Miller v. Gittings

37 L.R.A. 654, 37 A. 372, 85 Md. 601, 1897 Md. LEXIS 79

• Court: Court of Appeals of Maryland
• Decided: April 8, 1897
• Status: Published

Opinion

Bryan, J.,

delivered the opinion of the Court.

Ernest Gittings filed a bill in equity against Emanuel H. Miller and Arthur E. Wilson.

It was alleged that Gittings was a citizen and resident of the State of Maryland and of the city of Baltimore; that Miller and Wilson were also citizens and residents of the same city and State ; that in the month of September, eighteen hundred and ninety-five, Gittings and Charles C. Allen, who is a resident and citizen of the State of New York, formed a partnership for the conduct of the stock brokerage business in the city of Baltimore under the name of Git-tings 8c Co., and that in said business Gittings was the active member who alone saw the customers, and conducted the operations with them; that in the summer and early fall of eighteen hundred and ninety-six Miller and Wilson had a large number of transactions with Gittings and Company in relation to stocks; that said transactions were in the form of purchases and sales of stock made by Gittings & Co., for the account and risk of Miller and Wilson, but were in reality gambling transactions, and that there was no .intention or belief-by any of the parties to the transactions that the stocks should ever be actually delivered, but that the sole purpose was that there should be an accounting and settling as the stocks rose or fell in price; that all these . gambling transactions were entered into in the city of Baltimore ; and all settlements were also to be made in the city of Baltimore ; that for the purpose of indemnifying Gittings & Co. against loss in executing their orders Miller and Wilson placed in the hands of Gittings as margins ten bonds of the par value of a thousand dollars, and two hundred shares . of the preferred stock of the Southern Railway Company ; that these bonds and shares of stock were delivered to Git-tings with the express intention and expectation on the part of Miller and Wilson that he would hypothecate them for the purpose of obtaining money to enable him to aid Miller and Wilson in their gambling transactions ; that the amount of money which would have been necessary to purchase the stocks and. carry them until Miller and Wilson should elect .to order the sale of them to make their settlements with Gittings & Co. would have been over two hundred thousand dollars, and Miller and Wilson both knew that neither Gittings nor Gittings & Co. had any such sum; and Miller and Wilson had no such sum with which to make payment for the stocks, as it would be necessary for them to do, if it (had been intended that there should be an actual delivery of them; that Gittings hypothecated the ten bonds in the First National Bank of Baltimore for the sum of eight thousand dollars, for which sum the account of Miller and Wilson was duly credited by him on the books of Gittings & Co.; that this hypothecation was made with the full knowledge at the time it was made of Wilson and of William H. Miller, the father of Emanuel Miller; that at that time Emanuel Miller was absent from Baltimore, and that on his return a day or two afterwards he was informed of it by Gittings; that the Southern Railway stock was also hypothecated in accordance-with the understanding and expectation of the parties when it was delivered to Gittings ; that it was hypothecated with Cuthbert & Co., stock brokers in the city of New York, through whom Gittings acted in carrying on the greater part of the speculative transactions for Miller and Wilson.

The bill of complaint further alleges that on the tenth day of September, eighteen hundred and ninety-six, Gittings & Co. were unable to settle with Miller and Wilson for the winnings to which they would have been entitled if their dealings had not been illegal gambling transactions; and that Gittings would not have felt justified in making such a defence but for the perjuries and fraud, and the oppressive and dishonest conduct of said Miller and Wilson hereinafter set forth. It also alleges that on the said tenth day of September Gittings gave to Miller a check on the Continental National Bank for eight thousand dollars in part payment of said winnings, and that at the time the check was given Miller knew that there were no funds to meet it, and that it would not and could not be good, unless Allen, the partner of Gittings, should provide for its payment, which he did not do; that Miller and Wilson brought two actions in the city of New York against Gittings and the said Allen, claiming in one of them about eight thousand dollars for non-payment of the check, and in the other seventeen thousand dollars, for the alleged conversion of the bonds and stock deposited as margin, and for the alleged conversion of the different stocks on whose fluctuations in price Miller and Wilson had been gambling; that Gittings was summoned to appear to these actions when he was in New York. (This was at the time hereinafter mentioned when he was arrested and held to bail); that Gittings has filed his answers to these actions, and copies of the answers are filed with the bill of complaint; that the complainant believes that Allen has also filed answers, but that complainant is not possessed of copies of them, and cannot therefore file them; that he believes and therefore avers that by the law and practice of the State of New York the complaints and answers in actions are kept in the offices of the attorneys of the several parties until the cause is ready for trial; and that the complainant believes and therefore avers that Allen’s answer is not filed in any public office from which a duly certified copy could be obtained. The bill of complaint further alleges that the right of Miller and Wilson to recover in these actions depends on the question whether the aforesaid transactions are wagering or gambling transactions, and that their validity depends' on the law of Maryland; that the complainant has a right to have their legality decided by the law of Maryland; that if these causes are tried in New York it will be necessary to aver and prove the Maryland law as a fact, while if they are tried in Maryland the law of the State will be judicially recognized, and more equal and complete justice can be done; that the complainant submits his rights to the jurisdiction of the Court, and is willing that such decree may be passed as is just between himself and Miller and Wilson; that the said Miller and Wilson went out of the jurisdiction in which both they and the complainant resided, for the purpose of evading and escaping the Maryland law and of obtaining a judgment in New York, to which they are not entitled by the law of the place where the transactions arose and where the parties are domiciled. The bill of complaint further alleges that they obtained an order for the arrest of the complainant from a Justice of the Supreme Court of New York in the second of the above mentioned suits upon certain affidavits made by them and others, which state, among other things, that the complainant wrongfully, and without the knowledge and consent of Miller and Wilson, hypothecated the before-mentioned bonds; that the said statement was false, and was known to be false by Miller and Wilson, and was made for the deliberate, malicious and unlawful purpose of enabling them to have the complainant arrested suddenly when away from home, and dishonestly and oppressively coercing him and his friends to pay their unlawful and fraudulent claims in order to secure complainant’s liberty; that the complainant was arrested when in the city of New York and held to bail in the city of New York in the sum of fifteen thousand dollars ; that the complainant moved by his attorney to vacate the order of arrest, but the Court overruled the motion without filing an opinion; that the said Allen has stated through his attorneys that he will voluntarily appear in this suit, if made a party defendant. The prayer of the bill of complaint was for an injunction prohibiting the further prosecution of the suits in New York, and from any further proceedings looking to the arrest or imprisonment of the complainant in said suits ; and that the Court would assume jurisdiction, and for general relief. Process was prayed against Miller and Wilson and against Allen. The Court granted the injunction. Miller and Wilson having filed an answer appealed. It is stated in the appellee’s brief that Allen has appeared as a defendant and submitted himself to the jurisdiction of the Court. He was represented by counsel at the argument in this Court.

It appears by the exhibits filed with the bill of complaint that the suits were brought in the city of New York abouf the sixteenth of September, eighteen hundred and ninety-six, and that the order for the arrest of Gittings was issued on the twenty-seventh day of October. He was arrested on the same day and gave bail, by which he and his surety became bound that he should at all times render himselt amenable to any mandate which might be issued to enforce a final judgment against him in the action. After his release on bail, that is, on the fourth of December, he filed his answers to the two suits against him and his partner Allen. The plaintiffs in the suits in anticipation of Gittings’ visit to New York prepared their own affidavits in the city of Baltimore on the seventeenth of October, and obtained about the same time the affidavits of other persons in the same city. The plaintiff Wilson made an additional affidavit in New York City on the twenty-seventh of October.' The bail given by Gittings required him to obey any mandate which might be made to enforce a final judgment in the action, and made it, therefore, necessary for the protection of his rights that he should answer and resist the complaint filed in the suit. It is not. a question in this case whether it was lawful for the plaintiffs in the New York suits to cause Gittings to be arrested. The declaration of the Constitution is unconditional and absolute: “ No person shall be imprisoned for debt.” The payment of debts is to be obtained from the property of the debtor'; his body cannot be taken in satisfaction of it. Neither can it be seized and held in restraint as a means of coercing or inducing him to make payment. An attempt made in this State by a creditor to do so would subject him to serious consequences. It is presumed that no one would contend that the citizens and residents of the State are not bound to yield obedience to the supreme law of the land.

The important inquiry concerns the powers of a Court of Equity to interfere and protect the citizens of the State in their constitutional rights, when the processes of legal tribunals are inadequate to the purpose. An examination of authorities of high character will assist us in the decision of this question. In Keyser v. Rice, 47 Md. 203, it appeared that Keyser and Rice were both residents and citizens of the State of Maryland, and that Keyser was an employee of the Baltimore and Ohio Railroad Company at Cumberland, and that the Railroad Company was indebted to him for wages in an amount less than a hundred dollars, and that Rice had caused an attachment to be issued in the State of West Virginia, and laid in the hands of the Railroad Company for the purpose of condemning the debt due to Keyser in payment of a debt due by him to Rice. The debt to Rice accrued subsequently to the passage of the Act of 1874, chapter 45. This Act exempted from attachment the wages or hire due to any laborer or employee by any employer or corporation to the amount of a hundred dollars. This Court decided that Rice should be prohibited by injunction from prosecuting his suit for the condemnation of the wages due to Keyser. In its opinion it stated very explicitly certain principles applicable to cases of the kind. We will quote some of them : “As long as a citizen belongs to a State, he owes it obedience, and as between States, that State in which he is domiciled has jurisdiction over his person and his personal relations to other citizens of the State.” “ The power of the State to compel its citizens to respect its laws, even beyond its own territorial limits, is supported, we think, by a great preponderance of precedent and authority.” It also said that the jurisdiction to prevent by injunction suits in other States was not founded ‘ ‘ upon any right to interfere with or control the proceedings of other tribunals in other States, but on the clear authority vested in Courts of Equity over persons within their jurisdiction and amenable to process to restrain them from doing acts which will work wrong and injury to others, and are contrary to equity and good conscience.” It also strongly condemned the effort by a creditor to evade the laws of his own country by a resort to a tribunal of another State for the purpose of obtaining a preference to the injury of other creditors and said that it was against equity to do so. And it also said at the conclusion of the opinion: “We think the intention to evade is necessarily presumed, when the act is persisted in after knowledge, and still inchoate, against the protestation of the complainant and the process of the Court.” Many high authorities were cited by the Court in support of their opinion. We may say that the decision in Keyser v. Rice has been quoted with approval in Courts of the highest repute.

In Cole v. Cunningham, 133 U. S. 107, this question was considered very fully and elaborately. Keyser v. Rice was quoted and many of the cases which this Court had cited in its opinion. The learned Court also quoted with approval Dinsmore v. Neresheimer, 32 Hun. 204, “Where the Supreme Court of New York held that an express company could maintain an action in New York to restrain the defendant, a resident of the State of New York, from prosecuting actions against the company in the District of Columbia, brought to avoid a decision of the Court of Appeals of New York, differing from the rule upon the same subject in the District of Columbia.” And it also said, adopting the words of another Court, “ that in the Courts of a State any citizen of that State may be enjoined from resorting to the Courts of any other State for the purpose of evading the exemption laws of his own State.” The facts in Cole v. Ctmningham were as follows : Two citizens of Massachusetts, who were partners, becoming aware of the insolvent condition of another citizen of the same State, assigned their claim against him without consideration to one Fayerweather, a resident of New York, and caused funds of their debtor in New York to be attached in Fayerweather’s name but for their own benefit; while these attachments were pending the debtor in Massachusetts was adjudicated an insolvent. The Supreme Court of Massachusetts, at the suit of the assignee in insolvency, decided that the Massachusetts creditors should be restrained by injunction from prosecuting the attachment in New York in the name of Fayerweather, saying: “ As residents of this State, they cannot be allowed to this extent to defeat the operation of the assignment, and thus to obtain a preference over other creditors resident here. They are within the limits of the jurisdiction of this Court, and amenable to its process and should be enjoined from prosecuting a suit the effect of which, if successful, will be to work a wrong and injury to other residents of the State.” This decision was affirmed by the Supreme Court of the United States. The principle involved is sustained by a vast weight of authority, as may be readily seen by an examination of the opinion of the learned Court.

There are other cases which we think it proper to mention. In Talleyrand v. Boulanger, 3 Vesey, 447, two complainants filed a bill in equity against the defendant for an injunction. It appeared that all the parties were Frenchmen sojourning in England, and that one of the complainants while in France had become indebted to the defendant, and that by the law of France there could not be an arrest of the person in a suit on the obligation which had been given for the debt. The complainants and defendant fled from France and came to England during the Revolution. The debtor was arrested in England at the suit of his creditor, and to procure his release he paid some cash, and gave bills of exchange, and a bond, to all of which the other complainant in the equity suit became a surety. After the first bill of exchange had been paid, the complainants refused to make any more payments, whereupon they were arrested in four actions and held to bail at the suit of the defendant in the equity suit. An injunction was granted against proceeding with the suits and it was continued by the Lord Chancellor. He said that the proceeding on the part of the defendant had been extremely oppressive and immoral; and that if the case stood on the original contract “ it would be contrary to all the principles which guide the Courts of one country in deciding on contracts made in another, to give a greater effect to the contract, than it would have by the laws of the country where it took place.” He also said : “ I cannot suffer these bills of exchange so obtained to have effect.” “ I cannot suffer these actions to proceed.” This case is remarkable from the circumstance that the Court extended to domiciled aliens, in respect to the contracts made in their own country, the protection due to its own fellow-subjects under similar circumstances. It has been made the subject of adverse criticism and disapproval in Liverpool Marine Credit Company v. Hunter, Law Reports, 3 Chancery Appeals, 486. Nevertheless it was pointedly approved by the House of Lords in Don v. Lippmann, 5 Clark and Finnelly, 18; Lord Brougham delivering the opinion. In the same opinion, Melan v. Fitzjames, 1 Bosanquet & Puller, 138, was approved on the same point. It is unnecessary in this case to determine the question in respect to aliens, as we have before us only citizens and residents of. our own State claiming the protection of its laws. The Liverpool Company case is thus stated: “A British ship, mortgaged in England by a British subject to British subjects, was arrested at New Orleans by creditors of the mortgagor, also British subjects resident in England, and as the Courts of New Orleans do not recognize such mortgages of ships, the mortgagees, in order to protect the ship from sale, gave bonds for the amounts claimed by the creditors. The mortgagees afterwards filed a bill to restrain the creditors from suing on these bonds : Held, that though the decisions of the Courts of New Orleans might be open to the reproach of injustice, yet as the creditors owed no duty to the mortgagees, and had a right to proceed against the property of their debtor wherever they found it, the bill could not be maintained.” Whatever credit may be due to this decision it is proper to say that it is in direct conflict with Simpson v. Fogo, in the High Court of Chancery, i Heming & Miller, 195. The principle, however, on which it is decided can have no bearing on the questions in the present case. It is stated that the creditors who proceeded against the ship owed no duty to the mortgagees.

In Bushby v. Munday, 5 Maddock, 297; and in Portarlington v. Soulby, 3 Mylne & Keen, 104, gambling debts were contracted in England, and the defendants were enjoined from prosecuting suits on them in Scotland and Ireland respectively. In Bushby's case, the Court said that the English Court was a more convenient jurisdiction than the Scotch Court for determining the question between the parties, which depended on the law of England. And also said: “The substantial ends of justice would require that this Court should pursue its own better means of determining both the law and the fact of the case, and it must necessarily follow that it must bind the interests of the parties by its own conclusions.” In Claflin v. Hamlin, 62 Howard’s Practice Reports (N. Y.), it was alleged that a suit in Illinois brought by a citizen of New York against other citizens of the same State was instituted for blackmailing purposes, and upon causes of action obtained by fraud. It was held that it should be enjoined ; the Court saying that it was not brought in good faith, but for the purpose of vexing, annoying and harrassing the parties sued.

The authorities shew that equity will enjoin suits in other States where there is fraud, oppression, vexation, injustice or unconscientious advantage ; and most especially where there is an attempt to evade or defeat the operation of the laws of the State where both parties to the suit reside. The transactions in this case all occurred in the city of Baltimore ; the parties to this controversy are all citizens and residents of that city ; the evidence would naturally be there and readily obtainable; and Courts are established there with jurisdiction competent to determine the rights of the parties, according to the law of Maryland of which they have judicial knowledge. The.complainant is subjected to prosecution before a tribunal in another State which must ascertain the law through imperfect methods of proof; where there must be much difficulty and expense in obtaining the evidence of the witnesses ; and where the legal processes have features of severity and harshness from which citizens of Maryland are protected by the Constitution of the State. Ever since the adoption of the Constitution of ■ 1851, arrest of the person has been forbidden in the prosecution of civil* actions. The capias both as mesne and final process has been unknown. Collection of a debt cannot be coerced either by imprisonment or threat of imprisonment. In the present case the complainant was arrested, and presented with the alternative of going to prison, or giving bail, which bound him at all times to “ render himself amenable to any mandate which may be issued to enforce a final judgment against him in the action. It is believed that no one would • seriously contend that such a proceeding would be lawful in Maryland. When this cause of action arose Miller and Wilson well knew that by the Constitution Gittings was protected from any such invasion of his liberty as a mode of enforcing the payment of what was alleged to be due from him. And* yet they de-. liberately violated his constitutionally guaranteed right of personal liberty. A Court of Law has not adequate power to relieve him from this imposition. If redress is to be afforded, it must come from a Court of Equity. This Court has solemnly decided that a statute for the protection of the property of a citizen of the State shall not be violated by another citizen through the instrumentality of a suit in another State. When the statute says that the citizen’s property shall be unmolested, no other citizen shall disobey the laws even beyond the bounds of the State. But here the sacred right of personal liberty is violated in contempt and defiance of the Constitution. The person of a citizen is seized as a portion of the proceeding for litigating a civil liability. The complainant below has every title to relief which has been established in the adjudicated cases. All the transactions arise from and are parts of gambling contracts made between citizens of this State. In Bushby v. Munday, 5 Maddock, 297, a contract of this kind was made in England, and the Court of Chancery prohibited the prosecution of a suit on it in Scotland, although the complainant was a resident of Scotland, and had real estate there. A gambling contract was void in Scotland as well as in England; but as the Court had better means of determining both the law and the facts of the ease than the Scotch Court, it thought that justice required that it ought to try the case and enjoin the suit in Scotland. In Portarlington v. Soulby, 3 Mylne & Keen, 104, Lord Brougham enjoined a suit in Ireland on a gambling contract in England. It is not questioned that by the law of New York Miller and Wilson could sue Gittings in the State of New York. The question in the cases where equity has intervened has not been whether the plaintiffs at law had a right to sue at law; but whether there were not equitable circumstances which ought to prevent the exercise of such a legal right. If they had no right to sue according to the course of the local law there would have been no necessity for equitable relief. The suit here is not only brought on a contract made in a gambling- transaction, but, although the bonds and stock were delivered to Gittings with the express intention and expectation thát he should hypothecate them, it is alleged that he had wrongfully hypothecated them without the knowledge and consent of Miller and Wilson, and on this allegation an order has been obtained for Gittings’ arrest.

In the long line of cases on this subject, beginning at Lord Hardwicke’s decision in McIntosh v. Ogilvie, 4 T. R. 193, and coming-down to the present time, it has been uniformly held that a suitor- shall not by impleading a fellow citizen or fellow subject in the Court of a foreign country, deprive him of a right or benefit given to him by the laws of their own country. When they owe a duty to each other, this duty must be observed both abroad and at home. And on this footing Courts of Equity exert their jurisdiction to give the relief which cannot be obtained in a Court of Law. The further prosecution of the suits in New York ought to be enjoined and the controversy ought to be determined by the Court granting the injunction, which has power to do full and complete justice between the parties. If the suits should be continued against Allen alone, and result in a judgment against him, it could be enforced against the partnership property, and would thus affect the interest of Gittings in the partnership effects as fully as if the judgment had been rendered against him. Johnson v. Matthews, 32 Md. 368; Folsom v. Fertilizer Co., October Term, 1896, ante, p. 52.

The fact that Allen is a resident of New York might distinguish this case from those relied on to sustain the right of' a Court of Equity to interfere under ordinary circumstances, but the appeal admits for the purpose of this case the allegation in the bill, “that the said Miller and Wilson went out of the jurisdiction in which both they and this plaintiff resided and still reside, for the purpose of evading and escaping the Maryland law and of obtaining a judgment against the plaintiff in New York,” and that the statement upon which the plaintiff was arrested “ was known to be false when sworn to by said Miller and Wilson, and was made for the deliberate, malicious and unlawful purpose of enabling the said Miller and Wilson to have the plaintiff arrested suddenly when away from home, and of thus enabling said Miller and Wilson to dishonestly and oppressively coerce him and his friends, in order to secure the liberty of the plaintiff into paying the said Miller and Wilson’s unlawful and invalid claims against this plaintiff” If it be true as the appeal admits, that the proceedings were instituted in New York for those purposes, and not because Allen resided there, his residence is immaterial. On this appeal we are obliged to assume that all the allegations of the bill of complaint are true.

(Decided April 8th, 1897).

We have considered the questions before us exclusively upon the allegations of the bill of complaint, as it was our duty to do. We have given considerable prominence to the arrest of the complainant, but we think that we have mentioned other circumstances, which show that the bringing of the suits in New York was oppressive and unreasonable; that it tended to embarrass and defeat justice in the settlement of the controversy between the parties ; that it was an unconscientious and inequitable attempt to obtain an advantage over the parties who were sued.

Order affirmed with costs and cause remanded.

Fowler, ]., dissents.