Hunt v. Fay

7 Vt. 170

• Court: Supreme Court of Vermont
• Decided: February 15, 1835
• Status: Published

Opinions

The opinion of the court was delivered by

Williams, Ch. J.

Richard Gookin having his domicil in Hav-erhill, in the state of New Hampshire, deceased in the year 1826. Letters of administration on his estate were duly granted in the state of New Hampshire. The estate was represented insolvent, and a commissioner was appointed to receive and examine the claims of the creditors to the estate. The present plaintiff, at that time and until after the commissioner had made his return, in pur-, suance of the statute of the state of New Hampshire, was a resident in and had his domicil also in the state of New Hampshire.' He omitted to .present any claim against the estate of Mr. Gookin to the commissioner. Afterwards, letters of administration on the estate of Mr. Gookin within this state were granted to the defendant, commissioners were duly appointed to receive and examine the claims of the creditors against said estate, and the plaintiff here presents to the commissioners his claim as a creditor to the estate. The administrator pleads in bar the statute of New Hampshire, and the question is, whether the plaintiff, having neglected to present his claim against the estate in New Hampshire, can be considered as a creditor to the estate, and have his debt here allowed.

The statute of that state provides, that where an estate is represented insolvent and- a commission issues, all claims which might be, but which are not exhibited to commissioners, shall be forever barred. The plaintiff was under no disability to present his claim; and further, it appears by the pleadings, that the estate of Mr. Gookin is not in fact insolvent, although so represented. The effect of the statute of New Hampshire on the claim of the plaintiff is now to be considered.

It may here be noticed, that where a suit is had against an administrator, it is of no consequence whether an estate represented insolvent actually proves to be so or not. If other claims are al-'owed against an estate, except those allowed by commissioners, an estate may prove to be insolvent, when by the returns of the commissioners it would appear to be otherwise. ' Hence, where an estate is represented insolvent, and settled as such, the rights and duties of the creditors and administrators are the same, whether it is in fact insolvent or not. The averment, therefore, in the pleading, that the estate proved solvent, is to be disregarded.

The general principles of law, which are considered as having a bearing on the question before us, have been settled by repeated adjudications. The difficulty arises from the application of those principles to the case before us. It has become a rule of international jurisprudence, and is settled also as the municipal law of most states, that the lex loci contractus governs as to the nature, construction and validity of a contract. From the operation of this rule, it has been considered that a discharge of a debt in the country where it is made, or where it is to be executed, is a discharge every where. The case before us is considered by the defendant’s counsel as governed by the application of this rule. It has also become a settled rule of law, that the lex fori governs entirely as to the remedy. Whoever comes into another jurisdiction is entitled to all the benefits and subject to all the disabilities, either in enforcing or defending against claims which the persons belonging to that jurisdiction have or are subject to. Hence a law directing the mode of proceeding, or affecting the remedy alone between creditors and debtors, has no extra territorial force. From this principle it has been held, that the statute of limitation in the country where a debt was contracted is of no force in the state where the collection of it is attempted to be enforced, notwithstanding it in fact extinguishes all remedy in the place where the contract was made. The propriety of the application of the principle to cases of that class was questioned in the case of Le Roy vs. Crowninshield, 2 Mason, 151, but it was considered as too well established by authority to be shaken. The plaintiff contends that the statute of New Hampshire only affects the remedy, and for that reason that his claim may be enforced in any jurisdiction, where a suit cam be instituted. So far as there is any analogy between the cases which have established these principles and the case at bar, it is apparent to me that this case falls within the former principle; that the effect of the statute of New Hampshire is more in the nature of a discharge of the debt, or an extinguishment of the fight of the creditor, than of a mere suspension or extinction of the remedy. It will still, however, remain a question, whether it is such a discharge as we ought to give effect to here.

It has been very justly remarked, that foreign laws are not admitted to have any effect, ex proprio rigore, but only ex comitate; and that the judicial tribunals are to exercise a discretion wherever a new case comes before them for the application of the principles which have been adopted. Thus while infancy, a tender and refusal, &c., if they constitute a valid defence under the lex loci con-tractu;s, will be considered as a good defence elsewhere; and also while the bankrupt laws or insolvent laws of a state where they have power to pass them, and no constitutional barrier is overleap-ed, are respected every where, yet if those laws are manifestly unjust and injurious in their operation on the citizens of another government, the courts of that government will not sanction them. It was asserted by the Lord Chancellor in Burton, ex parte, 1 Atk. 255, that an absolute discharge of the effects as well as’ of the person by a bankrupt law in Holland would be an absolute discharge of the debt, and this assertion has since been settled to be the law by repeated adjudications both in England and in the United States. Yet it has been held, that if a discharge was had under a foreign law, manifestly unjust, and not justified by the law of nations, the courts of England would not regard it. This principle was asserted in the case of Blanchard vs. Russell, 13 Mass. Rep. 6, and in the case of Prentiss et al. vs. Savage, 13 Mass. Rep. 20. The court refused to recognize a discharge obtained under an insolvent Jaw made by the government in the island of Jamaica, upon the ground, that if the law was intended to operate beyond the jurisdiction of the government where it was made, it was evidently partial and unjust, and the principles of comity did not require that it should be regarded. The case of Lincoln vs. Battele, 6 Wend. 475, which is so much relied on in the argument, might have been decided on this principle. Of that case, however, it is sufficient to say, that it is not applicable to the case before us. Upon the principle which the court assumed, there can be no doubt of the correctness of the decision. They lay stress on the fact, that there was no insolvency, and no surrender of property, but that the calling in of the creditors was nothing more than a limitation of the remedy. Upon these premises, if the proceedings were in the nature of a limitation, the conclusion from all the authorities on this subject was, that the debt of the creditor was not thereby discharged, but might be enforced by the courts of any other jurisdiction. The arguments of the attorney general in opposition to the decision of the court, it must be confessed, are very able and entitled to great weight.

The statute of New Hampshire, which is in question, is not liable to any objections as either partial or unjust. It is similar in its provisions to the statutes of many other states, and provides for an equal distribution of the effects of a deceased debtor among all his creditors, if there is a deficiency. In its terms it is a complete ex-tinguishment of all right and remedy in that state. The administrator there is not liable to any action after payment of the debts allowed, either in the courts of New Hampshire or elsewhere. For although there has been a decision, that a foreign administrator or executor is liable to be sued in another state, and is accountable for all the assets which come into his hands, unless he has duly administered, yet that decision has been questioned by very high authority, (Story, de conflictu legum,) and seems not to be sustained by principle.

The original party to the contract, Mr. Gookin, is deceased, his estate has passed into the hands of his representatives, and as there is no remedy left, either against the person of the administrator or estate, it would seem to follow as a necessary conclusion, that all the debts of the creditors, not presented to the commissioner in New Hampshire, were discharged. It is very apparent that this must be the case, if there were no effects, except in New Hampshire, where Mr. Gooki'n had his domicil and where he deceased. For although debts may be said to have no situs, but to follow the person of the debtor when living, yet on his decease they must be' pursued in the place where he left effects, on which letters of administration are taken, and only in the courts of that place. It is obvious, therefore, that if there had been no property of Mr. Goo-kin in any other place than the state of New Hampshire, all his creditors must have resorted there to obtain satisfaction of their debts, and could only have a right or remedy according to the laws of that state. The personal estate of the deceased became vested in his administrators, in trust for those to whom it should be ordered, after the payment of the debts ascertained in the mode required by statute, and the real estate descended to the heirs, except so far as it was made assets in the hands of the administrator for the payment of debts. To enforce or collect these claims, the creditors must have resort to the tribunals of that state, prove their debts before commissioners, if the estate was represented insolvent, and be subject to all the consequences attending their neglect so to do. The original claim presented to commissioners and allowed is extinct, becomes merged in a debt of record, for the recovery of which an appropriate remedy is provided, and if not presented, is declared to be forever barred, and no remedy left, either against person or estate.

It is obvious, that the language and effect of this statute is altogether different from that used in ordinary statutes of limitation. In this statute the claim is said to be barred. In the statute of limitations, the language is, that no action shall be maintained. In the statute of limitations, the remedy may be revived by a new promise. The change of residence of the debtor may furnish a new remedy, but in this case the debt is barred, and no suit can be sustained against the administrator.

It is argued, however, that the effect of considering this neglect as a discharge will be, to defeat a mortgage which a creditor may have for the security of his debt. A mortgage is in the nature of a pledge.. The creditor holding his pledge may retain it until redeemed. . It is not precisely a remedy for the recovery of a debt, though it is sometimes so called, but is a transfer of property, which the person transferring may have again, by paying the sum for which the property was mortgaged or pledged; and although there may be other means or remedies for recovering this sum, yet these may be entirely lost and the pledge remain good. Thus in England, under the bankrupt law, a creditor having a mortgage may-retain his security, although the debt or sum secured by the mort- „ , .. , . . , A gage may be effectually gone and discharged by the certificate given to the mortgagor. If the mortgagee proves his debt under the commission, he must surrender his security, unless his security is deficient, when he may be permitted to prove the sum for which the security is deficient, as a debt under the-commission.

By the view already taken of the statute of New Hampshire, it is evident that all claims of the creditors, including that of the present plaintiff, were effectually barred. There was neither person or property to which they could resort. The debt, as to every legal effect and operation, was extinguished. The question then will arise, whether a creditor, who has thus suffered his debt to be extinguished, can go abroad and collect his debt in another jurisdiction, where there happens to be property which belonged to the intestate at the time of his decease; and this will lead into a short inquiry into the nature and duty of separate administrations.

It is a principle well settled, that letters of administration issued in one state confer no authority to the administrator to commence a suit in another. If an administrator wishes to collect the funds which belonged to his intestate in another government, he must either take out letters of administration in that government, or collect them through the medium of an administrator there appointed. It is so in England. If an intestate left bona notabilia in the two provinces of York and Canterbury, there must be two administrations. An administrator, by virtue of letters granted in Ireland, cannot commence a suit in England. The administration granted in the place where the deceased had his domicil is considered as the principal administration. The administrator there appointed must administer upon all the assets there collected, all he receives from any former administrator, if there has been a previous administration, all he receives or collects by virtue of any authority derived from any other jurisdiction or from any foreign administrator, and after payment of debts, distribute according to the laws of the place where deceased had his domicil.

Administrators appointed in any state other than that where deceased had his domicil, are considered ancillary or subordinate to the principal administrator. Funds are usually collected and transmitted to the principal administrator for distribution. It is not necessary, however, that this should be done, as the courts in the country where the property is situated, having jurisdiction over the same, may make the distribution themselves, and are not obliged to remit to the foreign administrator, having regard in the distribution óf personal estate to the laws of the country where the deceased was domiciled. The duty which every government owes to those who are subject to its jurisdiction, and are citizens thereof, requires that they should protect them. Hence, if debts are due and owing in the country where the subordinate administration is taken out, they will not transmit the funds or make distribution until those debts are paid; they will not and ought not to leave their own citizens to the hazard and inconvenience of proving and receiving their debts in another state, and before the tribunals of that state, but they will first see that justice is done to their own citizens, and. then either remit or distribute, as circumstances may require.

It is not immediately connected with the subject before us, and not necessary, to inquire what proceedings are to be had where an estate is actually insolvent. Justice requires that all creditors should be treated alike, and not that the creditors in one state should receive the whole amount of their demands, and the creditors in another should only receive a partial dividend; and no great practical difficulties suggest themselves to me in effecting this object. As it respects creditors proving their debts in the state where the principal administration is, they are all made equal; they take their dividend of the funds at home, and also of those from abroad. If both are sufficient to pay all the debts, they receive the full amount of their claims. If the estate is insolvent, unless all the creditors, wherever situated, who can legally claim a share, are made equal, they have a better chance of receiving a larger dividend than the creditors living in another government.

Considering the administration where the intestate had his dom-icil as the principal administration, and that the creditors must resort there for the purpose of substantiating their claims, and that all personal assets must ultimately be transmitted for that purpose to the principal administrator, if the funds collected by the auxiliary administrator are necessary for the purpose of paying debts against the estate, and if not wanted, are to be distributed among those entitled thereto, by the principal or auxiliary administrator, as the courts where the funds are collected shall deem expedient, subject to the claims which the citizens of the government have upon the funds within their jurisdiction; we think the citizens of no other state can come in to claim a share of the funds in the hands of a subordinate administrator, and that the object of a commission in the state where the second administration is granted is only to ascertain the claims of the creditors within that state, who are to be paid before the funds collected are suffered to be transmitted ; that to permit any creditor, not living within the jurisdiction where the auxiliary administration is granted, to come in for a share of the effects there found, would be unjust and inequitable, as it respects the citizens of the government where either administration is granted, gives them an undue advantage, and presents great embarrassments in the settlement of estates. And indeed, unless the second administration is thus limited, there can be no good reason why the same creditors may not prove their claims under several administrations, and thus derive an unjustifiable benefit, to the injury of those who are compelled to resort to one fund alone. If an estate is actually insolvent, the claim of a creditor who has neglected to present his claim against the estate where the debtor was domiciled, cannot be allowed to be proved elsewhere without doing manifest injustice to those who have proved their debts, who are of course entitled to all the estate which can be collected through the principal or subordinate administrations; and as it respects the creditors in the state where the subordinate administration is granted, the claim of a creditor living in the same state where the debtor had his domicil cannot be allowed without depriving them of that portion of the estate of the deceased lying within the jurisdiction of their own government, to which they have a right to resort for the satisfaction of their several claims.

It may be made a question, as to the effect of the question before us, of the constitution of the United States securing to the citizens of each state the privileges and immunities of citizens in the several states. This was not urged in the argument, but we have not overlooked it. Upon this subject it may be remarked, that there are various duties arising out of the relations between a government and the citizens thereof, and various rights, which cannot be equally enjoyed. There are some privileges and immunities, which are necessarily connected with the residence of the citizen, which cannot be enjoyed by those residing elsewhere; and the right of resorting to the funds of a deceased debtor, within the territorial limits of a state, may be one of these. Further, the government may, if they please, permit an administrator from abroad, either by virtue of letters of administration there granted, or granted by them, to collect all the funds of an intestate, without any regard to claims of their own citizens. It is a matter of discretion in them, whether they will distribute or remit, and a matter of favor to their citizens that they will not remit, until provision is made for satisfying their claims. While, therefore, the citizens of each state, are entitled to all the privileges and immunities of citizens of the several states, it does not follow that they are enti-tied to all the favors which a government may bestow on its own citizens. Hence, while a government or state may refuse to permit the funds of a deceased debtor to be taken from their jurisdiction until the claims of their own citizens are first satisfied, it may permit this to be done without regard to the claims of citizens of other states, without violating the provisions in the constitution before mentioned. All the creditors, wherever situated, have the opportunity of presenting and proving their claims, where the debtor resided, and it is only a matter of accident or favor, if any who neglect the opportunity, have any other means of satisfying their claims.

The result to which we have arrived on this part of the case is, that the plaintiff, having been a citizen of the state of New-Hampshire, at the time of the decease of Mr. Gookin, the intestate, at the time when the commission of insolvency issued on his estate, and until the same was returned, having neglected to present his claim to the commissioners there appointed, and in consequence thereof his claim being barred by the law of the state of N. Hampshire, cannot remove into this state, here prove his debt, and come in with the creditors in this state, for a share of those funds, to which they have a claim for the satisfaction of their debts.

As the defendant, on this part of the pleadings, will be entitled to a judgment, it is unnecessary to consider the other question presented by the pleadings, as to the effect of the contract made between the plaintiff and Mrs. Gookin, in April, 1828.

The judgment of the county court, which was in favor of the defendant, is therefore affirmed.