State Ex Rel. Lewis & Clark County v. District Court

ON MOTION FOR REHEARING. (Filed June 22, 1931.) Complaint is made that the opinion promulgated April 6, 1931, erroneously treats the action as a "creditor's suit" and refers to the time limit for commencement of an action to enforce a stockholder's liability as a statute of limitations.

Conceding that the action is not technically a creditor's suit as that term is used in the equity practice, that fact does not affect the soundness of the opinion; "a rose by any other name would smell as sweet."

The Mitchells exercised a right granted by statute and which did not exist at common law (Mitchell v. Banking Corp.,83 Mont. 581, 273 P. 1055, 1058). The statute was modeled after the equity practice, and, under it, a creditor could only maintain an action to enforce the stockholder's liability "for the use and benefit of all." (Barth v. Pock, 51 Mont. 418,155 P. 282.) This the Mitchells did, and thus became representatives of all creditors who might thereafter come in to share in the fruits of the litigation, if any. Technically speaking, the action is a representative one rather than a creditor's suit, but the result is the same.

In the opinion it is said: "The running of the statute of limitations, whatever its character may be, is suspended in representative cases of this kind prior to the bringing in of the absent creditors sued for."

The time limit declared by section 9061, Revised Codes of[13] 1921, does not constitute a statute of limitations, as it "does not affect the remedy merely, but is of the essence of the right itself, and one who seeks to enforce such a right must show affirmatively that his action is timely." (Mitchell v. BankingCorp., above.)

However, when Mitchell and his coplaintiffs brought this action for themselves and all others similarly situated, they represented all who might thereafter assert their rights, and, under the maxim "he who acts through another acts through himself," each of the creditors became a potential plaintiff when the complaint was filed, and, on asserting their rights, their right to make proof will relate back to the date of such filing, so that all creditors entitled to share in the trust fund are in the same position before the court as though all had joined in the original complaint. All of the reasons for the rule applied to creditors' suits with reference to the ruling of the statute of limitations are applicable here, and the authorities cited in the opinion sustain the decision that the filing of the Mitchell complaint was not only timely as to the named plaintiffs, but as to those not named but made plaintiffs in the action and who are found to be in the same situation as those named.

In the further proceedings suggested in the opinion it will, of course, be necessary that those who would share in the fund must in an appropriate manner, in which the stockholders have the right to be heard, show to the court that they have valid existing claims.

It is contended that the Mitchell action is in law, and, therefore, the rules at law, including the right of trial by jury, and not in equity, should apply. Whether an action on a stockholder's liability is at law or in equity depends largely upon the wording of the statute fixing the liability. (7 Fletcher's Cyc. of Corporations, sec. 4218.) In declaring this action to be one in equity, we follow the decisions of New York, which state has a provision in the identical words of our section 6036, and from which we probably adopted it (Hirshfeld v.Fitzgerald, 157 N.Y. 166, 46 L.R.A. 839, 51 N.E. 997), and, as pointed out in the opinion herein, it is only in equity that the intention of the statute can be carried out and justice done.