for their wrongful act, it may well be considered penal, in the sense that it should be strictly construed. But as it gives a civil remedy, at the private suit of the creditor only, and measured by the amount of his debt, it is as to him clearly remedial. To maintain such a suit is not to administer a punishment imposed upon an offender against the State, but simply to enforce a private right secured under its laws to an individual. We can see no just ground, on principle, for holding such a statute to be a penal law, in the sense that it cannot be enforced in a foreign State or country." 55

In support of this doctrine no authority quite in point was cited except the decision of the Privy Council, nor is it believed that at that time any such authority existed. The cases in State courts holding such obligations penal were cited without attempting to distinguish them. The court in support of its view referred to several cases (previously cited in this chapter) where the right was clearly remedial; and to a few cases in which it is difficult to discover how the question under consideration was in any way involved. The view expressed in the case cannot be regarded as sound in principle.

This doctrine was not necessary to the decision of the case before the court, either in the Privy Council or in the Supreme Court of the United States. In both cases the question was whether action could be brought in a foreign State upon a judgment obtained against the director in the State of charter. How far the dictum in Huntington v. Attrill will be followed when the question is actually presented in the Supreme Court of the United States it is difficult to say. It is naturally followed in the inferior Federal courts.56

§ 452. Enforcement of judgment against the director.

A proceeding against a director in such a case, though an action for a penalty, is not a criminal proceeding; and if action

55 Huntington v. Attrill, 146 U. S. 657, 36 L. ed. 1123.

56 First Nat. Bank v. Weidenbeck, 97 Fed. 896.

is brought against the director and judgment obtained in the State of charter, the judgment will be enforced everywhere. The original claim, which was not enforceable in a foreign State, is merged in the judgment; and that being an ordinary judgment inter partes, effect is given to it in a foreign State.57 By this method the director may always be reached, if the incorporating State will have it so; for even if the director is not an inhabitant of that State, a valid judgment may be had against him under a statute providing that any member of the corporation shall be subject to the jurisdiction of the courts of the State. Judgment having been obtained in the State of charter may then be enforced anywhere. No injustice is done, therefore, by the refusal of a foreign State to enforce such provisions.

§ 453. Statutory refusal to enforce individual liability.

In New Jersey it is provided by statute that "No action or proceeding shall be maintained in any court of this state against any stockholder, officer or director of any domestic corporation for the purpose of enforcing any statutory personal liability of such stockholder, officer or director for or upon any debt, default or obligation of such corporation, whether such statutory personal liability be deemed penal or contractual, if such statutory personal liability be created by or arise from the statutes or laws of any other state or foreign country.

"No action or proceeding shall be maintained in any court of law of this state against any stockholder, officer or director of any domestic or foreign corporation by or on behalf of any creditor of such corporation to enforce any statutory personal liability of such stockholder, officer or director for or upon any debt, default or obligation of such corporation, whether such statutory personal liability be deemed penal or

57 Huntington v. Attrill, 146 U. S. 657, 36 L. ed. 1123, reversing Attrill v. Huntington, 70 Md. 191.

contractual, if such statutory personal liability be created by or arise from the statutes or laws of any other state or foreign country, and no pending or future action or proceeding to enforce any such statutory personal liability shall be maintained in any court of this state other than in a nature of an equitable accounting for the proportionate benefit of all parties interested, to which such corporation and its legal representatives, if any, and all of its creditors and all of its stockholders shall be necessary parties." 58

This statute has been held unconstitutional so far as it applies to a liability incurred prior to the act.59

§ 454. Procedure regulated by law of form.

The plaintiff who chooses to bring suit against a stockholder in a foreign State must pursue the procedure provided in that State; he cannot claim the privilege of suing without using the form in which suit is to be brought.60 Thus if he files a creditors' bill against the stockholder, and by the local practice such a bill will not lie until judgment has been obtained against the corporation within the State and execution issued and returned unsatisfied, the bill will be dismissed if no judgment has been obtained against the corporation.o1 But since the effect of such a rule of procedure would often be that the creditor, not being able to serve process on the corporation within the jurisdiction, must go without remedy, the presumption would seem to be against applying such a rule of procedure, required in the case of a domestic corporation, to a suit against a stockholder in a foreign corporation. And the better view appears to be that where prior judgment against a corporation is made a condition to suit against a

58 N. J. Corp. Supp. § 131.

50 Western Nat. Bank v. Reckless, 96 Fed. 70; Western Nat. Bank v. Skillman, 21 N. J. L. J. 375.

60 Drinkwater v. Portland Mar. Ry., 18 Me. 35.

61 Globe R. M. Co. v. Ballou, 42 Fed. 749; Turner v. Ala. M. & M. Co., 25 Ill. App. 144; Jessup v. Carnegie, 80 N. Y. 441; Rocky Mountain Nat. Bk. v. Bliss, 89 N. Y. 338.

stockholder the provision applies only in case of a domestic corporation; and that a stockholder in a foreign corporation, if he might otherwise be sued, may be sued without first obtaining within the jurisdiction a judgment against the corporation.62

§ 455. Statute of limitations.

It is common to find a special statute of limitations provided for the enforcement of individual liability. Such a statute may be an independent rule of procedure, limiting the right to sue, or it may be a condition attached to the very existence of a statutory right. Which kind of statute a particular statute of limitations is, is a question of interpretation; and indeed a single statute may be both a rule of procedure as to all rights of the sort by whatever law created, and a condition limiting the exercise of the right in the case of a domestic corporation.

63

If a statute of limitations is to be interpreted as a rule of procedure, it is applicable not only to actions to enforce the liability of members of a domestic corporation, but also to actions to enforce such liability in the case of foreign corporations; being a matter of procedure, the law of the forum applies to all actions of the sort brought within the State. If on the other hand the statute limits the right, it applies to all actions to enforce the liability created by the statute, wherever brought. "Courts . . . treat limitations of time as standing like other limitations, and cutting down the defendant's liability wherever he is sued." 64 And a statute cutting down the right by limiting the time within which action may be brought to enforce it may be passed by the State of charter even after the right has accrued. Such a statute would properly

62 Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489; Brice v. Munro, 12 Ont. App. 453.

63 Platt v. Wilmot, 193 U. S. 602; Hobbs v. Nat. Bank of Commerce, 96 Fed. 396.

64 Holmes, J., in Davis v. Mills, 194 U. S. 451.

be enforced within the State; and it has been held that it applies to an action outside the State to enforce the liability, and that so applied it is not unconstitutional.65

§ 456. Suit for contribution.

When one stockholder or director is obliged to satisfy a claim against the corporation, because of his statutory liability to do so, a claim for contribution from his fellow-stockholders or fellow-directors arises which may be enforced in any jurisdiction."

65 Davis v. Mills, supra.

66 Allen v. Fairbanks, 45 Fed. 445; (but see Sayles v. Brown, 40 Fed. 8); Nickerson v. Wheeler, 118 Mass. 295.