1. An enactment reducing the time prescribed by the statute of
limitations in force when the right of action accrued is not
unconstitutional provided a reasonable time be given for the
commencement of a suit before the bar takes effect.
2. This Court concurs in opinion with the Supreme Court of
Georgia that the time prescribed by the statute of that state,
approved March 16, 1863, in which suits for the enforcement of
rights which accrued prior to June 1, 1865, should be brought is
not so short or unreasonable, under the circumstances which led to
its enactment, as to render it unconstitutional.
3. That statute may be set up as a valid bar to suits brought
after Jan. 1, 1870, to enforce the individual liability of the
stockholders of a bank in that state for the ultimate redemption of
its bills which it ceased and failed to pay before June 1, 1865, or
to recover the unpaid balance due on stock subscriptions at the
time of such failure.
4. That balance is a debt to the bank, and inures to the benefit
of all its creditors, while the individual liability for the
redemption of its bills operates only in favor of the holders of
them.
5.
Quaere,, can a creditor of a dissolved corporation
who has not recovered a judgment and exhausted his remedies at law
proceed in equity to subject chosen in action to the payment of his
demand ?
6. A statutory liability is as much the subject of remedial
legislation as a liability by contract, unless the remedy enters
into and forms a part of the obligation which the statute
creates.
The Planters' Bank of the state of Georgia was incorporated by
the legislature of that state, with a charter, providing that the
stockholders, for the time being, shall
"be pledged and bound, in proportion to the amount of the shares
that each individual or company may hold in said bank, for the
ultimate redemption of the bills or notes issued by or from said
bank, during the time he, she, or they may hold such stock, in the
same manner as in ordinary commercial cases, or in simple cases of
debt."
The bank issued notes, some of which, in due course of trade,
came into the possession of the complainants.
The bank failed to pay its notes in lawful money on the
twentieth day of February, 1865, and nothing has been paid thereon
except as hereinafter stated.
On the 24th of May, 1866, the stockholders, being of opinion
that the corporation was insolvent and unable to pay its debts,
Page 95 U. S. 629
ordered the board of directors to execute an assignment to
Anderson and Mercer of the assets of the bank, for the purpose of
equally distributing them among the creditors and bill-holders, and
to surrender its charter to the governor of the state at such time
as they might deem expedient.
On the 9th of July, 1866, the directors, in the name of the
bank, assigned to Anderson and Mercer its property, both real and
personal, and made said assignees their attorneys, in the name of
the bank or otherwise, and, for the trusts created by the
assignment, to ask, demand, recover, and receive of and from all
and every person and persons all and singular the property and
estate, goods, chattels, wares, merchandise, debts, choses in
action, sum and sums of money and demands due and owing or
belonging to said bank, and in default of delivery or payment in
the premises, to sue, prosecute, and implead for the same, as they
might see fit, &c.
The assignees accepted their trust on the same day, and soon
after published a notice to all bill-holders and other persons
having claims against the bank, to present them for
liquidation.
On the 24th of December, 1869, Harvey Terry presented to the
assignees for liquidation bills of the said bank, to the amount of
$5,605.
Joshua and Thomas Green, in December of that year, presented to
the assignees for liquidation bills to the amount of $5,791. Upon
the bills so presented, a dividend of twenty percent was paid
before Jan. 1, 1870.
Subsequently to the payment of this dividend, the assignees
filed a bill in equity in the Superior Court of Chatham County,
Georgia. McNish and other creditors of the bank, including the
present complainants, were made defendants.
Their object was to obtain direction as to the mode of paying
out the assets in their hands; and the court, July 14, 1871,
adjudged, among other things, that there was due to Terry the sum
of $5,605, less the dividend of twenty percent received by him, and
also the sum of $1,117, on bills on which he had received no
dividend; that there was due to Joshua and to Thomas Green $5,791
on bills of the bank, less the dividend of twenty percent
previously paid thereon; and that the assignees
Page 95 U. S. 630
should pay the balance of the assets to all creditors named in
the decree, in proportion to their respective dues.
In obedience to the decree, the assignees paid further
dividends, making the whole amount so paid thirty and one-eighth
percent of the face value of the bills, and they were finally
discharged June 30, 1873.
On the eighteenth day of March, 1869, the General Assembly of
Georgia passed an act accepting the surrender of the charter of the
bank.
The amount of bills outstanding at the time of the failure of
the bank was $1,460,112. Of this amount, $207,448 were redeemed
before the bank executed its deed of assignment.
Besides the bills so presented by said Terry, he is now the
owner and holder of bills to the amount of $1,464, upon which no
dividend has been paid.
The present bill of complaint was filed April 6, 1874, by him,
Joshua Green, and Thomas Green, on behalf of themselves and others,
against said Anderson and Mercer, the assignees and the other
defendants who are stockholders of the bank. It sets forth the
preceding facts, and alleges that at the time the bank failed its
capital stock was not paid in full, and that many of the
stockholders had paid in only about eighty percent of their
subscription; that the right to sue for and recover the several
balances due by them on their shares passed by the assignment of
July 9, 1866, to the assignees, who had never collected them.
It prays that the stockholders be decreed to pay such sum upon
each share of stock owned and held by them respectively as shall
make up the full sum of $100 -- its par value -- and such further
sums respectively as may be found due, in order to pay the
complainants' demands.
The defendant Anderson demurred generally.
The others demurred specially, upon the ground
1, that the suit was barred by the statute of limitations;
2, that complainants, although defendants in the case of
Anderson and Mercer against McNish and others, in the Superior
Court for Chatham County, allege no reason or excuse for not
seeking the aid of that court to require the assignees to collect
the unpaid subscriptions due from the several stockholders, or
why
Page 95 U. S. 631
the decree rendered in that cause should not be conclusive and
binding upon them,
3, that the complainants do not allege that the defendants held
any stock of the bank when the bills were issued, and
4, that as to the bills amounting to $1,464, as to which Terry
seeks judgment, the complaint does not set forth whether he became
the holder of them before or after the final decree in that case,
or why they were not presented for participation in the
distribution of assets of the bank.
The demurrers were sustained and the bill was dismissed. The
complainants thereupon brought the case here.
The statute of limitations of Georgia approved March 16, 1869,
so far as it bears upon this case, is as follows:
"SECTION 3. And be it further enacted that all actions on bonds
or other instruments under seal, and all suits for the enforcement
of rights accruing to individuals or corporations, under the
statute or acts of incorporation, or in any way by the operation of
law which accrued prior to the 1st of June, 1865, not now barred,
shall be brought by the 1st of January, 1870, or the right of the
party, plaintiff or claimant, and all right of action for its
enforcement, shall be forever barred."
"SEC. 4. And be it further enacted that all actions on
promissory notes, bills of exchange, or other simple contracts in
writing, and all actions on open accounts, or for the breach of any
contract not under the hand of the party sought to be charged, or
upon any implied assumpsit or undertaking, which accrued on a
contract which was made prior to June 1, 1865, not now barred,
shall be brought by the 1st of January next, after the passage of
this act, or the right of the party, plaintiff or claimant, and all
right of action for its enforcement shall be for ever barred."
"SEC. 6. And be it further enacted, that all other actions upon
contracts, expressed or implied, or upon any debt or liability
whatsoever, due the public, or a corporation, or a private
individual or individuals, which accrued prior to the 1st of June,
1865, and are not now barred, shall be brought by the 1st of
January, 1870, or both the right and the right of action to enforce
it shall be forever barred. All limitations hereinbefore expressed
shall apply as well to courts of equity as courts of law, and the
limitation shall take effect in all cases mentioned in this act,
whether the right of action had actually accrued prior to the 1st
of June, 1865, or was then only inchoate and imperfect, if the
contract or liability was then in existence. "
Page 95 U. S. 632
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
In
Terry v. Tubman, 92 U. S. 156, we
decided that where the charter of a bank contained a provision
binding the individual property of its stockholders for the
ultimate redemption of its bills in proportion to the number of
shares held by them respectively, the liability of the stockholder
arose when the bank refused or ceased to redeem, and was
notoriously insolvent, and that when such insolvency occurred prior
to June 1, 1865, an action against a stockholder not commenced by
Jan. 1, 1870, was barred by the statute of limitations of Georgia
of March 16, 1869. That act, as recited in its preamble, was passed
on account of the confusion that had "grown out of the distracted
condition of affairs during the late war," and substantially barred
suits upon all actions which accrued before the close of the war,
if not commenced by the first day of January, 1870.
This is a suit to enforce the liability of the stockholders of a
bank under a provision of the charter similar to that considered in
Terry v. Tubman, and it is expressly averred in the bill
that the bank stopped payment on the 20th of February, 1865, and
never resumed. The affairs of the bank were closed up under an
assignment made July 9, 1866, the proceeds of which paid only a
small percentage upon its liabilities. The case is thus brought
directly within our former ruling, but it is insisted that the act
of 1869 is unconstitutional because it impairs the obligation under
which the complainants claim, and, as that question was not
directly passed upon in the other case, we are asked to consider it
now. The argument is, that as the statute of limitations in force
when the liability of the defendants was incurred did not bar an
action until the expiration of twenty years from the time the
action accrued, a statute passed subsequently reducing the
limitation impaired the contract, and was consequently void.
This Court has often decided that statutes of limitation
affecting existing rights are not unconstitutional, if a reasonable
time is given for the commencement of an action before the
Page 95 U. S. 633
bar takes effect.
Hawkins v.
Barney, 5 Pet. 451;
Jackson v.
Lamphire, 3 Pet. 280;
Sohn v.
Waterson, 17 Wall. 596;
Christmas v.
Russell, 5 Pet. 290;
Sturges v.
Crowninshield, 4 Wheat. 122. It is difficult to see
why, if the legislature may prescribe a limitation where none
existed before, it may not change one which has already been
established. The parties to a contract have no more a vested
interest in a particular limitation which has been fixed, than they
have in an unrestricted right to sue. They have no more a vested
interest in the time for the commencement of an action than they
have in the form of the action to be commenced, and as to the forms
of action or modes of remedy, it is well settled that the
legislature may change them at its discretion, provided adequate
means of enforcing the right remain.
In all such cases, the question is one of reasonableness, and we
have, therefore, only to consider whether the time allowed in this
statute is, under all the circumstances, reasonable. Of that the
legislature is primarily the judge, and we cannot overrule the
decision of that department of the government, unless a palpable
error has been committed. In judging of that, we must place
ourselves in the position of the legislators, and must measure the
time of limitation in the midst of the circumstances which
surrounded them, as nearly as possible; for what is reasonable in a
particular case depends upon its particular facts.
Here, nine months and seventeen days were given to sue upon a
cause of action which had already been running nearly four years or
more. The third section of the statute is as follows:
"That all actions on bonds or other instruments under seal, and
all suits for the enforcement of rights accruing to individuals or
corporations under the statute or acts of incorporation, or in any
way by operation of law which accrued prior to the 1st of June,
1865, not now barred, shall be brought by the 1st of January, 1870,
or the right of the party, plaintiff or claimant, and all right of
action for its enforcement, shall be forever barred."
The liability to be enforced in this case is that of a
stockholder, under an act of incorporation, for the ultimate
redemption
Page 95 U. S. 634
of the bills of a bank swept away by the disasters of a civil
war which had involved nearly all of the people of the state in
heavy pecuniary misfortunes. Already the holders of such bills had
had nearly four years within which to enforce their rights. Ever
since the close of the war, the bills had ceased to pass from hand
to hand as money, and had become subjects of bargain and sale as
merchandise. Both the original billholders and the stockholders had
suffered from the same cause. The business interests of the entire
people of the state had been overwhelmed by a calamity common to
all. Society demanded that extraordinary efforts be made to get rid
of old embarrassments, and permit a reorganization upon the basis
of the new order of things. This clearly presented a case for
legislative interference within the just influence of
constitutional limitations. For this purpose the obligations of old
contracts could not be impaired, but their prompt enforcement could
be insisted upon or an abandonment claimed. That, as we think, has
been done here, and no more. At any rate, there has not been such
an abuse of legislative power as to justify judicial interference.
As was said in
Jackson v. Lamphire, supra:
"The time and manner of their operation [statutes of
limitation], the exceptions to them, and the acts from which the
time limited shall begin to run will generally depend upon the
sound discretion of the legislature, according to the nature of the
titles, the situation of the country, and the emergency which leads
to their enactment."
The Supreme Court of Georgia, in
George v. Gardner, 49
Ga. 441, held that the time prescribed in this act was not so short
or unreasonable under the circumstances as to make it
unconstitutional, and the Circuit Court of the United states for
the Southern District of Georgia held to the same effect in
Samples v. Bank, 1 Woods 523. We are satisfied with these
conclusions. The circumstances under which the statute was passed
seem to justify the action of the legislature. The time, though
short, was sufficient to enable creditors to elect whether to
enforce their claims or abandon them.
This disposes of the questions arising upon the individual
liability of the stockholders under the charter. It still remains
to consider the cases of the stockholders whose subscriptions
Page 95 U. S. 635
were not paid in full at the time of the failure of the bank.
For this purpose it is not necessary to decide whether this
liability passed to the assignees under the assignment. If it did
not, and the present complainants have the right to sue for it,
their action is barred by the statute of 1869. It was a debt due
the corporation June 1, 1865, and, by sec. 6 of that statute all
actions upon any debt or liability due a corporation, which accrued
prior to that date and was not barred when the act was passed, must
be brought by Jan. 1, 1870. The case of
Cherry v. Lamar,
decided by the Supreme Court of Georgia in January, 1877, is not,
as we understand it, at all in conflict with this. There, the
charter of the bank made a call by the directors and sixty days'
notice of it to the stockholders conditions precedent to the
collection of unpaid stock subscriptions, and it was consequently
held that the statute did not commence to run against such a
liability until the requisite call had been made and notice given.
Neither in this case nor in
Terry v. Tubman does any such
provision of the charter appear. For all that is shown in the
record, the stockholders were liable to suit at any time for the
recovery of the balance due from them.
These complainants are neither of them judgment creditors of the
bank. In a suit instituted by the assignees to close up the
assignment, they proved their claims, and the amount due them was
found for the purposes of a dividend. The finding was sufficient
for the purposes of distribution, but it has none of the
characteristics of a judgment or decree to be enforced as against
anything but the fund which the court was then administering.
We see nothing to take this case out of the operation of the
decision in
Terry v. Tubman, and the decree of the circuit
court is therefore
Affirmed.
At a subsequent day of the term, a petition for rehearing was
filed.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
In this petition, it is suggested that the provision of the
Page 95 U. S. 636
charter of the Planters' Bank, in respect to the liability of
subscribers to the capital stock for the payment of the balances
due upon their subscriptions, is substantially the same as that
passed upon in
Cherry v. Lamar, and that consequently,
under the ruling in that case, the statute of limitations is no bar
to this action for the recovery of balances due. This does not
appear either in the record or in the voluminous printed arguments
filed at the hearing. If it was mentioned in the oral argument, it
did not attract our attention.
But upon the facts as they are now stated the result will not be
changed. The liability of the stockholders upon their unpaid
subscriptions is that of debtors to the bank.
Ogilvie v.
Knox Insurance Co., 22 How. 380. Consequently the
balances now in controversy passed to the assignees under the
assignment, which was "of all the property, estate, credits, and
assets of the" bank. The liability of a stockholder for his
subscription is entirely different from that imposed by the charter
"for the ultimate redemption of the bills" issued by the bank. The
subscription inures to the benefit of all creditors, while the
individual liability under the charter operates only in favor of
billholders.
Since the debts due upon the subscriptions passed to the
assignees, the appellants, being parties to the suit instituted by
them to close their trust, had the right to insist that this part
of the assets should be reduced to possession, and distributed
before the trust was closed and the assignees were discharged.
Ordinarily, a creditor must put his demand into judgment against
his debtor and exhaust his remedies at law before he can proceed in
equity to subject choses in action to its payment. To this rule,
however, there are some exceptions, and we are not prepared to say
that a creditor of a dissolved corporation may not, under certain
circumstances, claim to be exempted from its operation. If he can,
however, it is upon the ground that the assets of the corporation
constitute a trust fund which will be administered by a court of
equity in the absence of a trustee; that principle being that
equity will not permit a trust to fail for want of a trustee. But
here there was a trustee invested with ample powers to collect and
dispose of all the assets belonging to the alleged trust fund. In a
suit to which
Page 95 U. S. 637
these appellants were parties one court of equity has found that
this trustee has fully executed his trust, and that the fund is
exhausted. That decree is a bar to any further proceeding in equity
by them, as creditors of the bank before judgment, for the purpose
of securing the administration of the same trust. If there are
assets which the trustee did not reach, the appellants are remitted
to their remedies, after judgment against the bank, to subject
equitable assets to the payment of their demands. We have seen, in
the former opinion filed, that they do not now occupy the position
of judgment creditors.
The other questions presented by the petition for rehearing have
already been sufficiently considered. A liability by statute is as
much the subject of remedial legislation as a liability by
contract, unless the remedy enters into and forms part of the
obligation which the statute creates. Such, we think, is not the
case here.
Petition overruled.
NOTE -- In
Terry v. Coskery, error to the Circuit Court
of the United states for the Southern District of Georgia, which
was argued at the same time as was the preceding case by Mr. Harvey
Terry and Mr. William Stone for the plaintiff in error, and by Mr.
W. H. Hull for the defendant in error, MR. CHIEF JUSTICE WAITE, in
delivering the opinion of the Court, remarked:
"There is nothing to distinguish this case in principle from
that of
Terry v. Tubman, 92 U. S. 156, and that of
Terry v. Anderson, supra, p.
95 U. S.
628."
Judgment affirmed.
