Baylies v. James Houghton & Co.

A promissory note, executed in, and made payable to citizens of, the state of Massachusetts, although the maker reside in this state, is not subject to our trustee process, it being, by the law of the place of contract, exempt from such process.

Trustee process against Dodge & Keith and C. Spalding, who were sued as trustees of James Houghton & Co. of Boston, in the state of Massachusetts. In the county court, Dodge & Keith made their disclosure in writing, setting forth, that, at Boston aforesaid, on the 17th September, 1841, they executed their promissory note for $357.64, made payable to the said Houghton & Co. or order, in six months from date; and that on the 19th of April, 1842, at said Boston, they executed another promissory note for $ 127.20, made payable in six months from date, to said Houghton & Co. or their order, which notes remained unpaid. And the said Charles Spalding in like manner disclosed, that, on the 15th September, 1841, at said Boston he executed his note payable to said Houghton & Co. or their order, for $410.07, in six months from date; and on the 16th of April, 1842, executed another note payable in the like manner and time, for $158.71, which notes remained unpaid. Upon these disclosures, the court decided that the said Dodge & Keith, and Charles Spalding were not liable, as trustees, and rendered judgment for them to recover their eosts, to which decision the plaintiff excepted. I. The authorities are uniform, that debts due the residents in a foreign jurisdiction can be attached and holden by trustee process in favor of creditors ; and that the payments of the debtor under the judgments in such trustee suits are, in all jurisdictions, admitted as a defence, pro tanto. Bissell v. Briggs, 9 Mass. R. 462; Story’s Con. of Laws, 450; Embree &f Collins v. Hanna, ,5 Johns. R. 101 ; Holmes v. Remsen, -20 Johns. R. 229; S. C, 4 Johns. Ch. R. 467; Hull v. Blake, 13 Mass. R. 153 ; Merriam v. Rundlett, 13 Pick. R. 511 ; McDaniel v. Hughes, 3 East, 367 ; Le Chevelier v. Lynch, 1 Doug. R. 170 ; Barrote v. West, 23 Pick. R. 270 ; et passim. In proceedings in rem, the judgment is of universal obligation, and proceedings by way of attachment of debts in favor of creditors are entitled to the same consideration. Story’s Con. of Laws, 592, and cases cited. And debts) with respect to the liability of the debtor, follow him, and are subject to the jurisdiction of the law of his domicil, where process must be brought to enforce the contract. Blake v. Williams, 6 Pick. R. 286. The locus rei sita of debts with reference to creditors, is the locality of the debtor. 2 Kent’s Com. 406. That a judgment obtained in one jurisdiction against a principal debtor, resident in another, without legal service upon the principal debtor, cannot be enforced in the courts of the foreign jurisdiction against him, we well understand ; but insist that it is a defence to the trustees who have been compelled to make payment by the judgment. Chief Justice Parsons sets forth this distinction in Bissell v. Briggs. II. The courts of Massachusetts, where the notes were given., have admitted, as a defence, proceedings under statutes like our own, making negotiable paper trusteeable, and though the notes were endorsed before due. Hull v. Blake, 13 Mass. R. 153 ; Merriam v. Rundlett, 13 Pick. R. 511. It may be attempted to distinguish the present case from ábese. It is different, .first, in that there has been no legal service on the principal defendants. And there was none in the trustee process sustained in Barrow v. M7est, 23 Pick. R.; Blake v. Williams, 6 Pick. R.; Embree Sf Collins v. Hanna, 5 Johns. R., and in other cases. There is this further distinction, that these notes were made in Massachusetts, and not where they are attached by trustee process ; whence it may be inferred that they cannot be discharged, excepffby the law of the place where made, according to the doctrine found in Story’s Con. of Laws, §> 335 and 342. This doctrine is held in reference to discharges by bankrupt laws, &c., without payment for the benefit of the promisee. The cases that may be cited are no precedents for this, in which, by a judgment for the plaintiff, the notes would be paid for the benefit of the promisees. The notes are payable every1where; (8 Pick. R. 197) and a payment in Vermont should be good everywhere. III. At the time of disclosure, all the notes were overdue, and it is to be presumed no notice of indorsement had been received, except that disclosed. If the notes had been endorsed, notice would have been given by the new' holders to the makers, by a demand according to the law-merchant. All these notes, then, but one, were in the hands of the payees and overdue at the time of disclosure. And negotiable paper, overdue, stands upon the same footing as other choses in action. If any debt can be attached that is due a resident of Massachusetts, this can. Hinsdill v. Safford, 11 Vt. R. 309; Hutchins v. Evans, 13 Vt. R. 541. IV. It is a well established rule of policy and practice for courts to prefer the interests of their own citizens. Story’s Con. of Laws, 28. Resident creditors, attaching by trustee process are, throughout the United States, preferred to foreign assignees in bankruptcy, whether the assignment be voluntary or by operation of law. Ingraham v. Geyer, 13 Mass. R. 146 ; Ogden v. Sanders, 12 Wheat. R.; 15 Pick. R. 11; 5 Greenl. R. 245, et passim. The principal debtors having become insolvent, the resident creditors should be preferred. It would be absurd to extend the comity of law so far as to secure to foreign holders the contents of their notes, when under the same circumstances residents would lose them. By the well known exception to the rule of comity, the laws of a foreign state should not be admitted, if injurious to ourselves. Frentiss v. Savage, 13 Mass. R. 24. No state of the Union has committed such an act of injustice to its own citizens as to send abroad property of insolvents found within its jurisdiction, when there were resident creditors. 2 Kent’s Com. 406-7. Whatever may be the policy and laws of other states, this state should enforce and vindicate her own, by which the notes disclosed are clearly attachable. This state alone has jurisdiction of the persons of the trustees, and to this forum, alone, can the holders of the notes resort to collect them, where the judgment in this case will be a bar. The legislature would have exempted foreign holders from the general provisions of the statute ©f 1841, had it not been the intention to extend it to all cases alike. And if the act, being constitutional, results in a conflict of laws, legislation alone should remove the difficulty. Penniman v. Meigs, 9 Johns. R. 325 ; 1 Gall. R. 168 — de conflictu legum. The law of the place where the contract is made must govern the construction of the contract, and that whether the parties to the contract are inhabitants of that place or not. This rule is founded upon the presumption of law that the parties to a contract are conusant of the laws of the country where the contract is made. Negotiable paper is governed by the same principles. Wherever the contract between the particular parties is made, the law of the place will operate as well in respect to the discharge as to the obligation thereof. Story on Conflict of Laws, 199, 219, 282, 283; 13 Mass. R. 5 and 153 ; 16 Mass. 304 ; and it is enacted by the 12th section of the statute of Massachusetts, “ that no person shall be considered or adjudged to be a trustee, within the intent and meaning of that act, by reason, or on account of, his having made, given, indorsed, negotiated or accepted, any negotiable security whatever.” Hence if the lex loci governs in the discharge, as well as in the construction, the trustees cannot be held liable for the notes in question. They were negotiable, and made in Boston, payable to the defendants, living in Boston, and must be governed by the law of Massachusetts. If payable every where, they are governed by the law of the place where made, for the plain reason that they cannot be said to have the law in any other place in contemplation to govern them. Story’s Conflict of Laws, 264. The trustees insist that they ought to be discharged, inasmuch as a judgment against them here would not be a bar to an action on the notes in question in the state where the notes were made and payable, for the statute in that state exempts negotiable notes from the liability of the trustee process ; and it would be manifestly unjust to place the trustees in a condition in which they may be twice charged for the same credits. The credit, therefore, liable to this attachment, must be so situated that, if it be taken by the attaching creditor, the trustee may legally defend himself when called on by the principal, and, in this case, a judgment against the trustees, would not be conclusive against the principal debtor. Story on Conflict of Laws, 492, 501, 508. In order to found a proper ground of recognition of any foreign judgment in another country, it is indispensable that the court pronouncing judgment should have a lawful jurisdiction over the cause, over the thing, and over the parties. If the jurisdiction fails as to either, it is treated as a mere nullity, having no obligation, and entitled to no respect beyond the domestic tribunal, and this is equally true, whether the proceedings be in rem, or in personam, or in rem and also in personam. Story on Conflict of Laws, 492, 449, 458; 9 Mass. R. 462.