not been marshalled or appropriated for the benefit of creditors and there was no way to determine, with any degree of accuracy, the amount of the deficiency or how much the defendant ought to pay. The action, if it had not been arrested by the demurrer interposed to the complaint, would naturally have resulted in the appropriation by one creditor, alone, of that which belonged to others equally with himself. Under these circumstances we declared that 'when the courts of this state are asked to administer the statutes of Kansas, and we can see that the case is surrounded by such complications, and the circumstances are such that it cannot be done without injustice to our own citizens or that

40 162 N. Y. 179, 56 N. E. 489.

41 Citing Lowry v. Inman, 46 N. Y. 119; Christensen v. Eno, 106 N. Y. 97, 103.