Sturges v. Crowninshield.

erty of no real value to the creditor, because for that subject also particular

*205] provision is made. - Nothing but *gold and silver coin can be made a

tender in payment of debts. It remains to inquire, whether the prohibition under consideration could be intended for the single case of a law directing that judgments should be carried into, execution by instalments ? This question will scarcely admit of discussion. If this was the only remaining mischief against which the constitution intended to provide, it would undoubtedly have been, like paper money and tender laws, expressly forbidden. At any rate, terms more directly applicable to the subject, more appropriately expressing the intention of the convention, would have been used. It seems scarcely possible to suppose, that the framers of the constitution, if intending to prohibit only laws authorizing the payment of debts by instalment, would have expressed that intention by saying no state shall pass any law impairing the obligation of contracts." No men would so express such an intention. No men would use terms embracing a whole class of laws, for the purpose of designating a single individual of that class. No court can be justified in 'restricting such comprehensive words to a particular mischief, to which no allusion is made.

*206]

66

The fair, and we think, the necessary, construction of the sentence requires, that we should give thèse words their full and obvious meaning. A general dissatisfaction with that lax system of legislation which followed the war of our revolution undoubtedly directed the mind of the convention to this subject. It is probable, that laws such as those which *have been stated in argument, produced the loudest complaints, were most immediately felt. The attention of the convention, therefore, was particularly directed to paper money, and to acts which enabled the debtor to discharge his debt, otherwise than was stipulated in the contract. Had nothing more been intended, nothing more would have been expressed. But, in the opinion of the convention, much more remained to be done. The same mischief might be effected by other means. To restore public confidence completely, it was necessary, not only to prohibit the use of particular means by which it might be effected, but to prohibit the use of any means by which the same mischief might be produced. The convention appears to have intended to establish a great principle, that contracts should be inviolable. The constitution, therefore, declares, that no state shall pass "any law impairing the obligation of contracts."

If, as we think, it must be admitted, that this intention might actuate the convention; that it is not only consistent with, but is apparently manifested by, all that part of the section which respects this subject; that the words used are well adapted to the expression of it; that violence should be done to their plain meaning, by understanding them in a more limited sense; those rules of construction, which have been consecrated by the wisdom of ages, compel us to say, that these words prohibit the passage of any law discharging a contract, without performance.

By way of analogy, the statutes of limitations, and against usury, have *207] been referred to in argument; *and it has been supposed, that the construction of the constitution, which this opinion maintains, would apply to them also, and must, therefore, be too extensive to be correct. We do not think so. Statutes of limitations relate to the remedies which are furnished in the courts. They rather establish, that certain circumstances

shall amount to evidence that a contract has been performed, than dispense with its performance. If, in a state where six years may be pleaded in bar to an action of assumpsit, a law should pass declaring that contracts already in existence, not barred by the statute, should be construed to be within it, there could be little doubt of its unconstitutionality.'

So, with respect to the laws against usury. If the law be, that no person shall take more than six per centum per annum for the use of money, and that, if more be reserved, the contract shall be void, a contract made there after, reserving seven per cent., would have no obligation, in its commencement ́; but if a law should declare that contracts already entered into, and reserving the legal interest, should be usurious and void, either in the whole or in part, it would impair the obligation of the contract, and would be clearly unconstitutional."

This opinion is confined to the case actually under consideration. It is confined to a case in which a creditor sues in a court, the proceedings of which, the legislature, whose act is pleaded, had not a right to control, and to a case where the creditor had not proceeded to execution against the body

of his debtor, within the state whose law attempts to absolve a *con- [*208 fined insolvent debtor from his obligation. When such a case arises, it will be considered.

It is the opinion of the court, that the act of the state of New York, which is pleaded by the defendant in this cause, so far as it attempts to discharge this defendant from the debt in the declaration mentioned, is contrary to the constitution of the United States, and that the plea is no bar to the action.

CERTIFICATE.-This cause came on to be heard, on the transcript of the record of the circuit court of the United States, for the first circuit, and the district of Massachusetts, and on the questions on which the judges of that court were divided in opinion, and was argued by counsel: on consideration whereof, this court is of opinion, that, since the adoption of the constitution of the United States, a state has authority to pass a bankrupt law, provided such law does not impair the obligation of contracts, within the meaning of the constitution, and provided there be no act of congress in force to establish a uniform system of bankruptcy, conflicting with such law. This court is further of opinion, that the act of New York, which is pleaded in this case, so far as it attempts to discharge the contract on which this suit was instituted, is a law impairing the obligation of contracts within the meaning of the constitution of the United States, and that the plea of the defendant is not a good and suflicient bar of the plaintiff's action. All which is directed to be certified to the said circuit court.

1 Webster v. Cooper, 14 How. 488; Lewis v. Broadwell, 3 McLean 568; Johnson v. Bond, Hempst. 633. And see Metz v. Hipps, 96 Penn. St. 15.

? See Hart v. Lamphire, 3 Pet. 280; McElmoyle v. Cohen, 18 Id. 312; Bank of Alabama v. Dalton, 9 How. 522; Bacon v. Howard, 20 Id. 22; Barker v. Henry, 1 Paine 559.

109

*MOMILLAN v. MONEILL.

State bankrupt law.

A state bankrupt or insolvent law (which not only liberates the person of the debtor, but discharges him from all liability for the debt), so far as it attempts to discharge the contract, is repugnant to the constitution of the United States; and it makes no difference in the application of this principle, whether the law was passed before or after the debt was contracted. A discharge under a foreign bankrupt law is no bar to an action, in the courts of this country, on a contract made here.1

ERROR to the District Court of Louisiana. This was a suit brought by McNeil, the plaintiff below, against McMillan, the defendant below, to recover a sum of money paid for the defendant's use, under the following circumstances: McMillan, residing in Charleston, South Carolina, transacting business there as a partner of the house of trade of Sloane & McMillan, of Liverpool, on the 8th of October and 9th of November 1811, imported foreign merchandise, on which he gave bonds at the custom-house, with McNeill and one Walton, as sureties. These bonds were payable the 8th of April and 9th of May 1812, and were paid, after suit and judgment, by McNeill, on the 23d of August and 23d of September 1813. Some time afterwards, McMillan removed to New Orleans; where, on the 23d of August 1815, the district court of the first district of the state of Louisiana, *210] having previously taken into *consideration his petition, under a law of the state of Louisiana, passed in 1808, praying for the benefit of the cessio bonorum, and a full and entire release and discharge, as well in his person as property, from all debts, dues, claims and obligations, then existing, due or owing by him, the said McMillan, and it having appeared fully and satisfactorily, that the requisite proportion of his creditors, as well in number as amount, had accepted the cession of his goods, and had granted a full entire discharge, as well with respect to his person as to his future effects, it was then and there ordered, adjudged and decreed by the said court, that the proceedings be homologated and confirmed, and that the said McMillan be acquitted, released and discharged, as well his person as his future effects, from the payment of any and all debts, dues and demands, of whatever nature, due and owing by him, previous to the day of the date of the commencement of said proceedings, to wit, previous to the 12th day of August 1815. The house of trade of Sloane & McMillan, of Liverpool, having failed, a commission of bankruptcy issued against both the partners, in England, on the 28th of September 1812, and on the 28th of November 1812, they both obtained certificates of discharge, signed by the commissioners, and sanctioned by the requisite proportion of creditors in number and value, and confirmed by the Lord Chancellor of Great Britain, according to the bankrupt laws of England.

On the 1st of July.1817, the present suit. was instituted by McNeill, describing himself as a citizen of South Carolina, against McMillan, described as a citizen of Louisiana, *in the district court of the United States for *211] the district of Louisiana (having circuit court powers), to recover the sum of $700, which McNeill had paid, under the judgments on the customhouse-bonds, in South Carolina. To this suit, McMillan pleaded in bar his

McMillan v.. McNeill.

certificates under the Louisiana and English bankrupt laws; to which plea, the plaintiff below demurred, the defendant joined in demurrer, and the court gave judgment for the plaintiff; from which judgment, the cause was brought, by writ of error, to this court.

February 18th. This cause was argued by C. J. Ingersoll, for the plaintiff in error, no counsel appearing for the defendant in error. He contended, 1. That this case was distinguishable from the preceding case of Sturges v. Crowninshield, because the state law, under which the insolvent obtained his discharge, was passed long before the contract was made, and therefore, it could not be said to impair the obligation of a contract not then in existence.

2. That although the contract was made in Sonth Carolina, between parties who were at the time citizens of the state, yet the debtor having removed to Louisiana, and become a resident citizen of that state, and the creditor pursuing him thither, the local court had authority, under the local laws, to grant him a discharge, which might be effectual within the limits of the state, even if it had no extra-territorial operation. The discharge, being effectual in the courts of the state where it was obtained, would, of course, be equally effectual in the courts of the United States, sitting [*212 *in that state, the laws of the state being made by the judiciary act of 1789, c. 20, § 34, rules of decision in the courts of the United States, in cases where they apply..

3. That the certificate of discharge under the English bankrupt laws, was a good plea in bar to the action. (a)

MARSHALL, Ch. J., delivered the opinion of the court, that this case was not distinguishable in principle from the preceding case of Sturges y. Crowninshield. That the circumstance of the state law, under which the debt was attempted to be discharged, having been passed before the debt was con

tracted, made no difference in the application of *the principle. And [*213

that as to the certificate under the English bankrupt laws, it had frequently been determined, and was well settled, that a discharge under a foreign law, was no bar to an action on a contract made in this country.

Judgment affirmed.

(a) He cited Ruth. Inst. b. 2, c. 5, § 3, c. 9, § 6; Huber. Prælec. lib. 1, tit. 3; Greenough. Amory, 3 Dall. 370, note; James v. Allen, 1 Id. 188; Millar v. Hall, Id. 229. Thompson v. Young, Id. 294; Gorgerat v. McCarty, Id. 366; Donaldson v. Chambers, 2 Id. 100; Harris' v. Mandeville, Id. 256; Emory v. Greenough, 3 Id. 369; Smith v. Brown, 4 Binn. 201; Boggs v. Teakle, 5 Id. 332; Hilliard v. Greenleaf, Id. 336, note; Van Raugh v. Van Arsdaln, 3 Caines 154; Smith v. Smith, 2 Johns. 235; Penniman v. Meigs, 9 Id. 325; Hicks v. Brown, 12 Id. 142; IIamersley v. Lambert, 2 Johns. Ch. 511; Blanchard v. Russell, 13 Mass. 1; Bradford v. Farrand, Id. 18; Walsh v. Farrand, Id. 19; Baker v. Wheaton, 5 Id. 509; Babcock v. Weston, 1 Gallis. 168; Van Reimsdyk v. Kane, Id. 371; Golden v. Prince, 3 W. C. C. 313; Adams v. Storey, 1 Paine 79; Farm. & Mech. Bank v. Smith, 3 S. & R. 63; Burrows v. Jemino, 2 Str. 733; Ballantine v. Golding, Coop. Bank. Law 347; Id. 362; Smith v. Buchanan, 1 East 6; Potter v. Brown, 5 Id. 124; Terasson's case, Coop. Bank Law, App'x, 30.

111

BARR v. GRATZ's Heirs.

Estoppel by deed. Disseisin.-Deed as evidence.-Record evidence.

A patent issued on the 18th November 1784, for 1000 acres of land, in Kentucky, to J. C., who had previously, in July 1784, covenanted to convey the same to M. G., the ancestor of the lessor of the plaintiff, and on the 23d June 1786, M. G. made an agreement with R. B., the defendant in ejectment, to convey to him 750 acres, part of the tract of 1000 acres ; under which agreement, R. B. entered into possession of the whole tract, and on the 11th of April 1787, J. C., by direction of M. G., conveyed to R. B., the 750 acres, in fulfilment of said agreement, which were severed by metes and bounds from the tract of 1000 acres. J. C. and his wife, on the 26th of April 1791, made a conveyance in trust of all his property, real and personal, to R. J. and E. C.; on the 12th of February 1813, R. J. as surviving trustee, conveyed to the heirs of M. G., under a decree in equity that part of the 1000 acres not previously conveyed to R. B., and in the part so conveyed, under the decree, was included the land claimed in the ejectment. R. B. (the defendant) claimed the land in controversy, under a patent for 400 acres, issued on the 15th of September 1795, founded on a survey made for B. N., May 12th, 1782; and under a deed of the 13th of December 1796, from one Coburn, who had, in the winter and spring of 1791, entered into and fenced a field, within the bounds of the original patent for 1000 acres, to J. C., claiming to hold the *same under B. M.'s survey of 400 acres : Held, that upon *214] the issuing of the patent to J. C., in November 1784, the possession then being vacant, he became, by operation of law, vested with a constructive actual seisin of the whole tract included in his patent; that his whole title passed by his prior conveyance to M. G. (the ancestor of the lessor of the plaintiff); and that when it became complete at law, by the issuing of the pacent, the actual constructive seisin of J. C. passed to M. G., by virtue of that conveyance.1 Held, that when, subsequently, in virtue of the agreement made in June 1786, between M. G. and R. B. (the defendant), the latter entered into possession of the whole tract, under this equitable title, his possession, being consistent with the title of M. G., and in common with him, was the possession of M. G. himself, and inured to the benefit of both, according to the nature of the respective titles. And that when, subsequently, in April 1787, by the direction of M. G., J. C. conveyed to the defendant 750 acres, in fulfilment of the agreement between M. G. and the defendant, and the same were severed by metes and bounds, in the deed, from the tract of 1000 acres, the defendant became sole seised in his own right of the 750 acres so conveyed. But as he still remained in the actual possession of the residue of the tract, within the bounds of the patent, which possession was originally acquired under M. G., the character of his tenure was not changed by his own act, and therefore, he was quasi tenant to M..G., and as such, continued the actual seisin of the latter, over this residue, at least, up to the deed from Coburn to the defendant, in 1796.

Held, that if Coburn, in 1791, when he entered and fenced a field, &c., had been the legal owner of B. N.'s survey, his actual occupation of a part would not have given him a constructive actual seisin of the residue of the tract included in that survey, that residue being, at the time of his entry and occupation, in the adverse seisin of another person (M. G.) having an older and better title. But there being no evidence that Coburn was the legal owner of B. N.'s survey, his entry must be considered as an entry without title, and consequently, his disseisin was limited to the bounds of his actual occupancy.2

The deed of the 16th of July 1784, from J. C. to M. G., being more than thirty years old, and proved to have been in possession of the lessors of the plaintiffs, and actually asserted as the ground of their title in the equity suit, was admissible in evidence, without regular proof of its execution.'

The deed from J. C. and wife, to D. J. and E. C., in 1791, was not within the statute of champerty and maintenance of Kentucky; *for us to all the land not in the actual occupancy 215] of Coburn, the deed was operative, the grantors and those holding under them having at all times had the legal seisin.

In general, judgments and decrees are evidence only in suits between parties and privies; but the doctrine is wholly inapplicable to a case like the present, where the decree in equity was not introduced as per se binding upon any rights of the other party, but as an introductory fact to a

1 S. P. Bush v. Marshall, 6 How. 284.

2 See Clarke v. Courtney, 5 Pet. 319; Miller v. McIntire, 6 Id. 61; Sicard v. Davis, Id. 124.

2 Hinde v. Vattier, 1 McLean 110; s. c. 7 Pet. 252.