162 N.Y. 179 (1900)
A receiver of an insolvent corporation can enforce a stockholder’s statutory liability in a foreign jurisdiction when the liability is considered contractual in nature, arising from an implied promise to adhere to the corporation’s governing laws.
Summary
This case addresses whether a receiver of an insolvent Washington state bank can sue a New York stockholder in New York to enforce a statutory liability for the bank’s debts. The New York Court of Appeals held that the receiver could maintain the action. The court reasoned that the stockholder’s liability, though statutory in origin, was contractual in nature, arising from an implied promise to adhere to the bank’s governing laws. As such, it could be enforced in New York as a contractual obligation, not solely as a foreign statutory obligation.
Facts
The Tacoma Bank, a Washington state corporation, became insolvent, and a receiver (Howarth) was appointed. Angle, a New York resident, owned stock in the Tacoma Bank. Washington law imposed a statutory liability on stockholders for the debts of the corporation. The receiver sued Angle in New York to recover Angle’s proportionate share of the bank’s deficiency, as determined by Washington courts.
Procedural History
The receiver sued Angle in New York. The trial court ruled in favor of Angle, dismissing the case. The Appellate Division affirmed. The New York Court of Appeals reversed, holding that the action could be maintained in New York.
Issue(s)
Whether the receiver of an insolvent Washington bank can enforce a stockholder’s statutory liability in New York, when the liability is considered contractual under Washington law.
Holding
Yes, because the stockholder’s liability, though statutory in origin, is contractual in nature, arising from an implied promise to adhere to the bank’s governing laws, and can be enforced in a foreign jurisdiction like a contract.
Court’s Reasoning
The Court of Appeals reasoned that while statutory liabilities are generally enforced in the state that created them, the liability in this case was contractual. By purchasing stock in the Tacoma Bank, Angle impliedly agreed to be bound by Washington law, which included the statutory liability for the bank’s debts. The court emphasized that “the defendant took stock in the Tacoma Bank subject to the burden of the law, which he impliedly agreed to bear, as he could not otherwise become a stockholder.” This implied agreement created a contractual obligation that the receiver could enforce in New York, much like enforcing a promissory note. The court distinguished this case from situations involving purely statutory liabilities, noting that this was “not because the laws of Washington are in force here, but because the defendant voluntarily assented to the conditions upon which the bank was organized.” The court directly linked the stockholder’s acceptance of the stock with an implied agreement to perform the statutory conditions, making the out-of-state enforcement valid. The court highlighted the importance of enforcing promises, whether express or implied, to ensure creditors are protected. The court noted, “There is no substantial difference between the liability for an unpaid balance on a stock subscription, which is an express contract to take stock and pay for it…and the liability for the unpaid deficiency of assets assumed by the act of becoming a member of the corporation through the purchase of stock, from which a contract is implied to perform the statutory conditions upon which stock may be owned.”