Case ID: mass_25/html/0199-01.html
Source: Caselaw Access Project
Author: {"author": "Parker C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Selden Braynard versus Josiah T. Marshall
    A discharge obtained under an insolvent law of one of the United States, is no bar to an action brought by a citizen of another State against the insolvent, even upon a contract made between them in the State where the insolvent law was passed. Therefore where P, who was residing in New York with the intention of becoming a citizen of that State, sold goods there as the agent of B, a citizen of Massachusetts, to M, a citizen of New York, taking for them M*s note payable to P or order in three months, which P immediately passed to B j and afterwards M obtained a discharge under the insolvent law of New York ; in an action by B as indorsee against M as maker of the note, it was held, that the discharge obtained in New York was no bar to the action.
    This was assumpsit by the plaintiff, as indorsee, against the defendant, as maker of a promissory note, dated at New York, May 24, 1826, by which the defendant promised to pay William Plympton, or order, 269 dollars in three months and grace. The case was submitted to the Court on a statement of facts agreed by the parties.
    The plaintiff is a citizen of Massachusetts, and has never been an inhabitant of New York. The defendant, at the time the note was given, was a resident in the city of New York, doing business there as a merchant, and has continued to reside there ever since. Plympton, the payee, went to New York in February, 1826, with an intention to become an inhabitant or citizen of New York, and his family went there in May following ; he continued to reside there for nine or ten months. The note in suit was given by the defendant to Plympton, in payment for goods sold to him, which goods had been consigned to Plympton by the plaintiff for sale ; and the note was on the same day handed to the plaintiff’s clerk. It was agreed, that if Plympton was a competent witness, he would testify, that the defendant was informed at the time the note was given, that it was to be immediately handed to the plaintiff, but not that the plaintiff was interested in the goods. At the time the note became due, it belonged to Thomas Darling, a citizen of Massachusetts, to whom it had been indorsed by Braynard ; and Wheelwright & Johnson of New York, the agents ‘of Dailing, caused it to be protested. Braynard, as indorser, afterward paid the amount of the note to Darling. The defendant, on March 3, 1827, obtained a discharge under the insolvent laws of New York ; and it was admitted that the discharge was obtained fairly and in pursuance of the laws of New York.
    The plaintiff was to become nonsuit, or the defendant to be defaulted, according to the opinion of the Court.
    The statute of New York, under which a discharge is claimed, was passed April 12, 1813, and the discharge under it releases the insolvent from all debts “ due at the time of the assignment, or contracted before that time, though payable afterwards.”
    
      March. 16th.
    
    Bartlett, for the plaintiff.
    The indorsement of the note to the plaintiff, which created a new contract between the indorsee and the maker,- was made before Marshall obtained his discharge ; or rather, since Plympton was merely acting as agent of the plaintiff, the contract originally created was between the plaintiff and the defendant. Scrimshire v. Alderton, 2 Str. 1182. The discharge, therefore, under the laws of New York, cannot defeat this action brought by a citizen of Massachusetts. The insolvent laws of a State cannot discharge a contract made with a citizen of another State. Ogden v. Saunders, 12 Wheat. 358; Baker v. Wheaton, 5 Mass. R. 509; Watson v. Bourne, 10 Mass. R. 337. It is now well settled, that a bankrupt or insolvent law cannot have an extra-territorial operation. Thus the assignment in bankruptcy under a foreign law, will not pass property in this country, against the attachment of an American creditor. 2 Kent, 330; Blake v. Williams, 6 Pick. 286.
    
      Cooke, for the defendant.
    The case of Blanchard v. Russell, 13 Mass. R. l, is directly in point to show that a discharge in New York defeats the rights of a creditor here But even if that case cannot be supported in its full extent, still the plaintiff’s right of action was defeated by the discharge, because Plympton, the original party to the note, was a citizen of New York. The case falls within the decision of Ogden v. Saunders.
    
    The note being made in New York, was made with reference to the laws of that State, and an indorsee therefore can have no greater rights than the original payee. Mather v. Bush, 16 Johns. R. 251; Andrews v. Herriot, 4 Cowen, 514, note. The note which was given in New York, did not discharge the original contract. Was not, then, the original consideration of the note discharged under the insolvent law ? And if so, was not the note itself discharged ? In England, a discharge under a foreign bankrupt law defeats the rights of a creditor there. Potter v. Brown, 5 East, 124. The same comity ought to be shown in this State to the laws of a sister State, which in England is shown to the laws of a foreign country.
    
      June 27th
    
   Parker C. J.

delivered the opinion of the Court. The questions which arise out of the subject of State insolvent laws, and the effect of discharges under them, have been so long unsettled in this Commonwealth, owing to the unsatisfactory character of the decisions of the Supreme Court of the United States, which ought to govern cases of this nature, that we have waited with anxiety for a revision of all the cases by that high tourt, and a final adjudication upon a subject so universally ineresting, and hitherto involved in so much perplexity. The case of Ogden v. Saunders, seemed, in its progress, to promise such a result, but unhappily, on some of the points which the case presented, the law is left as uncertain as it was before.

One thing however we understand to have been clearly decided by a majority of the justices of that court, and virtually by all, (as those who admit no validity at all to such laws, may be considered as uniting with those who give them only a limited operation,) which is, that discharges under such laws have no 1 effect without or beyond the territory of the State where they are obtained, or against a party not a citizen of that State, or where the suit shall be brought in a court of the United States or of any State other than that in which the proceedings took place, notwithstanding the contract on which the discharge was intended to operate, was entered into and was to be performed in the State in which the discharge was gránted.

Now this law, thus settled, is binding upon this Court, as well on account of the nature of the question, which is peculiarly proper for the decision of the highest court of the nation, as because the case itself, unless restrained by the smallness of the sum in controversy, may be carried to that court by writ of error, and our judgment be reversed ; it being a questian, of which, by § 25 of the judiciary act of the United States (of September 24, 1789), that court has jurisdiction.

But even if we were not inclined to repose on the decision in Ogden v. Saunders, but considered ourselves at liberty to resort to general principles, we are disposed to think that the defence set up under the certificate in this case could not prevail. It does not come within the case of Blanchard v. Russell, in which the contract was made in New York, by a citizen of that State, and was to be performed there, it not being transferable in its nature, being matter of account. A negotiable instrument made in New York, and indorsed for a valuable consideration to a citizen of Massachusetts before an application for the benefit of the insolvent law, ought not to be discharged under the process provided by that law. It is a debt payable anywhere, by the very nature of the contract, and it is a promise to whosoever shall be the holder of the note. At the time of the defendant’s application for a discharge, his creditor upon this note was a Massachusetts man, and according to the case of Baker v. Wheaton, 5 Mass. R. 509, the certificate would be no bar to the action. The principle of this case was fully recognised and adopted in the case of Watson v. Bourne, 10 Mass. R. 337. Nor is there any thing in the case of Blanchard v. Russell to controvert these decisions, whatever may have been said arguendo by the judge who delivered the opinion. The contract in that case was in its nature to be performed in New York, and so was to be governed entirely by the laws of that State. The case before us is that of a negotiable promissory note, given in the first place by a citizen of New York to a person resident there, by whom it was immediately indorsed to a citizen of Massachusetts. The promisor became, immediately upon the indorsement, the debtor to the indorsee, who was not amenable to the laws of New York, where the application was- made for relief under the insolvent law.

Defendant defaulted. 
      
       See Agnew v. Platt, 15 Pick. 417, Betts v. Bagley, 12 Pick. 572; Glenn v. Humphreys, 4 Wash. Circ. C. R. 424; Hobblethwaite v. Batturs, 1 Miles, 82; White v. Canfield, 7 Johns. R. 117; Peck v. Hozier, 14 Johns. R. 346.