A plaintiff, after the recovery of a judgment against a Kansas
corporation in the courts of Kansas and the return of an execution
unsatisfied, can maintain an action in any court of competent
jurisdiction against a stockholder of the corporation to recover in
satisfaction of his judgment an amount not exceeding the par value
of the defendant's stock.
Whitman v. Oxford National Bank,
ante, 176 U. S. 563,
followed to this point.
The action of the Supreme Court of Rhode Island in failing to
recognize such right in the plaintiff in error can be revised by
proceeding in error in this Court.
The judgment rendered in the Kansas court is in that state
conclusive against the corporation, as well as binding upon the
stockholder, and, under the Constitution and laws of the United
States, it should have the like force and effect in other states
when attempted to be enforced in their courts.
The facts of this case are these: the plaintiff in error,
plaintiff below, a creditor of the Commonwealth Loan & Trust
Company, a corporation duly organized under the laws of the State
of Kansas, recovered a judgment on December 8, 1893, in the Circuit
Court of the United States for the District of Kansas against the
corporation for the sum of $16,136.76 debt, and $28.45 costs of
suit. Thereafter, on April 27, 1894, an execution was issued on the
judgment, and after due search and diligence, no property of the
corporation could be found to be taken in satisfaction thereof, and
it was returned wholly unsatisfied. The corporation was not a
railway, religious, or charitable corporation. The defendant is a
stockholder in that corporation, holding ten shares of the capital
stock of the par value of $100 each, and appearing as such
stockholder on the books of the corporation. Setting forth these
facts with further detail of the provisions of the Kansas
Constitution and statutes, the plaintiff filed its declaration in
the Common Pleas Division of the Supreme Court of Rhode Island to
recover a judgment for a sum equal to the amount of defendant's
stock. To this declaration a demurrer was filed
Page 176 U. S. 641
and sustained and judgment entered for the defendant, 20 R.I.
466, to reverse which judgment the plaintiff sued out this writ of
error.
MR. JUSTICE BREWER delivered the opinion of the Court.
This case brings to our consideration the same constitutional
and statutory provisions of the State of Kansas which were before
us in
Whitman v. Oxford National Bank, 176 U.
S. 559. In that case, we decided that a plaintiff, after
the recovery of a judgment against a Kansas corporation in the
courts of Kansas and the return of an execution unsatisfied, could
maintain an action in any court of competent jurisdiction against a
stockholder of the corporation to recover in satisfaction of his
judgment an amount not exceeding the par value of the defendant's
stock. It is unnecessary to re-discuss the questions there
considered.
It remains to be determined whether the action of the Supreme
Court of Rhode Island in failing to recognize the right which, in
the case just referred to, we have held that the plaintiff
possessed is one which can be revised by this proceeding in error.
In order to give this Court jurisdiction of a case decided in the
courts of a state, there must be some question arising under the
Constitution of the United States, some alleged denial of a right
or immunity secured by that Constitution. The plaintiff says that
the decision of the Supreme Court of Rhode Island denied it a right
given by Section 1, Article IV, of the Constitution of the United
States, which reads:
"Full faith and credit shall be given in each
Page 176 U. S. 642
state to the public acts, records, and judicial proceedings of
every other state. And the Congress may by general laws prescribe
the manner in which such acts, records, and proceedings shall be
proved, and the effect thereof,"
and the following statute passed in pursuance thereof, to-wit,
Revised Statutes, section 905:
"The acts of the legislature of any state or territory, or of
any country subject to the jurisdiction of the United States, shall
be authenticated by having the seals of such state, territory, or
country affixed thereto. The records and judicial proceedings of
the courts of any state or territory, or of any such country, shall
be proved or admitted in any other court within the United States
by the attestation of the clerk and the seal of the court annexed,
if there be a seal, together with a certificate of the judge, chief
justice, or presiding magistrate, that the said attestation is in
due form. And the said records and judicial proceedings, so
authenticated, shall have such faith and credit given to them in
every court within the United States as they have by law or usage
in the courts of the state from which they are taken."
The plaintiff's contention that these federal provisions
required a decision different from that made by the state court was
distinctly presented and ruled against. The jurisdiction,
therefore, of this Court is clear. It may examine and inquire
whether any right secured by these provisions was denied by the
state court, though if it finds that no such right was denied, the
judgment will have to be affirmed, no matter what may be the
opinion of this Court as to the correctness of the ruling as a
question of general law.
The Constitution declares that full faith and credit shall be
given in each state to the public acts, records, and judicial
proceedings of every other state, and that Congress may not only
prescribe the mode of authentication, but also the effect thereof.
Section 905 prescribes such mode, and adds that the
"records and judicial proceedings, so authenticated, shall have
such faith and credit given to them in every court within the
United States as they have by law or usage in the courts of the
state from which they are taken."
Such is the congressional declaration
Page 176 U. S. 643
of the effect to be given to the records and judicial
proceedings of one state in the courts of every other state. In
other words, the local effect must be recognized everywhere through
the United States.
What, then, is the faith and credit given by law or usage in the
courts of Kansas to a judgment against a corporation? What is the
effect of such a judgment as there established? This is a question
not answered by referring to general principles of law, by
determining what at common law was the significance and effect of a
judgment, but can be answered only by an examination of the
decisions of the courts of Kansas. The law and usage in Kansas,
prescribed by its legislature and enforced in its courts, make such
a judgment not only conclusive as to the liability of the
corporation, but also an adjudication binding each stockholder
therein. We do not mean that it is conclusive as against any
individual sued as a stockholder that he is one, or if one, that he
has not already discharged by payment to some other creditor of the
corporation the full measure of his liability, or that he has not
claims against the corporation, or judgments against it, which he
may, in law or equity, as any debtor, whether by judgment or
otherwise, set off against a claim or judgment, but in other
respects it is an adjudication binding him. He is so far a part of
the corporation that he is represented by it in the action against
it.
Ball v. Reese, 58 Kan. 614. In that case, it was said,
correcting an inference which was sought to be drawn from language
in the case of
Howell v. Manglesdorf, 33 Kan. 194, in
respect to the effect of a judgment against a corporation (pp.
617-618):
"The general holding in this court has been that a judgment is
final and conclusive between the parties and their privies, and we
think it must be held that every stockholder in a corporation is so
far privy in interest in an action against the corporation that he
is bound by the judgment against it. In the absence of fraud and
collusion, the judgment must be held to be final and conclusive
against the stockholder if the court rendering it has final
jurisdiction. As the judgment was valid, the court committed error
in allowing the defendants to go
Page 176 U. S. 644
behind it and contest matters which were conclusively settled by
the judgment against the corporation."
This representative character of the corporation has been
affirmed by this Court in several cases. In
Hawkins v.
Glenn, 131 U. S. 319, it
was held that
"in the absence of fraud, stockholders are bound by a decree
against their corporation in respect to corporate matters, and such
a decree is not open to collateral attack."
This was a case in which an assessment ordered by a court which
had jurisdiction of the corporation was held binding upon
stockholders residing in another state, and in the opinion, on page
131 U. S. 329,
it was said by CHIEF JUSTICE FULLER:
"A stockholder is so far an integral part of the corporation
that, in the view of the law, he is privy to the proceedings
touching the body of which he is a member."
See also Glenn v. Liggett, 135 U.
S. 533;
Great Western Telegraph Co. v. Purdy,
162 U. S. 329,
162 U. S.
337.
Now, as the judgment rendered in the Kansas court is in that
state not only conclusive against the corporation, but also binding
upon the stockholder, it must, in order to have the same force and
effect in other states of the Union, be adjudged in their courts to
be binding upon him, and the only defenses which he can make
against it are those which he could make in the courts of Kansas.
The question to be determined in this case was not what credit and
effect are given in an action against a stockholder in the courts
of Rhode Island to a judgment in those courts against the
corporation of which he is a stockholder, but what credit and
effect are given in the courts of Kansas in a like action to a
similar judgment there rendered. Thus and thus only can the full
faith and credit prescribed by the Constitution of the United
States and the act of Congress be secured.
In
Crapo v.
Kelly, 16 Wall. 610,
83 U. S. 619,
referring to the statute of Congress respecting the authentication
of records, it was said:
"Under this statute, it has been held in this Court from an
early day that the faith and credit spoken of are not limited to
the form of the record, and are not satisfied by its admission
Page 176 U. S. 645
as a record. It is held that the same effect is to be given to
the record in the courts of the state where produced as in the
courts of the state from which it is taken."
The fact that this judgment was rendered in a court of the
United States, sitting within the State of Kansas, instead of one
of the state courts, is immaterial, for, as said in
Crescent
City Live Stock Co. v. Butchers' Union, 120 U.
S. 141,
120 U. S. 147,
citing
Dupasseur v.
Rochereau, 21 Wall. 130,
88 U. S. 135;
Embry v. Palmer, 107 U. S. 3:
"It may be conceded, then, that the judgments and decrees of the
circuit court of the United States sitting in a particular state,
in the courts of that state, are to be accorded such effect, and
such effect only, as would be accorded in similar circumstances to
the judgments and decrees of a state tribunal of equal
authority."
See also Metcalf v. Watertown, 153 U.
S. 671,
153 U. S. 676;
Pittsburgh, Cincinnati &c. Railway. v. Long Island Loan
& Trust Co., 172 U. S. 493.
We are of the opinion, therefore, that the Supreme Court of
Rhode Island has failed to give to the judgment in the Circuit
Court of the United States for the District of Kansas that force
and effect which it has within the limits of the State of Kansas,
and that the failure so to do is an error available in this
Court.
The judgment of the Supreme Court of Rhode Island must
therefore be reversed, and the case remanded for further
proceedings not inconsistent with the views herein
expressed.
MR. JUSTICE PECKHAM dissents.