U.S. Supreme Court
Christopher v. Brusselback, 302 U.S. 500 (1938)
Christopher v. Brusselback
Argued December 16, 1937
Decided January 3, 1938
302 U.S. 500
1. Sec. 16 of the Federal Farm Loan Act of July 17, 1916, declares that shareholders of every joint stock land bank organized under the Act shall be held individually responsible, equally and ratably, and not one for another, for the debts of the bank to the extent of the amount of stock owned by them at the par value thereof, in addition to the amount paid in and represented by their shares.
(1) That the only means of enforcing the liability for creditors is an adversary suit in equity against the stockholders wherever they may be found. P. 302 U. S. 502.
(2) The liability of each stockholder is personal, enforceable only in a court having jurisdiction to render a judgment against him in personam, and a judicial determination of the inability of the bank to pay its debts and of the amount to be assessed against the stockholders to meet the deficiency are prerequisites to the enforcement of liability, and are essential parts of the only cause of action which the statute gives to the creditors. Id.
(3) A bill against stockholders which sought to collect an assessment decreed in another suit, but which showed on its face that, though named as defendants, they were not served with process in that suit, and which omitted to allege the existence and extent of insolvency of the bank, failed to state a cause of action. P. 302 U. S. 502.
2. The purpose of Equity Rule 38, providing that, in a class suit, "one or more may sue or defend for the whole," was procedural, not to enlarge jurisdiction of federal courts. P. 302 U. S. 505.
3. This rule preserves the jurisdiction of federal courts of equity in a class suit to render a decree binding upon absent defendants affecting their interest in property within the jurisdiction of the court. P. 302 U. S. 505.
87 F.2d 761 reversed.
Certiorari, post, p. 672, to review the reversal of a judgment for stockholders of a Federal Joint Stock Land Bank, the present petitioners, in a suit against them by the chanroblesvirtualawlibrary
creditors of the bank, the respondents here, to collect a stockholders' liability assessment.