152 Va. 800 | Va. | 1929
delivered the opinion of the court.
The Bank of Roper was organized in 1906, and became insolvent in 1921, at which time there were outstanding 200 shares of stock of the par value of $20,000.00. Five shares had been subscribed for and was and is owned by the defendant, Robert F. Baldwin, a citizen of Norfolk, Virginia.
Section 237 of the Consolidated Statutes of North Carolina declares that stockholders, in such circumstances, shall be liable to the extent of the par value of their stock, in addition to the amount already invested in it. Section 239 goes on to provide that when a bank’s assets are insufficient to discharge its obligations, an accounting may be had, “and the shareholders made parties defendant thereto,” and that when a deficiency is adjudged to exist an assessment shall be made.
Section 240 authorizes the receiver to sue these stockholders both within and without the State, and declares that “the receiver may, within ten years after an assessment on the stock, institute civil actions against the stockholders to reduce the liability thereon to final judgment.”
To this motion for judgment, filed November 9, 1927, the defendant pleaded both the three and the five year statute of limitations (Code Va. 1919, section 5810). An agreed statement of facts sets out that A. B. Litchfield was, on October 10, 1921, appointed receiver in the case of Corporation Commission of North Carolina v. Bank of Roper, by the Superior Court of Washington county, a court of general jurisdiction. Litchfield qualified and gave the required bond, and at the January term of that court, 1923, filed a petition
The general rule is that while contracts are to be construed according to the lex loci contractus, they are to be enforced according to the lex fori. Wood on Lim. (4th ed.), section 8; Burks Pleading and Practice (2d ed.), page 389; Patton v. Lumber Co., 171 N. C. 837, 73 S. E. 167.
To this general rule there is an exception now as universally recognized as the rule itself.
“Where the statute imposing the liability and creating the remedy does not itself limit the time within which an action to enforce it must be brought, but leaves the matter to be governed by the general statute of limitations, the laws of the forum will govern in determining whether an action brought in a State other than that by which the corporation was created is barred, since general statutes of limitations relate to the remedy and have no extra-territorial force. This rule does not apply, however, when the statutes of the State by which the corporation was created, and the liability is imposed, prescribe a special limitation for actions to enforce the liability. In such a case the statutes of that State govern, and they will be given the eohstruction which they have received by the highest court of that State.” 7 Fletcher’s Cyc. Corp., pages 7452-3.
“Where by statute a right of action is given
“The reason upon which this line of decisions is based is that in the enforcement of a liability not existing at common law, and arising by virtue of a statute, the right, as well as the mere remedy, is involved, and that to the statute in question alone, as construed by the courts of the State of its passage, can report be had, either in the matter of the ascertainment of rights arising thereunder, or remedies provided thereby. The statute itself prescribes just what right it gives, and it can likewise provide the remedy for its enforcement, and the time within which it shall be operative.” Brunswick Terminal Co. v. National Bank, (C. C. A.) 99 Fed. 636, 48 L. R. A. 625.
The Supreme Court of the United States refused a writ of certiorari in the above styled case, 178 U. S. 611, 20 S. Ct. 1029, 44 L. Ed. 1215. See also, The Harrisburg, 119 U. S. 199, 7 S. Ct. 140, 30 L. Ed. 358; Northern Pac. Ry. Co. v. Crowell (D. C.), 245 Fed. 668; Burks Pl. & Pr. (2d ed.), 389; 17 R. C. L. page 701.
This is not seriously questioned, but it is said that the statute law of Virginia provides otherwise, and we are cited to section 5825 of the Code of Virginia, 1919, which declares that: “Upon a contract which was made and was to be performed in another State or country by a person who then resided therein, no action shall be maintained after the right of action thérein is barred either by the laws of such State or country or of this State.” Plainly this statute has no application.
It is argued that any other construction would be inequitable in that a North Carolina subscriber, who afterwards moves to Virginia, would be better circumstanced than a Virginia subscriber who had always lived here. This may be true, but we have to take the statute as written. It is difficult to frame one that at all times and in all circumstances operates with exact equality. This has actually occurred. Mary A. Roper, a citizen of Norfolk, held property in North Carolina. She was also a stockholder in that bank and her property there located has been attached and sequestrated (Litchfield v. Roper, 192 N. C. 202, 134 S. E. 651), so that the net result of this is that one stockholder in Norfolk has had to pay and one has been set free. Of course, this has little to do with the issue before us, but only serves to show the difficulty in drafting laws which at no time discriminate between litigants.
No general statute of limitations acts extra-territorially. It must inhere in and attach to the right sought to be asserted, 37 Corpus Juris, page 735. It is also true that in the construction of State statutes we follow the courts of that State, though their enforcement under the guarantees of the Federal Constitution may continue to present open questions.
With this in mind, it is said that the North Carolina statute has been twice construed in North Carolina to be simply one of limitation and not a condition attached to the contract of subscription.
In Long v. Bank, 90 N. C. 405, the court said: “The three year statute of limitations (since changed to ten years) begins to fun, against an action to enforce the
Again, in the Litchfield Case, supra, it is observed: “We must assume that the General Assembly acted with deliberation and had good reason for extending the limitation of actions for an assessment against the stockholders of a bank from three to ten years.”
Of course, broadly speaking, it is a statute of limitations; it is that and something more — -not a general statute governing all implied contracts, but a special one intended to apply only to stockholders of insolvent banks into whose contract of subscription it is incorporated.
An examination of these North Carolina cases shows that the court had no such distinction in mind as we are called upon to make in the case in judgment, nor was it necessary. The same conclusion would have been reached and the same statement of the law there made would have been unassailable, whether the limitation had been regarded as general or special. To apply any statement of the law intelligently, the facts to which it is addressed are to be always remembered, nor are we to presume that the Supreme Court of North Carolina intended in this easual way to set aside a rule so well established.
The Bank of Boper was chartered in 1906, and the limitation at that time was three years. This continued to be the law until 1911, Laws N. C. 1911, chapter 25 (C. S. N. C. section 240), when the statute was changed and the time extended to ten years. There is no constitutional bar to the extension of statutes of limitation. Wood on Lim., 4th ed., section 11.
These special statutes may be likewise extended,
We are therefore of opinion that neither the three year nor five year Virginia statute applies, but that we are bound by the ten year period fixed in that of North Carolina.
There are two cross-assignments of error. First, it is said that this defendant was never made a party to the North Carolina proceeding under which the assessment was ordered; that no lawful summons was ever executed as to him, and that he never voluntarily appeared in the North Carolina court. In short, it is said that certain designated conditions declared by the North Carolina statute to be prerequisite to the right to sue have not been met.
It does not appear from the agreed statement of facts that he received any notice of what was done in 1923. It does appear that Litchfield was appointed receiver; that the bank was totally insolvent, and that he petitioned the court for right to sue the stockholders. This the court authorized and directed him to do.
In discussing the statute of limitations, we are told that the Supreme Court of North Carolina has decided that the statute of limitations began to run in 1923, and it is everywhere properly conceded that as a prerequisite therefor a valid assessment w.as necessary. This statement is made in the brief filed on behalf of Baldwin:
“It seenis that counsel for appellant admits that the situation of Mr. Baldwin is the same as that of Mary A. Roper, who was the defendant in the case of Litchfield,
It is further said in that brief: “It has been repeatedly held by the Supreme Court of the United States, that the construction of a State statute, given by the highest appellate court, is binding on all courts.”
With all of this we are in accord. The Supreme Court of North- Carolina must have been of opinion that all preliminary steps required by her statute had been met when it gave judgment against Boper.
Of course, what was done would not sustain a personal judgment against Baldwin, and none was entered.
“Process from the tribunals of one State cannot run into another State, and summon parties there domiciled to leave its territory and respond to proceedings against them. Publication of process or notice within the State where the tribunal sits cannot create any greater obligation upon the nonresident to appear. Process sent to him out of the State, and process published within it, are equally unavailing in proceedings to establish bis personal liability.” Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565.
The purpose of the North Carolina proceeding was merely to assemble . these stockholders that they might have an opportunity to protest against being sued at all if the facts warranted such a protest. Process from North Carolina does not run in Virginia, but it was sufficient to give notice of what was proposed to be done, just as service by publication would be sufficient. Certainly this is the construction placed upon this statute by the North Carolina courts which have twice held that the requirements of North Carolina, preliminary to actual suit, have been met, and we follow their judgment. Personal service of process is not necessary to make one party defendant to a suit, though it, or a voluntary appearance, is a prerequisite to personal judgment. No constitutional right has been violated, for it is in the Norfolk action, duly
We are of opinion that the trial court was right in striking out this plea, numbered one.
The second assignment of cross-error rests upon the fact that the trial court struck out plea No. 2, which charges that Litchfield, the first receiver, failed to sue the directors of the Bank of Roper for negligence, etc., although ordered to do so by the court.
In Corporation Commission v. Merchants’ Bank and Trust Co., 193 N. C. 113, 136 S. E. 362, it was held that stockholders of an insolvent bank are not liable for assessment of double liability under C. S. Supp. 1924, section 219(a) and C. S., section 237, until tort liability of officers and directors for wilful mismanagement is determined, in view of C. S., sections 239, 240, since right of action against such officers and directors, unlike statutory liability of stockholders, was an asset of the bank, which must be determined to be insufficient before assessment is made.
Suit was promptly brought by Norman, the second receiver, but it was held that such rights as might have existed were barred by the statute of limitations. That is to say, this liability has been determined by final judgment of a competent court, and that is all that is necessary. If the first receiver was derelict in the performance of his duty, then his estate and his official bondsman may be liable. The failure of the present receiver to proceed against them is not assigned as a defense. This plea was also properly rejected by the trial court. To it this entire action was submitted.
For reasons stated, we are of opinion that plaintiff’s claim is not barred by the statute of limitations, and that final judgment should now be entered against the defendant. It is so ordered.
Reversed.