Johnson & Miller v. Hunt

23 Wend. 86
New York Supreme Court·Decided January 15, 1840·Published·Cited by 4 cases

Opinion

Cowen, J.

*By the Court, The statute concerning attachments [ *89 ] against absconding debtors, who are residents of this state, (1 R. S. 764, 2d ed.) authorizes a summary ex parte proceeding, without personal notice, even to the debtor, by which the title to his entire estate, real and personal, may be divested, and assigned to his trustees ; by whom it is to be converted into cash, and the proceeds distributed in payment of his debts. To guard, as far as possible, against fraud upon the fund, and preferences of one creditor over another, the 32d § declares, that all sales, assignments, transfers, mortgages and conveyances, of any part of the estate real or personal, &c. of such absconding debtor, made after the first publication of the notice mentioned in § 28, in payment of, or as security for any existing prior debt, or for any other consideration, and all judgments confessed by him after that time, shall be absolutely void, as against his creditors.

It is not denied by the counsel for the plaintiffs in error, that the transfer was within the general terms of the act; but he insists that the statute had no operation in the state of Pennsylvania, where the transfer was effected.

The act in question is in nature of a bankrupt law. The whole proceedings are conducted and the assignment effected in invitum, without the participation of the bankrupt, farther than the' assent of every man may be implied to the statutes of his own country; and it is too late since the decision of the court for the correction of errors, in Abraham v. Plestoro, 3 Wendell, 538, to question the general doctrine contended for by the counsel for the plaintiffs in error. That case related to a proceeding precisely similar in principle under the bankrupt law of England. The absconding debtor had fled to this country, bringing property with him in a ship, which he deposited at the custom house in the city of New-York. In the meantime, proceedings in bankruptcy had been instituted against him in England, a provisional assignee had been appointed, and this, followed by a general cession of the bankrupt’s property. The assignee and others, being creditors, and they, with the bankrupt, being all British subjects, filed their bill *and obtained an injunction restraining-the property in the hands [ *90 ] of the custom house officer, to await the .decision of suits at law, which they had here commenced against the same bankrupt, and be held and forthcoming on any executions which might he eventually obtained. The learned chancellor admitted, that had the contest arisen between the creditors abroad claiming under the proceedings in bankruptcy, and creditors here claiming adversely under our laws, the preference would be due to the latter. But he made an exception in that case, inasmuch as the question [90] arose entirely between the bankrupt and his assignee and creditors, all residing in. the country under whose laws the assignment was made. On appeal, Justices Marcy and Sutherland, with two senators, agreed that the distinction was rightly taken by the chancellor, and were for affirming his decree. But a very large majority of the court were in favor of a reversal; and I understand the senators who argued in favor of a reversal, as all concurring in the rule laid down by the supreme court of the United States in Harrison v. Sterry, 5 Cranch, 289, without any express qualification, even as between resident subjects of the country in which the law was enacted, viz. that the bankrupt law of a foreign country is incapable of operating a legal transfer of property in the United States. The doctrine rests on the same footing as between one state and another. That was held in Ogden v. Saunders, 12 Wheat. 358, and in Raymond v. Johnson. 11 Johns. R. 488. In the latter case, the plaintiff had assigned all his debts, .among which was the claim on the note now sued for, and been discharged under the insolvent law of New-Jersey. This court denied that the foreign assignee could sue here in his own name, citing Bird v. Caritat, 2 Johns. R. 342. The assignment in the latter case was by English bankrupts ; and its legal operation here denied, on the ground, among others, as stated by Kent, Ch. J., that “ the mode of recovering the debts of the bankrupt, will depend upon the forms of proceeding in the country and in the forum, in which the assignee institutes his suit.” I cite this remark to show, what I shall by and [ *91 ] by have occasion to notice again, that the question *before us must be dealt with as depending on the effect of the lex fori, and not the lex loci contractus.

But for the present, let us return to Abraham v. Plestoro. It seems to me that, if I have not mistaken the point decided by that case, it is unnecessary to go farther. The amount of the decision, as I understand it, is, that an assignment in invitum, under the law of one state or nation, has no operation in another, even with respect to its own citizens; that the bankrupt, a subject of the very country uuder whose laws he was proceeded against, may, on crossing the territorial line, dispose of the property which he has brought with him : may withhold it entirely from the creditors who are proceeding against him in the foreign jurisdiction ; and it follows, that other creditors coming from the same jurisdiction may either pursue him by attachment, by judgment and execution, or take a voluntary transfer of the property so brought by the debtor in satisfaction of claims. If so, it would be absurd to say, that, on the creditor’s return, he should account in the courts of his country, for what he had thus obtained under the express sanction of the foreign law.

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Johnson & Miller v. Hunt, 23 Wend. 86 (N.Y. Super. Ct. 1840).

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