The constitution of Maryland of I 867 provided that owners of bank stock should be liable for debts of the corporation to an extent equal to the value of the stock owned by them. The bank in which the defendants owned stock was organized under legislation of 1870 containing the provision, "this act and every part of it may be altered from time to time, or repealed by the legislature." The Maryland court held that, while the constitution provided no remedy, the right was conferred on each creditor in his individual capacity to be enforced by separate suits against those who were stockholders at the time the debt was created, subject to the right of the stockholders to set off claims held against the bank. In 1910, subsequent to the organization of the bank in the principal case, the legislature changed the statute, and provided that the liability was an asset of the corporation enforceable by the receiver thereof. Accordingly, in the instant case, suit was brought by the receiver of the bank. The defense was that the legislation of 1910 impaired the obligation of contract, and was therefore unconstitutional. Affirming the decision of the Supreme Court of Maryland, the United States Supreme Court held that the change was not an impairment of the obligation of contract, but was merely a modification of remedy to implement an existing liability. Stockholders of Peoples Banking Co. of Smithsburg, Md. v. Sterling, 300 U.S. 175, 57 S. Ct. 386 (1937).
Michigan Law Review,
CORPORATIONS - ALTERATION OF CHARTER UNDER RESERVED POWER - CHANGE IN REMEDY TO ENFORCE STOCKHOLDERS' LIABILITY,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol36/iss3/16