ANDRI!:WS V. BACON.
The complaint averred invention by. and issue of letters patent to, defendant Collins, subsequent assignment by him to complainant of onehalf interest therein, and infringement by defendant the Morris & Cummings Dredging Company without consent of either complainant or Collins. It further set forth that Collins was made a defendant because he refused to join as plaintiff. The answer of the dredging company attacked the validity of the patent, and set up license by Collins. Collins, who appeared by the same attorney, also answered that the dredging company was acting under his license. The case for complainant being closed, the defendant (against objection) proved the admission referred to in the opinion. Motion was duly made to strike out the testimony. Francia Forbes, for complainant. A. G. N. Vermilya, for defendants.
LACOMBE, J. It appears by the answer of defendant William Collins that subsequent to the beginning of this suit, and on December:22, 1888, at the city of New York, he admitted in the hearing of one 1. T. Brown' that the buckets made and used by his co-defendant were made and used by his consent. The evidence which plaintiff moves to strike out only shows that Collins, some time in February, 1889, admitted in the hearing of one Dudley W. Bain that the buckets so made and used were made Mid used by his consent. In the present state of the case one admission by the defendant Collins is as good as fifty. The evidence, therefore, is cumulative, and should be stricken out. It may be urged that theevidence is not cumulative, on the ground that the answer'of Collins cannot be used as evidence in favor of his co-defendant. Whether or not it may be so used need not now be decided. The same arguments which might be presented against the use of the answer would apply with equal force to the evidence submitted; both are merely the admissioll8 of a third party not subjected to cross-examination.
COirettit (Jourt, IJ. Maaaachu86tta. April 26,1889.) 1.
CO:KPOlU.TioNs-LIABILITY OF STOCKHOLDERS FOR DEBTS-FORM OF ACTION.
The proper form of action to enforce a statutory liability of stockholders for corporate debts is by bnI in equity. Suits in the federal courts to enforce the stockholders' liability, under a state statute. are governed by the state statute of limitations, and the, interpretationput upon the statutes by the state courts.
SAME-FEDERAL COURTS-STATE STATUTES.
Such liability being entirely statutory, and not contractual, the cause of ac· tion is not a1fected by Revision N. J. 1>94, requiring all actions "founded upon any lending or contract without specialty» to be commenced within six years.
FEDE:RALRIlJPORTER, vol. 38.
.:." In Equity. On demurrer to. bill. R. M. MQfSe, Jr., and A .. D. Ohandler, for complainant. Jooo. .Bullard, for. defendants. COLT, J. This is a bill in equity, brought by the receiver of the Nathe laws tional Color Printing Company, a corporation organized of New Jersey, against certain' stockholders of the corporation, to enforce a statutory liability for the corporate debts. The defendants have demurred to the bill on three grounds. namely, want of equity, an adequate remedy at law, and the statute of limitations. Under the decisions of the supreme court in PoUard v. Bailey, 20 Wall. 520, and subsequent cases, I think there can be no doubt that the proper form of action in this case is a bill in equity. To my mind the only serious question raised by the demurrer is whether the caUf;le of action is not barred by the statute of limitations. that on October 10,1882, a receiver of the company was The bill appointed,hy the.United States. circuit court for the district of New Jer'sey. The:present bill was filed October 20, 1888, or more than six years thereafter. The defendants contend that the cause of action against at; the time·of the appointment ofa receiver, or upon the them insolvency of the corporation, and that, by the statute of New Jersey, suit mu.st have been brought within six years. In reply to this the .plaintiff relies mainly .on two .points: }first, that by the decision of the su.preme courtin,Scovill.v. ,Thayer, 105 U. S. 143; the statute did not begin to run until the liability of the defeRdants became fixed, or was at least apprOlXimately undedhe statute of New Jer,.. sey, the liability of the defendantawas not because stockholders are only liable for unpaid subscriptions ill a sum required to pay the debts·of the company, and, consequently I that no cause of action accrued against them until it was made known to them that the paid capital was insufficient to satisty the claims Qf creditors,.and that they would be held to make good the deficiency. The facts in the case of Scovill v. . Thayer differ in some important respects from those set out in this bill, and I prefer, therefore, to decide this demurrer upon the second point urged by the plaintiff, which seems to me to be conclusive. Suits at law or in equity in the circuit court by creditors of a corporation tQ enforce the lHibility of'stockholders under a state statute are, governed by the statute of limitations of the state, andaliability, to be enforceable, nlust be'in compliance with thecoriditions 'applicable to it under aqts and judicial the statewh;ich create.s ,t4e corporation and imposes the lia,bility. Ba.nk.v.Francklyn, 120 U. S. 747,7 Sup. Ct. Rep. 757. This therefore,:is governed by the statute of li 01 itations of New Jersey, and the interpretation put uptmthe "'tat4teby highest COl.-wt.orthE( state. In Odwenliolien v; Preeholders, 44 N. J. Law, 232, ChiefJustice.BEAsLEY, following the cases of Railway v. Goode, 13 C. B. 826, and Bullard v. Bell, 1 Masoil,243,heldthat ,th¢ smttitdty limitation of six years' for the bringing' o.f'asuit under the Newlersey stf!.tute was not applicable when the entire cause of action
arises out of a statute, the reason being that the action is founded on the statute, and not on contract, and therefore rests upon a specialty. The statute reads: "All actions * * * founded upon any lending or contract without specialty * * * shall be commenced and sued within six years next after tile cause of such action shall have accrued, and not after." Revision N. J. 594. The cause of action in the present case being statutory, I thihk the court should follow the rule of construction laid down in (Jowenhooenv. Freeholders. It follows that this cause of action " is not barred by the statute of limitations, and that the demurreuhould be overruled. Demurrer overruled.
PEAKE: 11. CITY OF NEW ORLEANS. (Oz'rlJ'Uit Oourt, E. D. LouiBiana. <:May 81,1889.)
MUNICIPAL CORPORATIONB---FISCAL' MANAGEMENT-LIMIT, OF I:NDEl!TEDNEB&
In 1858 the legislature of Louisiana adopted a system of drainage for th. city of New Orleans, the work to be controlled by commissioners, and the expense to be defrayed by assessments on the land benefited. Act La., 1871, No. 80, abolished the boards of commissioners and intrusted the control of the work to the, board of administrators of the city., The assessments collected were to be used only as a drainage fund. and the expenses paid by warrants payable therefrom. A constitutional amendment taking effect January 1, 1875, pTohibltedthe city from increasing its indebtedness, but allowed the increase of the debt of the drainage fund. Warrants to complainants were drawn on the drainage fund the adop't,ion of said amendment. Held, that.the city could not be made hable for the amount of the warrants as a muniCipal cor· poration, for mismanagement ,of the drainage fund. whereby a deficit occurred, IilO as to increase its indebtedness. Thesam'e rule applies to warrants issued for the purcnas8 of mfochinery 'authorized by act 1876, No. 16, whi,ch required payment to be made by warrants on the drainage fund.
Nor would the city be liable on tbe theory wat it had falsely held out that there was 8 fund available for the payment of the warrants. Failure to collect the assessments and complete the drainage would not render the city liable for the amount of the warrants when it appears that the assessments had been uncollected by tire commissioners. before the city took charge of the work. for 18 years, and that they were uncollectible without incurring cost ee:tual to amount, and that thEl system of drainage was it· self 80 impracticable that failure to complete it was inevitable.
The city having retired bonds issued on the drainage fund 8S authorized by act Hl72. No. 78. and issued in lieu thereof its own bonds. it would be entitled to a credit for the amount of which it had relieved the drainage fund. though the act required the bonds reth'ed to be replaced by bonds payable out of th& , eame fund. '
Bill for account.
R.De Gray and T. J; SenilmeS, for complainant.