Argument for Defendant in Error.

State court upon the demurrer to the declaration when the sufficiency of the latter was again questioned upon demurrers to the subsequent pleadings. II. Furthermore, the general principle of law is well settled, that when a statute confers a right and imposes a liability, without providing a distinct remedy for their enforcement, the common law supplies an adequate remedy by giving to a party an appropriate action, by which his rights may be enforced. But it is equally well settled, that when a statute confers a right and prescribes a remedy, that remedy and that only, can be pursued. Knowlton v. Ackley, 8 Cushing, 97; Pollard v. Bailey, 20 Wall., 527. III. The liability set forth in the declaration, being in the nature of a penalty imposed by a statute of New York, cannot be enforced in Florida. Halsey v. McLean, 12 Allen, 438; Bird v. Hayden, 1 Robertson, 383; Derrickson v. Smith, 3 Dutcher (N. J.), 166; First National Bank v. Price, 33 Md. 487; The State v. John, 5 Ohio, 217; Cable v. McCune, 26 Mo. 371; Lawler v. Burt, 7 Ohio St. 340. IV. The declaration is bad, because it does not show that the liability it sets up had been fixed and made actionable by legal proceedings against the corporation in the State of New York. The 10th and 24th sections, construed together, show that the liability created by the former is inchoate; and that it is the return of the fi. fa. unsatisfied which makes the liability of the stockholder absolute, fixed, and actionable. To have that effect, the execution must necessarily be issued by the court of the State which declares by statute it shall have such effect; for it is well settled, that when a statute confers a right and prescribes a remedy, that remedy, and that remedy only, can be pursued. Pollard v. Bailey; Knowlton v. Ackley, supra. But the force and effect of an execution issued by a Florida court against a New York corporation must be determined by the laws of Florida, not those of the State of New York. Story, Conflict of Laws, sec. 556-9. V. The case made by the declaration and the sixth plea, upon the demurrer to the latter, is not the subject of a common-law action, but of a bill in equity. In Terry v. Tubman, 92 U. S. 156, this court said:

"The case of Pollard v. Bailey, 20 Wall. 520, is an authority

Opinion of the Court.

against the maintenance of a separate action by one creditor who seeks to obtain his entire debt, to the possible exclusion of others similarly situated. The proper proceeding is in equity, where all claims can be presented, all the liabilities of the stockholders ascertained, and a just distribution made."

MR. JUSTICE WOODS delivered the opinion of the court.

The only question arising upon the record is whether the declaration presents a cause which entitles the plaintiffs to recover in this action. This was the question considered by the court below, and upon what it deemed the insufficiency of that declaration its judgment was based. The sufficiency of the pleas and rejoinder were not considered, for, if the declaration was bad, the question whether the pleadings of the defendant were good was an immaterial one. If the pleas and rejoinder of the defendant had been adjudged good, that would not have been a final judgment to which a writ of error would lie, but the plaintiffs would have had leave to reply and surrejoin. We are, therefore, limited to the consideration of the sufficiency of the declaration.

The liability which this suit was brought to enforce arises, as the plaintiffs contend, on the tenth section of the act mentioned in the declaration, namely the act of the legislature of New York passed February 17th, 1848, entitled "An Act to authorize the formation of corporations for manufacturing, &c., purposes." The tenth section of the act and the eleventh and twenty-fourth, which also have reference to the liability of stockholders of the company, were as follows:

"SEC. 10. All the stockholders of every company incorporated under this act shall be severally individually liable to the creditors of the company in which they are stockholders, to an amount equal to the amount of stock held by them respectively, for all debts and contracts made by such company, until the whole amount of capital stock fixed and limited by such company shall have been paid in, and a certificate thereof shall have been made and recorded as prescribed in the following section.

"SEC. 11. The president and a majority of the trustees, within thirty days after the payment of the last instalment of the capital

Opinion of the Court.

stock so fixed and limited by the company, shall make a certificate stating the amount of the capital so fixed and paid in, which certificate shall be signed and sworn to by the president and a majority of the trustees; and they shall within the said thirty days record the same in the office of the county clerk of the county wherein the business of said company is carried on.

"SEC. 24. No stockholder shall be personally liable for the payment of any debt contracted by any company formed under this act, which is not to be paid within one year from the time the debt is contracted, nor unless a suit for the collection of such debt shall be brought against such company within one year after the debt shall become due; and no suit shall be brought against any stockholder until an execution against the company shall have been returned unsatisfied in whole or in part."

Section 12 of the act will also throw some light on the present controversy. It provided that within twenty days from January 1st in every year every company organized under the act should make a report, which should be published, which should state the amount of the capital of the company, the proportion paid in, and its existing debts, and which should be signed by the president and a majority of the trustees and verified by the oath of the president and filed in the office of the clerk of the county where the business of the company was carried on; and if any of said companies should fail to do so all the trustees of the company so failing should be jointly and severally liable for its debts then existing.

The defendant contended on several grounds that the declaration set out no cause of action on which the suit could be maintained against him. The first ground was that the liability of the stockholders under section 10 of the act under which the company was organized, and which the suit was brought to enforce, was in the nature of a penalty, and could not be enforced in any court sitting beyond the limits of the State by which the law was passed.

It is well settled, and is not denied by plaintiffs' counsel, that the penal laws of one State can have no operation in another. They are strictly local and affect nothing more than they can

Opinion of the Court.

reach. The Antelope, 10 Wheat. 66; Scoville v. Canfield, 14 Johns. 338; Western Transp. Co. v. Kilderhouse, 87 N. Y. 430; Lemmon v. People, 20 N. Y. 562; Henry v. Sargeant, 13 N. H. 321; Story, Conflict of Laws, § 621, 8th ed.

Upon this branch of the case the question for solution is, therefore, whether the individual liability of stockholders provided for by section 10, above quoted, is in the nature of a penalty, or whether it is, as plaintiffs contend, based on a contract between the stockholders and the creditors of the company.

We think the liability imposed by section 10 is a liability arising upon contract. The stockholders of the company are by that section made severally and individually liable, within certain limits, to the creditors of the company for its debts and contracts. Every one who becomes a member of the company by subscribing to its stock assumes this liability, which continues until the capital stock is all paid up and a certificate of that fact is made, published and recorded. The fact that the liability ceases when these events take place does not change its nature and make that a penalty which would, without such limitation, be a liability founded on contract.

Such has been the construction given to section 10 by the Court of Appeals of New York. In the case of Wyles v. Suydam, 64 N. Y. 173, that court had under consideration sections 10 and 12 of the act under which the Pensacola Lumber Company was organized. The complaint alleged the liability of the defendant, both as a stockholder under section 10 and as a trustee under section 12. The complaint was demurred to, on the ground that two causes of action were improperly joined. The court sustained the demurrer. In giving the reasons for its judgment it said:

"The cause of action against the defendant as a stockholder consists of the debt and the liability created by statute against stockholders where the stock has not been paid in and a certificate of that fact recorded. In effect the statute in such a case withdraws the protection of the corporation from the stockholders, and regards them liable to the extent of the amount of their stock as copartners. Corning v. McCullough, 1 N. Y. 47. The allegations in the complaint are sufficient to establish a perfect cause

Opinion of the Court.

of action against the defendant as a stockholder, primarily liable for the debts to the amount of his stock.

"The allegations against the defendant as trustee also constitute a distinct and perfect cause of action, but of an entirely different character. Here the liability is created by statute, and is in the nature of a penalty imposed for neglect of duty in not filing a report showing the situation of the company. The object of the action is the same, viz.: the collection of a debt, but the liability and the grounds of it are entirely distinct and unlike. That there are two causes of action in this complaint seems too clear to require much argument. The first cause of action against the defendant as a stockholder is an action on contract. The six years' statute of limitation applies. 1 N. Y. supra. The defendant is entitled to contribution. But in respect to the action against defendant as trustee, this court held, in Merchants' Bank v. Bliss, 35 N. Y. 412, that the three years' statute of limitations applied under the following provision of the code: An action upon a statute for a penalty or forfeiture when the action is given to the party aggrieved.'”

This decision is upon the precise point of the controversy in this case. It declares that the liability such as that which the plaintiffs in this action seek to enforce is one arising upon contract, and is not in the nature of a penalty. This decision has never been modified or overruled by the Court of Appeals of New York.

We think this is a case where the construction of the State court is entitled to great if not conclusive weight with us. It is the settled construction of a law of the State upon which the rights and liabilities of a large number of its citizens must depend. If the liability of a stockholder under section 10 arises upon contract, the six years' limitation applies to it; if the liability is in the nature of a penalty the three years' limitation applies. It is clear that confusion and uncertainty would result should the State and Federal courts place different constructions on the section. Such a result ought, if possible, to be avoided.

It is true that this decision was made after the defendant had become a stockholder in the Pensacola Lumber Company,