Russell v. Todd, 309 U.S. 280 (1940)
U.S. Supreme CourtRussell v. Todd, 309 U.S. 280 (1940)
Russell v. Todd
Argued January 12, 1940
Decided February 26, 1940
309 U.S. 280
1. The shareholders' liability, "equally and ratably," for the debts of a joint stock land bank, under § 16 of the Federal Farm Loan Act, is enforceable only by a single representative suit in equity in behalf of all the creditors, in which the existence and extent of insolvency, and the ratable shares of the contribution by shareholders, can be ascertained and an equitable distribution made of the fund recovered. P. 309 U. S. 285.
The suit is not any the less in equity because it turns out that the liability of the shareholders equals the full par value of their stock. P. 309 U. S. 286.
2. The test of the inadequacy of the legal remedy prerequisite to resort to a federal court of equity is the legal remedy which federal, rather than state, courts afford. P. 286.
The jurisdiction of federal courts of equity, as determined by that test, is neither enlarged nor diminished by the names given to remedies or the distinction made between them by state practice.
3. The Rules of Decision Act embraces rules established by judicial decision as well as statutory rules, but does not apply to suits in equity. P. 309 U. S. 287.
4. Equity provides its own rule of limitations through the doctrine of laches, in the absence of any statute of limitations made applicable to equity suits. P. 309 U. S. 287.
5. When consonant with equitable principles, federal courts of equity apply as their own the local statutes of limitations applicable to equitable causes of action. P. 309 U.S. 288.
6. Even though there is no state statute applicable to similar equitable demands, when the jurisdiction of the federal court is concurrent with that at law, or the suit is brought in aid of a legal right, equity will withhold its remedy if the legal right is barred by the local statute of limitations. P. 309 U. S. 289.
7. Where the federal equity jurisdiction is exclusive and is not exercised in aid of a legal right, state statutes of limitations barring actions at law are inapplicable, and, in the absence of any state statute barring the equitable remedy in like cases, the federal court
is remitted to and applies the doctrine of laches as controlling. P. 309 U. S. 289.
8. In the absence of a controlling Act of Congress, federal courts of equity, in enforcing rights arising under federal statutes, will, without reference to the Rules of Decision Act, adopt and apply local statutes of limitations which are applied to like causes of action by the state court. P. 309 U. S. 293.
9. Sec. 49 of the New York Civil Practice Act, barring in three years actions against directors or stockholders of moneyed corporations or banking associations to enforce a liability created by the common law or by statute, appears to have been construed by the state courts as inapplicable to suits where the remedy is exclusively equitable. Held, that the present equitable cause of action given by § 16 of the Federal Farm Loan Act is not barred by the three-year statute of limitations prescribed by that section. Pp. 309 U. S. 290, 309 U. S. 293.
10. The extent to which federal courts, in the exercise of the authority conferred upon them by Congress to administer equitable remedies, are bound to follow state statutes and decisions affecting those remedies is not considered. P. 309 U. S. 294.
104 F.2d 169 affirmed.
Certiorari, 308 U.S. 541, to review the affirmance of a decree, 1 F. Supp. 788; 20 id. 930, 936, which overruled a plea of the statute of limitations and granted relief to the plaintiffs in a suit to enforce shareholders' liability for debts of an insolvent joint stock land bank.