In courts of the United States the common law rule governs. Connecticut Mut. Ins. Co. v. Schaefer, 94 U.S. 457; Liggett v. Glenn, 51 F. 381; Rosen v. United States, 245 U.S. 467. There is a conflict in the decisions as to the admissibility of privileged communications where testimony thereof is procured from witnesses other than husband or wife, attorney and client, or physician and patient.
The order of assessment, whether made by the directors as provided in the contract of subscription, or by the court as the successor in this respect of the directors, was doubtless, unless directly attacked and set aside by appropriate judicial proceedings, conclusive evidence of the necessity for making such an assessment, and to that extent bound every stockholder, without personal notice to him. Hawkins v. Glenn, 131 U.S. 319; Glenn v. Liggett, 135 U.S. 533; Glenn v. Marbury, 145 U.S. 499. But the order was not, and did not purport to be, a judgment against any one. It did not undertake to determine the question whether any particular stockholder was or was not liable in any amount.
The defendant stockholder may set up personal defenses ( Chandler v. Peketz, 297 U.S. 609 [56 S.Ct. 602, 80 L.Ed. 881]), but once the obligation of the stockholders is determined in an assessment proceeding, the existence and amount of the debt and the proportional liability of each are res judicata and not subjectto collateral attack in an action brought in another state to enforce collection against a non-resident stockholder. ( Selig v. Hamilton, 234 U.S. 652 [34 S.Ct. 926, 58 L.Ed. 1518]; Marin v. Augedahl, 247 U.S. 142 [38 S.Ct. 452, 62 L.Ed. 1038]; Glenn v. Liggett, 135 U.S. 533 [10 S.Ct. 867, 34 L.Ed. 262]; see Restatement, Conflict of Laws, § 186, comment c; 13 Fletcher, Cyclopedia of the Law of Private Corporations (perm. ed.), § 6522, p. 953.) It is unconstitutional to impose as a prerequisite of suit a condition impossible to fulfill on the pretext of regulating procedure.
See Strickland v. Lowry National Bank, 140 Ga. 653 ( 79 S.E. 539); Anderson v. Anderson, 150 Ga. 142 ( 103 S.E. 160). 2. Touching the proposition of law referred to in the second headnote, see Swing v. Humbird, 94 Minn. 1 ( 101 N.W. 938); Hawkins v. Glenn, 131 U.S. 319 ( 9 Sup. Ct. 739, 33 L. ed. 184); Great Western Tel. Co. v. Purdy, 162 U.S. 329 ( 16 L. ed. 810, 40 L. ed. 986); Glenn v. Liggett, 135 U.S. 533 ( 10 Sup. Ct. 867, 34 L. ed. 262); Selig v. Hamilton, 234 U.S. 652 ( 34 Sup. Ct. 926, 58 L. ed. 1518); and the authorities collected in Chandler v. Peketz, 297 U.S. 609 ( 56 Sup. Ct. 602, 180 L. ed. 881, and citations in the note). The rule referred to is based on the theory that in litigation to which the corporation is a party its stockholders are represented by it to the extent that they are bound by any judgment rendered against the corporation in so far as it relates to corporate matters; and that the action of the court in determining the necessity for, and fixing the amount of, the assessments, is merely performing a duty which would have fallen on its directors had it continued to be a going concern; the court substituting its decree for the formal call of the directors, which call is ordinarily a prerequisite to fixing an individual liability on the stockholders.
(Italics ours.) Hawkins v. Glenn, 131 U.S. 319, 9 Sup. Ct., Rep., 739; (Anno.), 33; 184; Glenn v. Liggett, 135 U.S. 533, 10 Sup. Ct. Rep., 867, 34, 262; Glenn v. Marbury, 145 U.S. 499, 12 Sup. Ct. Rep., 914, 36, 790."
There are several Pennsylvania cases which are of assistance in indicating the length to which the courts of a particular state will go in applying the rule of comity as to the appointment of receivers: Frowert v. Blank, 205 Pa. 299; Smith v. Machinery Co., 83 Pa. Super. 143; Solis v. Blank, 199 Pa. 600; Jagode v. Smalley, 10 Pa. Super. 320; Bagby v. R. R., 86 Pa. 291. The judgment of the Court of Common Pleas of Mahoning County, Ohio, liquidates the claim of the State of Ohio as one of the debts of the Liberty Clay Products Co. and is a judgment entitled to full faith and credit under the federal Constitution: French v. Harding, 235 Pa. 79; Hancock National Bank v. Farnum, 176 U.S. 640; Mutual Fire Ins. Co. v. Furniture Co., 108 Michigan 34; Glenn v. Liggett, 135 U.S. 533; Hawkins v. Glenn, 131 U.S. 319. The trial court's finding that the amount found due by the Ohio court is a just debt of Liberty Clay Products Company is conclusive upon appellants: Himrod v. McFayden, 283 Pa. 103; Glenn v. Trees, 276 Pa. 165, 167; Atlas Portland Cement Co. v. Brick Clay Co., 280 Pa. 449, 453.
The liability of a stockholder of a corporation is determined by the laws of the state in which it was organized, and not by the laws of the state of the domicile of the stockholder. Relfe v. Rundle, 103 U.S. 222, 26 L.Ed. 337; Canada Sou. Ry. Co. v. Gebhard, 109 U.S. 527, 3 Sup. Ct. 363, 27 L.Ed. 1020; Nashua Savings Bank v. Anglo-Amer. Co., 189 U.S. 230, 23 Sup. Ct. 517, 47 L.Ed. 786; Hawkins v. Glenn, 131 U.S. 332, 9 Sup. Ct. 739, 33 L.Ed. 192; Glenn v. Liggett, 135 U.S. 544, 10 Sup. Ct. 867, 34 L.Ed. 267; Bernheimer v. Converse, 206 U.S. 533, 27 Sup. Ct. 755, 51 L.Ed. 1163, 1176. The courts of Alabama are required by the full faith and credit clause of the Constitution of the United States to give effect to the decree of the superior court of Fulton County, Ga., judicially determining that it is necessary for the protection and payment of creditors of the Empire Life Insurance Company that all stock subscriptions be collected by plaintiff.
It may be that this cause of action never came into existence until the receiver made a demand upon defendant for the balance of the unpaid purchase price of the stock. Such a holding would accord with Hawkins v. Glenn ( 131 U.S. 319; 9 S.Ct. 739; 33 L.Ed. 184); Glenn v. Liggett ( 135 U.S. 533; 10 S.Ct. 867; 34 L.Ed. 262); Glenn v. Marbury ( 145 U.S. 499; 12 S.Ct. 914; 36 L.Ed. 790). This same question was presented in Glenn v. Garth (60 Hun, 584; affd., 133 N.Y. 18; writ of error dismissed, 147 U.S. 360; 13 S.Ct. 350; 37 L.Ed. 203).
On the fundamental economic and political theory that taxation and protection may well go hand in hand, Maine should therefore have the right to tax the shareholder. See Jellnick v. Huron Co., 177 U.S. 1; Tappan v. Merchants Bank, 19 Wall. 490; Glen v. Liggett, 135 U.S. 533. Stock in a Maine corporation cannot be validly transferred except on the books of the corporation; the corporation cannot sell out its assets over the objection of a minority stockholder; and dissolution proceedings must be brought in the equity courts of Maine.
The nature, the extent, and the conditions of the liability of a stockholder on account of stock not full-paid depend primarily upon the law of the State or country by which the corporation was created. Glenn v. Liggett, 135 U.S. 533, 548. Compare Benedict v. Ratner, 268 U.S. 353, 359. That law determines whether the liability is to the corporation or is to creditors. Compare Converse v. Hamilton, 224 U.S. 243, 253; Selig v. Hamilton, 234 U.S. 652, 658. If the liability is to the corporation, it passes like other choses in action to the trustee in bankruptcy.