Source: https://supreme.justia.com/cases/federal/us/120/747/
Timestamp: 2019-04-22 00:52:55+00:00

Document:
This statute permits the alternative remedy by suit in equity -- whether before or only after recovering judgment against the corporation we need not now inquire -- and modifies the previous statutes in no other respect than by abolishing the right to take the person of a stockholder for the debt of the corporation; by substituting, for the taking of his property on attachment and execution against the corporation, a new form of remedy, by action of debt against him upon a judgment obtained against the corporation, and by authorizing him, when so sued, either in equity or at law, to make any defense that the corporation might have made. As it does not undertake to annul the liability of the stockholders for the debts of the corporation, but only modifies the form of remedy and the rules of evidence, it is not doubted that it is a constitutional exercise of the power of the legislature, even as applied to debts contracted by the corporation before its enactment. Hawthorne v. Calef, 2 Wall. 10; Penniman's Case, 103 U. S. 714, aff'g 11 R.I. 333; Ogden v. Saunders, 12 Wheat. 213, 25 U. S. 262, 25 U. S. 349; Webb v. Den, 17 How. 576; Curtis v. Whitney, 13 Wall. 68; Tennessee v. Sneed, 96 U. S. 69.
Under either statute of Rhode Island, the debt must be established by a judgment recovered against the corporation, before the creditor can proceed against the stockholder. The execution under the earlier laws, and the action against the stockholder under the existing statute, must be founded on that judgment. In short, it is only a judgment creditor of the corporation who can collect a corporate debt from its stockholders at least at law. What state of facts would be necessary to support a bill in equity by a creditor of the corporation against one or all of its stockholders is a question not before us. See Combridge Waterworks v. Somerville Dyeing & Bleaching Co., 4 Allen 239; New England Bank v. Stockholders of Newport Factory, 6 R.I. 154; Smith v. Railroad Co., 99 U. S. 398; Case v. Beauregard, 101 U. S. 688.
20 Wall. 87 U. S. 526-527.
Pursuant to these principles, this Court has repeatedly held not only that suits either at law or in equity in the circuit court by creditors of a corporation to enforce the liability of stock holders under a state statute are governed by the statute of limitations of the state, Terry v. Tubman, 92 U. S. 156; Carrol v. Green, 92 U. S. 509; Terry v. Anderson, 95 U. S. 628, but also that the question whether the remedy in the federal courts 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, Mills v. Scott, 99 U. S. 25; Terry v. Little, 101 U. S. 216; Patterson v. Lynde, 106 U. S. 519; Flash v. Conn, 109 U. S. 371. See also Blair v. Gray, 104 U. S. 769; Chase v. Curtis, 113 U. S. 452, 113 U. S. 460.
The case of Flash v. Conn, 109 U. S. 371, upon which the learned counsel for the plaintiff greatly relied, is in principle quite in line with the other cases, and was decided in favor of the plaintiff because of essential differences between it and the case at bar.
In Burgess v. Seligman, 107 U. S. 20, the question was whether the defendant was such a holder of stock in a corporation as to be liable for its debts, and no question of the form of the remedy was presented or considered.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.