The demurrer raises the question whether the complaint states facts sufficient to constitute a cause of action. The plaintiffs contend that their cause of action is based upon the decisions and judgments of the courts of the State of Minnesota, and upon the statutes of that State, and that the Wisconsin Supreme Court in sustaining the demurrer has thereby failed to give that full faith and credit to the laws and judgments of the State of Minnesota and its courts which they receive in that State and which they are entitled to under the Constitution and laws of the United States, and that by reason thereof a Federal right has been denied them.
They urged that, under the judgment of the American Savings & Loan Association v. Farmers' & Merchants' State Bank, which was recovered in the Minnesota court, and is referred to in the foregoing statement of facts, the defendant is concluded as to her defence to the same extent she would have been had she appeared and contested her liability in the Minnesota courts, and that as a consequence the Wisconsin courts are bound to give the same effect to that judgment in their courts that it has in the courts of Minnesota; that if such effect had been awarded that judgment, then this action could have been maintained; and the Wisconsin court in sustaining the demurrer denied such effect to the judgment, which was a violation of a right founded upon the Federal Constitution.
It is stated by the Supreme Court of Wisconsin that that State for many years has had a statute for the enforcement of the liability of stockholders in corporations similar to that which exists in Minnesota, and that it had been frequently decided under such statute that an action of the nature of the one at bar could not be maintained in her courts, and also that it was against the public policy of Wisconsin to permit it; that the remedy under the Wisconsin statute was exclusive, and consisted in a suit in equity at the home of the corporation, in the nature of a partnership accounting, the parties to which would be all the creditors or a creditor in his own behalf and in behalf of all
Whether a cause of action is stated in a pleading, is generally to be decided with reference to the law of the State where the action is pending. If the state court hold that no cause of action is set forth in the pleading and that it is against the public policy of the State to permit an action for such a purpose, we should generally hold that there was no Federal question involved in such determination. The plaintiffs, however, urge that there is here an exception to that rule founded upon the considerations just stated, and that if under the Minnesota law this action could be maintained, the courts of Wisconsin are bound to entertain jurisdiction to the same extent. It is not, however, the case that every decision regarding the proper construction of the statute of another State, involves a Federal question. Where the case turns upon the construction and not the validity of the statute, a decision of that question is not necessarily of a Federal character. Johnson v. New York Life Insurance Company, 187 U.S. 491, 496. Without precisely determining just how far questions of this kind can in all cases be regarded as coming under the rule giving full faith and credit to the public acts, records and judicial proceedings of another State, depending, as such questions must, upon the particular facts of each case and the manner in which they are presented, we may, nevertheless, examine the contentions of the plaintiffs in error to see how far they are justified in the law.
After quite a full examination of the Minnesota decisions on the question, we have just decided in Hale v. Allinson, 188 U.S. 56, that a receiver appointed in Minnesota, under these same statutes, could not maintain an action outside of that State to enforce the liability of a stockholder, and it was said that the courts of Minnesota had held the same thing for many years. An examination of the decisions of the Minnesota courts shows that they had held that the remedy provided by the statutes of the State for the enforcement of stockholders' liability was a suit in equity in that State by a creditor in his own behalf and that of all other creditors, against all the stockholders of the
The case of Allen v. Walsh, 25 Minnesota, 543, has been cited as sustaining this rule. Many other cases have been cited as holding the same rule, an exclusive remedy under the statute and to be pursued only in the courts of the State. Allen v. Walsh does hold (and it has been followed by many others to the same effect) that the only remedy is that created by the statute, and that remedy is an action in equity in the home courts wherein all the creditors and all the stockholders are parties, or as many of the latter as can be served, and in that action all the rights of the different parties can be adjusted. The remedy being exclusive, the statute must be followed, and the result is that no other action to enforce the liability can be availed of in another State. This would call for an affirmance of the judgment but for the claim now urged by counsel for plaintiffs, that the case of Allen v. Walsh has been overruled by subsequent cases in Minnesota, and that the law is correctly set forth in the complaint. He calls attention to the fact that this case has not gone to trial upon an issue of any question of fact, but the questions to be determined have arisen on demurrer to the complaint; that the complaint avers as a fact that by the law of Minnesota such an action as this can be maintained in the courts of a foreign jurisdiction after a judgment has been recovered in an action in the state court, such as is referred to in the complaint, and that the defendant by demurring admits that the law is as stated in the complaint, and therefore the court is bound to give effect to the law of Minnesota such as is set forth in that pleading. This is too broad a claim to be maintained.
If the case had been on trial upon issues of fact, among them
It was stated by Mr. Justice Brewer, speaking for the court in Eastern Building & Loan Association v. Williamson, 189 U.S. 122, a case just decided and where the same question in substance was before us, as follows:
"But it is contended that the construction of the New York statutes as applicable to this contract was shown by the decisions of the courts of that State and the opinion of one learned in its laws; that there was no contradictory testimony, and, therefore, it was the duty of the South Carolina courts to find as a fact that such was the true construction."
This was the contention of the defendant, and then, after referring to the construction of the contract as contended for by the plaintiff, the Justice continued:
"It is said that the promise made in the certificate is expressly based upon `full compliance with the terms, conditions and by-laws printed on the front and back of this certificate;'
This right and duty of the courts to themselves construe the statutes and decisions are not altered because the law of the foreign State and the various decisions of its courts are alleged to be as set forth in a pleading which is demurred to instead of being proved on a trial.
In this case the statutes together with references to the decisions of the state courts are given in the complaint, and the pleader, by making an averment in the form of a fact, assumes to give a meaning to them such as he thinks to be correct, but
We are unable to see that the case of Allen v. Walsh, 25 Minnesota, 543, supra, has been overruled upon the material point in this case, by Hanson v. Davison, 73 Minnesota, 454, so as to call for a different decision than would be made under Allen v. Walsh, and the many similar cases. We have already referred to the Hanson case in Hale v. Allinson, 188 U.S. 56, supra, and do not regard it as necessary to continue the discussion here. It is enough to say that it is no authority for the contention that the former cases are overruled further than the issue presented in the case called for. The right to bring into the original case in equity in the state court after judgment had been obtained therein, a stockholder who was not served with process in that suit, but who appeared after judgment and after his property had been attached, was asserted in and decided by the state court, but it did not decide that the remedy in the state court as provided in the statute did not continue to be exclusive, nor did the state court assume to decide that any further action could be maintained in the courts of a foreign jurisdiction to enforce the stockholders' liability. No such issue was involved in the Hanson case, and the opinion regarding such question is only the opinion of the very able judge who gave it, upon an abstract proposition, as distinguished from an adjudication upon a point actually in issue, and in that case, in
Nor is this case controlled or covered by Whitman v. Oxford National Bank, 176 U.S. 559, and Hancock National Bank v. Farnum, 176 U.S. 640. In the former case the special provisions of the Kansas statutes were referred to. It was stated to be the law in Kansas that it only required a judgment against the corporation and an unsatisfied execution returned, after which any creditor could sue any shareholder wherever he could be found. There was no suit in equity in the nature of a partnership accounting necessary. The liability of the shareholder, although statutory in origin, was held contractual in its nature, and under the statute the cause of action was transitory and could be maintained in any tribunal having jurisdiction where process could be served upon the individual shareholder, and in such an action the latter could set off debts due him from the company. The Kansas cases, expressing these views, were referred to in the opinion.
In the second case it was again held that under the statute and the decisions of the Kansas courts, after a judgment had been obtained against the corporation and an execution returned unsatisfied, the individual creditor could maintain an action against a single stockholder in any court of competent jurisdiction. Having the right to maintain such action, it was held that when it was commenced in another State and in a proper court thereof, the judgment which was obtained in Kansas must have the same faith and credit given it in the courts of another State that was given it in Kansas. Neither case is applicable to the one before us. The statutes are radically different, and no one creditor can maintain the action under the Minnesota statute, and if all unite, they must sue in the courts of that State.
Whether, aside from the Federal considerations just discussed,
The judgment of the Supreme Court of Wisconsin must be
MR. JUSTICE McKENNA did not hear the argument and took no part in the decision of this case.
MR. JUSTICE BREWER dissented.