Ramsden v. Knowles

LOWELL, Circuit Judge.

This is an action at law to enforce stockholders’ liability in the Lombard Investment Company, a Kansas corporation, pursuant to Comp. Laws Kan. 1885, c. 23, art. 5, § 44. The declaration alleges that the corporation is indebted to the plaintiff upon debenture bonds under seal, some of which became due July 1, 1899, and others at earlier dates; that the defendant has been a stockholder since 1890; that the corporation suspended business about September 14, 1896, since which time it has carried on no business whatever; that it is insolvent and has no assets, and is therefore dissolved. The defendant has amwered, and the plaintiff has demurred to several paragraphs of the answer, viz.:

(7) That the statute of Kansas above referred to was rejiealed by Acts 1898, p. 36, c. 10, § 17, and is no longer in force. The demurrer is sustained upon the authority of Kisseberth v. Prescott (C. C.) 95 Fed. 357. The defendant’s suggestion, that some of the bmds may have been issued since the repeding statute, contradicts the date of assignment set out in the account annexed.

(9) That the plaintiff’s right of. action did not accrue within three years before the dale of the writ, and is therefore barred by Comp. Laws Kan. 1885, c. 80, art. 3, § 18. The defendant admits that, speaking generally, the Massachusetts statute of limitations controls this action, but he urges that, inasmuch as the plaintiff could not at this time bring suit on the bonds against the corporation in the courts of Kansas, he therefore cannct bring suit against the stockholders, whose liability is in the nature of a guaranty. But it does not follow that the plaintiff could not now sue the corporation in Massachusetts, and, moreover, inasmuch as the liability of the guarantor to the plaintiff was fixed upon the dissolution of the corporation, that liability is not affected by the subsequent extinction of the plaintiff’s remedy against the principal.

(10) That tlie right of action did not accrue within five years before tlie plaintiff’s writ, and that the defendant is therefore barred by the statute of Kansas last quoted. This defense falls with that set out in paragraph 9.

(11) That the right of action did not accrue within six years, which is the ordinary statutory limitation of Massachusetts. The statute of Massachusetts is applicable, as has already been decided. The plaintiff contends that the statutory liability here sued upon is a liability upon a specialty, and so is barred only by the lapse of 20 years. Rev. Laws Mass. c. 202, § 1; Bullard v. Bell, 1 Mason, 243, 289, 2 Fed. Cas. No. 121; Cork & Bandon Ry. v. Goode, 13 C. B. 826.

But the Massachusetts statute is not the statute of 21 Jac. I, c. 16, which was, in substance, under consideration in the cases just cited. It contains no mention of-a “specialty.” In Baker v. Atlas Bank, 9 Metc. 182, the Supreme Court of Massachusetts decided that Rev. St. Mass. 1836, c. 120, § 1, the remote predecessor of the Massachusetts statute here under consideration, differed substantially from *720the English statute, and that a suit upon a liability substantially like the liability’of this defendant was barred in six years. In Commonwealth v. Cochituate Bank, 3 Allen, 42, 46, the same court said that Gen. St. Mass. 1860, c. 155, § i, the next statute in the order of succession, had the same meaning. The verbal changes introduced by Pub. St. Mass. c. 197, § 1, and by the statute here in question, import no change of meaning in this respect.

The plaintiff urges that some of the bonds did not fall due until 1899, and so the liability did not arise until that date, which is within the six-year term. The Supreme' Coitrt of Kansas has held that the stockholders liability arose at the time of dissolution, and the date of payment expressed in the bonds thus became immaterial. Brigham v. Nathan, 62 Kan. 243, 62 Pac. 319; McHale v. Moore, 66 Kan. 267, 71 Pac. 522. The plaintiff contends that these cases, which were decided since the dissolution of this corporation, overruled the earlier decisions of Hoyt v. Bunker, 50 Kan. 574, 32 Pac. 126, and Cottrell v. Manlove, 58 Kan. 405, 45 Pac. 519, and so should here be disregarded under the rule laid down in Gelpcke v. Dubuque, 1 Wall. 175, 17 L. Ed. 520. But in the earlier cases the law is not laid down so clearly in the plaintiff’s favor that the modification, if any, introduced by the later decisions amounts to an impairment of the plaintiff’s contract. The demurrer to this defense must be overruled.

The twelfth article of the defendant’s answer seems to state in another form the defense declared to be insufficient in the ninth paragraph. Demurrer to the eleventh paragraph of the answer overruled. Tn other respects, the demurrer is sustained.