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in the Ohio courts alone is contemplated by | Ohio Rev. Stat. 1880, § 3260, as amended in 1894, which was enacted in pursuance of this constitutional provision, and itself provides for the procedure and states the remedy.

[No. 167.]

stockholders of certain corporations, which appear in the Revised Statutes of 1880, § 3258, in the following form:

"The stockholders of a corporation which may be hereafter formed, and such stockholders as are now liable under former statutes, shall be deemed and held liable,

Argued and submitted March 7, 1905. De- in addition to their stock, in an amount cided April 3, 1905.

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Statement by Mr. Justice Peckham:

This case comes here by virtue of a certificate from the United States circuit court of appeals for the second circuit, which sets forth the following facts:

The case came before the circuit court of appeals by appeal from the decree of the United States circuit court for the southern district of New York, sustaining demurrers to the bill of complaint and dismissing the bill. The complainant in the bill was a creditor of the railway company (the defendant), which is a corporation created under the laws of the state of Ohio; and complainant recovered a judgment against the defendant railway company in the supreme court of the state of New York, upon which execution was issued and returned unsatisfied. The complainant then brought its bill in equity in the United States circuit court for the southern district of New York, for the benefit of itself and other creditors, against numerous stockholders of the railway company, defendant, residing in the district, to enforce the liability of those stockholders for the debts of the railway company, under the laws of Ohio, and that company was made a party defendant.

The Constitution of Ohio (1851), art. 13, §3, is as follows:

"Dues from corporations shall be secured by such individual liability of the stockholders, and other means, as may be prescribed by law; but in all cases, each stockholder shall be liable, over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum, at least equal in amount to such stock."

In pursuance of this provision of the Constitution the legislature of Ohio adopted statutory provisions with respect to the

equal to the stock by them subscribed, or otherwise acquired, to the creditors of the corporation, to secure the payment of the debts and liabilities of the corporation."

Section 3260 of the Revised Statutes of 1880, as amended in 1894, provided as follows:

"A stockholder or creditor may enforce such liability by action jointly against all the holders or owners of stock, which action shall be for the benefit of all the creditors of the corporation, and against all persons liable as stockholders; and in such action there shall be found and determined the amount payable by each person liable as stockholder on all the indebtedness of the corporation, in which adjudication no costs shall be taxed to nor collected of any stockholder to an amount which, together with the amount to be paid on said indebtedness, will exceed the amount of the stock on which he is liable, Provided, that in any such action, the plaintiff may file in the court a sworn statement that a stockholder or stockholders or the legal representatives of a deceased stockholder have not been summoned, giving their residence if known, and that it is impracticable to secure service of summons upon such stockholders or such legal representatives of a stockholder, and remitting from the claims of the plaintiff, or of other creditors consenting, so much as may be found payable by such stockholders not served with summons except those who may be insolvent or nonresident of the state; and judgment shall be rendered against the stockholders who have been served with summons for the pro rata amount for which they would be liable if all solvent stockholders resident of the state were served with summons; and when a creditor has prosecuted against a corporation an action of [at] law begun before any action to enforce the stockholders' liability, and has recovered final judgment only after such an action to enforce the stockholders' liability has been prosecuted to a final decree in the court in which the action was commenced, such judgment creditor may bring a like action against the stockholders of the corporation to enforce such judgment at any time within four years after the recovery of his said judgment, but the stockholders shall not be liable for any amount in excess of that provided in § 3258."

As so amended this section stood at the

time when this suit was begun. Afterwards, | less than six months from the first publicain 1900, but before the filing of the sec- tion of such order, and, in default thereof, ond amended bill of complaint, the section, as further amended and supplemented, provided as follows:

"Sec. 3260. Whenever any creditor of a corporation seeks to charge the directors, trustees, or other superintending officers of a corporation, or the stockholders thereof, on account of any liability created by law, he may file his complaint for that purpose in any common pleas court which possesses jurisdiction to enforce such liability.

"Sec. 3260 (a). The court shall proceed thereon, as in other cases, and, when necessary, shall cause an account to be taken of the property and obligations due to and from such corporation, and may appoint one or more receivers.

to be precluded from all benefit of the judgment which shall be rendered in such action, and from any distribution which shall be made under such judgment.

"Sec. 3260 (f). Upon a final judgment in any such action against an insolvent corporation, the court shall cause a just and fair distribution of the property and assets of such corporation or the proceeds thereof to be made among its creditors.

"Sec. II. That said § 3260 be, and hereby is, repealed.

"Sec. III. This act shall apply to pending actions, and shall take effect and be in force from and after its passage."

The court below sustained the demurrer on the following ground:

"It is thought that the question raised by this demurrer should be decided upon the assumption that the action is the one provided for by § 3260, Ohio Rev. Stat. as it stood after the amendment of 1894. Inasmuch as that section expressly provides for an action jointly against all the stockhold

"Sec. 3260 (b). If, on the coming in of the answer or upon the taking of such account, it appears that such corporation is insolvent, and has not sufficient property or effects to satisfy such creditor, the court may proceed to ascertain the respective liabilities of the directors, officers, and stockholders, and enforce the same by its judg-ers, including such as are out of the jument, as in other cases.

risdiction or for other causes cannot be served, and the complaint avers that there are stockholders who have not been made parties, there is a lack of parties defendant, and the demurrer is sustained. If, moreover, the amendments of the statute passed in 1900 are to be considered, the

"Sec. 3260 (c). In all cases in which the directors or other officers of a corporation, or the stockholders thereof, are made parties to an action in which a judgment is rendered, if the property of such corporation is insufficient to discharge its debts, the court shall give notice to nonresident stock-position of the demurrants is even stronger. holders, as provided in §§ 5048, 5049, 5050, 5051, or 5052 of the Revised Statutes, and shall first proceed to compel each stockholder to pay in the amount due and remaining unpaid on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the company.

"Sec. 3260 (d). If the debts of the company remain unsatisfied, the court shall proceed to ascertain the respective liabilities of the directors or other officers and of the stockholders, and to adjudge the amount payable by each, and enforce the judgment as in other cases. The court may authorize and direct the receiver to prosecute such action in his own name as receiver, as may be necessary, in other jurisdictions, to collect the amount found due from any officer or stockholder.

"Sec. 3260 (e). Whenever any action is brought against any corporation, its directors or other superintending officers, or stockholders, according to the provisions of this chapter, the court, whenever it appears necessary or proper, may order notice to be published in such manner as it shall direct, requiring all creditors of such corporation to exhibit their claims and become parties to the action, within a reasonable time, not

Manifestly, this action is not the one thereby provided for."

Messrs. Frederick C. McLaughlin and
Harvey Scribner for the bank.

Mr. Lucius H. Beers for Eno et al.
Mr. Joseph Fettretch for Hudson.
Messrs. Charles N. Judson and Wil-
liam B. Hale for Ivison.

Mr. Arthur F. Cosby for Clews et al.
Mr. John G. Milburn for Astor.

Mr. Justice Peckham, after making the foregoing statement, delivered the opinion of the court:

The questions propounded by the circuit court of appeals are the following:

First. Whether art. 13, § 3, of the Constitution of Ohio is so far self-executing that it may be enforced outside of the jurisdiction of said state without compliance with said requirements of § 3260 of the Revised Statutes of said state as amended in 1894.

Second. Whether art. 13, § 3, of the Constitution of Ohio is so far self-executing that it may be enforced outside of the jurisdiction of said state without compliance with said requirements of § 3260 of the

Revised Statutes of said state as amended | bility. The cases of Wright v. McCormack, in 1900.

The counsel for the complainant contends that the article of the Ohio Constitution, above set forth, is self-executing to the extent of declaring the general contractual obligation and the general rule as to property rights; and it is insisted that the liability of the stockholders in the railway corporation may be enforced by the courts of another jurisdiction without compliance with the requirements of any of the statutes which have been passed by the legislature of Ohio in regard to the enforcement of the liability provided for in the Constitution. These statutes, it is said, refer only to the form and mode of procedure in local courts, and neither of them contains any limițation or condition imposed upon the substantive right declared by the Constitution, as construed and enforced by the Ohio courts for many years prior to the statutory enactments.

We have not been referred to any decision of the Ohio supreme court directly involving the question whether the provision of the Constitution referred to is selfexecuting or not. If there were any such decision we should follow it. That court has, however, regarded the liability of stockholders as statutory in its nature, as is seen from its decisions in the cases hereinafter cited.

17 Ohio St. 86, and Umsted v. Buskirk, 17 Ohio St. 113, were both brought under a statute enacted to provide a method for enforcing the constitutional liability, and in the former case the courts speaks of the liability of the stockholders as a "statutory liability," and of the statute itself as a "statute under which the liability arises." That was an early statute, passed not long after the adoption of the constitutional provision, and for the purpose of executing it. 50 Ohio Laws, 296, passed May 1, 1852. Wright v. McCormack was approved in Umsted v. Buskirk, 17 Ohio St. 113. Subsequent statutes were passed for the same purpose of enforcing the liability of stockholders, and those set out in the record not only definitely state the liability, but give the procedure and provide the remedy in order to enforce it. It will be seen that the constitutional provision refers in terms to the securing of dues from corporations by the individual liability of stockholders, and by such other means as may be prescribed by law. The Constitution evidently looks to the legislature for providing means. statute which is passed in pursuance of such a provision, and which itself provides for the procedure and states the remedy, even though imposing no limit or conditions in regard to such liability other than such as are found in the constitutional provision itself, is, nevertheless, a statute providing a remedy which is to be followed within the principle sustained by the authorities cited below. The statute, under such circumstances, may be said to so far provide for the liability and to create the remedy as to make it necessary to follow its provisons and to conform to the procedure pro

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The question has arisen in some of the other states regarding this same provision, and it has been held to be not self-executing. Barnes v. Wheaton, 80 Hun, 8, 29 N. Y. Supp. 830. In that case it was held by the appellate division that it was obvious that the provision was not self-executing, but its purpose was to confer upon the legislature the power and impose upon it the duty ofvided for therein. See Pollard v. Bailey, 20 securing dues from corporations by imposing upon the stockholders of such corporations as are organized under the laws of that state an individual liability, and by such other means as, in its discretion, it should deem proper, but limiting such power and discretion by the provision that each stockholder should be made liable to an amount at least equal to the amount of stock held by him. This provision was not regarded as imposing a liability independent of the statute, nor as conferring upon the plaintiff any right to maintain the action then before the court. It has been held substantially to the same effect in Nimick v. Mingo Iron Works Co. 25 W. Va. 184.

Wall. 520, 526, 22 L. ed. 376, 378; Fourth Nat. Bank v. Francklyn, 120 U. S. 747, 756, 758, 30 L. ed. 825, 829, 7 Sup. Ct. Rep. 757; Evans v. Nellis, 187 U. S. 271, 47 L. ed. 173, 23 Sup. Ct. Rep. 74; Morley v. Thayer, 3 Fed. 737, circuit court, district of Massachusetts; Cleveland, L. & W. R. Co. v. Kent, 87 Hun, 329, 34 N. Y. Supp. 427; Nimick v. Mingo Iron Works Co. 25 W. Va. 184. In Fourth Nat. Bank v. Francklyn, 120 U. S. 747, 756, 758, 30 L. ed. 825, 829, 7 Sup. Ct. Rep. 757. Mr. Justice Gray, speaking for this court, said: "In all the diversity of opinion in the courts of the different states, upon the question how far a liability imposed upon stockholders in a corporation by the law of the state which creates it can But whether the constitutional provision be pursued in a court held beyond the limits might be regarded as, to a certain extent, of that state, no case has been found in self-executing in the absence of any statute which such a liability has been enforced on the subject, we find that the legislature of by any court without a compliance with Ohio has passed statutes to enforce such lia-the conditions applicable to it under the 25 S. C.-30.

legislative acts and judicial decisions of the state which creates the corporation and imposes the liability. To hold that it could be enforced without such compliance would be to subject stockholders residing out of the state to a greater burden than domestic stockholders." In order to comply with the conditions of the statute of Ohio it seems plain from the provisions of the statute that the action must be brought in that state.

In the case now before us the complainant has paid no attention to the statutes of Ohio, so far as bringing suit in that state is concerned, and therefore has not followed the provisions contained in them. It has commenced no action in the state of Ohio, but, on the contrary, assumes to ask the Federal circuit court in New York state to administer the relief asked for in its bill, against stockholders who are residents of New York, the same as if the suit had been commenced in Ohio. This, we think, the complainant could not do. By the terms of the Ohio statute, properly construed, the remedy must be pursued in the courts of that state. The case of a plaintiff failing to obtain satisfaction of his judgment by following, in Ohio, the remedies given by the Ohio statute, is not before us, and we need not determine the character of any other remedy, or where it may be enforced. We therefore answer the first question in the negative. It is unnecessary to answer the second question. The answer will be certified to the Circuit Court of Appeals for the Second Circuit.

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Circuit Court in that state enforcing the lien of an assessment for a street improvement. Affirmed.

See same case below, 25 Ky. L. Rep. 1024, 76 S. W. 1097.

The facts are stated in the opinion. Messrs. Helm Bruce, James P. Helm, and T. K. Helm for plaintiff in error.

Messrs. William Furlong, A. E. Richards, Benjamin F. Washer and Henry L. Stone for defendants in error.

Mr. Justice Holmes delivered the opinion of the court:

This is a proceeding under the Kentucky Statutes, § 2834, to enforce a lien upon a lot adjoining a part of Frankfort avenue, in Louisville, for grading, curbing, and paving with asphalt the carriage way of that part of the avenue. The defendant, the plaintiff in error, pleaded that its only interest in the lot was a right of way for its main roadbed, and that neither the right of way nor the lot would or could get any benefit from the improvement, but, on the contrary, rather would be hurt by the increase of travel close to the defendant's tracks. On this ground it set up that any special assessment would deny to it the equal protection of the laws, contrary to the 14th Amendment of the Constitution of the United States. It did not object to the absence of the parties having any reversionary interest, but defended against any special assessment on the lot. The answer was demurred to, judgment was rendered for the plaintiff, and this judgment was affirmed by the Kentucky court of appeals. 25 Ky. L. Rep. 1024, 76 S. W. 1097. A writ of error was taken out, and the case was brought to this court. It will be noticed that the case concerns only grading, curbing, and paving, and what we shall have to say is confined to a case of that sort.

The state of Kentucky created this lien by a statute entitled "An Act for the Government of Cities of the First Class." Louis

ville is the only city of the first class at present in Kentucky, and the general principles of the act are taken verbatim from the part of the charter of Louisville which was considered and upheld by this court in Walston v. Nevin, 128 U. S. 578, 32 L. ed. 544, 9 Sup. Ct. Rep. 192. But we take the statute as a general prospective law, and not as a legislative adjudication concerning a particular place and a particular plan, such as may have existed in Spencer v. Mer

Argued March 7, 8, 1905. Decided April 3, chant, 125 U. S. 345, 31 L. ed. 763, 8 Sup.

1905.

Ct. Rep. 921, and as was thought to exist in Smith v. Worcester, 182 Mass. 232, 59 N ERROR to the Court of Appeals of the L. R. A. 728, 65 N. E. 40, referred to at the

I state of fontucky to of Appe judgment argument.

which affirmed a judgment of the Jefferson

The law provides in the case of original

construction, such as this improvement was, | contrary to the Constitution of the United that it shall be made at the exclusive cost States. Walston v. Nevin, 128 U. S. 578, of the adjoining owners, to be equally ap- 32 L. ed. 544, 9 Sup. Ct. Rep. 192; French portioned according to the number of feet v. Barber Asphalt Paving Co. 181 U. S. 324, owned by them. In the case of a square 45 L. ed. 879, 21 Sup. Ct. Rep. 625; Webor subdivision of land bounded by principal ster v. Fargo, 181 U. S. 394, 45 L. ed. 912, streets, which the land including the de- 21 Sup. Ct. Rep. 623; Cass Farm Co. v. fendant's lot was held to be (see Cooper v. Detroit, 181 U. S. 396, 45 L. ed. 914, 21 Sup. Nevin, 90 Ky. 85, 13 S. W. 841; Nevin v. Ct. Rep. 644; Detroit v. Parker, 181 U. S. Roach, 86 Ky. 492, 499, 5 S. W. 546), the 399, 45 L. ed. 917, 21 Sup. Ct. Rep. 624; land is assessed half way back from the Chadwick v. Kelley, 187 U. S. 540, 543, improvement to the next street. Act of 544, 47 L. ed. 293-295, 23 Sup. Ct. Rep. 1898, chap. 48; Ky. Stat. § 2833. A lien 175; Schaefer v. Werling, 188 U. S. 516, 47 is imposed upon the land, and "the general L. ed. 570, 23 Sup. Ct. Rep. 449; Seattle v. council, or the courts in which suits may Kelleher, 195 U. S. 351, 358, 25 Sup. Ct. be pending, shall make all corrections, rules, Rep. 44, 49 L. ed. 232. and orders to do justice to all parties concerned." § 2834. The principle of this mode of taxation seems to have been familiar in Kentucky for the better part of a hundred years. Lexington v. McQuillan, 9 Dana, 513, 35 Am. Dec. 159.

A statute like the present manifestly might lead to the assessment of a particuiar lot for a sum larger than the value of the benefits to that lot. The whole cost of the improvement is distributed in proportion to area, and a particular area might receive no benefits at all, at least if its present and probable use be taken into account. If that possibility does not invalidate the act, it would be surprising if the corresponding fact should invalidate an assessment. Upholding the act as embodying a principle generally fair and doing as nearly equal justice as can be expected seems to import that if a particular case of hardship arises under it in its natural and ordinary application, that hardship must be borne as one of the imperfections of human things. And this has been the implication of the cases. Davidson v. New Orleans, 96 U. S. 97, 106, 24 L. ed. 616, 620; Mattingly v. District of Columbia, 97 U. S. 687, 692, 24 L. ed. 1098, 1100; Parsons v. District of Columbia, 170 U. S. 45, 52, 55, 42 L. ed. 943, 946, 947, 18 Sup. Ct. Rep. 521; Detroit v. Parker, 181 U. S. 399, 400, 45 L. ed. 917, 921, 21 Sup. Ct. Rep. 624; Chadwick v. Kelley, 187 U. S. 540, 544, 47 L. ed. 293, 294, 23 Sup. Ct. Rep. 175.

The argument for the plaintiff in error oscillates somewhat between the objections to the statute and the more specific grounds for contending that it cannot be applied constitutionally to the present case. So far as the former are concerned they are disposed of by the decisions of this court. There is a look of logic when it is said that special assessments are founded on special benefits, and that a law which makes it possible to assess beyond the amount of the special benefit attempts to rise above its source. But that mode of argument assumes an exactness in the premises which does not exist. The foundation of this familiar form of taxation is a question of theory. The amount of benefit which an improvement will confer upon particular land-indeed, whether it is a benefit at all —is a matter of forecast and estimate. In its general aspects, at least, it is peculiarly a thing to be decided by those who make the law. The result of the supposed constitutional principle is simply to shift the bur- But in this case it is not necessary to den to a somewhat large taxing district, stop with these general considerations. The the municipality, and to disguise, rather plea plainly means that the improvement than to answer, the theoretic doubt. It is will not benefit the lot, because the lot is dangerous to tie down legislatures too close-occupied for railroad purposes and will conly by judicial constructions not necessarily tinue so to be occupied. Compare Chicago, arising from the words of the Constitution. B. & Q. R. Co. v. Chicago, 166 U. S. 226, Particularly, as was intimated in Spencer v. 257, 258, 41 L. ed. 979, 992, 17 Sup. Ct. Merchant, 125 U. S. 345, 31 L. ed. 763, 8 Rep. 581. That, apart from the specific use Sup. Ct. Rep. 921, it is important for this to which this land is devoted, land in a goodcourt to avoid extracting from the very gen-sized city generally will get a benefit from eral language of the 14th Amendment a system of delusive exactness in order to destroy methods of taxation which were well known when that amendment was adopted, and which it is safe to say that no one then supposed would be disturbed. It now is established beyond permissible controversy that laws like the one before us are not

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having the streets about it paved, and that this benefit generally will be more than the cost, are propositions which, as we already have implied, a legislature is warranted in adopting. But, if so, we are of opinion that the legislature is warranted in going one step further and saying that on the question of benefit or no benefit the land

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