Page 147 U. S. 481
v. Cunningham, 133 U. S. 107,
133 U. S. 129,
and it was there said:
"Great contrariety of state decision exists upon this general
topic, and it may be fairly stated that, as between citizens of the
state of the forum and the assignee appointed under the laws of
another state, the claim of the former will be held superior to
that of the latter by the courts of the former, while, as between
the assignee and citizens of his own state and the state of the
debtor, the laws of such state will ordinarily be applied in the
state of the litigation unless forbidden by or inconsistent with
the laws or policy of the latter. Again, although in some of the
states the fact that the assignee claims under a decree of a court
or by virtue of the law of the state of the domicile of the debtor
and the attaching creditor, and not under a conveyance by the
insolvent, is regarded as immaterial, yet, in most the distinction
between involuntary transfers of property, such as work by
operation of law, as foreign bankrupt and insolvent laws, and a
voluntary conveyance is recognized. The reason for the distinction
is that a voluntary transfer, if valid where made, ought generally
to be valid everywhere, being the exercise of the personal right of
the owner to dispose of his own, while an assignment by operation
of law has no legal operation out of the state in which the law was
passed. This is a reason which applies to citizens of the actual
situs of the property when that is elsewhere than at the domicile
of the insolvent, and the controversy has chiefly been as to
whether property so situated can pass even by a voluntary
conveyance."
We have here a voluntary transfer of his property by a citizen
of Utah for the payment of his debts, with preferences, which
transfer was valid in Utah, where made, and was consummated by the
delivery of the property in Idaho, where it was situated, and then
taken on an attachment in favor of a creditor not a resident or
citizen of Idaho. Was there anything in the statutes or established
policy of Idaho invalidating such transfer?
Title XII of part 3 of the Revised Statutes of the Territory of
Idaho, entitled "Of proceedings in insolvency," (Rev.Stats.Idaho
§§ 5875-5932), provided that "No
Page 147 U. S. 482
assignment of any insolvent debtor otherwise than as provided in
this title is legal or binding on creditors;" that creditors should
share
pro rata, "without priority or preference whatever;"
for the discharge of the insolvent debtor upon compliance with the
provisions of the title, by application for such discharge by
petition to the district court of the county in which he had
resided for six months next preceding, with schedule and inventory
annexed, giving a true statement of debts and liabilities, and a
description of all the insolvent's estate, including his homestead,
if any, and all property exempt by law from execution. The act
applied to corporations and partnerships, and declared that if the
partners resided in different counties, that court in which the
petition was first filed should retain jurisdiction over the case.
Nothing is clearer from its various provisions than that the
statute had reference only to domestic insolvents. As pointed out
by Judge Berry in his dissenting opinion, the first section of the
fifty-eight upon this subject, in providing that "every insolvent
debtor may upon compliance with the provisions of this title, be
discharged from his debts and liabilities," demonstrates this. The
Legislature of Idaho certainly did not attempt to discharge
citizens of other jurisdictions from their liabilities, nor intend
that personal property in Idaho, belonging to citizens of other
states or territories, could not be applied to the payment of their
debts unless they acquired a six months' residence in some county
of Idaho, and went through its insolvency court.
The instrument in controversy did not purport to be executed
under any statute, but was an ordinary common law assignment, with
preferences, and as such was not in itself illegal.
Jewell v.
Knight, 123 U. S. 426,
123 U. S. 434.
And it was found as a fact that it was valid under the laws of
Utah. While the statute of Idaho prescribed
pro rata
distribution, without preference, in assignments under the statute,
it did not otherwise deal with the disposition of his property by a
debtor, nor prohibit preferences between nonresident debtors and
creditors through an assignment valid by the laws of the debtor's
domicile. No just rule required the courts of Idaho at the instance
of a citizen of another state, to adjudge a
Page 147 U. S. 483
transfer, valid at common law and by the law of the place where
it was made, to be invalid because preferring creditors elsewhere
and therefore in contravention of the Idaho statute and the public
policy therein indicated in respect of its own citizens, proceeding
thereunder. The law of the situs was not incompatible with the law
of the domicile.
In
Halstead v. Straus, 32 F. 279, which was an action
in New Jersey involving an attachment there by a New York creditor
as against the voluntary assignee of a New York firm, the property
in dispute being an indebtedness of one Straus, a resident of New
Jersey, to the firm, Mr. Justice Bradley remarked:
"It is true that the statute of New Jersey declares that
assignments in trust for the benefit of creditors shall be for
their equal benefit, in proportion to their several demands, and
that all preferences shall be deemed fraudulent and void; but this
law applies only to New Jersey assignments, and not to those made
in other states, which affect property or creditors in New Jersey.
It has been distinctly held by the courts of New Jersey that a
voluntary assignment made by a nonresident debtor, which is valid
by the law of the place where made, cannot be impeached in New
Jersey with regard to property situated there by nonresident
debtors.
Bentley v. Whittemore, 19 N.J.Eq. 462;
Moore
v. Bonnell, 31 N.J.Law 90. The execution of foreign
assignments in New Jersey will be enforced by its courts as a
matter of comity, except when it would injure its own citizens;
then it will not. If Deering, Milliken & Co. were a New Jersey
firm, they could successfully resist the execution of the
assignment in this case. But they are not; they are a New York
firm. New York is their business residence and domicile. The mere
fact that one of the partners resides in New Jersey cannot alter
the case. The New Jersey courts, in carrying out the policy of its
statute for the protection of its citizens by refusing to carry
into effect a valid foreign assignment, will be governed by
reasonable rules of general jurisprudence, and it seems to me that
to refuse validity to the assignment in the present case would be
unreasonable and uncalled for. "
Page 147 U. S. 484
In
May v. First National Bank, 122 Ill. 551, the
Supreme Court of Illinois held that the provision in the statute of
that state prohibiting all preferences in assignments by debtors
applied only to those made in the state, and not to those made in
other states; that the statute concerned only domestic assignments
and domestic creditors, and the court, in reference to the
contention that, if not against the terms, the assignment was
against the policy of the statute, said:
"An assignment giving preferences, though made without the
state, might, as against creditors residing in this state, with
some reason be claimed to be invalid as being against the policy of
the statute in respect of domestic creditors; that it was the
policy of the law that there should be an equal distribution in
respect to them. But as the statute has no application to
assignments made without the state, we cannot see that there is any
policy of the law which can be said to exist with respect to such
assignments or with respect to foreign creditors, and why
nonresidents are not left free to execute voluntary assignments,
with or without preferences, among foreign creditors, as they may
see fit, so long as domestic creditors are not affected thereby,
without objection lying to such assignments that they are against
the policy of our law. The statute was not made for the regulation
of foreign assignments, or for the distribution, under such
assignments, of a debtor's property among foreign creditors."
In
Frank v. Bobbitt, 155 Mass. 112, a voluntary
assignment made in North Carolina, and valid there, was held valid
and enforced in Massachusetts, as against a subsequent attaching
creditor of the assignors resident in still another state and not a
party to the assignment. The Supreme Judicial Court observed that
the assignment was a voluntary, and not a statutory, one; that the
attaching creditors were not resident in Massachusetts; that at
common law in that state, an assignment for the benefit of
creditors which created preferences was not void for that reason,
and that there was no statute which rendered invalid such an
assignment when made by parties living in another state, and
affecting property in Massachusetts, citing
Train v.
Kendall, 137 Mass. 366.
Page 147 U. S. 485
Referring to the general rule that a contract, valid by the law
of the place where made, would be regarded as valid elsewhere, and
stating that
"it is not necessary to inquire whether this rule rests on the
comity which prevails between different states and countries or is
a recognition of the general right which everyone has to dispose of
his property or to contract concerning it as he chooses,"
the court said that the only qualification annexed to voluntary
assignments made by debtors living in another state had been "that
this court would not sustain them if to do so would be prejudicial
to the interests of our own citizens, or opposed to public policy,"
and added:
"As to the claim of the plaintiffs that they should stand as
well as if they were citizens of this state, it may be said in the
first place that the qualification attached to foreign assignments
is in favor of our own citizens as such, and in the next place that
the assignment being valid by the law of the place where it was
made, and not adverse to the interests of our citizens, nor opposed
to public policy, no cause appears for pronouncing it invalid."
And see, among numerous cases to the same effect,
Butler v. Wendell, 57 Mich. 62;
Receiver v. First
National Bank, 34 N.J.Eq. 450;
Egbert v. Baker, 58
Conn. 319;
Chafee v. Fourth National Bank of New York, 71
Me. 514;
Ockerman v. Cross, 54 N.Y. 29;
Weider v.
Maddox, 66 Tex. 372;
Thurston v. Rosenfield, 42 Mo.
474.
We do regard our decision in
Green v.
Van Buskirk, 5 Wall. 307,
74 U. S. 7 Wall.
139, as to the contrary. That case was fully considered in
Cole
v. Cunningham, supra, and need not be reexamined. The
controversy was between two creditors of the owner of personalty in
Illinois, one of them having obtained judgment in a suit in which
the property was attached, and the other claiming under a chattel
mortgage. By the Illinois statute, such a mortgage was void as
against third persons unless acknowledged and recorded as provided
or unless the property was delivered to and remained with the
mortgagee, and the mortgage in that case was not so acknowledged
and recorded, nor had possession been taken. All parties were
citizens of New York, but that fact was not
Page 147 U. S. 486
considered sufficient to overcome the distinctively politic and
coercive law of Illinois.
In our judgment, the Idaho statute was inapplicable, and the
assignment was in contravention of no settled policy of that
territory. It was valid at common law, and valid in Utah, and, the
assignee having taken possession before the attachment issued, the
district court was right in the conclusions of law at which it
arrived.
The judgment is reversed, and the cause remanded to the Supreme
Court of the State of Idaho for further proceedings not
inconsistent with this opinion.
Judgment reversed.
