Ogden v. Saunders.

itself thus: "When, therefore, the defendant was discharged from that contract, lege loci, the promisee was bound by that discharge, as he was a party to the laws of that state, and assenting to their operation. But if, when the contract was made, the promisee had not been a citizen of Rhode Island, he would not have been bound by the laws of it or any other state, and holding this note at the time of the discharge, he might afterwards maintain an action upon it, in the courts of this state." And again (page 311), "if the note had been transferred to the plaintiff, a citizen of this state, whilst it remained due and undischarged by the insolvent laws of Rhode Island, those laws could not affect his rights in the courts of law in this state, because he is not bound by them." This, it will be observed, regards a contract acknowledged to be of Rhode Island origin.

There is another case reported in the decisions of the same state (10 Mass. 337), which carries this doctrine still further, and, I apprehend, to a length which cannot be maintained. This was the case of Watson v. Bourne, in which Watson, a citizen of Massachusetts, had sued Bourne in a state court, and obtained judgment. Bourne was discharged under the insolvent laws of that state, and being afterwards found in Massachusetts, was arrested on an action of debt upon the judgment. He pleads the discharge; plaintiff replies, that he, plaintiff, was a citizen of Massachusetts, and therefore, *364] not precluded by the discharge. The origin of the *debt does not appear from the report, and the argument turned wholly on the question, whether, by entering judgment in the court of the state, he had not subjected his rights to the state laws pro tanto. The court overruled the plea, and recognised the doctrine in Baker v. Wheaton, by declaring," that a discharge of that nature can only operate where the law is made by an authority common to the creditor and debtor in all respects, where both are citizens or subjects." I have little doubt, that the court was wrong in deny-ng the effect of the discharge, as against judgments rendered in the state courts, when the party goes voluntarily and unnecessarily into those courts; but the decision shows, in other respects, how decidedly the British doctrine is repelled in the courts of that state.

The British doctrine is also unequivocally repelled, in a very learned opinion delivered by Mr. Justice NOTT, in the court of the last resort in South Carolina, and in which the whole court, consisting of the commonlaw judges of the state, concurred. This was in the case of the assignees of Popham v. Chapman et al., in which the rights of the attaching-creditor were maintained against those of the assignees of the bankrupt (1 Mill's Const. Rep. 253); and that the same rule was recognised at an early day in the courts of Pennsylvania, appears from the leading case of Phillips v. Hunter, 2 H. Bl. 402, in which a British creditor, who had recovered of a debtor of the bankrupt, in Pennsylvania, was compelled by the British courts to refund to the assignees in England, as for money had and received to their use.

I think it, then, fully established, that in the United States, a creditor of the foreign bankrupt, may attach the debt due the foreign bankrupt, and apply the money to the satisfaction of his peculiar debt, to the prejudice of the rights of the assignees or other creditors. I do not here speak of assignees, or rights created, under the bankrupt's own deed; those stand on a different ground, and do not affect this question. I confine myself to assignments or transfers, 1esting on the operation of the laws of the country,

Ogden v. Saunders.

independent of the bankrupt's deed; to the *rights and liabilities of debtor, creditor, bankrupt and assignees, as created by law.

What is the actual bearing of this right to attach, so generally recog nised by our decisions? It imports a general abandonment of the British principles; for, according to their laws, the assignee alone has the power to release the debtor. But the right to attach necessarily implies the right to release the debtor, and that right is here asserted, under the laws of a state which is not the state of the contract. So also, the creditor of the bankrupt is, by the laws of his country, entitled to no more than a ratable participation in the bankrupt's effec s. But the right to attach imports a right to exclusive satisfaction, if the effects so attached should prove adequate to make satisfaction. The right to attach also imports the right to sue the bankrupt; and who would impute to the bankrupt law of another country, the power to restrain the citizens of these states in the exercise of their right to go into the tribunals of their own country for the recovery of debts, wherever they may have originated? Yet, universally, after the law takes the bankrupt into its own hands, his creditors are prohibited from suing.

Thus much for the law of this case, in an international view. I will consider it with reference to the provisions of the constitution. I have said above, that I had no doubt, the erection of a distinct tribunal for the resort of citizens of other states, was introduced ex industria, into the constitution, to prevent, among other evils, the assertion of a power over the rights of the citizens of other states, upon the metaphysical ideas of the British courts on the subject of jurisdiction over contracts. And there was good reason for it; for, upon that principle, it is, that a power is asserted over the rights of creditors which involves a mere mockery of justice. Thus, in the case of Burrows v. Jemino (reported in 2 Strange 733, and better reported in Moseley, and some other books), the creditor, residing in England, was cited, probably, by a placard on a door-post in Leghorn, to appear there to answer to his debtor; and his debt passed upon by the [*366 court, perhaps, without his having ever heard of the institution of legal process to destroy it. The Scotch, if I remember correctly, attach the summons on the flag-staff, or in the market-place, at the shore of Leith ; and the civil law process by proclamation, or viis et modis, is not much better, as the means of subjecting the rights of foreign creditors to their tribunals. All this mockery of justice, and the jealousies, recriminations, and, perhaps, retaliations, which might grow out of it, are avoided, if the power of the states over contracts, after they become the subject exclusively of judicial cognisance, is limited to their own citizens. And it does appear to me almost incontrovertible, that the states cannot proceed one step farther, without exercising a power incompatible with the acknowledged powers of other states, or of the United States, and with the rights of the citizens. of other states.

Every bankrupt or insolvent system in the world, must partake of the character of a judicial investigation. Parties whose rights are to be affected, are entitled to a hearing. Hence, every system, in common with the particular system now before us, professes to summon the creditors before some tribunal, to show cause against granting a discharge to the bankrupt. But on what principle can a citizen of another state be forced into the courts of a state for this investigatior? The judgment to be passed is to prostrate

Ogden. Saunders.

his rights; and on the subject of these rights, the constitt tion exempts him from the jurisdiction of the state tribunals, without regard to the place where the contract may originate. In the only tribunal to which he owes allegiance, the state insolvent or bankrupt laws cannot be carried into effect; they have a law of their own on the subject ;(a) and a certificate of discharge under any other law would not be acknowledged as valid even in the courts of the state in which the court of the United States that grants it, is held. Where is the reciprocity? Where the reason upon which the state courts *can thus exercise a power over the suitors of that court, *367] when that court possesses no such power over the suitors of the state courts? In fact, the constitution takes away the only ground upon which this eminent dominion over particular contracts can be claimed, which is that of sovereignty. For the constitutional suitors in the courts of the United States are not only exempted from the necessity of resorting to the state tribunals, but actually cannot be forced into them. If, then, the law of the English courts had ever been practically adopted in this country in the state tribunals, the constitution has produced such a radical modification of state power over even their own contracts, in the hands of individuals not. subject to their jurisdiction, as to furnish ground for excepting the rights of such individuals from the power which the states unquestionably possess over their own contracts and their own citizens.

Follow out the contrary doctrine in its consequences, and see the absurdity it will produce. The constitution has constituted courts professedly independent of state power in their judicial course; and yet the judgments of those courts are to be vacated, and their prisoners set at large, under the power of the state courts, or of the state laws, without the possibility of protecting themselves from its exercise. I cannot acquiesce in an incompatibility so obvious. No one has ever imagined, that a prisoner, in confinement under process from the courts of the United States, could avail himself of the insolvent laws of the state in which the court sits. And the reason is, that those laws are municipal and peculiar, and appertaining exclusively to the exercise of state power in that sphere in which it is sovereign, that is, between its own citizens, between suitors, subjected to state power exclusively, in their controversies between themselves.

In the courts of the United States, no higher power is asserted than that of discharging the individual in confinement under its own process. This affects not to interfere with the rights of creditors in the state courts, against the same individual. Perfect reciprocity would seem to indicate, *368] *that no greater power should be exercised under state authority over the rights of suitors who belong to the United States jurisdiction. Even although the principle asserted in the British courts, of supreme and exclusive power over their own contracts, had obtained in the courts of the United States, I must think that power has undergone a radical modification by the judicial powers granted to the United States. I, therefore, consider the discharge under a state law, as incompetent to discharge a debt due a citizen of another state; and, it follows, that the plea of a discharge here set up, is insufficient to bar the rights of the plaintiff.

It becomes necessary, therefore, to consider the other errors assigned in

(a) Act of congress of January 6th, 1800, ch. 4. (2 U. S. Stat. 4.)

Ogden v. Saunders.

behalf of the defendant; and first, as to the plea of the act of limitations. The statute pleaded here is not the act of Louisiana, but that of New York; and the question is not raised by the facts or averments, whether he could avail himself of that law, if the full time had run out, before his departure from New York, as was supposed in argument. The plea is obviously founded on the idea, that the statute of the state of the contract, was generally pleadable in any other state, a doctrine that will not bear argument.

The remaining error assigned has regard to the sum for which the judgment is entered, it being for a greater amount than the nominal amount of the bills on exchange on which the suit was brought, and which are found by the verdict. There has been a defect of explanation on this subject; but, from the best information afforded us, we consider the amount for which judgment is entered, as made up of principal, interest and damages, and the latter as being legally incident to the finding of the bills of exchange, and their non-payment, and assessed by the court under a local practice consonant with that by which the amount of written contracts is determined, by reference to the prothonotary, in many other of our courts. We, therefore, see no error in it. The judgment below will, therefore, be affirmed.

And the purport of this adjudication, as I understand it, is, that as between citizens of the same state, a discharge of a bankrupt by the laws of that state, is valid as it affects posterior *cont: acts; that as against [*369 creditors, citizens of other states, it is invalid as to all contracts. The propositions which I have endeavored to maintain in the opinion which I have delivered are these:

1st. That the power given to the United States to pass bankrupt laws is not exclusive.

2d. That the fair and ordinary exercise of that power by the states does not necessarily involve a violation of the obligation of contracts, multo fortiori, of posterior contracts.

3d. But when, in the exercise of that power, the states pass beyond their own limits, and the rights of their own citizens, and act upon the rights of citizens of other states, there arises a conflict of sovereign power, and a collision with the judicial powers granted to the United States, which renders the exercise of such a power incompatible with the rights of other states, and with the constitution of the United States.

WASHINGTON, THOMPSON and TRIMBLE, Justices, dissented. MARSHALL, Ch. J., and DUVALL and STORY, Justices, assented to the judgment, which was entered for the defendant in error.

Judgment affirmed. (a)

(a) In the case of Shaw v. Robbins, the judgment below was reversed. This was an action on several bills of exchange, drawn by the plaintiff on the defendant, payable to plaintiff's order, and by the defendant duly accepted. At the time of the transaction, the plaintiff was a citizen of Massachusetts, resident in that state, and the defendant, a citizen of New York, and there resident. The action was brought in a state court, in Ohio, and the defendant relied on a discharge, obtained in New York, under the provisions of the insolvent laws of that state. The highest court of law in Ohio gave judgment for the defendant; and the cause was brought before this court by a writ of error.

JOHNSON, Justice,-This is a contract between a citizen of New York and a citizen

Mason v. Haile.

of Massachusetts. It only differs from Ogden v. Saunders in this particular, that the action was brought in a state court; not the court of New York, but the court of another state. We think the decision in the case of Ogden v. Saunders applies to this, and must govern its decision. The judgment below, therefore, must be reversed, and the cause remand for such further proceedings as the law may require.

*370]

*MASON V. HAILE.

Obligation of contracts.-Remedies.

The states have a right to regulate or abolish imprisonment for debt, as a part of the remedy for enforcing the performance of contracts.

Where the condition of a bond for the jail-limits, in Rhode Island, required the party to remain a true prisoner, in the custody of the keeper of the prison, and within the limits of the prison, "until he shall be lawfully discharged, without committing any manner of escape or escapes during the time of restraint, then this obligation to be void, or else to remain in full force and virtue:" Held, that a discharge, under the insolvent laws of the state, obtained from the proper court, in pursuance of a resolution of the legislature, and discharging the party from all his debts, &c., "and from all imprisonment, arrest and restraint of his person therefor "—was a lawful discharge, and that his going at large under it, was no breach of the condition of the bond.

CERTIFICATE of Division from the Circuit Court of Rhode Island.

This was an action of debt, brought in the circuit court of Rhode Island, upon two several bonds, given by the defendant, Haile, to the plaintiff, Mason, and one Bates, whom the plaintiff survived, one of which bonds was executed on the 14th, and the other on the 29th of March 1814. The condition in both bonds was the same, except as to dates and sums, and was as follows:

"The condition of the above obligation is such, that if the above-bounden Nathan Haile, now a prisoner in the state's jail, in Providence, within the county of Providence, at the suit of Mason and Bates, do and shall, from henceforth, continue to be a true prisoner, in the custody, guard and safekeeping of Andrew Waterman, keeper of said prison, and in the custody, guard and safe-keeping of his deputy, officers and servants, or some one of them, within the limits of said prison, until he shall be lawfully discharged, without committing any manner of escape or escapes, during the time of restraint, then this obligation to be void, or else to remain in full force and virtue."

*To the declaration upon these bonds, the defendant pleaded

*371] several pleas, the substance of which was, that in June 1814, after

giving the bonds, the defendant presented a petition to the legislature of Rhode Island, praying for relief, and the benefit of an act passed in June 1756, entitled "an act for the relief of insolvent debtors," and that, in the meantime, all proceedings against him for debt might be stayed, and he be liberated from jail, on giving bonds to return to jail, in case his petition shall not be granted. Upon this petition, the legislature, in February 1815, passed the following resolution:

"On the petition of Nathan Haile, praying, for the reasons therein stated, that the benefit of an act, entitled, 'an act for the relief of insolvent debtors,' passed in the year 1756, be extended to him, voted, that said petition be continued till the next session of this assembly; and that, in the meantime, all proceedings against him, the said Haile, on account of his debts, be