PITTSBURG STEEL COMPANY
v.
BALTIMORE EQUITABLE SOCIETY

U.S. | 1913-01-06
No. 103
226 U.S. 455 Supreme Court of the United States (1913) Positive Treatment
Also reported at: 57 L. Ed. 297 · 33 S. Ct. 167 · SCDB 1912-047 · 1913 U.S. LEXIS 2250
Cited by 19 cases

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Synopsis

Pittsburg Steel Company, a creditor of a corporation, sued a stockholder to recover on an unpaid stock subscription, but Maryland enacted a statute retroactively changing the remedy from a legal action to an equitable bill and making the stockholder's liability an asset of the corporation. The Supreme Court affirmed the dismissal of the action, holding that the statute did not unconstitutionally impair the obligation of contract because the creditor's right was precarious and shared with other creditors, the old remedy was uncertain in practice, and states retain broad power to modify remedies for enforcing creditor rights against stockholders.

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Opinion of the Court
Mr. Justice Holmes

Mr. Justice Holmes delivered the opinion of the court.

This is an action brought by the plaintiff in error as a creditor of the South Baltimore Steel Car and Foundry Company to recover its claim from the defendant/a holder of stock in that company the subscription for-which had not been fully paid. The action was begun on February 26, 1908, and at that date it could .be maintained. But in April a statute was enacted (Act of April 6, 1908, c. 305, Laws 1908, p. 58), making the stockholder’s liability assets of the corporation, saving the'rights of creditors at the date of the act, but providing that the exclusive remedy for such rights as against Maryland stockholders should be by bill in equity on behalf of such creditors as might come in. This provision was made operative as of July 1, 1907, and was to cause all actions at law of this kind brought since then to abate-, saving the right to become party to a bill. On this statute the defendant moved to dismiss the suit. The motion was granted and the judgment was affirmed1 by. the Court1 of Appeals, which sustained the constitutionality of the act as so applied. 113 Maryland, 77.

Of course the objection is that the law impairs the obligation of the plaintiff’s contract. If the stockholder’s liability were purely local and no more than matter of remedy for the collection of the principal debt, still this objection would have to be considered. See Hawthorne v. Calef, 2 Wall. 10. Brown v. Eastern Slate Co., 134 Massachusetts, 590, 592. But the case was argued on the footing of a contract between the creditor and the stockholder, and ¿s the statute seems to assume that the stockholder’s liability may follow him into other jurisdictions and the Court of Appeals affirmed that a contract between the parties is presumed, we in turn assume that view to be correct. Bernheimer v. Converse, 206 U. S. 516, 529. In either view the question put in the form most favorable for the plaintiff is the same; whether the remedy against the defendant is impaired so materially as to affect the plaintiff’s rights. McGahey v. Virginia, 135 U. S. 662, 693.

The plaintiff’s supposed contract was subject to peculiar infirmities. His right was shared equally .by all other creditors of the corporation, and not only might some other creditor by diligence have got in ahead of the plaintiff and have exhausted the fund for which the defendant could be held, but'the right depended1 on the stockholder’s will. As was observed by Judge Rose, following the Maryland cases, in Republic Iron & Steel Co. v. Carlton, 189 Fed. Rep. 126, 137, thé statute'does no more than the stockholder was free to do before. He could have paid the corporation or a receiver or other creditors. The question whether the remedy on this contract was impaired materially is affected not only by the precarious character of the plaintiff’s right, but by considerations of fact — of what the remedy amounted to in practice. It is admitted that bringing the action gave the plaintiff no lien, as it seems mistakenly to have been assumed to do in Myers v. Knickerbocker Trust Co., 139 Fed. Rep. 111, 116; The Court of Appeals states that the remedy has been found in practice an uncertain one, less efficacious than that which is substituted. There is nothing to contradict their statement as to what experience has taught. With that fact beforé us and also the absolute dependence of the creditor upon the will of the stockholder, we cannot go into nice speculation as to the probable result of this particular case, or say that the decision was wrong. The power of the State to make similar changes of remedy is asserted in more general terms than we have employed, in Fourth National Bank v. Francklyn, 120 U. S. 747, 755. See also Henley v. Myers, 215 U. S. 373, 385.

A further objection is based upon the period of limitation established by the act. But as it does not appear that the plaintiff was hurt by it, this objection is not open., Darnell v. Indiana, ante, p. 390.

Judgment affirmed.

Cases With Similar Vibessemantic neighbors from the corpus

Citator

Cited By

  • State ex rel. T. v. Buckwalter, 112 Fla. 200 (Fla. 1933)
    …e principles, the writ should not be allowed when to grant it would be to give a preference under such circumstances as under equitable principles would be denied. See, in this general connection, Pittsburgh Steel Co. v. Baltimore Equitable Society, 226 U. S. 455, 57 L. Ed. 297, 33 Sup. Ct. Rep. 167; Note to case of Douglas v. Loftus, (Kan.) L. R. A. 1915-B, 797, 806, et seq.; State ex rel. Gillespie v. Thursby, 104 Fla. 103, 139 So. 372; State ex rel. East Side Bank v. Holloway, 105 Fla. 616, 142 So. 221 M…
  • Mahood v. Bessemer Props. Inc., 154 Fla. 710 (Fla. 1944)
    …de their contract with knowledge of the power of the State to change the remedy or method of enforcing [*719] the contract, which may be done by a state without impairing contract obligations. See Pittsburgh Steel Co. v. Baltimore Equitable Society, 226 U. S. 455, 57 L. Ed. 297, 33 S. Ct. 167. A state may by legislative enactment modify existing remedies and substitute others without impairing the obligation of contracts, provided a sufficient remedy be left or another sufficient remedy be provided. See Wagg…
    1 / 2
  • Palm Beach Mobile Homes, Inc. v. Strong, 300 So. 2d 881 (Fla. 1974)
    …rties made their contract with knowledge of the power of the State to change the remedy or method of enforcing the contract, which may be done by a State without impairing contract obligations. See Pittsburg Steel Co. v. Baltimore Equitable Society, 226 U.S. 455, 33 S.Ct. 167, 57 L.Ed. 297. A State may by legislative enactment modify existing remedies and substitute others without impairing the obligation of contracts, provided a sufficient remedy be left or another sufficient remedy be provided. See Waggon…

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