Smith v. Gardner — 17 N.Y. Super. Ct. 54

Majority

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Dudley Smith v. Symmes Gardner, Survivor, &c.

Headnote

1. The makers of a promissory note, which, in terms, is payable to their own order, and is by them indorsed, thereby contract with whomsoever may be the legal indorsee when it becomes payable, to pay it to him.

2. Such a note, though made in and by a resident of Massachusetts, and delivered by the maker to a resident of the same State, can be collected of the maker by an indorsee of it residing in Hew Hampshire, notwithstanding the subsequent discharge of the maker by the insolvent laws of Massachusetts; such indorsee having taken it for value before its maturity, and not having been a party to such insolvent proceedings.

(Before Hoffman, Pierrepont and Moncrief, J. J.)

Heard, December 4th;

decided, December 31st, 1858.

This is a motion by the plaintiff for judgment on a verdict in Ms favor taken subject to the opinion of the Court. The case presenting only questions of law, they were ordered, at the trial, to be heard hr the first instance at the General Term. The action was tried before Mr. Justice Slosson and a jury, on the 23d of April, 1857. It was brought by the plaintiff (Dudley Smith), a resident of the State of New Hampshire, to recover of the defendant, Symmes Gardner, survivor, &c., the amount of a promissory

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note for $1,466.20, dated 13th September, 1851, made by the firm of Gardner & Bartlett, (of whom defendant is the survivor,) payable six months after date, to their own order, and by them indorsed.

The defendant claims the benefit of a discharge alleged to have been obtained by him under the insolvent laws of Massachusetts, on the 19th May, 1853, whereby he insists he was discharged from liability on the note.

The material facts, as proved at the trial, are as follows:

On or about 13th of September, 1851, the firm of Smith & Lou-gee, (composed of Frederick Smith, Jr., and Charles F. Lougee,) at Boston, in Massachusetts, where they were doing business, sold to Gardner & Bartlett, of the same place, merchandise, and received therefor the note in suit.

Smith & Lougee sold said note before its maturity, to Frederick Smith, Sr., (an uncle of Frederick Smith, Jr.,) who received it on account of a large debt due him by Smith & Lougee.

On or about 15th of October, 1851, the plaintiff (Dudley Smith), who, for twenty years, has resided, and still resides, in New Hampshire, at Gilford, in that State, purchased this note from Frederick Smith, Sr., and gave him therefor a note of Frederick Smith, Sr., for $814.46, dated 18th December, 1848, payable on demand, with interest, and a receipt to account to him for the balance of this note when collected, after deducting charges and expenses of collection; Frederick Smith, at the same time, guaranteeing the note.

The record of the proceedings in insolvency, the admission of which was objected to, as not being proved by sufficient or competent testimony, purported to show, that the'original warrant in the insolvency proceedings of Gardner and Bartlett was issued on the 5th of November, 1852, and that such proceedings were thereupon had; that on the 19th of May, 1853, the commissioner granted to Gardner and Bartlett a discharge, which is set forth in the case.

The discharge was granted under a statute of the State of Massachusetts, passed on the 23d of April, 1838, and the statutes or “ acts in addition thereto,” and in terms declares “that by force of the acts aforesaid, the said Symmes Gardner is absolutely and

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wholly discharged from all his joint and separate debts which have been or shall be proved against his joint or separate estate assigned as aforesaid, and from all his joint and separate debts which are provable under the said acts, and which are founded on any contract made by him within this Commonwealth or to be performed within the same, and made since the passing .of the first named act aforesaid, and from all debts which are provable as aforesaid, and which are founded on any contract made by him since the passing of said first named act, and due to any persons who were resident within this Commonwealth on the 6th day of November last, being the day of the first publication of the notice of the warrant issued for the seizure of the estate of the said Symmes Gardner, and from all demands against him for or on account of any goods or chattels wrongfully obtained, taken or withheld by him according to the form of the act aforesaid.”

The exceptions taken to the sufficiency and competency of the evidence given to prove the proceedings in insolvency, are not stated, as the Court was of opinion that the discharge, though proved by unexceptionable evidence, was not a bar to the present action.

The Judge directed a verdict in favor of the plaintiff for $1,915.10, subject to the opinion of the Court, and directed the questions of law arising in the case, to be first heard at the General Term. A verdict was given accordingly, and the plaintiff now moves for judgment on the verdict.

B. W. Bonney & Alfred Roe, for the plaintiff.

.Even if it be admitted that the discharge of the defendant was duly granted and duly proved at the trial, the plaintiff is still entitled to recover: He was never a resident of the State of Massachusetts ; and, being a non-resident creditor, his claim is not affected by this discharge. (Laws of Mass., 1838, ch. 163, § 7; Baker v. Wheaton, 5 Mass. R., 509 ; Watson v. Bourne, 10 id., 337; Braynard v. Marshall, 8 Pick. R., 194; Betts v. Bagley, 12, id., 572; Agnew v. Platt, 15 id., 417; Savoye v. Marsh, 10 Met. R., 594; Fiske v. Foster, 10 id., 597 ; Ilsley v. Merriam, 7 Cush. R., 242; Towne v. Smith, 1 Woodb. and Minot, 115; Donnelly v. Corbett, 3 Seld., 500; Gardner v. Oliver Lee's Bank,

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11 Barb., 558 .) The plaintiff is, therefore-, entitled to judgment for the amount due on the note, as stated in the case, with interest from the time of the trial, and costs.

John E. Parsons for the defendant.

1. All contracts not expressly providing that they are to be performed elsewhere, are deemed to be contracts of the place where they are made.

This note, for example, made in Boston, and payable generally, was payable in Boston.

Its obligation, effect, and construction, therefore, are governed, and are to be determined by the Laws of the State of Massachusetts, where it was made and was to be paid. (Story’s Conf. of Laws, §§ 242, 261, 263, 266, 278a, 280, 314; 2 Kent’s Com., 459; Note to Andrews v. Herriot, 4 Cowen, 511, stating all the authorities. Vide all the cases cited below.)

2. It follows as a part of the same rule, that a discharge which is valid by the laws of the place where the note is made, and is to be paid, is valid everywhere. (Story’s Conf. of Laws, §§ 331, 333, 335, 340, 346; 2 Kent’s Com., 459; Potter v. Brown, 5 East. R., 124; Blanchard v. Russell, 13 Mass. R., 4 .)

3. That this is so where the parties to the contract are all subject to the jurisdiction of the same State, and where the law is made by an authority common to the debtor and creditor, is abundantly demonstrated by the following authorities. ( Smith v. Smith, 2 Johns. R., 240; Mather v. Bush, 16 Johns., 233 ; Van Hook v. Whitlock, 26 Wend., 53 ; Baker v. Wheaton, 5 Mass., 509 .)

4. That the residence of the parties to the contract does not vary the effect of the discharge, but that a discharge in proceedings conformed to the laws of the State where the contract was made, and is to' be performed, (the contract having been originally made between citizens of that State,) absolutely discharges all liability upon the contract, is now established to be the true rule in respect to the effect of a discharge in insolvency. Parties contract with reference to the law of the place where the contract is made; the creditor looks to the remedies which that law provides, and every assignee of a contract takes with notice of every defense to it, given as matter of course by the laws of the

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place where the contract was made. The true rule is that the obligation of a contract may be discharged by the same law which gave it force. (Story’s Conf. of Laws, § 340; 2 Kent’s Com.; Potter v. Brown, 5 East. R. 123, 130; Hicks v. Brown, 12 Johns., 142 ; Sherrill v. Hopkins, 1 Cowen, 103, 107; Blanchard v. Russell, 13 Mass. R., 1 ; Reviewing all the earlier cases; Ory v. Winter, 16 Martin’s (Lou.) R., 277; Stevens v. Morris, 10 N. H., 466 ; Hall v. Boardman, 14 N. H., 38 ; Brigham v. Henderson, 1 Cushing, 430.) He also cited, and commented on, (McMillan v. McNeill, 4 Wheat., 209 ; Sturges v. Crowningshield, id., 122; Cook v. Moffat, 5 How., 295 ; Ogden v. Saunders, 12 Wheat., 213 ; Donnelly v. Corbett, 3 Seld., 500,) and insisted that the discharge terminated all liability of the defendant, as maker of the note in suit.

The questions for consideration are: First, whether the defendant has shown a discharge under the insolvent laws of Massachusetts, by competent evidence ?

And second, whether such discharge, if proved, is a bar to this action ?

We have very grave doubts whether any discharge has been shown by legal proofs. But conceding the discharge to have been established, as claimed by the defendant, we think such discharge no bar to this action. The note was negotiable; and payable at no particular place. It was drawn to the makers’ order; by them indorsed in blank and put into the market, in payment for goods. It passed to the plaintiff, (a resident of Hew Hampshire,) before due, in the regular course of business, and for value. It was not a contract to be performed at any particular place. It was a contract to pay the holder, wherever such holder might reside, at its maturity. If the maker, after default in payment, had been found in Hew Hampshire, he could have been sued there. He was found in Hew York and is sued here. (Braynard v. Marshall, 8 Pick., 194 ; Savage v. Marsh, 10 Met., 594 .)

He pleads a discharge from his debts under the insolvent laws of Massachusetts, to which discharge, or to any proceedings therewith connected, the plaintiff has never been a party. On

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the principle of comity between the States, our courts are asked to recognize this discharge as a good plea in bar to the action. I think it quite clear, from several decided cases, that if this suit were before the courts of Massachusetts, this discharge would not avail the defendant. (Dinsmore v. Bradley, 5 Gray, 487 ; Houghton v. Maynard, 5 id., 552 ; Savage v. Marsh, 10 Met., 594 ; Braynard v. Marshall, 8 Pick., 194 .)

It would then be something more than comity, for our courts to give effect to a Massachusetts discharge, which the courts of that State would not.

Since the case of Donnelly v. Corbett, in which Judge Gardiner delivered the opinion of the Court of Appeals, (3 Seld., 500,) the question as to the effect of a discharge under an insolvent law of a sister State, has been considered settled in" New York. Corbett, a resident of South Carolina, purchased goods of Donnelly, a merchant of New'York, and gave his note for the price, payable eight months after date, at the Bank of South Carolina, in Charleston. The note was dishonored, and Donnelly recovered judgment in the State of South Carolina; a ca. sa. was issued upon the judgment, and Corbett was imprisoned. Subsequently he obtained a discharge from imprisonment, and from his debts, under the insolvent laws of South Carolina, which were passed in 1759, and perpetuated in 1783. Some two years after the discharge, Donnelly commenced suit upon the judgment, by attachment, issued out of the Supreme Court of this State. Corbett pleaded his discharge in bar. The Court held that the discharge was no bar to this action, although the place of the performance of the contract was in South Carolina, and although the law of that State, under which the discharge was granted, had been in force more than fifty years before the debt was contracted.

Judgment must be entered for the plaintiff, with costs.

Judgment accordingly.^[1]

1 See Robinson’s Practice, Title “Effect of discharge under Insolvent or Bankrupt Law,” vol. 1, p. 89.