Court Opinion

ID: 5513097
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:25:51.682386+00
Date Added: 2024-06-11T08:34:12.758176
License: Public Domain

By the Court, Marcy J.
The decision of this case depends upon the validity of the defendant’s discharge under the insolvent act. Discharges under state insolvent laws have been assailed, on the ground that they impair the obligation of contracts. The leading case calling in question the constitutionality of the insolvent laws of the states, is that of Sturges v. Crowninshield, (4 Wheaton, 122.) Though the language of the court in that case might admit of a broader application, both this court and the court of chancery of this state have considered it as going no farther than to declare the discharge inoperative upon a debt existing antecedent to the passing of the law under which the discharge was granted. (Mather v. Bush, 16 Johns. R. 233, and Hicks v. Hotchkiss, 7 Johns. C. R. 297.) The supreme judicial court of Massachusetts has viewed the decision of the U. S; court in the same light. (13 Mass. Rep. 16.) During the same term of the supreme court of the U. S. another important decision was made in relation to these insolvent laws. In the case of McMillan v. McNiel, (4 Wheaton, 209,) the court laid down principles that go far to declare all discharges under state insolvent laws void. Our courts have confined the application of this decision to cases precisely similar to that before the U. S. court. The debt in that case was contracted in South Carolina while the parties were residents of that state. The defendant afterwards obtained his discharge under the insolvent laws of Louisiana on a cessio bonorum. He was subsequently sued in that state on the contract made in South Carolina, and interposed his discharge obtained in Louisiana, and it was declared invalid. It appears. to be impossible to distinguish in principle this case from that of McMillan v. McNiel. It is true that the suit in that case was prosecuted in the United States *459court sitting in Louisiana, and this suit is in a court of the state under whose authority the discharge was granted ; hut this circumstance cannot vary the application of the principie, because a United States court, sitting in a state, regards the laws of such state as the rules of its decision, unless such laws conflict with the constitution or laws of the union. (Hicks v. Hotchkiss, 7 Johns. Ch. R. 297.) In the case last cited, it is expressly decided by the chancellor that “the discharge of the defendants under the insolvent act of this state is not a bar, even in this state, to an action upon a contract made, or a debt contracted in Connecticut, between parties residing there at the time.” “ Valid discharges under an insolvent act must at all events be confined to cases of debts contracted after the passing of the act, and which are' contracted within this state.” The same principle is recognized in the opinion of Sutherland, J. in the case of Wyman v. Mitchell, (1 Cowen, 316.) The debt in this case was not contracted in this state, but in Vermont, and before either party bad become an inhabitant of New-York; and on the principle of the cases referred to, the discharge of the defendant cannot be interposed as a bar to the plaintiff’s action.
Judgment for the plaintiff.