',.nDE1UL REPORTER,

vol. 64.

wduld subserved by: maintaining any technical subtlety would render this suit abortive. ,T4e:,Q1Qtion Chwre for leave to intervene as party plainti:lf is granted. " 'IDhe defendant's motion to strike off the affidaviteitJflled on beh3lfof the complainants on Noyember 8, 1894, is granted. Counsel for the plaintiffs may prepare a decree for a receiver and injunction, and sl1bmitthe same for settlement upon 48 hourS' notice (with copy of thedeeree proposed) to defendant's coun· sel.
==NATIONAL PARK BANK

v.

PEAVEY.

(Olreult Court, S. D. Iowa, C. D.

N,o. 3,567.

December 13, 1894.)

1.

a.

Plaintiff recovered a 'judgment against the S. C. Street-Ry. Co., an Iowa corporatiqn;, upon which execution was Issued and returIied unsatisfied. He ,defendapt, a stockholder In the railway company, alleging these facts, and that nothing had ever been paid In on defendant's stock, and alsQ,In. a s,eparate paragraph, that defendant's stock purported to be In consequence ot defendant's receiving and holding It as sUch,'therallwaycompany appeared to be possessed of money that it did not,ln;tact PQ8SeSB, which was a fraud upon plaintiff, and entitled the aUl0'lWt of his judgment from defenqa;I;l:L The statutes ot 16Wa COde, §§ 1632-1635) provide that stockholders shall individualliablllty to the amount of the unpaid installments on the, stocli::owned by them, and execution against the corbe levle<iupon the privllte property of individual stockholdto th,at .that ):)etore such property is taken an execution against the COIrp0riW0n shall be,lssued and returned unsatisfied; that, before a Btockho!der be elrllrged with the 'payment of a judgment for a corporatA debt,'anaction shall be brought against him, in, which judgment qlay be; for l!.ny balance after diSpQsin,g of the corporate and the property of a Iiltockholder has been so he an action, against, the, ,corporation for tndemnityl,'or against any other stockholder for contribution. Such statutes also provide (Id; 0<1(21) that' intentional fraud", in failing to comply with of inGlilrporation,or the public as to their Shall sllbJert the guiltr:pa,rties to pUiQ.1llhment,and person injured by suqp frll,udmay rec,ov:ef damalfes against the parties participating In it. Held, that the pleading, framed as aforesaid, set up two causes of action at law, ba.sed upon the two statutory provisions.
SnrEi-Pnb6k!DuRE IN FEDF.RAL COURTS.

OF STOCKHl>LDERS-PLEADING IOWASTpUTIil.' , " , "

ACTION AT LAW OR IN EQUITY,

Held>,turtlher:,; that a$,ithe statute Imposed a new lIabUlty on the stockand did not depend on the llability of other holder, stoCkh,Old, .an,d, a rem,e,"d"ripr,' its enforcement had bee,II, provl,ded by the same statute' under w,llich the state courts had recognized and approved an action: at law as the eorrect method of procedlll'e, the federal courts shOUld aJsoenforee such liability' by action at law,and were not confined 'to a suit ,inequ,ity fQ!.' adjustment ottIie rights and liabilities of aU stockholde+1l and ereditp1'1l.

'8.

Held, turther. that theflict, that no' forJ:!lal assessm.ent or call for the subscription to the stoCk had been madewouId not protect the stockholder from liability to of the (:orporatlon, who was entitled to regard ,the stoCk subscripti()nliJ lWIa, fund for pis :1;lenefit.

NATIONAL PARK BANK 11. PEAVEY.

913

This was an action at law by the National Park Bank against Frank H. Peavey to recover the amount of a judgment held by the bank against the Sioux City Street-Railway Company, in which defendant was a stockholder. Defendant demurred to the petition. Chas. A. Clark, for plaintiff. Cummins & Wright, for defendant. WOOLSON, District Judge. The petition alleges that in September, 1893, plaintiff recovered judgment in the district court of Woodbury county, Iowa, against the Sioux City Street-Railway Company (a corporation for pecuniary profit, org,wized under the laws of the state of Iowa), for $40,611.02; that said judgment was based upon certain promissory notes executed by said company, which had been purchased and discounted by plaintiff; that general execution was issued upon said judgment, and duly placed for service in the hands of the sheriff of said Woodbury county, within which county said company had its principal place of business, and has been by said sherifi' returned, indorsed "No property found"; that said company is in fact insolvent, and has no property or assets whatever from which said judgment can be collected on execution; that defendant, at the time of the execution of said promissory notes and the rendition of said judgment, owned and held, and still owns and holds, 2,744 shares, of the par value of $100 each, of the capital stock of said company, upon which neither defendant nor any other person ever paid into the treasury of said company any sum or sums of money Whatever, and no part of said shares have been paid up, and there remains unpaid on said shares an amount in excess of plaintiff's said judgment. .The last paragraph of the petition is as follows:
That all of saId shares of stock of the Sioux·City Street-RaHway Company, so as aforesaid Issued to the defendant, and so as aforesaid owned and held by him, purported to be full-paid capital stock of said railway company, and thus and thereby, by reason of the actIon of defendant In receiving and holdIng saId shares of capital stock as aforesaId, the Sioux City StreetRailway Company, apparently and In semblance, possessed money or property to the amount and value of two hundred and seventy-four thousand dollars, by reason of saId shares of capital stock issued to the defendant, and owned and held by him, all of whIch apparent capital In money or property of said company was false, nonexistent, fictitious, and fraudulent, by reason of the fact that the said defendant never paid In any sum, amount, or value whatever for his said shares of capItal stock in the said corporatlon, and was a fraud upon this plaintiff; that, by means .of the premises, plaintiff is entitled to recover from the defendant the amount ot its said judgment agaInst the said company, together with interest and costs and the costs of thIs suIt.

To the petition, defendant assigns as grounds of demurrer: (1) The relief herein prayed can only be granted in equity; (2) this court has no common-law jurisdiction to render a judgment at suit of one creditor against a stockholder for alleged balances due from such stockholder on his shares of stock; (3) no assessment is shown to have been made on defendant's shares of stock; (4) there is a defect of parties,-the other stockholders and all creditors and the said Sioux City Street-Railway Company being necessary parties hereto. It will be observed that the last paragraph of petition, copied in v.64F.no.8-.58

9..14

no,elose relntion..to:that ·part of the petitiQnJ w,hich precedes' it. Defendant daims .tbatlthis .paragraph prOv.el:li·tbisaction i$·. an acti<>n' to recoverllnpaid assessments on shares Qtsmck, or unpaid balances. due thereont:but that the action is "in the right of the creditor seeking toshOiW tJlatthe proceedas fully. paid up operated ings by which the issuance of as a fraud on him, of which he can complain; 'an action wherein t.o jlliability Oil pllrt, the sum, du@ hIm is a trust fund, whicll the plaIntiff, as a credItor, .And thereupon defendant: clai1Jls that the. action must be b:t,'ougRt thllt is, so as that the court w.H;l q9 . 1. plaintiff to b,ri.n.g in corporah.o.n. an,d t.he o.ther stoc.kholdEtl's/J'OO, end that the entire matter stock maybe each stock:ho1q.el.'; cODlpelled to Qear his due and p;ropel'.lj)IftjQnof the. outli\tal:u,ling indebtedness.., "If the character of t9. :be lletennined from the cl.QsiAg paragraph of WIthout reference tQ tl;1e Jowa argument of defenq.ilfltdwuilt ,have . ;But such w:Mi tlIe theory ,of or attb;:e oral Thetheory on whi.c4, /Wgument then pr9,ceeded that the, was brought judgment. agaiI;lst Ilefen,dant .beclluile of his beieg the ljIwn.ef AA4 holder amp:tJ.nt: to dissaid ju(lgmeJ;lt. . two causes .of to be; set of the Iowa statb.ere. Sections Iowa Code, are jls foll!?'V;s,; i . .. . · ,
1632{: this chapter contjUned, nor any provisions in the articles exempt the stockb.olders. from individulil l1abUity to tHe' amount of the unpaid instalments on tb.e stoCk owned by them, or transfetted by them for the purpose of defrauding .creditors, and execution against, !the company IDltY', to that extent, be levied upon the private property Ql''8iiy sueh individual. . of the cases contemplated in this chapter, can the. private propert,i Of the stookholdersbe levied upon for the payment ot corporatedebbl, while cOl'Porate ·property can be' found with which to satisfy the same; blit it wUL·.be··sufficient proof thitt:no property can be found, if an execution has issUedoDi a' judgment against the corporation, and a demand has been made thereon> of80me one of the:last acting officers of the· body for property on whidl oo'leVY,and If he neglects to point out any such property. ' any stoekholder can be charged with the payment of a judgmen-t,reuderedfor a corporate:debt, an action shall be brought against him, in any stage of which he may point out corporate property subject to levy; and upoD·hissatisfying the court of the existence of such property. by affidavit or otherwise, the cause may be Continued or execution against him stayed, until the property can be levied upon and sold, and the court may render for any balance which there may be, after dispdsln:g ot the corporate property; but, if a demand has been made as contemplated in the preceding section, the costs of such aCtion shall in· any event, ,paid by the company or the defendant tb.erein, but he shall not to controvert tlle.validity of the judgment rendered against the corpotatfbn,unless it was rendered through fraud or collusIon. the property of a stockholder Is taken for a corPorate debtl,he may'maintain an action againsttheicorporation for indemnity, and against any of the otherstoc)plolders for contributio!l.

It will ·no doubt be cbnceded the,pleader has sought to draft th'e petition) except the closing paragraph, with the intent to bring him-

NATIO)<AL PA.RK BANK V. PEAVEY.

915

self within the sections just quoted. section '1621, McOlain's Iowa Code, is as follows:
1621. Intentional fraud In failing to comply substantially with 'the articles of Incorporation, or in deceiving the public or individuals in relation to their means or liabilities, shall subject those guiltY thereof to fine and Imprisonment. or both, at the discretion of the court. Any person who has sustained injury from such fraud, may also recover damages therefor agaInst those guilty of participating in such fraUd.

The pleader, in the closing paragraph of petition, apparently had in mind the section last quoted, and sought to bring himself within its terms. So that, iDfstead of the paragraph serving the purposes by defendant's counsel, it is brought at law, as a new and distinctcause of action, and should be numbered as such. The m.ain argument of defendant's counsel is aimed at that part of petition which precedes this closing paragraph. I will, therefore, for convenieJ;lce, and witIr a view to Qrevity, hereafter speak of such part as the "petition." , The energy and ability with which counsel have presented their views;, and the exhaustive research shown in the briefs submitted, compel at the hands of the court a fuller and more lengthy statement of the views which control the decision herein reached than might otherwise be deemed necessary. The first two grounds of, demurrer, as above stated, may profitably be considered together. Defendant claims, that, even though the action herein proposed might, under the decisions of the supreme coU,rt of lowa,be maintained at law in the state courts of Iowa, yet it cannot be so maintained in this court. Assuming, then, that an"action at law would lie in the state courts, let us examine the matter as applied to the federal courts. Weare cited to various eases decide!l by the supreme court of the Ul1itedStates, wherein has been considered, how far the federal courts are bound by and, follow the state courts in actions against stockholders in corporations. We may suggest that these cases relate to two distinct classes of liability of stockholders, and that, unless we keep in mind this distinction, we are liable to draw incorrect' conclusions as to what bas been actually decided' by the suprem.e court. One oJ:. these classes is the liability which is created by-statutory enactment, as, for instance, where the statute provides that each stockholder shall be liable, to the par value of stock held by him, for indebtedness of the corporation, or for the debts of the corporation, until a certific,ate is filed with the proper officers (named in the statute), showing entire amount of capi" tal stock, etc. The other class of liability is where the statute declares tM liability of the stockholder under certain circumstancesor after certain preliminaries have been performed by the creditorto a creditor of the corporation fornnpaid amounts on shares held by him. As to the first class named, the supreme court has uniformly held strictly to the remedy in' or by the statute provided, as the remedy to be enforced in federal, equally with state, courts. Thus, in Pollard v. Bailey, 20 Wall. 520, the supreme court use this language:

or

The individual liability of stockholders in' a corporation for the payment its debts, is always a creature of statute. ,At..commoD law, it does uot

916

DDERAL REPORTER,

vol. 64.

,'l'b& statute which creates It, may also declare the purposes of its creation, and provide for the manner of Its enforcement.

1Ill:'Bank v. Francklyn, 120U.'S. 74:7, 7 Sup. Ct. 757, the conrt say:
).lestion of th,e ma"Mer in ,w,h,iCh the ,liability ofstockhold,ers under of the state which creates the corporation may be enforced in theco1Uis Of the United States, Is not a new one in this court.
.·',

And the court proceed to consider Pollard v. Bailey, supra, and, in addition to what was above quoted, there is quoted:
beiJ1gS0, the, remedy provided is, exclusive of all others. A general, liability statute, witho)ita remedy, may be enforced by an appropriate

The llablllty and the remedY were both created by the same statute.

This

action. But, wbere the provision for the Ilabll1ty Is coupled with a PrQ'V1slon for a special remedy, that remedy, and that 'alone, must be enforced i'

thereupon deClare that:

Pursuant to these prinCiples, this court has repeatedly held - - - that ,whether the, remedy in the federal courts should be by action atlaw:oi" 'by suit In eqUity depends upon the nature of the remedy given by tha8tatutes of the state. [Citing Mills v. Scott, 99 U. S. 25, and a large number ,of other cases.)

As to the second class of liability, above noted, the supreme court has declared that the state statutes providing liability of a stock· to the extent of unpaid amounts on shares held by him do notereatea new right,bl1t merely recognize a liability of the stock· to the Corporation creditor-which existed at the timetlleistatute was enacted. In Patterson v. Lynde, 106 U. S. 519, 1 'Btl-P. Ct. 432, the court, in considering the provision of the oonstitution, that <'the stockholders 'of all corporations shall be liable for the indebtedness of said corporation to the amount subscribed, for and no more," etc., declare: of
The constitution of Oregon created no new right in this particular; It simply proVid.m i for the preservation of an old one. The liability is not to the creditor" butifQr :the Indebtedness. That Is no more than the liability created by the.

Gl,at'k v. Bever, 139 U. S. 96, 116, 11 Sup. Ct. 468, the court to statutes undel" the Revision of 1860' (which imniMiaifelypreceded the Code of 1873,in Iowa), whose provisions as to the 'point now under consideration, are substantially the same as those now in force, say:
So

in the IoWa statutes Of the right of creditors of corporations to look to unpaid Installments of stock subscriptions, to obtain satisfai<ltioIl!o.t demands, .4iq. not confer a .new right, butls a recognition ot a before the, by virtue of the relations between a cor· creditors ,and stockholders.

In all 1J'he ,decisions of the supreme court our attention" haa been called by counsel, this same general <UstiAction or, classi· "ftcati6Ji ',obtains; and numy of the seeming ,inconsistencies in cases either side"are cleared away, and the line of cited decision made' uniform, by beariJ),g in mind the fact just noted. In that portion of the petition which we are now considering, no many liability beYQJ;ldthat which arises of unpaid amouI1tson 'shares of stock ,held by defendant. Assuming
h

NATIONAL PARK BANK fl. PEAVEY.

917

liability exists, the question to be considered is, how is it to be enforced? The contention of defendant is that it cannot be enforced at law, but must be enforced in equity. Defendant concedes that receivers and assignees of insolvent corporations may sue at law to recover of stockholders fixed and determined assessments. The reasoning which supports this concession is that the stockholder is liable in such a case to the corporation, and the receiver represents in that action the corporation. Hence he sues, as the corporation might have done.' But in case at bar the defendant holds shares, on their face, paid up. The corporation cannot sue for whatever amounts are actually unpaid on these shares. It must be conceded, we think, that, unless relieved therefrom by the Iowa statute, plaintiff's remedy in this court must be in equity. In Handley v. Stutz, 139 U. S. 417, 4-.27, 11 Sup. Ct. 530, it is said:
Ever since the case of Sawyer v. Hoag, 17 Wall. 610, it has been the settled doctrine of this court that the capital stock of an insolvent corporation is a trust fund for the payment of its debts; that the law implies a promise by the original subscriber of stock, who did not pay for it In money or other property, to pay for the same when called upon by creditors.

In Clark v. Bever, 139 U. S. 96, 11 Sup. Ct. 468, the court says:
In Sawyer v. Hoag, 17 Wall. 610, 620, it was held that the capital stock of B corporation, especially Its unpaid subscriptions, Is a trust fund, sub modo, for the benefit of its general creditors. And this principle was reaffirmed In Upton v. Trebilcock, 91 U. S. 45. [And the court cite various other cases, extending to Richardson's Ex'r v. Green, 133 U. S. 30, 10 Sup. Ct. 280.]

And there is no contention but that, had such been the desire, suit in equity might have been brought, wherein might have been attempted and obtained general and full decree with regard to unpaid amounts on the shares then outstanding in said corporation. It will be noticed, upon an examination of the cases which have been decided by the supreme court wherein the collection of unpaid amounts on shares of capital stock was by suit in equity, and approved by that court, or was at law, and disapproved by the court, that none of these cases closely resemble the case at bar. Pollard v. Bailey, supra, was an action at law, where the holder of bills of an insolvent bank attempted to recover the amount of same from an owner of shares therein. The provision under which plaintiff claimed to recover was:
The individual stockholders shall be bound respectively for all the debts of the bank in proportion to their stock holden therein.

The court call attention to the fact that:
.Each stockholder Is bound for the debts In proportion to his stock. · · * The provision, therefore, for a proportionate liability is equivalent to a provision for an appropriate form of equitable action to enforce it. The -case is different from what it would be if the chapter had provided generally that all stockholders would be Individually liable for the payment of debts.

the company, etc.

In Manufacturing Co. v. Bradley, 105 U. S. 175, the statute pro· vided: The members * * * lihall be jointly and severally liable for all debts ot

918

'PBD&ltAL' l1JllP01tTEB,

vol. 64.

Th@ oourt say:

Tbestatttte" under consideration prescribes no formot aCtion, and the jurisdictlonlnlltbe as concUrrent, both at law B:ndequity, according to thei the by the'cirquplstances upon which the rl@t arises.
L . · ''','': ..

f.;<.i,,:'

'.'.

,

AftertbtreC@gnition by the court of the righf to sue at law. the court denlarethat in the case then under consideration there was anacknbw.ledged jurisdiction to grant equitable relief, because of the lien inev'idence, upon the corporate property, and, as an rincldent to: that, to make a decree against the' corporation for the payment' of the debt Such equitable jurisdiction having attached; dtdwaisproper, to avoid multiplicity of suits, to extend to plaintUllful1' and complete relief in that action.. · In :M1llsrv"Sco'tt j '99 U. 13.28, thecharter<>f the bank pledged' and persons and property of the stockholders for the redemptioB'ofthe billsdSEiued by the bank, "in proportion to the number held' by the several stockholders, the court say:
The propoJ!li'bil the illda'btednesswitll which the stockholder is to be charged can be ascertained only upon taking account of the debts and stock of the bank, Ilil?-tl, a . c,ourt of Is the proper tribunal to bring before It all necessary parties for that purpose; but by the law of the state, as declared by thli, bighest triburial; an action for'debt will lie wIiere the amount of the bank's':c;ultstllJIldingindebtedness and the number of shares held by the stockholderJCftD1Je stated; In such, cases the extent 'ot the latter's llnbilltyls fixed;: llnd the amount With Which he should be charged Is a mere arithmetical calcUlation. '

, In Terry 101 U. S. 216, the language establishing the liability, of! was, "Hable and bound for notexeeedingltw;ice thearoount of their shares'!' After declaring that this is, inlegal effect, for a proportionate liability of the stocklwldet's," and therefore to he enforeedi in' equity, the , COurt saY':
UndoubtAdl,l ,qndars,otne Charters! suits .at: law may be maintained by one crE)ditor) more . The form and extent ot a statutoi-y liability Of, tills k!nddeJ;len/1 upon the particuIarphraseology of the 81f1tute creating the' liability." "','°'.1:' .
I" ·.

In Kenned,yv.Gibson;8: Wall. 498, the receiver of It national bank, by bUl, inrequity,;$Qught.to recover from defendants,. as stockholders, for a deficiency in assets. The case was deci!led complainant, buton the ground that the bill contained nQ.a;verment al:lto necessary action by comptroller preliminary to right to sue. The reasoning of the court is valuable, in matters bearing 'on the p(>ilit now in question. 'deolared that,in actions' to ,enforce the orders of the' liability of stockholderR to pay th.e debts ,,' . ' .
The Jjability,' is sevtWal,.' and .notjoln't. .. The llmit of their llabll1ty is the par of the stock held by each one. When the whole amj)UIlt is, it Inu$t;'be at law;,' :Wbere less Is required, It may be in equity. and in such a case an Interlocutory decree may be taken for contribution, and the cas.=! may stand for the further action of the court, lit :m1ch a:etiOnshotlldsubsequentl1 proven.sart·...;.untU the tull amount of the llabU1ty 18 exhausted. .
f

NATIONAL PARK BANK II. PEAVEY.

919

Stone v. Chisolm, 113 U. S. 302, 5 Sup. Ct. 497, was an action heard on certificate of division of opinion, where the only question was whether the liability imposed on corporation directors by the statutes of South Carolina might be enforced in an action at law, at the instance of one or more creditors, or must be enforced by creditors' bill in equity. The statutes provided that, in case of debts in excess of capital stock actually paid in, the directors should be .personally liable for same, both to the creditors and to the corporation. After considering the applicability of various statutes of that state, in the attempt to ascertain what if any remedy the statutes provided fur enforcement of the statutory liability thus created, the court say:
No special remedy being prescribed by statute for enforcing the liability created by that section, from a consideration of its nature and the circumstances which are made the conditions of it, we are led to the conclusion that the only appropriate remedy in the courts of the United States is by a suit in equity.

The subsequent reasoning of the opinion shows that this conclusion is based on the fact that there must be an ascertainment of the total amount of this excess indebtedness and of capital stock paid in, and thus a basis is reached, once for all, concluding all parties interested; and that if left to the determination of various juries, in different actions which might be brought against the stockholders under varying circumstances, the findings of theSe juries might essentially vary, either in amount of excess indebted· ness or of capital stock paid in, and therefore the per cent. to be paid in by the stockholders in the different actions would possibly vary, and indeed there might be variance as to any amonnt to be paid in, so that the amounts to be paid might result in grossly unequal results to the different stockholders. A review of the cases cited above presents pretty clearly the controlling principles which determined the conclusions reached by the court as to whether the attempt to enforce the stockholder's liability should be by action at law or by suit in equity. But we are not left to ourselves to deduce these controlling principles. The court has stated them. In Flash v. Conn, 109 U. S. 371, 3 Sup. Ct. 263, a judgment creditor sought to recover from a stockholder on the ground of statutory liability of stockholder for all corporation debts made before the entire capital stock was paid in. The statute provided that: All stockholders * * * shall be severally individually liable to the creditors of the company * * * to an amount equal to the amount of stock

held by them respectively, for all debts, etc. No stockholder shall be personally liable for the payment of any debt contracted by the company * * * unless a suit for the collection of the debt shall be brought against said com· pany 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.

The court consider the point urged, that this should have been a suit in equity, instead of an action at law. And the court distinguish the pending case froUl Pollard v. Bailey, supra, where "the

920

,\J'EDElBA;LREPORTER,

vol. 64.

liability()f 'tbeBtbckllolderswas itl' proportion to the !$to.ckheld by them":
Each was therefore only liable for his proportion of the debts. This proporlfOltCOUld onJybe ascertained after an accou'nt of the debts and stock,and,.-, pro rata distribution of the indebrednesSRtnong the stock. holders.1;'hls, court held, could only be done by a suit In equity. But in this case the statute makes every stockholder individually liable for the debts of t!il(f'company, for an, amount equal to the amount of his stock. This liabl11ty" Is fixed, and does not depend on, the liability of other stockholders.There is no necessIty of bringing in other stockholders or creditor8. Any credItor who has recovered judgment against the company, and sued out thereon, which has been returned unsatisfied, may sue any stockhold'er, and no other creditor can.

We turn t9 the I()wa statutes, and the similarity, as to rem· edies by statute, between these and the provisions construed in Flash v. Conn, supra, seems remarkable. In both it is provided that suit must be first brought against the corporation, and executi()n issue thereon, with the result of being unsatisfied. And b9th provide for suit being then br()ught against the stockholder',l3'1lt, if there be any difference in this particular, the Iowa more definite, in specifically providing for "action (the stockholder). The reasoning in Flash v. Conn is strikingXy to the Iowa statute. This "statute makes individually liable for the debts of the company, every for an equal to the amount of the unpaid installments of his ,,',' 'l'lle liability, is fixed, and does not depend on the liability stockholderS. Any ,creditor who has recovered judgment company, and sued out execution thereon, which has been retufp,ed unsatisfied, may sue any stoclrholder whose shares of stock aren,Qt, paid up,"and no other creditor pan." But if it be urged that in the Plash Case the amount of stock held was as to the holder of stock, in fixthe onlYlWLtter ing thel4nit.Qf .his posj3ible liability,while here, under the Iowa be found both the amount (If stock held and the thereon, and that as tbis matter is.not "fixed, but to amount therefore the action .$ould be. anbe swer is .{without now considering the.. established, practice in the state coti,rts. that (quoting the language of Mills v. Scott, ':Of de!:)t will always lie, where the' amount sought to be recovered]s certain, or can be ascertained from fixed data by computation." Here the petition states number of shares the defendant own,s, !lnd tllat no part thereof is paid up. The entire debt$()f creditors. Whilethejudgment which is therefrom Is nxed, no computation being necessary" e:lli.06ptt<> find what interest is to be added to the amount in named. .In Mills'v. Scott" supra, which was an action a of.an bank, tb..e preme coui:t'IPJAdethe Co,;mP'lltatlOn, statmg that"m such cases,. the extent of the [stockholder's] liability is fixed, and the amount is 'a matter of,"merearithmetical calculation"; and the court, having 'by thus the liability of the defendant on the debt sought, toLie 'charged &g.!'-inst him at an amount less than the

NATJONAL PARK BANK V. PEAVEY.

921

judgment which had been recovered hi the court belQw, ordered that, unless plaintiff therein should remit the over the amount so fixed by the court, a new trial should be granted. Turning now to the decisions of the supreme court of Iowa as to the manner in which this liability of the stockholder should be enforced under the Iowa statutes first above quoted, we find the practice, which that court has recognized and approved as the correct practice, is settled beyond the possibility of doubt,-as to whether the action shall be at law or equity. But first let it be noticed that we are not now considering the question whether or not, as a matter of fact, ,defendant holds his stock so that he can be made liable under the Iowa statutes to plaiJitiff's judgment against the corporation. That is a matter of defense, to be hereafter examined, if such defense be tendered. The demurrer, on point now under consideration, viz. the appropriate remedy to be enforced by plaintiff, is conceding such ultimate liability. If at this point we were considering the question of defendant's liability, the case of Clark v. Bever, supra, might con· trol. In that case the question before the court was not the remedy to be enforced, and its manner of enforcement (that action was at law); but the question considered, the determination of which determined the judgment of the court, was whether, under the facts presented, the shareholder was liable for the judgment sought to be fastened upon him. IIi Bayliss v. Swift, 40 Iowa, 651, the question was directly presented and determined whether, under the Iowa statutes, the remedy must be enforced through action at law or in equity. The plaintiff, Bayliss, had recovered judgment against the corporation, had issued execution thereon, which was returned unsatisfied, and he now sued the stockholder in such corporation for amount of his judgment. The supreme court of the state (page 651) state the contention of plaintiff to be that the Iowa statute "authorizes an ordinary judgment against the stockholders":
We think the section in question sustains this position. It provides that. "before any stockholder can be charged with the payment of a judgment rendered for a corporate debt. an action shall be brought against him." The section does not prescribe what kind of an action shall be brought, and there is no principle of construction which warrants us in determining it to mean any other action than an ordinary action attended by the ordinary consequences.

Section 3712, McClain's Iowa Code, provides:
All forms of action are abolished in this state; but the proceeding in a civil action may be of two kinds, ordinary or equitable.

So that, when the court declare the appropriate proceeding under the statute to be I'the ordinary action," there can be no question, by that they mean an action at law, as contradistinguished from an ac· tion in equity. In Stewart v. Lay, 45 Iowa, 604, a receiver brought action at law against a stockholder, to recover judgment upon his unpaid stock. The defendant pleaded, among others, certain equitable grounds of defense, such as fraud in conduct of receiver and officers of corporation, in various ways. To the equitable defense the receiver demurred,-among other grounds, "that defendant has. a full and ade-

ship; were he required to waW the' EIldw 'progress of an equitY action, wherein all 'the! stockMlderslire' partiesj, itought to settle between them,. of their as associates ill t)le corporation.

quateremedyat setout." .·'JIhe demurrer WflS 'wstain'ed,·abddefeJidiUlta:ppea1ed. The court say: The depositor or other' Credftor iWebank would be exposMfo great hard-

ditlOl!ls'and facts Nt up . .lI@l'.pted.

reference ito the equitable defenses 'setup: cmj., .under the legaldlifenses plead by him, show the coil..
parts, ,of his equitable answer now under la:W,and the)¥qlding the court. ' . ' ,

wedtlithr, lIowever, that section 10S4orthe Code [section 1684, McClain's Code] col1templates the renditlon ot such judgment. Bayliss v. Swift, 40

corpot&tion'b}lliftction at lawiagainst a stockholder for unpaid amount9!u.pon hiS stock. The case was tried to a jury, with verdict, forplaintiifs. While no objection seems to have been mnde against the forrn·of action,. being at contended that ute .' did ootauthorize judgment·,against him on, the verdict of the jury·...· iffhe court say:

,'In. Singer v.. 61 Iowa,9S. :15 N. W. 858, judgment Creditors of· 'a'Mrpbrationl:were seeking payment of a judgment againat the

In Water-Power Co. v.Hopkins, 79 Iowa, 653, 44 N. W. 797, plaintifT, Rs"judgmenf(}reditorof acorIJoration, sued defendant, at law, as a.,s1!6cltholder:with unpaid ,in'Stallments of stock, to recover amol1ntof his judgment Trial to jury, and verdict for plaintiff. On Ms Rppealtneoourt (page 657, 79 Iowa, page 797, 1:4 N. W.) say as to. one of'the errors' a1ilsigned : .
"Apl1ellaint:cIalIriSthat the (corporation) has cell,sed to exist, and that in consequence the l'elletsought byplaintlff can be obtained onlJ: in equity. We do not discover that any obje.::tl<>l1, :was made in the, court beloW. tQ the kind of, !Ifl0pted. Tne liabUity of defendant, and the method of ob,proVided for by' sections 1082-1084, Code [McClain's Code, §§ Thefl.lcts upon which the liability of a stockholder depends can, asa:hJIe. bel;tsrendily ascertained by an action at law as a proceeding in 'We thin!!: the proper action was adopted,' Bayliss v. Swift, 4Q< lowa; 6 5 1 ; " ,

We may here cite, without delaying to particularize further, as, additionally showing that an a(:tion at law is recognized by the court of Iowa as the proper remedy; Jackson v. Traer, 64 Iowa, 469, 20 N;W.764; Carbon Co. v. Mills, 78 Iowa; 4'60, 43 N. W.290. Having-thuElaemertained, the 'proper proceeding to be by action at law'Mb0rding-oothe decisions 'of the highest court of the state, we that as to the remedy to be pursued, where the statute provides. for .an action, the supreme court of!the United States hUB" expressly recognized the propriety duty: of the fedfCilllUw: the state 'practice in that regard. Mills v. eral courts Scott, Sl1pral'sMtes 'and expressly recognizes that "by the law of the state,' its highest an action for debt 'proceeds to follow that declaration as tothe state1lllw. ,In Bank supra, the court, after care-

NATIONAL P.ABK!BANK t/;PEAVEY.

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fully examining the decisions of the highest court of Rhode Island, where the corporation was organized, as to whose capital stock defendant was sought to be held liable, and those from the like {lourt in Massachusetts, from which state the Rhode Islandstatu.te was adopted, state tnat the court has repeatedly held "that Wh'ether the remedy in the federal court should be by action at law or by suit· in equity depends upon the nature of the remedy given by the statutes of the state"; and the decision reached is largely, if not entirely, governed by the decisions of the Rhode Island court. In Clark v. Bever, supra, the supreme court, whilerefnsing to follow the supreme court of Iowa as to the decision there given (64 Iowa, 469, 20 N. W. 764) on the matter of the liability of a shareholder for unpaid installments or portions of his shares, on the ground that this was a question of general law, as to which the federal eourts must follow their own views and constructions, yet the court expressly recognize that the Iowa statute has given a new remedy for enforcement of such liability when that liability exists
116):

The new right given to the creditor DY the statute is to have his execution, when' corporate property cannot be found, ievied upon the private property of the stockholder who is indebted on his subscription of stock.

And had it become material to consider it, undoubtedly, that court . would have recognized the remedy by the next section of the state statute,-"an action,"-as the legitimate and proper method of enforcement, as construed by the state court. In Patterson v. Lynde, supra, in which it was held that the proceedingunder the Oregon statute should be by a suit in equity, as one reason therefor the supreme court say, "The creditor has not been given, either by the constitution or the statute, any new remedy for the enforcement of his rights." Well may it be said, as to the remedy to be here pursued, using the language of the supreme court in l!"'lash v. Conn, supra:
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 clear that confusion and uncertainty would reSUlt, should the state and federal courts place different constructions on the section. · · · If this was a case arising in the state of [Iowa,] we should follow the construction put upon the statute by the courts of that state.

And if in 'matters involving the determination of general principles, how much more when there is involved simply the question of the remedy to be adopted in enforcing a right, is the language of the supreme court pertinent, that:
The federal courts administering justice in Iowa, having equal and co-ordinate jurisdiction with the courts of that state, · · · will lean towards an agreement of views with the state court, if the question seem to them balanced with doubt. Clark v. Bever, 139 U. S. 117, 11 Sup. Ct. 468, and ·cases there cited. '

The question heretofore considered does not involve the point whether a state statute may limit the sphere of jurisdiction which the federal courts exercise their equity powers. Oounsel upon .either side concede .this as settled in the negative by repeated de-