King v. Cross

after making the foregoing statement, delivered the opinion of the court.

It is first asserted that the judgment of the Supreme Court of the State of Rhode Island was not due process of law, and was in conflict with the Fourteenth Amendment to the Constitution of the United States, because it recognized the right, in a suit brought in Rhode Island against a non-resident defendant, to garnishee the resident debtor of such defendant. It is contended that a judgment rendered by a court against a defendant who is neither within its jurisdiction, by his person or his property, is wholly void, and any attempt to enforce such judgment amounts to a denial of due process of law. The Rhode Island court, it- is claimed, had no jurisdiction over the defendant firm because it was a resident of Massachusetts, and

We need not enter into a review of the contentions thus presented, since they were all considered by this court at its last term and held to be untenable. Chicago, Rock Island &c. Railway v. Sturm, 174 U. S. 710 .

Conceding, however, as a general rule, that jurisdiction as to a non-resident can be acquired by trustee or garnishment process, against a resident debtor of a non-resident defendant, it is urged that the facts in this case cause it to be an exception to this general principle. The proceedings in involuntary insolvency were begun in Massachusetts before the commencement of the suit in Rhode Island. The legal effect of the insolvency proceedings, it is asserted, was to'vest all . the credits of the insolvent in the court of insolvency of Massa-' chusetts, and therefore there could legally be no debt due to the non-resident insolvent in Rhode Island, because that debt by operation of the Massachusetts insolvent proceedings had ceased to be a debt due the firm, and had become a debt controlled by the Massachusetts insolvent court. The debt in Rhode Island originally due to the firm in Massachusetts can not, it is claimed,, be treated as continuing after the insolvency

The contention thus relied upon, it is argued, is not contrary to the settled rule that insolvency proceedings of the several States do not have extra-territorial operation; and it is also asserted that the claim hére relied upon is not contrary to the decision of this court in Security Trust Co. v. Dodd, Mead & Co., 173 U. S. 624 . In that case it was held that a'general assignment for the benefit of creditors, made by an insolvent under the, insolvent laws of a State, did not .operate to exempt tangible property, situated at the time of the insolvent assignment in another State, from seizure in the State where the tangible property was actually situated. This decision, it is claimed, was but an exemplification of the general rule limiting insolvency proceedings of one State to the jurisdiction of that State and' depriving them of extra-territorial operation. A mere credit, however, it is asserted, conceding it to be subject to attachment or trustee process at the residence of the debtor, is governed by a different rule from that which controls tangible property. Such credit, the claim is, being at the situs of the domicil of the creditor, passes to the custody of the insolvent court when the insolvent law so provides, and therefore comes under the dominion and control of the insolvent court having jurisdiction of the person of the creditor. As by operation of law the credit from the. date of insolvency proceedings at the residénce of the creditor ceases to be under his dominion, but, on the contrary, is in gremio legis, the power to levy by garnishee or trustee process on the same at the residence of the debtor is destroyed. But the predicate upon which this contention rests is that the Massachusetts insolvent proceedings operated to deprive the insolvent of all control over his assets prior to or at the time when the suit in Rhode Island was commenced and the trustee process there issued. If this premise is unsound the whole contention is without merit, and therefore the legal proposition deduced from it need not be examined.

“ But we are nevertheless of opinion, that this consequence of the act is limited to cases instituted under the insolvent law subsequent to the period when the bankrupt law went into operation, and that it cannot supersede or suspend proceedings rightfully commenced under the insolvent act, prior to the time of its going into operation. The counsel for the

petitioner admits that it could not, if the property of the insolvent had been actually assigned prior to the first of February, when the bankrupt law went into operation; but he contends, that as the assignment in this case was not actually made until the 7th of February, the whole proceedings were suspended or superseded. Upon consideration, we are of opinion that the proceedings under the commission are not to be thus separated, but that they are to be treated as the parts of one whole; that the assignment not only relates back to the first publication of the notice, and vests all the property of the debtor, both real and personal, in the assignee, but that the debtor is divested of his property, before such assignment, by virtue of the warrant to the messenger and the taking of the property of the debtor into custody, by force of which a qualified property in the estate vests in the messenger, insomuch that no act of the debtor, after the due service and publication of the warrant, can be lawfully done to make any transfer of his property, or to affect the rights of any of his creditors: That the property is, by the act of publication, placed in the custody of the law, in the person of the messenger;' and that the judge or master alone can dispose of the same, by the appointment of an assignee to receive it, or by dissolving the process.”

In Clarke v, Minot, (1842) 4 Met. 346 , in the course of the opinion, the court, in speaking through Chief Justice Shaw, of the time when under the insolvency laws the insolvent debtor was divested of control over his assets, said:

“The question then recurs, to what time does this assignment relate back % The statute, sec. 5, thus states it: ‘ Which assignment shall vest in the assignee all the property of the debtor, both real and personal, which he could by any way or means have lawfully sold, assigned or conveyed, or which might have been taken on execution on any judgment against him, at the time of the first publication of the notice,of issuing the above mentioned warrant.’ This leads directly to the inquiry, what is the time of the first publication thus referred to, and for this we go to the second section. The first section having provided for the issuing of a warrant to a messenger

“ It seems to have been the obvious policy of the statute, to fix some precise point of time, at which the whole property and effects of the debtor shall be deemed to have passed from him, and vested in the assignees. The legislature appear to have intended that a time should be fixed, before which all transfers and conveyances of property by the debtor, made in good faith, and not intended to give preferences, shall be valid; so of all payments in the ordinary course of business, and transfers of property, made without the concurrence of the owner, as by seizure or levy on execution.

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“ We are now seeking to ascertain and fix the point of time intended by the statute as the time at which all the property of the debtor is changed and his power over it suspended; that point, in other words, prior to which all payments, made by him or to him, all conveyances (not fraudulent) made by him, all seizures, levies and extents of execution upon his property, shall be held valid, and all those, made after, void. It was competent for the legislature to have fixed any other time, as, for instance, the application to the judge, or the act of the judge in issuing the warrant, or the delivery of the warrant to the messenger. Either of these would have afforded security to the creditors, but might have unjustly interfered with the rights of those who had been dealing with the debtor, in good faith and without notice. The time of first publication was fixed, obviously because that act would, in most cases, afford actual notice to those immediately interested ; and it was intended as constructive notice to all. But no such effect can be attributed to personal notice to one individual.”

In Butler v. Mullen, (1868) 100 Mass. 453 , the rulings above referred to were reiterated. The syllabus of the case is as follows:

“ One who has been charged as the trustee of H., by. a judgment in the trustee process, and has paid to the judgment creditor, on execution, the sum with which he has been so charged, will not • be protected against H.’s assignee in insolvency, if the first publication of the warrant in insolvency against H. was before the rendition of the judgment in the trustee process, though he had no actual notice of H.’s insolvency until after payment.”

In delivering the opinion of the cpurt, Hoar, J., at page 454, said (italics ours):

“ The payment by the defendants upon the judgment against them as trustees was a valid payment as against Holbrook, his executors and administrators. (Gen. Sts., c. 142, sec. 37.) But it had no validity against a party whose title intervened before the judgment against them was rendered, and whose, title was superior to the attachment by which the fund had been. held. Not only does the assignment, when made, relate back to the first publication of the notice in insolvency, and vest all the property of the debtor in the assignee, but before the assignment the debtor is so far divested of his property, by virtue of the issuing of the warrant, that from the first publication no transfer or conveyance of it can be made which will have any validity against the assignee. Gen. Sts., c. 118, sec. 44; Clarke v. Minot, 4 Met. 346 ; Judd v. Ives, Ib. 401; Edwards v. Sumner, 4 Cush. 393 ; Gallup v. Robinson, 11 Gray, 20 .”

It being thus made patent that there is no merit in the contention that.the operation of the Massachusetts insolvent law was to divest the insolvent .of all control over his assets from the mere date of the filing of petition in insolvency, but, on the contrary, that the Massachusetts law only produced such effect from the time of the first publication of the notice' of issuing the warrant, it follows, as the levy'of the trustee process in Rhode Island was prior to the first publication of the warrant, that the whole theory upon which the argument in this case proceeds is fallacious. It is therefore unnecessary to express any opinion on the legal proposition urged upon our attention on an erroneous conception of the Massachusetts

The foregoing considerations would suffice to dispose of the case, but for the fact that it is claimed that as by the Massachusetts statute an assignment by the judge of the insolvent court dissolved attachments made within four months from the first publication aforesaid, therefore, although the trustee process in' Rhode Island was issued at a time when the debtor was not divested of control of the claim, nevertheless, by the operation of the Massachusetts law upon the Rhode Island levy, the latter should be dissolved. This contention, however, but asserts that the Massachusetts insolvent statute had, in this particular, an extra-territorial operation, and thereby controlled proceedings validly instituted in Rhode Island. This, however, is in conflict with the elementary doctrine that the insolvent statutes of the respective States do not, to the extent claimed, operate extra-territorially. Security Trust Co. v. Dodd, Mead & Co., supra, and authorities there cited. Indeed, the fact that the provision of the Massachusetts statutes retroactively vacating attachments does not control attachments levied in other States at a time when under the Massachusetts insolvent law the insolvent had not by operation of law been deprived of the dominion and control over his credits, is recognized in the courts of Massachusetts. Thus, in

“ As the attachments were made prior to the time when the assignment in insolvency took effect, and, having been made in other States, were not dissolved by the proceedings in insolvency in this Commonwealth, and were valid by the laws of the States respectively in which they were'made, they must prevail over the assignment, unless the statutes of the Commonwealth make a title so acquired by a citizen of the Commonwealth void or voidable at the election of the assignees in insolvency. * * * «• *

“ In the case at bar, the title to the credits attached, which passed to the assignees by virtue of the proceedings in insolvency, whether it be regarded as a legal or an equitable title, was a title subject to the attachments. As neither the common law nor our statutes give any right of action on the facts agreed in this case, the assignees cannot maintain their suit if the attachments were properly made.”

See also Proctor v. National Bank of the Republic, 152 Mass. 223 .

Affirmed.