court, to inquire into the liability or indebtedness of the garnishee; and the liability of the real defendant to the plaintiff on the alleged cause of action may be adjudicated before judgment as to the garnishee, and if judgment goes in favor of the plaintiff, the amount realized or reached by the garnishee process is applied thereon, or so much of it as will satisfy the principal liability and costs;1 but if nothing be found against the garnishee, or in his hands, jurisdiction is at an end, and the whole proceeding terminates.

1 Keep v. Sanderson, 12 Wis. 352

CHAPTER XIII.

INTER STATE INSOLVENT DISCHARGE BY STATE COURT.

I. THE COURT MUST HAVE JURISDICTION OF THE CREDITOR'S PERSON. II. DISTRIBUTION OF INSOLVENT ASSETS.

I. THE COURT MUST HAVE JURISDICTION OF THE CREDITOR'S PERSON.

In proceedings of a debtor to obtain a discharge under a State insolvent law, it is the citizenship of the parties that governs and enables the court to have jurisdiction, and not the place where the contract is payable, or where it is to be performed; therefore, a discharge in such a proceeding has no force against a creditor who is a citizen and resident of a different State at the time the proceeding is had, and who has not appeared therein, or in some manner made himself a party thereto, or consented to the discharge. Such is now the settled doctrine of the courts.1 Jurisdiction of the person of the creditor is necessary, by actual

Hawley v. Hunt, 27 Iowa, 303, 307, 308; Baldwin v. Hale, 1 Wall. 223; Ogden v. Saunders, 12 Wheat. 213; Boyle v. Zacharie, 6 Pet. 348; Suydam v. Broadnax, 14 Pet. 75; Cook v. Moffat, 5 How. 295, 310; Donnelly v. Corbett, 7 N. Y. 500; Felch v. Bugbee, 48 Maine, 9; Poe v. Duck, 5 Md. 1; Beers v. Rhea, 5 Tex. 349; Anderson v. Wheeler, 25 Conn. 603; Pugh v. Bussel, 2 Blackf. 394; Crow v. Coons, 27 Mo. 512; Beer v. Hooper, 32 Miss. 246; Woodhull v. Wagner, Bald. C. C. 296, 300; Springer v. Foster, 2 Story C. C. 382; Kelley v. Drury, 9 Allen, 27. Anything to the contrary hereof, going to make an exception as to cases where the contract is performable in the same State of the insolv.

ency tribunal, as held in Scribner . Fisher, 2 Gray, 43, is to be disregarded, as that case was overruled in this respect by the United States Supreme Court in Baldwin v. Hale, supra; and so, again, by the Supreme Court of Massachusetts, in Kelley v. Drury, supra; Collins v. Rodolph, 3 G. Greene, 299; McKim v. Willis, 1 Allen, 512; Gilman v. Lockwood, 4 Wall. 409; Riley v. Lamar, 2 Cr. 344; McMillan v. McNeill, 4 Wheat. 209; Woodbridge v. Allen, 12 Met. 470; Proctor v. Moore, 1 Mass. 198; Smith v. Smith, 2 John. 235; Watson v. Bourne, 10 Mass. 337; Soule v. Chase, 39 N. Y. 342. See, also, note to Baldwin . Hale, 3 Am. Law Reg. (N. s.) 462; Bishop on Insolvent Debtors, 64.

notice or service, as in personal actions, and can no more be given in one than in the other of those proceedings, where the party to be affected resides out of, and is not found within the State, and does not in some manner submit himself to the jurisdiction.1 In Ogden v. Saunders, the Supreme Court of the United States, JOHNSON, Justice, say: "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 contracts; as against citizens of other States it is invalid as to all contracts." And in Cook v. Moffat, the same court say: "A certificate of discharge under an insolvent law will not bar an action brought by a citizen of another State on a contract made with him;" and that State insolvent laws "can have no effect on contracts made before their enactment, or beyond their jurisdiction." Nor can such laws and proceedings act upon the debts in the nature of proceeding in rem, by reason of the debtor being within the jurisdiction; for it is a settled principle of the law, that a debt attends the person of the creditor, and not of the debtor, no matter where the debtor may be, or in what State the debt originated, or is made payable. So that if the debt attends the creditor, and the creditor is a non-resident of the State, it cannot at the same time be within the jurisdiction of the court where the proceedings are had, so as to be acted on in rem. The same doctrine is asserted in Felch v. Bugbee, infra. It is the citizenship, and not the locality or jurisdiction, which is designated as the place of payment, that the legal rights of the parties rest on, as to a discharge under the insolvent laws. In the case here cited, the notes were made in Boston, Massachusetts, payable to the maker's own order, and were assigned by him to citizens of Massachusetts, who, at Boston, negotiated and sold them to the plaintiff before maturity, and before the proceedings in insolvency were instituted. One of the notes was payable in Boston. The other did. not name any place of payment. The court held, or reasserted

1 Hawley v. Hunt, 27 Iowa, 303, 307, 308; D'Arcy v. Ketchum, 11 How. 165, and cases cited above.

212 Wheat. 233. And although there was a divided court in this case, yet by subsequent concurrence of all the judges in a parallel case, the doc

trine of the case of Ogden v. Saunders is no longer open to controversy. Boyle v. Zacharie, 6 Pet. 348, and Same v. Same, 6 Pet. 635.

3 5 How. 309.

4 Hawley v. Hunt, 27 Iowa, 303, 307.

the principle of law, that as between its own citizens, a State had power to grant a full discharge;1 and that a subsequent change of domicile or citizenship into another State, made after entering into the contract or creating the liability, did not in law affect the validity of a discharge obtained before such change or removal. But that where the liability is a negotiable one, payable generally, and is between citizens of the State granting the discharge, and endorsed to a citizen of another State before maturity, and before the inception of proceedings in insolvency, the endorsement is a new contract, and the discharge will not bar an action thereon. And such is the rule of law in both the State and United States courts. And so of a note made payable in one State wherein it is executed and the maker resides, but if it is made payable to a citizen or resident of another State, after a full review of the rulings on the subject it can be received, as well settled, that an insolvent discharge, under the law of the State wherein the debtor resides and the note is payable, will not bar an action on the note in favor of such non-resident payee, who has not subjected himself to the jurisdiction of the court granting the discharge in insolvency."

In the case of Baldwin v. Hale, the action was on a promissory note, made at Boston, in the State of Massachusetts, and endorsed by the maker, in whose own favor it was made, to the plaintiff in the action, who was then, and until the time of suit upon the note, a citizen and resident of the State of Vermont. The note was payable at Boston six months after its date. Soon after making and thus endorsing the note to Hale, Baldwin applied for and obtained the benefit of the insolvent law of Massachusetts, in a court of that State, and received his discharge in

1 Felch v. Bugbee, 48 Maine, 9, 11; Stone v. Tibbetts, 26 Maine, 110; Ogden v. Saunders, 12 Wheat. 213.

2 Felch v. Bugbee, 48 Maine, 9, 11; Stevens v. Norris, 30 N. H. 466; Brig. ham v. Henderson, 1 Cush. 430.

Felch v. Bugbee, 48 Maine, 9, 12; Banchor v. Fisk, 33 Maine, 316; Houghton v. Maynard, 5 Gray, 552; Savoye v. Marsh, 10 Met. 595; Anderson v. Wheeler, 25 Conn. 603.

4 Cook v. Moffat, 5 How. 309.

5 Felch . Bugbee, 48 Maine, 9, 13, 15; Cook v. Moffat, 5 How. 309; Ogden v. Saunders, 12 Wheat. 213; Donnelly v. Corbett, 7 N. Y. 500; Anderson v. Wheeler, 25 Conn. 603; Woodhull v. Davis, Bald. C. C. 300; Towne v. Smith, 1 Wood & M. 115, 137.

61 Wall. 223.

terms purporting to be from all contracts payable or to be performed in that State. Hale neither became a party to the proceedings nor made any appearance thereto, he being at the time in Vermont; neither did he prove up his claim upon the note. Hale then sued Baldwin on the note in the Circuit Court of the United States for the District of Massachusetts, and the defense principally relied on was that the note was payable in Massachusetts, and therefore came within the terms. of the discharge, but the court held that the discharge did not extend to a debt held, as that was, by one who, at the time of the proceedings, was resident in another State, and was in no manner a party thereto, and that such was the law irrespective of the fact that payment was to be made within the State of Massachusetts, where the insolvent proceedings were had. The case having gone to the Supreme Court of the United States upon a writ of error, that court affirmed the decision of the circuit court. In delivering the opinion, CLIFFORD, J., said: "Insolvent laws of one State cannot discharge the contracts of citizens of other States, because they have no extra-territorial operation, and consequently the tribunal sitting under them, unless in cases where a citizen of such other State voluntarily becomes a party to the proceedings, has no jurisdiction in the

case."2

In Louisiana there must be personal notice, to the creditor, of the proceeding in insolvency, or else their claims will not be barred by the supposed discharge. If the creditors are resident, actual notice must be served on them. If they are non-resident, then notice must be mailed to them by a notary. Also, public notice thereof by publication. Without these the debtor is not discharged by proceedings under the laws of insolvency.3

But, query? As to the jurisdiction of the State to effect a discharge as against a non-resident creditor, who does not make himself a party to the proceedings, or is not made so by actual personal service, effected within the State, even if these preliminary requirements of the Louisiana law be complied with, as to

1 Baldwin v. Hale, 1 Wall. 223; to same effect see Anderson v. Wheeler, 25 Conn. 605; Donnelly v. Corbett, 7 N. Y. 500; Poe v. Duck, 5 Md. 1; Woodhull v. Wagner, Bald. C. C.

300; Felch v. Bugbee, 48 Maine, 9; Towne v. Smith, 1 Wood. & M. 115. 21 Wall. 234.

Breedlove v. Nicolet, 7 Pet. 413