RULE to show cause why an Exoneretur should not be entered on
the bail-piece. The Defendant had obtained his discharge under the
insolvent law in the State of Maryland, which law was enacted
subsequent to the debt in question, and to the institution of this
suit. It was stated, and allowed, that the money for which the
action was brought, had been paid to Hall in Maryland, on account
of goods sold and delivered upon a commission as the partner of
Millar; but that the original agreement under which they acted in
the sale of those goods was executed in Philadelphia, and that the
proceeds belonged to merchants residing in Pennsylvania, where,
consequently, the payment was to be made. It was, likewise,
admitted, that the Defendant was resident in, and subject to the
laws of, Maryland, and that the Plaintiff was resident in, and
subject to the laws of Pennsylvania: And it did not appear to the
Court that the Plaintiff was returned as a creditor in the
Defendant's schedule; nor was any notice of the time and place of
surrender served upon him, though a general publication, of the
Defendant's intention to take the benefit of the Insolvent law, was
made, in the usual form, in the Baltimore Gazette.
Moylan, in showing cause against the rule, argued, that
according to the strict idea of a municipal law, it was limited in
its operation to the jurisdiction of the state that made it; for
jus civile est quod quisque fibi populus constituit; and to a free
people particularly, it must appear unreasonable that there should
be legislation where there is no representation. 2 Inst. 98. There
are, however, he acknowledged, cases in which an indirect effect is
given to foreign statutes
Page 1 U.S.
229, 230
in order to accomplish the rules of justice; as in the instance
of contracts entered into in other countries; or of bargains which
are unlawful where made; or of a certifcate obtained under a
bankrupt law in a foreign nation, of which both debtor and creditor
are members and subjects. Prin. of Eq 363. 1 Black. Rep. 234. 256.
But still, in all these exceptions, the foreign statutes, as such,
have no coercive authority extra territorium, but are received only
by consent as far as they are necessary to justice. He then
contended from the facts, that the Defendant did not come within
the principle of any of the cases referred to; for, as the
Plaintiff was not a subject of Maryland, it cannot be presumed that
either by himself or his representatives, he has consented to the
Defendant's discharge, or rather to the law, by which that
discharge was authorized; that, as between the Plaintiff and
Defendant, the place of the contract, which the law materially
regards, was Philadelphia, where the merchants to whom the money
was, in fact, payable, resided; and that even if the contract had
been made in Maryland, the Defendant would not be in a better
condition on that account, as the law under which he was
discharged, was enacted several years afterwards, and, therefore,
could not have been in the contemplation of the parties in making
their agreement. He urged, likewise, the inconveniencies that would
attend the adverse doctrine, from a variety of considerations.
Suppose there had been no bankrupt law in Pennsylvania, and that,
in truth, our Legislature disapproved of it, yet, every debtor by
going into Maryland and complying with the terms of their General
Act, or, perhaps, by virtue of a special one, might obtain a
certificate, which, it is contended, would discharge him from his
creditors here; and thus another state would make laws for us, not
only without our consent, but contrary to our interior policy.
Again, if no other notice is required than an advertisement in a
Maryland newspaper, which the citizens of Pennsylvania seldom read,
the spoils may be shared among the creditors present, to the
exclusion of the absent; who, at the same time, have been guilty of
no fault or negligence, but, if they had been apprized of the
transaction, might have suggested such circumstances of fraud, as
would prevent the granting the very certificate, which is set up as
a conclusive bar to their just demands. In England the king is not
bound by the bankrupt laws, 1 Atk. 303. and shall we be bound, who
are not in any degree connected with the government that made them?
If Maryland had given a preference to her own citizens in the
distribution of an insolvent's, or a bankrupt's estate, ought we,
who are strangers, to be affected by the certificate of discharge,
though we derive no benefit from the surrender of property? Where,
or how, is the line to be drawn? If, indeed, the certificate is to
be universally operative, so ought the assignment of the bankrupt's
estate to be, since the words of the bankrupt laws are, in this
respect, as comprehensive and forcible, as in that; and yet it is
an established doctrine, that the assignment is only binding in the
state in which the commission issues. Doug. 160. The act of
Page 1 U.S.
229, 231
Maryland is an insolvent, and not a bankrupt law, as it works no
extinguishment of the debt, but leaves all future acquisitions of
property liable to the creditors of the person discharged: And in
the case of James et al. vs. Allen ant. 188. SHIPPEN, President
determined that an insolvent law of New Jersey was local in its
terms, and local in its nature. Ingersol, in support of the rule,
having stated that an Exoneretur might be entered without an actual
surrender of the principal: Barn. 194. 1 Com. Dig. 496. and proved
that the Defendant had complied with the terms of the insolvent law
of Maryland, observed, that imprisonment had been thought by very
judicious writers, to be an act illegal in itself; Burgess on
Insolv. and it seems, indeed, that the only reasonable
justification of it, is to compel a debtor to surrender all his
effects for the benefit of his creditors. When that is done, it is
not only unreasonable and unjust, but, by the express provision of
the Const. of Penn. S. 8, independent of the doctrines founded on
the common law, it is illegal to restrain a man's personal freedom.
He then contended, that from general principles, from positive
authorities, arising under the bankrupt laws of different
countries, from the reason of the thing, and from the mischievous
consequences of a contrary position, the discharge of the Defendant
in one state, ought to be sufficient to discharge him in every
state; without this, perpetual imprisonment must be the lot of
every man who fails; and all hope of retrieving his losses by
honest and industrious pursuits, will be cut off from the
unfortunate bankrupt. But a debt paid according to the law of a
foreign country, though in a depreciated medium, has been decreed
to be a satisfaction; and a cessio bororum in Holland, which is a
discharge there, was decided to have the same effect in England.
Co. Bank. Law 60.1. 2. 115. 347. Green Bank. Law 131. 260. 2 Stra.
738. 1 Atk. 119, Brown Cases in Chan. 376. These authorities apply
here with additional force, under the sanction of the articles of
Confederation, which declare, that 'full faith and credit shall be
given in each of these states to the records, acts, and judicial
proceedings of the courts and magistrates of every other state:'
And also, that, the free inhabitants of each of these states, shall
be entitled to all privileges and immunities of free citizens in
the several states; and the people of each state shall have free
ingress and regress to and from any other state.' See Art. 4. The
Chief Justice, after consideration, delivered the opinion of the
Court.
M'Kean, Chief Justice. This comes before the Court on a motion
for leave to enter an Exoneretur on the bail piece, upon this
principle, that the defendant has been discharged under an
insolvent law of the state of Maryland, which is in the nature of a
general bankrupt law. To this it has been objected, that the
insolvent law by which the defendant has been discharged, was made
pending the action, and therefore, ought not to operate in the
present case, even
Page 1 U.S.
229, 232
if the laws of any particular country could be extended beyond
the jurisdiction of that country, which has likewise been denied;
and, it is said, that in order to give a binding force to laws, it
is necessary that the person to be affected should have consented
to them either by himself, or his representatives. But, having
considered the principles of the law of nations, and the reciprocal
obligation of the states under the articles of confederation, we
are of opinion, that the act of assembly by which the Defendant has
been discharged, must be considered as a general bankrupt law, made
for general purposes, and equally advantageous to all his
creditors. To execute, therefore, upon his person out of the state
in which he has been discharged, would be giving a superiority to
some creditors, and affording them a double satisfaction to wit, a
proportionable dividend of his property there, and the imprisonment
of his person here. It is true, that the laws of a particular
country, have in themselves no extra-territorial force, no coercive
operation; but by the consent of nations, they acquire an influence
and obligation, and, in many instances, become conclusive
throughout the world. Acts of pardon, marriage, and divorce, made
in one country, are received and binding in all countries. In the
state of Delaware there is a law, a narrow and contracted one
indeed, which obliges executors or administrators to discharge the
debts due from the deceased to his creditors within the state, in
preference to every other. This the executor is obliged to comply
with, because he is immediately under the coercion of the law which
prescribes it; so that the distribution thus made, is certainly
binding out of the state, and the law is in that respect every
where received; for, it would be more unjust to compel the executor
who acted legally in his own state, to pay the money out of his
pocket, than that the creditor should loose the amount of his
demand. With respect to the argument, that no person can be bound
by laws to which he has not either directly or virtually consented,
it must be observed that, though Mr. Millar, the plaintiff, was not
a citizen of Maryland, yet Mr. Hall was; and he by the law in
question, has been obliged to transfer all his effects for the
benefit of all his creditors. Having done this, we must presume
that he has fairly done it, and therefore to permit the taking his
person here, would be to attempt to compel him to perform an
impossibility, that is, to pay a debt after he has been deprived of
every means of payment, an attempt which would, at least, amount to
perpetual imprisonment, unless the benevolence of his friends
should interfere to discharge the Plaintiff's account. From the
nature of the act then, it appears to be founded upon equitable
grounds, for general and just purposes; it ought therefore to be
regarded in all other countries, and should enjoy that weight, in
our decisions, which it naturally derives from general conveniency,
expediency, justice, and humanity. For, mutual conveniency policy,
the consent of nations, and the general principles of justice
Page 1 U.S.
229, 233
form a code which prevades all nations, and must be every where
acknowledged and pursued.
Upon the whole, it is clear, that this transaction does not
arise in fraudem legis, and that extending the law of Maryland to
its present object, will be in no degree derogatory to the
independence and sovereignty of this state: Therefore, let the
exoneretur be entered.
Comments
Be the first to comment
Leave a Comment