U.S. Supreme Court BRODERICK v. ROSNER, 294 U.S. 629 (1935)

[Page 294 U.S. 629, 640]

noyer v. Neff, 95 U.S. 714; Wilson v. American Palace Car Co ., 65 N.J.Eq. 730, 55 A. 997; Papp v. Metropolitan Life Insurance Co., 113 N.J.Eq. 522, 530, 167 A. 873. The corporation has no place of business in New Jersey; only a few of the many stockholders and creditors have either residence or place of business there.

Moreover, even if it were legally possible to satisfy the statutory condition by making substituted service by publication upon nonresident stockholders and creditors (compare Kirkpatrick v. Post, 53 N.J.Eq. 591, 594, 32 A. 267; Id., 53 N.J.Eq. 641, 33 A. 1059), the cost would be prohibitive. The number of the stockholders is 20,843; the number of depositors and other creditors exceeds 400,000; and the amounts assessed against the individual defendants are relatively small-against some only $ 50. The aggregate of sheriff's fees alone as to the nonresident defendants, aside from expenses of publication and mailing, would exceed the aggregate amount due from the New Jersey stockholders. [Footnote 1] The suggestion, in the opinion of the Supreme Court, that leave might be granted to file a bill in equity is, therefore, without legal significance.

[Page 294 U.S. 629, 646]

the manner of pleading. [Footnote 5] But with such matters we have here no concern. It is enough, for present purposes, that a complaint alleging the stock ownership of the defendants, the assessment, the demand, and failure to pay, together with the determination of the value of assets and liabilities, referred to in section 80, sets forth a good cause of action. 6 Broderick v. Aaron, 147 Misc. 854, 264 N.Y.S. 15; Broderick v. Betco Corp., 149 Misc. 245, 267 N.Y.S. 139; Broderick v. American General Corp. ( C.C.A.) 71 F.(2d) 864, 94 A.L.R. 1359; compare Broderick v. Stephano, 314 Pa. 408, 171 A. 582; Broderick v. McGuire, 119 Conn. 83, 174 A. 314. Even if the administrative determination of the assessment made in New York is subject to attack in a suit brought there or in any other State, that fact would not justify New Jersey in denying to the Superintendent the right to bring this suit.

[Page 294 U.S. 629, 647]

monly affords relief against administrative orders. He argues that his powers and duties in respect to the assessment of stockholders, and the proceeding to enforce liability therefor, are substantially the same as those imposed by the National Banking Act on the Comptroller of the Currency, Van Tuyl v. Scharmann, 208 N.Y. 53, 63, 101 N.E. 881; Matter of Union Bank of Brooklyn, 176 App.Div. 477, 485, 163 N.Y.S. 485; Broderick v. Aaron, 151 Misc. 516, 523, 272 N.Y.S. 219; and that, as to these, it has been settled by an unbroken line of authorities beginning with Kennedy v. Gibson, 8 Wall. 498, 505, that the Comptroller's determination is conclusive in an action at law to enforce the stockholders' liability; being subject, like other administrative orders, only to a direct attack for fraud or error of law by appropriate proceedings in equity. [Footnote 7] United States v. Knox, , 425. Whether this contention is sound, we have no occasion to consider now. See Broderick v. Adamson, 148 Misc. 353, 369-371, 265 N.Y.S. 804. It is sufficient to decide that, since the New Jersey courts possess general jurisdiction of the subject-matter and the parties, and the subject-matter is not one as to which the alleged public policy of New Jersey could be controlling, the full faith and credit clause requires that this suit be entertained.

REVERSED.

Mr. Justice CARDOZO is of the opinion that the judgment should be affirmed. Footnotes

Footnote 1 It is stated by counsel, without contradiction, that, under the New Jersey practice, before substituted service can ever be made, the sheriff must have made as to each nonresident defendant a return non est inventus. New Jersey P.L. 1922, c. 88 (Comp. St. Supp. N.J. 1924, 188-70), entitles the sheriff to a fee of $1.50 for making an affidavit of nonresidence as to each defendant. After such affidavit the plaintiff, it is said, would be required to make applications for leave to effect substituted service on each of the absent defendants and to present the essential facts showing the necessity therefor, setting forth residence and place of business of each. Besides notice sent to each, it would be necessary to publish the notice once a week during four consecutive weeks in some newspaper. N.J.P.L. 1912, c. 155, 13 (Comp. St. N.J. Supp. 1924 , 33-13); N.J. Chancery Rules, 36-38. It is estimated that the 420,000 names of nonresident defendants would fill at least 80 newspaper pages of 8 columns each.

Footnote 2 Section 80 of the New York Banking Law provides: 'In case any such stockholder shall fail or neglect to pay such assessment within the time fixed in said notice, the superintendent shall have a cause of action, in his own name as superintendent of banks, against such stockholder either severally or jointly with other stockholders of such corporation, for the amount of such unpaid assessment or assessments, together with interest thereon from the date when such assessment was, by the terms of said notice, due and payable.'

Footnote 3 Chambers v. Baltimore & Ohio R.R., 207 U.S. 142, 28 S.Ct. 34, is not to the contrary; there no claim was made under the full faith and credit clause.

Footnote 4 See, too, Canada Southern Ry. v. Gebhard, 109 U.S. 527, 537, 538 S., 3 S.Ct. 363; Hawkins v. Glenn, 131 U.S. 319, 329, 9 S.Ct. 739; Nashua Savings Bnak v. Anglo-American Co., 189 U.S. 221, 229, 230 S., 23 S.Ct. 517; Harrigan v. Bergdoll, 270 U.S. 560, 564, 46 S.Ct. 413.

Footnote 5 Compare Broderick v. McGuire, 119 Conn. 83, 101-103, 174 A. 314.

Footnote 6 Before the adoption of section 80 by Laws 1914, c. 369, the Superintendent was required to allege and prove the facts necessitating the assessment. Cheney v. Scharmann, 145 App.Div. 456, 129 N.Y.S. 993; see Matter of Empire City Bank, 18 N.Y. 199, 211-213. By Laws N.Y. 1934, c. 494, further changes, of no importance here, have been made in this section.

Footnote 7 Casey v. Galli, , 681; Germania National Bank v. Case, 99 U.S. 628, 634, 635 S.; Deweese v. Smith (C.C.A .) 106 F. 438, 445, affirmed Smith v. Brown, 187 U.S. 637, 23 S.Ct. 845; Murray v. Sill (C.C.A.) 7 F.(2d) 589; Crawford v. Gamble (C. C.A.) 57 F.(2d) 15; B. V. Emery & Co. v. Wilkinson (C.C.A.) 72 F.(2d) 10; see Studebaker v. Perry, 184 U.S. 258, 266, 22 S.Ct. 463; Rankin v. Barton, 199 U.S. 228, 232, 26 S.Ct. 29. Compare Bushnell v. Leland, , 17 S.Ct. 209; Korbly v. Spring-field Inst. for Savings, 245 U.S. 330, 38 S.Ct. 88; Aldrich v. Campbell (C.C.A.) 97 F. 663.