A state statute changing a remedy for enforcing contract rights
does not impair the contract if it gives a more efficacious remedy
than existed before or does not impair it so materially as to
affect the creditor's rights.
Where, as in this case, this Court cannot say that the state
court wrong in holding the new remedy under a state statute to be
more efficacious than the former remedy for enforcing claim of
creditors
Page 226 U. S. 456
of a corporation against the stockholders, it will not declare
the statute unconstitutional. And so
held as to Chap. 305,
Laws of Maryland of 1908.
One not hurt by a provision of an act cannot raise the question
of its constitutionality on that ground.
113 Md. 77 affirmed.
The facts, which involve the constitutionality of a statute of
Maryland providing remedy for enforcing the liability of
stockholders of corporations, are stated in the opinion.
Page 226 U. S. 457
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is an action brought by the plaintiff in error as a
creditor of the South Baltimore Steel Car & Foundry Company to
recover its claim from the defendant, a holder of stock in that
company, the subscription for which had not been fully paid. The
action was begun on February 26, 1908, and at that date it could be
maintained. But in April, a statute was enacted (Act of 1908, c.
305
Page 226 U. S. 458
Laws 1908, p. 58) making the stockholder's liability assets of
the corporation, saving the rights of creditors at the date of the
act, but providing that the exclusive remedy for such rights, as
against Maryland stockholders, should be by bill in equity on
behalf of such creditors as might come in. This provision was made
operative as of July 1, 1907, and was to cause all actions at law
of this kind brought since then to abate, saving the right to
become party to a bill. On this statute, the defendant moved to
dismiss the suit. The motion was granted, and the judgment was
affirmed by the Court of Appeals, which sustained the
constitutionality of the act as so applied. 113 Md. 77.
Of course, the objection is that the law impairs the obligation
of the plaintiff's contract. If the stockholder's liability were
purely local, and no more than matter of remedy for the collection
of the principal debt, still this objection would have to be
considered.
See Hawthorne v.
Calef, 2 Wall. 10;
Brown v. Eastern Slate
Co., 134 Mass. 590, 592. But the case was argued on the
footing of a contract between the creditor and the stockholder,
and, as the statute seems to assume that the stockholder's
liability may follow him into other jurisdictions and the Court of
Appeals affirmed that a contract between the parties is presumed,
we in turn assume that view to be correct.
Bernheimer v.
Converse, 206 U. S. 516,
206 U. S. 529.
In either view, the question put in the form most favorable for the
plaintiff is the same -- whether the remedy against the defendant
is impaired so materially as to affect the plaintiff's rights.
McGahey v. Virginia, 135 U. S. 662,
135 U. S.
693.
The plaintiff's supposed contract was subject to peculiar
infirmities. His right was shared equally by all other creditors of
the corporation, and not only might some other creditor by
diligence have got in ahead of the plaintiff and have exhausted the
fund for which the defendant could be held, but the right depended
on the stockholder's
Page 226 U. S. 459
will. As was observed by Judge Rose, following the Maryland
cases, in
Republic Iron & Steel Co. v. Carlton, 189 F.
126, 137, the statute does no more than the stockholder was free to
do before. He could have paid the corporation or a receiver or
other creditors. The question whether the remedy on this contract
was impaired materially is affected not only by the precarious
character of the plaintiff's right, but by consideration of fact --
of what the remedy amounted to in practice. It is admitted that
bringing the action gave the plaintiff no lien, as it seems
mistakenly to have been assumed to do in
Myers v. Knickerbocker
Trust Co., 139 F. 111, 116. The Court of Appeals states that
the remedy has been found in practice an uncertain one, less
efficacious than that which is substituted. There is nothing to
contradict their statement as to what experience has taught. With
that fact before us and also the absolute dependence of the
creditor upon the will of the stockholder, we cannot go into nice
speculation as to the probable result of this particular case, or
say that the decision was wrong. The power of the state to make
similar changes of remedy is asserted in more general terms than we
have employed, in
Fourth National Bank v. Francklyn,
120 U. S. 747,
120 U. S. 755.
See also Henley v. Myers, 215 U.
S. 373,
215 U. S.
385.
A further objection is based upon the period of limitation
established by the act. But, as it does not appear that the
plaintiff was hurt by it, this objection is not open.
Darnell
v. Indiana, ante, p.
226 U. S. 390.
Judgment affirmed.