Sere & Laralde v. Pitot, 10 U.S. 332 (1810)

U.S. Supreme Court

Sere & Laralde v. Pitot, 10 U.S. 6 Cranch 332 332 (1810) Sere & Laralde v. Pitot

10 U.S. (6 Cranch) 332

ERROR TO THE DISTRICT COURT

FOR THE DISTRICT OF ORLEANS

Syllabus

A general assignee of the effects of an insolvent cannot sue in the federal courts if his assignor could not have sued in those courts.

The citizens of the Territory of Orleans may sue and be sued in the District Court of that territory in the same gases in which a citizen of Kentucky may sue and be sued in the Court of Kentucky.

Error to the District Court of the United States for the District of Orleans in a suit in equity in which Sere & Laralde were complainants against Pitot and others, defendants.

The complainants stated that they were aliens and syndics of the creditors of the joint concern of Dumas & Janeau, Pierre Lavergne, and Joseph Faurie; that Faurie died insolvent; that Dumas & Janeau were

Page 10 U. S. 333

also insolvent, and made a surrender of all their effects to their creditors, and that Lavergne acknowledged himself to be unable to pay the debts of the joint concern; that the joint concern, as well as the individual members, being insolvent,

"application was made by their creditors to the superior court of the Territory of Orleans, and such proceedings were thereupon had that according to the laws of the said territory, the complainants were, at a meeting of the creditors of the said partnership, duly nominated syndics for the said creditors, and by the laws of the said territory all the estate, rights, and credits of the said partnership were vested in the complainants."

They also stated that the defendants were citizens of the United States.

The defendants pleaded to the jurisdiction, and the court below allowed the plea.

Page 10 U. S. 334

MR. CHIEF JUSTICE MARSHALL delivered the opinion of the Court:

This suit was brought in the Court of the United States for the Orleans Territory by the plaintiffs, who are aliens and syndics or assignees of a trading company composed of citizens of that territory who have become insolvent. The defendants are citizens of the territory, and have pleaded to the jurisdiction of the court. Their plea was sustained, and the cause now comes on to be heard on a writ of error to that judgment.

Two objections are made to the jurisdiction of the district court.

1. That the suit is brought by the assignees of a chose in action in a case where it could not have been prosecuted if no assignment had been made.

2. That the district court cannot entertain jurisdiction, because the defendants are not citizens of any state.

The first objection rests on the 11th section of the Judicial Act, which declares

"That no district or circuit court shall have cognizance of any suit to

Page 10 U. S. 335

cover the contents of any promissory note or other chose in action in favor of an assignee unless a suit might have been prosecuted in such court to recover the said contents if no assignment had been made."

The plaintiffs are admitted to be the assignees of a chose in action, but it is contended that they are not within the meaning of the provision which has been cited, because this is a suit for cash, bills and notes, generally, by persons to whom the law transfers them, and not by such an assignee as is contemplated in the Judicial Act. The words of the act are said to apply obviously to assignments made by the party himself, on an actual note, or other chose in action, assignable by the proprietor thereof, and that the word "contents" cannot, by any fair construction, be applied to accounts or unliquidated claims. Apprehensions, it is said, were entertained that fictitious assignments might be made to give jurisdiction to a federal court, and, to guard against this mischief, every case of an assignment by a party holding transferable paper was excepted from the jurisdiction of the federal courts unless the original holder might have sued in them.

Without doubt, assignable paper, being the chose in action most usually transferred, was in the mind of the legislature when the law was framed, and the words of the provision are therefore best adapted to that class of assignments. But there is no reason to believe that the legislature were not equally disposed to except from the jurisdiction of the federal courts those who could sue in virtue of equitable assignments, and those who could sue in virtue of legal assignments. The assignee of all the open accounts of a merchant might, under certain circumstances, be permitted to sue in equity in his own name, and there would be as much reason to exclude him from the federal courts as to exclude the same person when the assignee of a particular note. The term "other chose in action" is broad enough to comprehend either case, and the word "contents" is too ambiguous in its import to restrain that general term. The "contents" of a note are the sum it shows to be due,

Page 10 U. S. 336

and the same may, without much violence to language, be said of an account.

The circumstance that the assignment was made by operation of law and not by the act of the party might probably take the case out of the policy of the act, but not out of its letter and meaning. The legislature has made no exception in favor of assignments so made. It is still a suit to recover a chose in action in favor of an assignee, which suit could not have been prosecuted if no assignment had been made, and is therefore within the very terms of the law. The case decided in 4 Cranch was on a suit brought by an administrator and a residuary legatee, who were both aliens. The representatives of a deceased person are not usually designated by the term "assignees," and are therefore not within the words of the act. That case, therefore, is not deemed a full precedent for this.

It is the opinion of the Court that the plaintiffs had no right to maintain this suit in the district court against a citizen of the Orleans Territory, they being the assignees of persons who were also citizens of that territory.

It is of so much importance to the people of Orleans to decide on the second objection that the Court will proceed to consider that likewise.

Whether the citizens of the Territory of Orleans are to be considered as the citizens of a state within the meaning of the Constitution is a question of some difficulty which would be decided should one of them sue in any of the circuit courts of the United States. The present inquiry is limited to a suit brought by or against a citizen of the territory in the District Court of Orleans.

The power of governing and of legislating for a territory is the inevitable consequence of the right to acquire and to hold territory. Could this position be contested, the Constitution of the United States declares

Page 10 U. S. 337

that "Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States." Accordingly, we find Congress possessing and exercising the absolute and undisputed power of governing and legislating for the Territory of Orleans. Congress has given them a legislative, an executive, and a judiciary, with such powers as it has been their will to assign to those departments respectively.

The court possesses the same jurisdiction which was possessed by the Court of Kentucky. In the Court of Kentucky a citizen of Kentucky may sue or be sued. But it is said that this privilege is not imparted to a citizen of Orleans, because he is not a citizen of a state. But this objection is founded on the idea that the Constitution restrains Congress from giving the court of the territory jurisdiction over a case brought by or against a citizen of the territory. This idea is most clearly not to be sustained, and, of consequence, that court must be considered as having such jurisdiction as Congress intended to give it.

Let us inquire what would be the jurisdiction of the court on this restricted construction.

It would have no jurisdiction over a suit brought by or against a citizen of the territory, although an alien or a citizen of another state might be a party.

It would have no jurisdiction over a suit brought by a citizen of one state against a citizen of another state, because neither party would be a citizen of the "state" in which the court sat. Of what civil causes, then, between private individuals would it have jurisdiction? Only of suits between an alien and a citizen of another state who should be found in Orleans. Can this be presumed to have been the intention of the legislature in giving the territory a court possessing the same jurisdiction and power with that of Kentucky.

The principal motive for giving federal courts jurisdiction is to secure aliens and citizens of other

Page 10 U. S. 338

states from local prejudices. Yet all who could be affected by them are, by this construction, excluded from those courts. There could scarcely ever be a civil action between individuals of which the court could take cognizance, and if such a case should arise, it would be one in which no prejudice is to be apprehended.

It is the unanimous opinion of the Court that by a fair construction of the act, the citizens of the Territory of Orleans may sue and be sued in that court in the same cases in which a citizen of Kentucky may sue and be sued in the Court of Kentucky.

Judgment affirmed with costs.