[134 U.S. 515, 516] This writ of error brings up for re-examination a judgment of the supreme court of Missouri, and presents the question whether a certain statute, to which that judgment gave effect, impaired the obligation of a contract arising out of a subscription by Britton A. Hill to the stock of an insurance company created by the laws of Missouri.
By the second section of an act of the Missouri legislature, approved March 3, 1857, creating the Washington Insurance Company, it was provided, in reference to subscriptions to its stock, that 'at the time of subscribing there shall be paid on each share one dollar, and nine dollars more within twenty days after the first election of directors. If any stockholder fails to make such payment, such stockholder shall forfeit the amount paid on such stock at the time of subscribing. The balance due on each share shall be subject to the call of the directors, and the said company shall not be authorized to make any policy or contract of insurance until the whole amount of shares subsribed shall be actually paid in, or secured to be paid on demand by approved notes or mortgages on real estate." The same act contained the following provisions: "This act shall be, and the same is hereby declared, a public act, and the same is hereby declared, a public act, and the same shall be deemed and construed as such; and the corporation established by this act shall be, and the same is hereby exempted from the operation of sections seven, thirteen, fourteen, fifteen, sixteen, and eighteen of article first of the act entitled "An act concerning corporations," approved November 23, 1855; and said sections shall be deemed as repealed, so far as the same concerns the corporation hereby established."
Sections 7, 13, 14, 15 ,16, and 18 of the above act of 1855, from the operation of which the Washington Insurance Company was ths exempted, are as follows:
By an act of the legislature of Missouri approved February 9, 1859, the Excelsior Insurance Company was created. That act is as follows:
Section 6, art. 8, of the constitution of Missouri, which went into effect in 1865, provides as follows: 'Dues from private corporations shall be secured by such means as may be prescribed by law; but in all cases each stockholder shall be individually liable, over and above the stock by him or her owned, and any amount unpaid thereon, in a further sum at least equal in amount to such stock.'
In order to give effect to this constitutional provision, the legislature, by an act which went into effect March 19, 1866, amended section 13 of the above act of 1855, so as to read as follows:
In July, 1866, Hill subscribed for 64 shares, of the par value of $ 100 for each share, of the stock of the Excelsior Insurance Company, paying part cash, and giving to the company four notes, for $750 each, dated, respectively, July 20, 1866, and one note dated July 11, 1866, for $ 1,800. Each one of these notes was payable on demand to the order of the insurance company. At the commencement of these proceedings his stock had become reduced to 37 shares.
The constitution of Missouri of 1875 provided that 'dues from private corporations shall be secured by such means as may be prescribed by law, but in no case shall any stockholder be individually liable in any amount over or above the amount of stock owned by him or her.' Article 12, 9. [134 U.S. 515, 520] In 1879 the statutes of Missouri were revised, and the above section of the act of 1866 was amended so as to read as follows:
The present action was brought under the statute last quoted. It was commenced by notice to Hill on behalf of the Merchants' Mutual Insurance Company that it would move the circuit court of the city of St. Louis for execution against him, as a stockholder of the Excelso r Insurance Company for the balance unpaid upon his 37 shares of the capital stock of the Excelsior Insurance Company. The proceeding was docketed as a suit against that company by the Merchants' Insurance Company. Hill appeared, and upon the trial of the action the court found that the unpaid balance on said shares was $2,127.50. For that amount, with costs, an execution was directed to be issued against Hill. Upon appeal to the St. Louis court of appeals that judgment was affirmed, and the judgment of the court of appeals was affirmed by the supreme court of the state. 12 Mo. App. 148; 86 Mo. 466.
G. M. Stewart, for plaintiff in error.
[134 U.S. 515, 524] E. W. Pattison, for defendant in error.
Mr. Justice HARLAN, after stating the facts in the foregoing language, delivered the opinion of the court.
The plaintiff in error contends that the act creating the Excelsior Insurance Company was a private act, and its charter exempted from alteration, suspension, or repeal by subsequent legislation; that its stockholders were exempted from the levy of an execution upon their individual property at the instance of a judgment creditor of the corporation in case of a deficiency of corporate property, and from actions at law by creditors; that the rights of its stockholders were not affected by subsequent legislation of a general nature; and that the method of collecting unpaid stock, specially provided for in the company's charter, was exclusive of any other remedy, except that supplied by a court of equity.
The assignment of error which gives this court jurisdiction to re- examine the judgment of the state court is that when the testator of the plaintiff in error purchased the stock of the Excelsior Insurance Company he entered into a contractual relation, not only with the company, but with the estate, both as to the method of paying for his stock, and in respect to the extent of his liability; and that the rights vested in him by the contract were taken away, and therefore the obligations of his contract were impaired by the legislation of 1879, the validity of which was sustained by the court below.
We assume, in conformity with the decision of the supreme court of Missouri,-and that view is favorable to the plaintiff in error,-that the Excelsior Insurance Company was not subject to the seventh section of the general statute of November 23, 1855, declaring that the charters of all corporations there- [134 U.S. 515, 525] after created should be granted subject to alteration, suspension, and repeal, in the discretion of the legislature; and that the other sections of that statute, specially named in the charter of the insurance company, were to stand as repealed so far as that company was concerned. The result of this construction of the charter of the insurance company is that prior to the passage of the act of 1866, which took effect March 19, 1866, no specific remedy was prescribed for creditors seeking to reach the unpaid subscriptions of stockholders. But it was open to them to proceed by a suit in equity. That such a remedy could be used without vioiating any provision of the company's charter, or any right of a stockholder cannot be doubted. But neither the company nor its stockholders had any vested right in that particular remedy They could only insist that the extent of their liability should not be increased. The act of 1866 authorized an execution to be issued against a stockholder 'to an extent equal in amount to the amount of stock by him or her owned, together with any amount unpaid thereon,' where no property or effects of the corporation could be found. This statute, if given a retrospective operation, certainly did increase the liability of those who became stockholders in the Excelsior Insurance Company prior to its passage. But the defendant in error contends that it was applicable to all who, like Hill, became stockholders after its passage. Waiving any consideration of this question, it is certain that the act of 1879, underw hich this action was instituted, did not increase Hill's liability. He was liable, by virtue of his original subscription and by his notes to the company, to pay the whole amount of his subscription. The statute of 1879 did not enlarge this liability, for it authorized an execution against a stockholder, where there was no corporate property to be levied on, only 'to the extent of the amount of the unpaid balance of such stock by him or her owned.' While, under the original charter of the company, he was liable to a suit in equity, under the statute of 1879 he was liable to be proceeded against by notice and motion in the action in which judgment was rendered against the corporation. In either mode he had opportunity to make defense. [134 U.S. 515, 526] It is, however, contended that under the charter of the company the stockholder was not bound to pay any amount beyond $10 on each share, except upon a call of the directors, and that the provision allowing an execution for the unpaid balance, pursuant to the judgment of the court, was a change of the contract. The provision in the company's charter, that 'the balance due on each share shall be subject to the call of the directors,' did not give the stockholder the right, as between himself and the company, or as between him and the company's creditors, to withhold payment of the balance due from him until the necessities of the company required payment in full for the shares subscribed The company was forbidden to make any policy or contract of insurance 'until the whole amount of shares subscribed shall be actually paid in, or secured to be paid on demand, by approved notes or mortgages on real estate.' Hence Hill executed demand notes, with surety, for the entire balance due on his original subscription. The authority of the company to call for the payment of those notes, by installments, did not give him a right, as a part of his contract, to make payment in that particularmode. His undertaking was to pay each and all of his notes on demand, and it was entirely competent for the legislature, as a regulation of the business and affairs of the company, to give its creditors a new or additional remedy by which this undertaking could be enforced in their behalf,-such remedy not increasing the debtor's liability. As said by this court in Insurance Co. v Needles, 113 U.S. 574, 580 , 5 S. Sup. Ct. Rep. 681, the condition is implied in every grant of corporate existence that 'the corporation shall be subject to such reasonable regulations, in respect to the general conduct of its affairs, as the legislature may, from time to time, prescribe, which do not materially interfere with or obstruct the substantial enjoyment of the privileges the state has granted, and serve only to secure the ends for which the corporation was created.'
Upon the point made by the plaintiff in error, that under the original charter of the company Hill was liable only to a suit in equity, to which all the stockholders could be made parties, and in which he could compel contribution from other [134 U.S. 515, 527] stockholders, whereas under the statute of 1879 he could be proceeded against alone, it is sufficient to say that, if neither the statute of 1866 nor that of 1879 had been passed, he could have been sued at law upon the notes he gave the company. The proceeding authorized by the statute of 1879 is, in effect, a suit upon his notes for the amount due thereon. His liability to pay that amount has no such connection with the liability of other stockholders as to exempt him from a suit at law to compel him to pay the sum he agreed to pay. Hatch v. Dana, 101 U.S. 205 . The statute restricts any judgment against him to the amount he originally assumed to pay. Consequently no substantial right of his has been violated. 'Whatever belongs merely to the remedy may be altered according to the will of the state, provided the alteration does not impair the obligation of the contract.' Bronson v. Kinzie, 1 How. 311, 316; Sturges v. Crowninshield, 4 Wheat. 122, 200; Bank v. Francklyn, 120 U.S. 77 , 755, 7 Sup. Ct. Rep. 757, and cases there cited.
[ Footnote 1 ] Affirming 12 Mo. App. 148, and 86 Mo. 466.