BLAIR
v.
GRAY
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A policyholder of the Republic Life Insurance Company sued stockholder Gray to recover amounts owed on an insurance policy, seeking to enforce the company's charter provision making stockholders liable for unpaid stock subscriptions when the company's losses exceeded its assets. The Supreme Court affirmed the lower court's judgment in favor of Gray, holding that a creditor cannot sue a stockholder to enforce such liability until the company's losses or liabilities actually exceed its assets.
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Mr. Chief Justice Waite delivered the opinion of the court.
The charter of .the Republic Life Insurance -Company of Chicago contains tbe following section: —
“ Sect. 6. The real and.personal property of each individual stockholder shall be held liable for any and all liabilities of -the company, to the amount ofstock subscribed and held by him and not actually paid in. In all cases of losses exceeding the means of the corporation, each stockholder shall be held liable to the amount of unpaid stock held by him.”
The defendant, Gray, subscribed $10,000 to the capital stock of the company. He. has paid only $2,000 on his subscription, and still owes the company for the rest. Under the foregoing section of the charter some appropriate action for the benefit of creditors may undoubtedly.be maintained against him for the , recovery of this unpaid balance, if the losses of the company áre in excess of its means.
This suit was at law by a policy-holder of the .company, against the defendant as a stockholder, to recover an amount claimed to be'.due on the policy. There is no averment in the declaration to the effect that the losses of the company, or its liabilities, exceed its assets. The. case stands on demurrer to the-declaration. Without, therefore, determining whether, under the decisions of the courts of Illinois, if it appeared that there was a deficiency of assets, an action like this might be maintained, .we affirm the judgment below, because we are all of opinion that, until such contingency arises, a creditor cannot sue a stockholder to enforce this liability.
Judgment affirmed.
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Fourth Nat'l Bank of N.Y. v. Francklyn, 120 U.S. 747 (U.S. 1887)…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, 460. [*757] 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 ‘…