Pratt v. Chase — 19 Abb. Pr. 150

Majority

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PRATT a. CHASE.

Supreme Court, First District;

General Term, Feb., 1865.

Headnote

Insolvent’s Discharge.^[1]

Objections to defects in the proceedings for an insolvent’s discharge of a merely formal nature must be taken by certiorari, and cannot be taken in a collateral action.

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An affidavit by a petitioning creditor that a sum of mouey, “being the sum ' annexed to his name subscribed to the petition, is justly due to him from the said insolvent for goods, war.es, and merchandise sold and delivered, secured by indorsement of M.’s note,’’—EeId, sufficient to support an insolvent’s discharge.

An insolvent’s discharge which stated “that the said insolvent has conformed in all things to those matters, required of him by the statute,” —Held,, sufficient in form without setting forth that the due proof was furnished of the

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notice having been given personally or by mail, twenty or forty days before the day of showing cause, &c.

The discharge of an insolvent under the insolvent laws of his own State is a bar to an action in the courts of such State by a citizen of another State, upon a contract made or to be executed in the State wherein such discharge was granted after the law was enacted.

Appeal from a judgment.

Tjie plaintiffs, Dundas T. Pratt and Benjamin Beath, of Philadelphia, brought an action against the defendant, Thomas B. Ohase, upon three promissory notes, two of them dated at Philadelphia in 1854, and the third dated at Buffalo, 1855, all payable in Buffalo.

The complaint set out the residence of the plaintiffs in Philadelphia, and of the defendants in the State of ¡New.York. The answer admitted these facts, but set up a discharge under the insolvent laws of the State of ¡New York.

On the trial the defendant put in evidence the insolvent’s discharge, of which the body was as follows:

. “ Whereas, Thomas B. Chase, of the city of Brooklyn, an insolvent debtor, residing in the said city, did, in conjunction with so many of his creditors, residing within the United States, as have debts in good faith owing to them by the said insolvent, amounting to at least two-thirds of all the debts owing by him to creditors residing within the United States, present a petition to me, praying that the estate of the said insolvent might be assigned for the benefit of his creditors, and he be discharged from his debts, pursuant to the provisions of the statute authorizing an insolvent debtor to be discharged from his debts; whereupon I ordered notice to be given to all the creditors of the said insolvent to show cause, if any they had, before me, at a certain time and place, why an assignment of the said insolvent’s estate' should not be made, and he be discharged from his debts, proof of the publication whereof hath been duly made. And whereas, it satisfactorily appears to me that the doings on the part of the creditors are just and fair, and, that the said insolvent has conformed in all things to those matters required of him by the said statute, I directed an assignment to be made by the said insolvent of all his estate, real and personal, both in law and equity, in possession, rever

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sion, or remainder, to William L. Yán Deryee, assignee nominated by the creditors to receive the same; and the said insolvent having, on the seventh day of November, 1859, made such assignment, and produced to me a certificate thereof executed by the said assignee, and duly proved, and also a certificate of the clerk of this county, that such assignmént is duly recorded in his office: Now, thebefoee, mow ye, That by virtue of the power and authority in me vested, I do hereby discharge the said insolvent from all his debts and from imprisonment, pursuant to the provisions of the said statute.”

The plaintiffs objected to the giving of the discharge in evidence on the grounds stated below; their objections were overruled. The plaintiffs then put in evidence the proceedings upon which the discharge was granted, to show that they were defective and irregular.

Especial exception was taken to the following matters, viz.: That the affidavit of the foreman of the State paper was not signed by him, and that the affidavits of the petitioning creditors were not sufficient.

The affidavits of four of the petitioning creditors were substantially as follows: that of the fifth added, after the word “ delivered,” “ and various stocks.”

A. B., one of the petitioning creditors of Thomas B. Chase, an insolvent debtor, being duly sworn, doth depose and say, that the sum of, &c., lawful money of the^TJnited States, being the sum annexed to the name of this deponent subscribed to the petition, is justly due to him from the said insolvent, for goods, wares, and merchandise, sold and delivered, secured by indorsement of C. W. Smith’s note, dated September 14,1858, and payable months after date; and that neither he, nor any person to his use, hath received from the said insolvent, or any other person, payment of any demand, or any part thereof, in money, or in any way whatever, or any gift or reward whatsoever, upon any express or implied trust or confidence that he should become a petitioner for the said insolvent.

The plaintiff’s counsel specified the following objections to the proceedings, which he contended rendered the discharge invalid and void:

The defendant’s discharge under the two-thirds act is void for the following reasons, namely:

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• 1st.—I. What purports to be the affidavit of the publication in the State paper is not an affidavit, because it is not signed by the deponent; the oath is not binding, as no perjury could be charged upon such a paper ; consequently there is no proof of such publication. By every definition of an affidavit, it must be signed. (2 Sandf.648, and cases cited ; 16 Barb., 319 ; 2 Kern., 375; 2 Abbotts' Pr., 175; 14 Ib., 45; Whitaker’s Pr., vol. 1, p. 166, and the cases there cited ; 2 Rev. Stat., ch. 17,. art. 3, § 178.)

II. By the affidavit of G. C. Stimson, of the publication in the New York Day Book, “the first publication was May 28, 1859,” which leaves only 63 days between the first publication and July 30, 1859, the day the affidavit was made, which gave the judge no jurisdiction to grant the discharge. (Small a. Wheaton, 2 Abbotts’ Pr., 175, and particularly noticed at bottom of page 179; Demarest a. Gray, 10 Ib., 468; Anon.; 1 Wend., 9 ; 9 Abbotts’ Pr., 374, decides that the publication must be 70 days; Stanton a. Ellis, 16 Barb. Sup. Ct. R., 399; affirmed in 2 Kern., 575.) There was a fatal defect as to time of notice. Affidavit shows creditors residing more than 100 miles from New York; and 10 weeks’ publication of notice was necessary. Only 9 weeks’ notice was given.

III. Variance in the title of the newspaper printed in Hew York, in which the judge' ordered the notice to be published, and that in which the proof of publication says it was published. - The order wak for the “newspaper entitled the Evening Day Book,” the proof is of its publication in “ the New York Day Book.”

An omission also occurred in both the Day Book and Brooklyn Daily Eagle notices. In the former, the words “ part 2” are left out, in describing the Revised Statutes under which the proceedings were had; and in the latter were left out the words “ of the 5th chapter.” These omissions render the notice vague and uncertain, and are an essential defect.

2d.—IV. There is a want of proper specifications in the affidavits of the petitioning creditors, as to the nature of their debts,—how, and for what they arose, when and where, and who were the parties, the consideration and character of the indebtedness, accounts not annexed as copies thereof, &c. All and each of these should appear on the papers; and without a

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full and proper statement, thereof, the intent to defraud is fairly inferrable, and need not be proved. (Slidell a. McCrea, 1 Wend., 156 ; Small a. Wheaton, 179, midway of the page; M’Nair a. Gilbert, 3 Ib., 344.)

In the affidavit of William Wilson, one of the petitioning creditors, it does not appear when or where the indebtedness arose, for what, nor the price, nor with whom the contract was made, nor any circumstances showing whose debt it is, unless it be Smith’s.

The same objection to the affidavit of Samuel Suydam; and the same objection is even more pertinent to that of William Hunger, who swears that his claim is “ for goods, wares, and, merchandise sold and delivered, and various stocks secured by indorsement of note drawn by Hr. Smith, now due and payable,” without specifying the particulars of the transaction, or annexing the original or copy-evidence of indebtedness. The only inference which can be drawn from such a vague and imperfect statement is, that it was a transaction between Hunger and Smith. Hr. Hunger gives no date or place of sale, does not say who bought or who sold, what kind of stocks, or what description of goods, &c., whether sold at one or ten different times, no date of note or time of credit. A most indefinite and uncertain statement. (2 Rev. Stat., 199, § 7; 2 Hilt., 338.)

Such statements would not uphold a judgment upon confession. (3 Abbotts' Pr., 375; Freleigh a. Brink, 16 How. Pr., 272 ; 12 Ib., 410.) Lockwood a. Finn et al. (13 Ib.), decides the particular point in question. (2 Kern., 245; 1 Wend., 156 .) Then, how much more full, precise, and particular should every such statement be made, in a case where the parties’ just claim is to be swept away by a judicial statutory proceeding!

3d.—V. The defendant’s discharge is invalid, as to this cause of action, because the plaintiffs, parties to the contract, were residents of another State. The note was dated in another State. Section 35 of the act has received the following conclusive adjudications : 3 Seld., 500 ; 2 Wend., 457 ; 12 Ib., 102; 19 Ib., 151, 630; 3 Paige, 338 ; 5 Hill, 244 ; 3 Comst., 217; 12 Wheat., 213 , 369; 6 Pet., 349 , 635; 3 Story on Const., 256 ; 10 Metc., 594 ; 10 Abbotts' Pr., 246; 4 Wheats.,

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209 ; 5 How. U. S., 295 ; 8 Barn. & Cres., 477; 4 Barn. & Ald., 654; 6 Johns. Ch., 59 ; 4 Wheat., 122 ; 2 Story, 383 ; 9 Abbotts’ Pr., 404; Baldwin a. Hale, 3 Am. Law Register, 462.

YI. The discharge does not set forth that the due proof was furnished of the notice having been given as required by law, personally or by mail, twenty or forty days before the day of showing cause. It seems that the clause on that point is erased from the printed blank used as the discharge. Several of the creditors said to have been “ personally served” are ready to swear that no such notice was ever given to them. The schedule was not signed, nor was the petition sworn to by any of them.

The court rendered the following decision:

The above cause having been tried before me, without a jury, by consent of the parties, and thereupon submitted, I find as follows:

That the facts stated in the complaint and answer are true; and that the discharge stated in the answer is a bar to the plaintiffs’ recovery.

I therefore order judgment to be entered for the defendant, with costs.

From the judgment entered under this, plaintiffs’ counsel appealed.

John Fitch, for the appellants.

E. R. Bogardus, for the respondent.

I. The principal objection to the discharge is that it is invalid against a non-resident of this State. The precise point involved in the present case is, whether the State courts of Hew York shall lend their aid in enforcing a contract to be performed in Hew York in favor of a non-resident plaintiff against a debtor duly discharged by the Hew York insolvent laws. This statement of the point, of itself, excludes every case cited by the plaintiff under his fifth point as inapplicable.

This is to be treated as a Hew York contract. (See Cook a. Maffit, 5 How. U. S., 295 ; Parkinson a. Scoville, 19 Wend.,

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150 ; Witt a. Follett, 2 Ib., 457; Donnelly a. Corbett, 3 Seld., 500; Burrill a. Rice, 5 Gray, 539 ; Capers a. Johnson, Ib., note, 539; Scribner, a. Fisher, 2 Ib., 43.)

Donnelly a. Corbett (3 Seld.) simply decides what many other cases also decide, that a suit can be maintained in a State which did not grant the discharge,—i. e., that the local law of that State has no extra-territorial effect, and certainly does not require its enforcement. Thus they are void as impairing the obligation of contracts, wherein they assume to discharge the obligation of the debtor.

The local law of discharge tabes away the remedy m the State courts of the State which granted the discharge, but does not operate in actions brought out of the State, as against nonresidents.

The case of Baldwin a. Hale (Amer. Law Register, vol. 3, No. 8, new Series, June, 1864, p. 462) does not in any manner conflict with these views, and decides that “ a certificate of discharge cannot be pleaded in bar of an action brought by a citizen of another State in the courts of the United States, or of any other State than that where the discharge was obtained.”

H. In reply to the other objections :

Signature to affidavits are not necessary, no statute requires it. (Haff a. Spicer, 3 Cai., 190 ; Colem, & C., 495; Jackson a, Virgil, 3 Johns., 540 .)

Hathaway a. Scott (11 Paige), to the contrary, relates merely to matters of "practice in chancery, having nothing to do with statute affidavits.

The publication was sufficient. In re Underwood .( 3 Cow., 59 ), the publication was but' six weeks instead of ten, and the affidavit was of publication for six weeks only.'

Here the affidavit swears to ten weeks’ publication; and the date given afterwards, at most only introduces an ambiguity. The fact of ten weeks’ publication is conceded. Ho discharge was ever vacated on such a frivolous pretext.

Besides, this objection ought properly to be taken on certiorari.

Rusher a. Sherman ( 28 Barb., 416 —decided at general term, first district, opinion by Ingraham, J.) declares that none of these objections can be taken collaterally, but only on certiorari.

All the following points of plaintiff (except points IY. and

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V.) are palpably within the express decision of Rusher a. Sherman ( 28 Barb., 416 ), and cannot be availed of in this suit. (See also, 24 Barb., 649 ; 2 Kern., 575 ; 12 N. Y., 579 .)

HI. The specifications in the affidavits are fully up to the requirements of the act under which defendant’s discharge was granted. (Taylor a. Williams, 20 Johns., 21 ; In Matter of Hurst, 7 Wend., 239 ; McNair a. Gilbert, 3 Ib., 344.)

The preliminary objections made to the proceedings upon which the discharge is founded, if tenable at all, with the exception of the fourth, could be taken advantage of only by certiorari, and not in this collateral manner. As to this fourth objection, undoubtedly, in order to give the officer jurisdiction, it is necessary that the affidavits of the petitioning creditors should show the amount, nature, and consideration of the debt, and that the creditor has received nothing to become a petitioner.

The affidavits of the petitioning creditors in this case contain all these requisites ; the objection is entirely untenable.

The objection to the discharge itself is equally untenable; it recites all that is necessary to give the officer jurisdiction.

The only serious question, therefore, is whether creditors residing in another State at the time the contract was made, and still residing there, are entitled to recover in the courts of this State, when the defendant afterwards obtained a valid discharge from all his debts, under the act entitled “ Of Voluntary Assignments made Pursuant to the Application of an Insolvent and his Creditors.” Two of the promissory notes on which this action is founded were made in Philadelphia, the third was made in Buffalo in this State; but the three, by express terms, were payable at White’s Bank, Buffalo.

The decisions upon this subject appear to me unsettled, if not conflicting, although the language employed by the judge who delivered the opinion of the court in Donnelly a. Corbett (3 Seld., 500) is so general as to appear at first to be an analogous case; but it is in reality very different. The discharge in that case was obtained in South Carolina; the plaintiff was a resident of this State, and brought his action in the courts of this State.

The discharge, of course, could be no bar to an action in this

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State, brought by one of its residents. It could not be pretended that any such discharge could have an extra-territorial effect.

Parkinson a. Scoville ( 19 Wend., 150 ) is very similar to the case before us. The plaintiff, who was never a resident of this State, brought his action here. The contract was made, and was to be performed, in this State. The discharge was decided to be available in all cases where the contract was made within this State, or where the contract was to be performed within this State. Indeed, the act (§ 30) makes it expressly applicable to any contracts “ to be executed within this State.” Burrill a. Rice, 5 Gray, 539 ; Capers a. Johnson, Ib., note, 539 ; Scribner a. Fisher, 2 Ib., 43, are cases precisely.similar to this.

The notes were made payable in Massachusetts by a debtor there, though dated in another State; and the discharge was held to be a bar in Massachusetts.

Of course, when contracts are made Between citizens of the same State, they are made in reference to the existing laws of the State.

It is a well-established principle, also, that where contracts made in one country are to be performed in another, the law of the latter governs not only in regard to the construction, but in regard to the remedy when it is sought there. If the act in question merely affected the remedy, we would, therefore, have no difficulty in deciding in favor of the efficacy of the discharge in the case before us.

In form at least, it absolves the debtor from the performance of his contract. As far as this State is concerned, the act under which this discharge was granted is a bankrupt law, exonerating the debtor from all further liability in this State; but, as far as the residents of other States are concerned, does it do any thing more than affect the remedy ? When they come here and bring actions in our courts, they seek a remedy against a citizen of this State for the non-performance of a contract which he promised to perform within this State. But the insolvent act itself expressly says that the discharge shall apply, not only to contracts made within this State, but to those which are to be executed within it. It has no qualification, and makes no distinction between residents and non-residents ; and when non-residents think fit to enter into a contract to be per

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formed in this State by a resident of it, I can see no good reason, founded on comity or constitutional law, why the discharge should not be effectual, when the contract is sought to be enforced through the instrumentality of the courts of this State. ' In accordance with general principles of jurisprudence,. I can discover no reason “ why laws of this nature should not •be held valid within the territorial limits of the State by which they are passed, even when they act upon contracts made in another county or upon citizens of another country, although beyond the limits of the State; they have no force except such as may be given to them by comity.”

When the contract was to he executed within the State, "the reason is still stronger why the discharge should be recognized as an avoidable defence in all cases, when the redress is voluntarily sought in the courts of the State.

I am aware that it has been decided in the Supreme Court of the United States (Cook a. Moffatt, 5 How. U. S, 295) that the insolvent law of Maryland could not discharge one of its own citizens from a contract to be executed in Hew York, made with citizens of that State. The suit was brought in Maryland. The principle of the decision was, that the contract and the remedy should be governed by the law of the place where it was to be executed. So that I may say, with Savage, Ch. J., in Van Hook a. Whitlock ( 26 Wend., 54 ) : “I am not aware that it has been directly determined by any case in the Supreme Court of the United States, that the discharge would not be a bar against a citizen of another State, where the suit is brought in the court of the State in which it was granted, and upon a contract made therein, posterior to the law.”

I add, “ or to be executed therein,” posterior to the law.

The judgment should be affirmed, with costs.