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defendant to reimburse plaintiff for moneys | ion, among other authorities, referred to expended in performing the duty which the this case as decided below, saying: statute imposed on defendant. In Carrol v. Green it was said: "According to the statute, the liability of 'each stockholder' arose upon 'the failure of the bank.' The liability gave at once the right to sue; and, by necessary consequence, the period of limitation began at the same time."

But here the right to sue did not obtain until the Comptroller of the Currency had acted, and his order was the basis of the suit. The statute of limitations did not commence to run until assessment made, and then it ran as against an action to enforce the statutory liability, and not an action for breach of contract.

We think that subd. 3 of § 4800 did not apply, and that § 4805 did.

The judgment of the Circuit Court of Appeals is reversed; the judgment of the Circuit Court is also reversed, and the cause remanded to that court with a direction to sustain the demurrer and enter judgment for defendant.

Mr. Justice White, with whom concur Mr. Justice Brown and Mr. Justice McKenna, dissenting:

The statutes of the state of Washington limit to three years the right to bring "an action upon a contract or liability, express or implied, which is not in writing, and does not arise out of any written instrument." The cause of action here involved is now held not to be embraced within this statute, and therefore barred by the following provision: "An action for relief, not hereinbefore provided for, shall be commenced within two years after the cause of

action shall have accrued."

The liability sought to be enforced is the obligation of a shareholder of a national bank to pay an amount equal to the par of his shares of stock. The circuit court held the action not to be one upon contract, but to enforce a conditional liability imposed by the law as an incident to ownership of bank stock, and therefore barred by two years. 98 Fed. 378. The circuit court of appeals reversed this judgment, and decided that the period of limitation was three years, because the liability was contractual.

45 C. C. A. 631, 106 Fed. 791.

In Suter v. Wenatchee Water Power Com

pany, decided April 18, 1904, 35 Wash. 1, 76 Pac. 298, the supreme court of Washington construed the provision of the statutes of limitation here involved, providing that an action might be brought within three years "upon a contract or liability, express or implied, which is not in writing," and held that it did not embrace torts, "but was evidently intended to refer to a contractual liability." The court, in its opin

"Such, in effect, was the decision in Sargent v. Tacoma, 10 Wash. 212, 215, 38 Pac. 1048. The same statute was construed by the United States circuit court, district of Washington, in Aldrich v. Skinner, 98 Fed. 375, and also in Aldrich v. McClaine, 98 Fed. 378. The last-named case was, on appeal to the United States circuit court of appeals, reversed. Aldrich v. McClaine, 45 C. C. A. 631, 106 Fed. 791. The reversal was, however, upon the ground that the liability involved was a contractual one, the lower court having held otherwise. The appellate court construed the statute itself as did the lower court."

It might well be considered that the supreme court of Washington regarded the interpretation of the court of appeals as harmonizing with its own views of the meaning of the provision in question. But be this as it may, the prior decisions of this court to me seem conclusive, since, in deciding various questions concerning the liability of stockholders in national banks to pay the double liability, this court has expressly held that such liability is contractual. Matteson v. Dent, 176 U. S. 521, 525, 526, 44 L. ed. 571, 573, 574, 20 Sup. Ct. Rep. S. 364, 372, 43 L. ed. 1007, 1011, 19 Sup. Ct. 419; First Nat. Bank v. Hawkins, 174 U. S. 364, 372, 43 L. ed. 1007, 1011, 19 Sup. Ct. Rep. 739; Richmond v. Irons, 121 U. S. 27, 55, 56, 30 L. ed. 864, 873, 7 Sup. Ct. Rep. 788. In Richmond v. Irons the court said (pp. 55, 56, L. ed. p. 873, Sup. Ct. Rep. p. 801):

"Under that [the national banking] act is an essential element in the contract by the individual liability of the stockholders which the stockholders became members of the corporation. It is voluntarily entered into by subscribing for and accepting shares of stock. Its obligation becomes a part of every contract, debt, and engagement of the bank itself; as much so as if they were made directly by the stockholder, instead of by the corporation. There is nothing in the statute to indicate that the obligation arising upon these undertakings and promises should not have the same force and effect, and be as binding in all respects, as any

other contracts of the individual stockholder. We hold, therefore, that the obligation of the stockholder survives as against his Flash v. Conn, personal representatives. 109 U. S. 371, 27 L. ed. 966, 3 Sup. Ct. Rep. 221; Hobart v. Johnson, 19 Blatchf. 359, 8 Fed. 493. In Massachusetts it was held, in Grew v. Breed, 10 Met. 569, that administrators of deceased stockholders were chargeable in equity, as for other debts of their intestate, in their representative capacity."

In Whitman v. National Bank, discussing a statute of the state of Kansas, the court, through Mr. Justice Brewer, said (p. 563, L. ed. p. 590, Sup. Ct. Rep. p. 478):

In Matteson v. Dent the evidence showed | Bank, 176 U. S. 559, 44 L. ed. 587, 20 Sup. that at the time of the death of Matteson Ct. Rep. 477; Flash v. Conn, 109 U. S. 371, he was the owner of ten shares of stock in 27 L. ed. 966, 3 Sup. Ct. Rep. 263. a national bank,-a going concern. His widow and heirs, by the decree of a probate court of Minnesota, became the joint and undivided owners of the stock, which continued, however, to stand in the name of Matteson. Thereafter the bank failed, and, on the ground that they had received assets of the estate, a suit was brought against the widow and heirs for the amount of an assessment made by the Comptroller against the stock. The suit was defended on two grounds; first, that the assessment was not binding, because the bank had not failed at the time of Matteson's death, and at the time when, by the decree of the probate court, the widow and heirs had become the owners in indivision of the stock; and, second, that under the national banking law they could only be made liable, in any event, each in proportion to his or her interest in the stock. In considering the first ground the court, approvingly citing the passage from Richmond v. Irons above quoted, said (p. 524, L. ed. p. 573, Sup. Ct. Rep. p. 420):

If

"The liability which, by the Constitution and statutes, is thus declared to rest upon the stockholder, though statutory in its origin, is contractual in its nature. It would not be doubted that, if the stockholders in this corporation had formed a partnership, the obligations of each partner to the others and to creditors would be contractual, and determined by the general common law in respect to partnerships. Kansas had provided for partnerships with limited liability, and these parties, complying with the provisions of the statute, had formed such a partnership, it would also be true that their obligations to one another and to creditors would be contractual, although only in the statute was to be found the authority for the creation of such obligations. And it is none the less so when these same stockholders organized a corporation under a law of Kansas which prescribed the nature of the obligations which each thereby assumed to the others and to the creditors. While the statute of Kansas permitted the forming of the corporation under certain conditions, the action of these parties was purely voluntary. In other words, they entered into a contract authorized by statute."

"Because the insolvency of the bank took place after the death of Matteson, did it result that the assessment, which was predicated upon the insolvency, was not a debt of his estate? To so decide the statute must be construed as imposing the liability on the shareholder for the amount of his subscription when necessary to pay debts only in case insolvency arises during the lifetime of the shareholder. In other words, And the principle sustained by the prethat all liability of shareholders to contrib-vious decisions of this court is also supute to pay debts ceases by death. This construction, however, would be manifestly unsound. The obligation of a subscriber to stock to contribute to the amount of his subscription for the purpose of the payment of debts is contractual, and arises from the subscription to the stock. True, whether there is to be a call for the performance of this obligation depends on whether it becomes necessary to do so in consequence of the happening of insolvency. But the obligation to respond is engendered by, and relates to, the contract from which it arises. This contract obligation, existing during life, is not extinguished by death, but, like other contract obligations, survives, and is enforceable against the estate of the stockholder."

And the same principle has been applied to similar liabilities imposed upon stockholders in state corporations, the court uniformly holding that the liability, although statutory in its origin, was contractual in its nature, and therefore the cause of action was transitory. Whitman V. National

ported by the decisions of state courts of last resort. Thus, the supreme judicial court of Maine in Pulsifer v. Greene, 96 Me. 438, 52 Atl. 921, held the doctrine to be consonant with reason and natural justice and sustained by the weight of authority, the court citing not only the decisions of this court previously referred to, but also decisions of the courts of California, Connecticut, Illinois, Kansas, Massachusetts, and Michigan. And the decisions of the state courts of last resort thus referred to were, in many cases, in part rested upon the previous adjudications of this court to which I have referred, those decisions being considered as conclusive on the subject of the contract nature of the liability. My mind sees no reason for saying that the doctrine thus settled is not applicable to a statute of limitations, for if the liability of the stockholder be contractual, for the purpose of enforcing the obligation, it is not by me perceived upon what principle it can be held that it is not contractual, but purely statutory, for the purpose of deter

mining whether an action to enforce the | effect, in my opinion, to overrule the cases liability is barred by a statute of limita- in this court determining that the liability

of a stockholder in a national bank is contractual. This becomes apparent when the ground of the alleged distinction is considered. That ground is this, that, as the national banking act empowers the Comp. troller to determine the necessity for an assessment on the stockholders of national banks, and to make a call for such assessment, thereby the obligation of the stockholder becomes secondary and contingent, and hence statutory, and not contractual. To me it seems that this interpretation, whilst overruling the previous cases also

tions. But the unsoundness of the distinction as an original question in my opinion does not require to be demonstrated, since it is absolutely foreclosed by previous decisions of this court. Thus, in Carrol v. Green, 92 U. S. 509, 23 L. ed. 738,-an action against stockholders of a South Carolina bank to enforce a double liability provided for in the act of incorporation,-it was expressly held that, as the liability was contractual, it was barred by a statute of limitations applicable to simple contract indebtedness. Reference was made to decisions of the courts of New York and Mas-originally considered, gives to the national sachusetts, holding the same doctrine in analogous cases (pp. 514, 515, L. ed. p. 740), and, in concluding the opinion, the court expressly noticed and overruled the contention "that the liability here in question, being created by a statute, is to be regarded as a debt by specialty."

Carrol v. Green was subsequently approved and followed in Metropolitan R. Co. v. District of Columbia, 132 U. S. 1, 23 L. ed. 231, 10 Sup. Ct. Rep. 19. The action was to recover the cost of certain street paving, the liability being recited in the act of incorporation. The trial court overruled demurrers to pleas of the statute of limitations, among other reasons, upon the ground that the action was founded on a statute, and that the statute of limitations did no apply to actions founded on statutes or other records or specialties. This ruling was held to be erroneous, the court saying (p. 12, L. ed. p. 235, Sup. Ct. Rep. p. 23):

"It is an action on the case upon an implied assumpsit arising out of the defendant's breach of a duty imposed by statute, and the required performance of that duty by the plaintiff in consequence. This raised an implied obligation on the part of the defendant to reimburse and pay to the plaintiff the moneys expended in that behalf. The action is founded on this implied obligation, and not on the statute, and is really an action of assumpsit. The fact that the duty which the defendant failed to perform was a statutory one does not make the action one upon the statute. The action is clearly one of those described in the statute of limitations."

banking act an erroneous construction. The mere fact that the act gives to the Comptroller the power of making a call on stockholders for the purpose of enforcing their contract liability, in my judgment lends no support to the proposition that the ministerial duty created to better enforce the contract must be considered as destroying the contract itself. The consequences which must arise from the new construction now placed upon the national banking act, it seems to me, will be of the most serious nature; and being unable to agree with such construction, I cannot concur in the opinion and judgment of the court.

I am authorized to say that Mr. Justice Brown and Mr. Justice McKenna join this dissent.

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[No. 141.]

To avoid the controlling effect of these rulings upon this case, on the theory that, Argued January 20, 23, 1905. Decided March

by virtue of the statutes which were considered in Carrol v. Green, and the Metropolitan Railroad Case, the right to recover was direct and immediate, whilst in the case at bar, in consequence of provisions of the national banking act, the right to recover is secondary and contingent, is, in'

ON

6, 1905.

N WRIT of Certiorari to the United States Circuit Court of Appeals for the Sixth Circuit to review a decree affirming a decree of the Circuit Court for the Southern District of Ohio, denying preference of a

claim for supplies over the lien of a rail- | cation of it in New England R. Co. v. Carroad mortgage. Affirmed. negie Steel Co. 21 C. C. A. 219, 33 U. S.

See same case below, 59 C. C. A. 637, App. 491, 75 Fed. 54, 58, and perhaps in 124 Fed. 721.

The facts are stated in the opinion.

Mr. Harlan Cleveland for petitioner. Messrs. Herbert Parsons and Lawrence W. Maxwell, Jr., for respondents.

Mr. Justice Holmes delivered the opinion of the court:

other cases. But we are of opinion, for reasons that need no further statement (Kneeland v. American Loan & T. Co. 136 U. S. 89, 97, 34 L. ed. 379, 383, 10 Sup. Ct. Rep. 950) that the general rule is the other way, and has been recognized as being the other way by this court.

The case principally relied on for giving priority to the claim for supplies is Miltenberger v. Logansport, C. & S. W. R. Co. 106 U. S. 286, 27 L. ed. 117, 1 Sup. Ct. Rep. 140. But, while the payment of some pre-existing claims was sanctioned in that case, it was expressly stated that "the payment of such debts stands, prima facie, on a different basis from the payment of claims arising under the receivership." The ground of such allowance as was made was not merely that the supplies were necessary for the preservation of the road, but that the payment was necessary to the business of the road,-a very different proposition. In the later cases the wholly exceptional character of the allowance is observed and marked. Kneeland v. American Loan & T. Co. 136 U. S. 89, 97, 98, 34 L. ed. 379, 383, 10 Sup. Ct. Rep. 950; Thom

This is a petition against a receiver appointed in proceedings for the foreclosure of two railroad mortgages. The petitioner, in pursuance of a contract made on December 1, 1896, with the Columbus, Sandusky, & Hocking Railroad Company, the mortgagor, delivered railroad ties to the value of $4,709.53 in May and on June 1, 2, and 3, 1897. The receiver was appointed on June 1, 1897. After his appointment there was found on hand a part of the above ties, to the value of $3,200, and these ties were used in the maintenance of the railroad as a going concern. The petitioner makes a claim on the body of the fund in the receiver's hands, for these and other necessary supplies furnished within six months, amounting in all to $6,804.49. The claim for the ties, at least, is admitted to have been “a necessary operating expense in keep-as v. Western Car Co. 149 U. S. 95, 110, ing and using said railroad, and preserving said property in a fit and safe condition as such." The petitioner waives a special claim against the receiver for $863.39 for the ties received June 2 and 3, but does claim a lien for $3,200 for ties on hand and not returned to him after the receiver's appointment, in case his whole claim is not allowed. The circuit court of appeals affirmed a decree of the circuit court establishing this claim as a six months' claim, but denying the right to go against the body of the fund, whereupon a certiorari was allowed by this court. 48 C. C. A. 318, 109 Fed. 220, 59 C. C. A. 637, 124 Fed. 721.

111, 37 L. ed. 663, 668, 669, 13 Sup. Ct. Rep. 824; Virginia & A. Coal Co. v. Central R. & Bkg. Co. 170 U. S. 355, 370, 42 L. ed. 1068, 1073, 18 Sup. Ct. Rep. 657. In Union Trust Co. v. Illinois Midland R. Co. 117 U. S. 434, 465, 29 L. ed. 963, 973, 6 Sup. Ct. Rep. 809, labor claims accruing within six months before the appointment of the receiver were allowed without special discussion, but the principles laid down in the Miltenberger Case had been repeated in the judgment of the court, and the allowance was said to be in accordance with them. It would seem from St. Louis, A. & T. H. R. Co. v. Cleveland, C. C. & I. R. Co. 125 U. S. 658, 673, 674, 31 L. ed. 832, 837, 8 Sup. Ct. Rep. 1011, that in both those cases there was a diversion of earnings. But the payment of the employees of the road is more certain to be necessary in order to keep it running than the payment of any other class of previously incurred debts.

The case stands as one in which there has been no diversion of income by which the mortgagees have profited, or otherwise, and the main question is the general one, whether, in such a case, a claim for necessary supplies furnished within six months before the receiver was appointed should be charged on the corpus of the fund. There are no special circumstances affecting the Cases like Union Trust Co. v. Souther, claim as a whole, and if it is charged on 107 U. S. 591, 27 L. ed. 488, 2 Sup. Ct. Rep. the corpus it can be only by laying down 295, where the order appointing the receiva general rule that such claims for supplies er authorized him to pay debts for labor or are entitled to precedence over a lien ex- supplies furnished within six months out pressly created by a mortgage recorded be- of income, stand on the special theory which fore the contracts for supplies were made. has been developed with regard to income, An impression that such a general rule was and afford no authority for a charge on to be deduced from the decisions of this the body of the fund. Fosdick v. Schall, court led to an evidently unwilling appli-99 U. S. 235, 25 L. ed. 339; Burnham v.

Bowen, 111 U. S. 776, 28 L. ed. 596, 4 Sup. | dry other obligations created in and about Ct. Rep. 675; Morgan's Louisiana & T. R. & S. S. Co. v. Texas C. R. Co. 137 U. S. 171, 34 L. ed. 625, 11 Sup. Ct. Rep. 61; Virginia & A. Coal Co. v. Central R. & Bkg. Co. 170 U. S. 355, 42 L. ed. 1068, 18 Sup. Ct. Rep. 857; Southern R. Co. v. Carnegie Steel Co. 176 U. S. 257, 44 L. ed. 458, 20 Sup. Ct. Rep. 347. It is agreed that the petitioner may have a claim against surplus earnings, if any, in the hands of the receiver, but that question is not before us here.

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the maintenance and operation of said railroad within six months next preceding and following the appointment of a receiver herein." By a further decree on July 7, $30,000 of these certificates were applied to payment for land bought by the company, $135,000 to car trust obligations, current pay rolls, necessary repairs, and expenses of operating the road, and $35,000 to the pay rolls for the previous April and May. The petitioner suggested that the latter decree was a diversion of funds in which, by the terms of the order authorizing the certificates, he was entitled to share, and that the payment of the $35,000 for the April and May labor entitles him to come in on principles of equality. It is not necessary to answer this contention at length. The original order gave the petitioner no such rights as he asserts. It would have been a

discretion, to apply the borrowed money to this debt. At least, he was not bound to do so. The petition on which the original order was made stated that the money was wanted to pay certain obligations, "or so much thereof as may be necessary," embodying the distinction which we have drawn from the cases. We already have intimated that the payment of railroad hands might stand on stronger grounds than the payment for past supplies; and, if the payment was wrong, it would not be righted by making another, less obviously within the scope of the decree.

The order appointing the receiver did not go beyond the distinction which we have mentioned, and gave the petitioner no new or higher right than he had before. After directing him to do certain things, it gave him authority, but did not direct him, to make various payments. It gave him authority, among other things, "to pay the employees, officials, and other persons hav-stretch of authority for the receiver, in his ing claims for wages, services, materials, and supplies due and to become due, and unpaid, growing out of the operation of the railroad of the defendant, including current and unpaid vouchers; to settle accounts incurred in the operation of the railroad of the defendant company; to pay any and all obligations accrued or accruing upon any equipment trust made by the defendant railroad company; and for such purpose, as well as for the purpose of meeting the obligations of the pay rolls," he was authorized, "in his discretion, to borrow such sums of money as may be necessary for such purpose, not exceeding $35,000. But said receiver will pay no claims against the said railroad company which have accrued due more than six months prior to the date of this order." It is questionable whether the purposes for which the $35,000 might be borrowed were other than paying equipment trust debts and pay rolls. But even if any words in the order authorized a charge on the corpus in order to pay claims like that of the petitioner, or a payment of them except from income, certainly there are none requiring it, or going beyond giving authority to the receiver if, for instance, he thought payments of previous debts necessary to the continued operation of the road. A strict construction of the decree is warranted by the previous decision of the same circuit court of appeals in International Trust Co. v. T. B. Townsend Brick & Contracting Co. 37 C. C. A. 396, 95 Fed. 850.

We are of opinion, finally, that there is no special equity with regard to the $3,200 worth of ties on hand and used by the receiver after his appointment. It is said that the purchase by the railroad company after it had defaulted, as it. had, in the interest of its bonds, was fraudulent, and that the petitioner would have been entitled to take back the ties but for the appointment of the receiver. The answers to the contention again are numerous. It does not appear that the purchase of the ties was fraudulent. Donaldson v. Farwell, 93 U. S. 631, 23 L. ed. 993. It does not appear, and is not likely, that the company bought with the intention not to pay the price. It does not appear that it concealed its insolvency. The default in the interest of the bonds was a public fact. Again, it is a mere speculation whether the petitioner, if he had had the right, would have demanded back the ties. He did not deA few days later, on June 7, 1897, the re-mand them of the receiver. It is quite as ceiver applied for and received leave to likely that, if he had known the whole truth, issue certificates up to $200,000, "for the he would have taken his chances. The thing purpose of paying car trusts, maturing and that he is least likely to have known is the matured, pay rolls, interest on terminal form of the appointment of the receiver, and, property, traffic balances, taxes, and sun- 'therefore, it is probably a fiction that that

25 S. C.-27.

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