Under the statute of Missouri authorizing execution upon a
judgment against a corporation to be ordered against any of its
stockholders to the extent of the unpaid balance of their stock
"upon motion in open court, after sufficient notice in writing to
the persons sought to be charged," a notice served in another state
upon a person alleged to be a stockholder, and who has never
resided in Missouri, is insufficient to support an order charging
him with personal liability.
Page 144 U. S. 42
This was an action brought by Wilson, a citizen of Missouri,
against Seligman, a citizen of New York, in the Circuit Court of
the City of St. Louis and duly removed by the defendant into the
circuit court of the United States. The action was upon an order or
judgment of the state court under section 736 of the Revised
Statutes of Missouri of 1879, which is copied in the margin,
* by which
execution was awarded against the defendant as a stockholder in the
Memphis, Carthage and Northwestern Railroad Company, a corporation
of Missouri, upon a judgment recovered by the plaintiff against the
corporation. The defendant answered denying that he was a
stockholder and averring that the order or judgment against him was
void for want of jurisdiction of his person. The present case was
submitted, a jury being duly waived in writing, to the court, which
found the following facts:
The plaintiff's judgment against the corporation was recovered
in the state court on April 2, 1883, for $72,799.38 and interest.
Upon that judgment, executions against the corporation were issued
to the sheriffs of the several counties in Missouri through which
it had built its road, and were returned unsatisfied, and the
corporation was then, and has been ever since, insolvent. On July
9, 1883, the plaintiff filed a motion in the same court for an
order that execution for the amount of that judgment issue against
the defendant as the alleged holder of stock in the corporation on
which more than the amount of the judgment against the corporation
was still unpaid. Notice of this motion was served on him
personally at his domicile in New York, and was posted in the
clerk's
Page 144 U. S. 43
office of the state court. No notice was served on him within
the State of Missouri, and he never was a citizen or a resident of
this state. At the hearing of the motion on December 3, 1883, the
defendant did not appear, and the court entered an order finding
that he was a stockholder as alleged, and was liable to execution
for the amount of the judgment against the corporation, and
granting the motion and ordering execution to issue against him
accordingly. This was the order or judgment upon which the present
action was brought.
Upon these facts, the court below gave judgment for the
defendant. 36 F. 154. The plaintiff sued out this writ of
error.
MR. JUSTICE GRAY, after stating the case as above, delivered the
opinion of the Court.
The statute of Missouri under which these proceedings were had
authorizes execution upon a judgment against a corporation to be
ordered against any of its stockholders only to the extent of the
unpaid balance of their stock, and "upon motion in open court,
after sufficient notice in writing to the person sought to be
charged." Missouri Gen.Stat. 1865, c. 62, § 11; Rev.Stat. 1879, §
736; Rev.Stat. 1889, § 2517. Each person sought to be charged as a
stockholder is thus given the right, before execution can be
awarded against him on a judgment against the corporation, to
written notice and judicial investigation of the questions whether
he is a stockholder, and, if he is, how much remains unpaid on his
stock. Although the statute does not define the course of
proceeding or the kind of notice otherwise than by directing that
the proceeding shall be summary, upon motion and "after sufficient
notice in writing
Page 144 U. S. 44
to the persons sought to be charged," there can be no doubt that
in this as in all other cases in which a personal liability is
sought to be enforced by judicial proceedings and after written
notice, the notice must be personally served upon the defendant
within the territorial jurisdiction of the court by whose order or
judgment his personal liability is to be ascertained and fixed,
unless he has agreed in advance to accept, or does in fact accept,
some other form of service as sufficient.
The general principles applicable to this subject were clearly
and exhaustively discussed by this Court, speaking by MR. JUSTICE
FIELD, in
Pennoyer v. Neff, 95 U. S.
714, from which it will be sufficient to quote a few
sentences: "Every state possesses exclusive jurisdiction and
sovereignty over persons and property within its territory," and
"no state can exercise direct jurisdiction and authority over
persons or property without its territory." P.
95 U. S.
722.
"It is in virtue of the state's jurisdiction over the property
of the nonresident situated within its limits that its tribunals
can inquire into that nonresident's obligations to its own
citizens, and the inquiry can then be carried only to the extent
necessary to control the disposition of the property."
P.
95 U. S.
723.
"Where the entire object of the action is to determine the
personal rights and obligations of the defendants -- that is, where
the suit is merely
in personam -- constructive service in
this form upon a nonresident is ineffectual for any purpose.
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 his personal liability."
P.
95 U. S.
727.
"A judgment which can be treated in any state of this union as
contrary to the first principles of justice, and as an absolute
nullity, because rendered without any jurisdiction of the tribunal
over the party, is not entitled to any respect in the state where
rendered."
P.
95 U. S.
732.
"To give such proceedings any validity, there must be a tribunal
competent by its
Page 144 U. S. 45
constitution -- that is, by the law of its creation -- to pass
upon the subject matter of the suit, and if that involves merely a
determination of the personal liability of the defendant, he must
be brought within its jurisdiction by service of process within the
state, or his voluntary appearance."
P.
95 U. S. 733.
See also D'Arcy v.
Ketchum, 11 How. 165;
St. Clair v. Cox,
106 U. S. 350;
Latimer v. Union Pacific Railway, 43 Mo. 105.
It may be admitted that any state may by its laws require, as a
condition precedent to the right of a corporation to be organized
or to transact business within its territory, that it shall appoint
an agent there on whom process may be served, or even that every
stockholder in the corporation shall appoint an agent upon whom, or
designate a domicile at which, service may be made within the
state, and that upon his failure to make such appointment or
designation the service may be made upon a certain public officer,
and that judgment rendered against the corporation after such
service shall bind the stockholders, whether within or without the
state. In such cases, the service is held binding because the
corporation or the stockholders, or both, as the case may be, must
be taken to have consented that such service within the state shall
be sufficient and binding, and no individual is bound by the
proceedings who is not a stockholder.
Lafayette
Ins. Co. v. French, 18 How. 404;
Ex Parte
Schollenberger, 96 U. S. 369;
Pennoyer v. Neff, 95 U. S. 714,
95 U. S. 735;
Vallee v. Dumergue, 4 Exch. 290, 303;
Copin v.
Adamson, L.R. 9 Exch. 345, 355, 356, 1 Exch.D. 17.
But such is not this case. Under a former statute of Missouri,
any officer holding an execution against a corporation which had
been returned unsatisfied might, without further action of the
court, levy the same execution upon the property of stockholders
within the state. Missouri Rev.Stat. 1855, c. 34, §§ 13, 14. In
that condition of the law the judgment and execution bound only the
property of stockholders on which it was levied within the state,
and created no personal liability on their part which could be
enforced by suit in another state, and if the officer levied the
execution on the
Page 144 U. S. 46
property of any person not a stockholder, he was liable as a
trespasser. The very object of the existing statute, as manifest on
its face and as declared by the Supreme Court of Missouri, was to
change the law so as to leave nothing to the discretion of the
officer and to require the judgment creditor to apply to the court
for execution against any person whom he sought to charge as a
stockholder, and to have all questions affecting his relations to
the corporation and its creditors investigated and determined by
the court before an execution should issue against him.
Skrainka v. Allen, 76 Mo. 384, 391.
And see Holyoke
Bank v. Goodman Co., 9 Cush. 576, 583.
In the case at bar, the defendant never resided in Missouri, and
was not served with process within the state either upon the
original writ against the corporation or upon the motion for
execution against him. He denies that he was a stockholder, and the
question whether he was one was not tried or decided in the
controversy between the plaintiff and the corporation nor involved
in the judgment recovered by one of those parties against the
other. Under the statute of Missouri and upon fundamental
principles of jurisprudence, he is entitled to legal notice and
trial of the issue whether he is a stockholder before he can be
charged with personal liability as such, and personal service of
the notice within the jurisdiction of the court is essential to
support an order or judgment ascertaining and establishing such
liability, unless he has voluntarily appeared or otherwise waived
his right to such service, which he has not done in this case.
These views are maintained by a very recent decision of the
Supreme Court of Missouri in
Wilson v. St. Louis & San
Francisco Railway, 18 S.W. 286, as well as by the English
cases expounding St. of 8 and 9 Vict. c. 16, § 36, which was the
source of the provision of the existing statute of Missouri.
Edwards v. Kilkenny &c. Railway, 1 C. B. (N.S.) 409,
14 C.B.(N.S.) 526, and note, citing words of English statute;
Ilfracombe Railway v. Devon and Somerset Railway, L.R. 2
C.P. 15;
Shrimpton v. Sidmouth Railway Company, L.R. 3
C.P. 80;
Skrainka v. Allen, 76
Page 144 U. S. 47
Mo. 384, 388, 389.
See also Howell v. Manglesdorf, 33
Kan. 194.
The cases in which judgments against a territorial and municipal
corporation have been enforced against its inhabitants, either by
direct levy of execution on their property, according to common law
or ancient usage, as in New England, or by mandamus to levy a tax
to pay the judgment, pursuant to express statute, as in Missouri,
have no bearing upon this case.
Bloomfield v. Charter Oak
Bank, 121 U. S. 121,
121 U. S. 120,
and cases cited;
State v. Rainey, 74 Mo. 229.
Judgment affirmed.
*
"If any execution shall have been issued against any
corporation, and there cannot be found any property or effects
whereon to levy the same, then such execution may be issued against
any of the stockholders to the extent of the amount of the unpaid
balance of such stock by him or her owned, provided always that no
execution shall issue against any stockholder except upon an order
of the court in which the action, suit, or other proceedings shall
have been brought or instituted, made upon motion in open court,
after sufficient notice in writing to the persons sought to be
charged, and upon such motion, such court may order execution to
issue accordingly, and provided further that no stockholder shall
be individually liable in any amount over and above the amount of
stock owned."