Court Opinion

ID: 6577162
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:35:19.42643+00
Date Added: 2024-06-11T15:57:08.529431
License: Public Domain

Storrs, C. J.
As the original parties to the note in question in this case were both citizens of the state of New York, where it was made, and where it was by its terms to be paid, it is plain that according to the doctrine settled by the supreme court of the United States in the case of Ogden v. Saunders, (12 Wheat., 213,) to the decision of which on a constitutional question like the one now before us, we are bound to conform, whatever might be our own opinion upon it, the discharge obtained by the defendant under the insolvent law *608of the state of New York, which was passed before the making of the note, is a bar to this suit, unless that discharge is rendered inoperative and void against the plaintiff, who is a citizen of this state, by reason of the note having been, before it fell due, transferred to him by being endorsed to him by the original payee. If, however, in consequence of such transfer, the contract should be considered in regard to the plaintiff as standing on the same ground as if the promise in the note had been originally made to him, then it is equally clear on the authority of the case which has been mentioned, that the contract being between citizens of different states, the discharge is no bar to the suit, unless validity is given to it by the fact that the note is expressly payable in New York. f
Two questions are therefore presented ; first, whether the contract should be treated as one between the plaintiff and defendant, citizens of different states, and secondly, whether if it is to be so treated, the fact that the note is payable in New York, delivers the case from the decision in Ogden v. Saunders, and makes the discharge valid.
As to the first of these questions we are clearly of the opinion, that the promise in this note should be considered as having-been originally made to the plaintiff, and that therefore the contract should be treated as if it had been originally entered into between him and the defendant. If the promise in this note had been made to the payee alone, and not to him or his order, and were therefore one of an ordinary character which by the general principle of the common law could not be negotiated or transferred to another, so as to vest the legal title to it in him, then, although the payee might have assigned an equitable title to it which would have been protected in favor of his assignee in an appropriate equitable mode, an action at law to enforce the promise must have been brought in the name of the original promisee, and perhaps in that action the effect of the insolvent discharge could not have been avoided by such assignment. It is unnecessary, however, to consider that point. In this case the contract is contained in a promissory note payable *609expressly to the original payee or his order, and was by him transferred by his indorsement to the plaintiff. It was made payable to the payee or to any person to whom he should by his endorsement, which is the usual mode of transferring such a contract, order it to be paid, and when it was so transferred, the effect of such transfer, according to the principle which prevails in regard to mercantile contracts of this peculiar description, and renders them negotiable and transferable so as to vest a legal title in them, and to the promise contained in them in the endorsee, contrary to the rule which applies to ordinary promises, and does not allow of their assignment so as to vest a legal right in them in the assignee, was to attach to and vest in the plaintiff, who was the endorsee, a legal title or right to the promise contained in the note, by virtue of which legal title an action in a court of law is sustainable in his name against the promisor. The promise of the defendant became in law by the endorsement of the payee a promise to the plaintiff, and thenceforth the note while in his hands should be considered as if it were originally made payable to him by his name. Indeed the original contract of the defendant from the time it was made, promises to pay the plaintiff as well as the payee, if the latter orders such payment, because it promises to pay the endorsee of the payee who is the plaintiff. The indorsement substitutes the endorsee as the promisee in the place of the payee and the law transfers to the former, on such substitution, the legal title of the payee by virtue of and in accordance with the original contract. This point has not been strenuously contested by the defendant, and is, we think, too plain to require a more extended discussion. We would only add that in several cases this point has been considered, in which, although it was not necessary to decide it, the views of the court strongly favored the conclusion to which we have come upon it. Baker v. Wheaton, 5 Mass. R., 509. Braynard v. Marshall, 8 Pick. R., 194. In regard therefore, to the effect of the discharge set up by the defendant, the contract is to be considered as if it was made originally between the parties to this suit.
*610In regard to the remaining question, as the discharge of the defendant was under the insolvent law of a state other than that of which the plaintiff was a citizen, we can not, according to our view of the decision in Ogden v. Saunders, as it has been expounded by the court by which it was pronounced, through Chief Justice Marshall, hold that the plaintiff is affected by that discharge because the note in this case was made payable in New York; which view accords with the construction which, in the case of Norton v. Cook, (9 Conn., 314,) was given by this court to that decision very soon after it was made. According to that exposition of the decision, it settled the principle that a state can not, consistently with the constitution of the United States, discharge its citizens by a bankrupt or insolvent law from contracts made with them by citizens of other states. Judge Johns on in that case first states the question under consideration to be, whether a discharge of a debtor under a state insolvent law would be valid against a creditor a citizen of another state, who has never voluntarily subjected himself to the state laws otherwise than by the origin of the contract, and after examining the question, gives the conclusion to which he comes, by saying that he considered “ the discharge under a state law as incompetent to discharge a debt due to a citizen of another state“ that as between citizens of the same state a discharge of a bankrupt is valid as it affects posterior contracts; as against citizens of other states it is invalid as to all contracts.” “ When the states in the exercise of that power” (the power of passing bankrupt laws,) “ pass beyond their own limits, and the rights of their own citizens, and act upon the rights of citizens of other states, there arises a conflict'of sovereign power, and a collision with the judicial powers granted to the United States, which renders the exercise of such a power incompatible with the rights of other states, and with the constitution of the United States.” That the court intended to settle the law on this subject as thus stated in this opinion of Judge Johnson, can not admit of a doubt. In Boyle v. Zacharie, (6 Pet. R., 348,) Chief Justice Marshall said, “ The judges who were in the *611minority of the court upon the general question as to the constitutionality of state insolvent laws, concurred in the opinion of Mr. Justice Johnson, in Ogden v. Saunders. That opinion is therefore to be deemed the opinion of the other judges who assented to that judgment. Whatever principles are established in that opinion are to be considered no longer open for controversy, but the settled law of the court.” If, after the explicit language of Judge Johnson in his opinion, and the equally explicit exposition of the decision in which it was given by Chief Justice Marshall, any confirmation is required to show that, by the true import of that decision, it settled the doctrine that a discharge by the insolvent law of a state operates only on contracts made between its own citizens, it is furnished by Judge Baldwin in Woodhall v. Wagner, Bald. R., 296, by Judge Story in Springer v. Foster, 2 Story R., 383, 387, and in his commentaries on the constitution of the United States, §§ 1011, 1384; and by the cases of Braynard v. Marshall, (Supra.) Towne v. Smith, 1 Wood. & Minot, 124, Brigham v. Henderson, 1 Cush., 430, Tebbets v. Pickering, 5 Cush., 83, and Pugh v. Bissell, 2 Blackf., 394, and the cases referred to in them. The same construction of the decision in Ogden v. Saunders, is adopted and maintained with great force in the cases of Poe v. Duck, 5 Maryland R., 1, and Donelly v. Corbett, 3 Selden R., 500, in which the precise point now under consideration was made and decided in conformity with the conclusion to which we have come. On the other hand, it was held in Parkinson v. Scoville, 19 Wend. R., 150, and Scribner et al. v. Fisher, 2 Gray R., 43, that the decision in Ogden v. Saunders, is inapplicable to a case where the contract was by its terms to be performed in the state under whose insolvent law the discharge was granted, and that therefore a discharge under such a law might be valid as to such a contract made between citizens of other states. The reasoning on this question is exhausted in the cases to which we have referred and we feel unable to super-add any important considerations. Suffice it therefore to say, that we are not satisfied that we are at liberty to intro*612duce the exception or qualification to the case of Ogden v. Saunders, claimed on this point by the defendant; especially as we think that it would be clearly opposed to the ground upon which that case, so far as the present question is concerned, appears to have been decided, the protection of the independent rights of the citizens of the several states of the union under our national constitution.
We therefore advise that judgment be rendered for the plaintiff.
In this opinion the other judges, Hinman and Ellsworth, concurred.
Judgment for plaintiff advised.