Wilson v. Seligman/Opinion of the Court

by Horace Gray

United States Supreme Court

144 U.S. 41

Wilson  v.  Seligman

The statute of Missouri under which these proceedings were had authorizes execution upon a judgment against a corporation to be ordered against any of its stockholders only to the extent of the unpaid balance of their stock, and 'upon motion in open court, after sufficient notice in writing to the person sought to be charged.' Gen. St. Mo. 1865, c. 62, § 11; Rev. St. 1879, § 736; Rev. St. 1889, § 2517. Each person sought to be charged as a stockholder is thus given the right, before execution can be awarded against him on a judgment against the corporation, to written notice and judicial investigation of the questions whether he is a stockholder, and, if he is, how much remains unpaid on his stock. Although the statute does not define the course of proceeding or the kind of notice otherwise than by directing that the proceeding shall be summary, upon motion and 'after sufficient notice in writing to the persons sought to be charged,' there can be no doubt that in this, as in all other cases, in which a personal liability is sought to be enforced by judicial proceedings and after written notice, the notice must be personally served upon the defendant within the territorial jurisdiction of the court by whose order or judgment his personal liability is to be ascertained and fixed, unless he has agreed in advance to accept, or does in fact accept, some other form of service as sufficient.

The general principles applicable to this subject were clearly and exhaustively discussed by this court, speaking by Mr. Justice FIELD, in Pennoyer v. Neff, 95 U.S. 714, from which it will be sufficient to quote a few sentences: 'Every state possesses exclusive jurisdiction and sovereignty over persons and property within its territory,' and 'no state can exercise direct jurisdiction and authority over persons or property without its territory.' Page 722. 'It is in virtue of the state's jurisdiction over the property of the nonresident situated within its limits that its tribunals can inquire into that non-resident's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of the property.' Page 723. 'Where the entire object of the action is to determine the personal rights and obligations of the defendants,-that is, where the suit is merely in personam, constructive service in this form upon a non-resident is ineffectual for any purpose. Process from the tribunals of one state cannot run into another state, and summon parties there domiciled to leave its territory and respond to proceedings against them. Publication of process or notice within the state where the tribunal sits cannot create any greater obligation upon the nonresident to appear. Process sent to him out of the state, and process published within it, are equally unavailing in proceedings to establish his personal liability.' Page 727. 'A judgment which can be treated in any state of this Union as contrary to the first principles of justice, and as an absolute nullity, because rendered without any jurisdiction of the tribunal over the party, is not entitled to any respect in the state where rendered.' Page 732. 'To give such proceedings any validity, there must be a tribunal competent by its constitution-that is, by the law of its creation-to pass upon the subject-matter of the suit; and, if that involves merely a determination of the personal liability of the defendant, he must be brought within its jurisdiction by service of process within the state, or his voluntary appearance.' Page 733. See, also, D'Arcy v. Ketchum, 11 How. 165; St. Clair v. Cox, 106 U.S. 350, 1 Sup. Ct. Rep. 354; Latimer v. Railway Co., 43 Mo. 105.

It may be admitted that any state may by its laws require, as a condition precedent to the right of a corporation to be organized or to transact business within its territory, that it shall appoint an agent there on whom process may be served, or even that every stockholder in the corporation shall appoint an agent upon whom, or designate a domicile at which, service may be made within the state, and that upon his failure to make such appointment or designation the service may be made upon a certain public officer, and that judgment rendered against the corporation after such service shall bind the stockholders, whether within or without the state. In such cases the service is held binding because the corporation or the stockholders or both, as the case may be, must be taken to have consented that such service within the state shall be sufficient and binding; and no individual is bound by the proceedings who is not a stockholder. Insurance Co. v. French, 18 How. 404; Ex parte Schollenberger, 96 U.S. 369; Pennoyer v. Neff, 95 U.S. 714, 735; Vallee v. Dumergue, 4 Exch. 290, 303; Copin v. Adamson, L. R. 9 Exch. 345, 355, 356, 1 Exch. Div. 17.

But such is not this case. Under a former statute of Missouri, any officer holding an execution against a corporation which had been returned unsatisfied might, without further action of the court, levy the same execution upon the property of stockholders within the state. Rev. St. Mo. 1855, c. 34, §§ 13, 14. In that condition of the law the judgment and execution bound only the property of stockholders on which it was levied within the state, and created no personal liability on their part which could be enforced by suit in another state; and, if the officer levied the execution on the property of any person not a stockholder, he was liable as a trespasser. The very object of the existing statute, as manifest on its face and as declared by the supreme court of Missouri, was to change the law so as to leave nothing to the discretion of the officer, and to require the judgment creditor to apply to the court for execution against any person whom he sought to charge as a stockholder, and to have all questions affecting his relations to the corporation and its creditors investigated and determined by the court before an execution should issue against him. Skrainka v. Allen, 76 Mo. 384, 391. And see Holyoke Bank v. Goodman Co., 9 Cush. 576, 583.

In the case at bar the defendant never resided in Missouri, and was not served with process within the state, either upon the original writ against the corporation or upon the motion for execution against him. He denies that he was a stockholder; and the question whether he was one was not tried or decided in the controversy between the plaintiff and the corporation, nor involved in the judgment recovered by one of those parties against the other. Under the statute of Missouri, and upon fundamental principles of jurisprudence, he is entitled to legal notice and trial of the issue whether he is a stockholder before he can be charged with personal liability as such; and personal service of the notice within the jurisdiction of the court is essential to support an order or judgment ascertaining and establishing such liability, unless he has voluntarily appeared or otherwise waived his right to such service, which he has not done in this case.

These views are maintained by a very recent decision of the supreme court of Missouri in Wilson v. Railway Co., 18 S. W. Rep. 286, as well as by the English cases expounding St. 8 & 9 Vict. c. 16, § 36, which was the source of the provision of the existing statute of Missouri. Edwards v. Railway Co., 1 C. B. (N. S.) 409, 14 C. B. (N. S.) 526, and note, citing words of English statute; Ilfracombe Ry. Co. v. Devon & S. Ry. Co., L. R. 2 C. P. 15; Shrimpton v. Railway Co., L. R. 3 C. P. 80; Skrainka v. Allen, 76 Mo. 384, 388, 389. See, also, Howell v. Manglesdorf, 33 Kan. 194, 5 S. W. Rep. 759.

The cases in which judgments against a territorial and municipal corporation have been enforced against its inhabitants, either by direct levy of execution on their property, according to common law or ancient usage, as in New England, or by mandamus to levy a tax to pay the judgment, pursuant to express statute, as in Missouri, have no bearing upon this case. Bloomfield v. Bank, 121 U.S. 121, 120, 7 Sup. Ct. Rep. 865, and cases cited; State v. Rainey, 74 Mo. 229.

Judgment affirmed.

Notes