Egbert v. Baker , 58 Conn. 319 ( 1890 )

Carpenter, J.

These are four cases against the same defendants. One of the defendants resides in the state of New York and the other in New Jersey. The plaintiffs in two of the cases reside in New York, and in the other two in New Jersey. In each case suit is brought in this state by process of foreign attachment. Property otherwise is not attached and no personal service was made on the defendants. In each case there is an appearance for the defendants for the sole purpose of pleading in abatement to the jurisdiction. The Superior Court found the allegations of the plea true and abated the suit. The plaintiffs in each case appealed, and precisely the same question is raised in all.

The sole question is—whether the debts due originally from the garnishees to the defendants were due to them when the suits were brought or to their assignee.

It appears that before the suits were brought the several debts had been assigned in a general assignment of all the property of the defendants, to one Clarence F. Birdseye, in trust for the benefit of certain preferred creditors, and notice given to the debtors of the assignors who are now garnishees. The assignment was not made by operation of law in bankruptcy or insolvent proceedings, but was a voluntary assignment at common law. It is conceded that if the assignment operated to transfer the several debts, the judgment is right; if not, that it is erroneous and must be reversed.

It is a general principle that debts have no situs. For purposes of administration and attachment in cases of foreign creditors, and possibly for some other, they are regarded as located where the debtor resides. But for most purposes, especially for the purposes of assignment by the creditor, they follow the residence of the creditor. No claim is made that these debts could only be assigned according to the requirements of our law.

Another general principle is, that an assignment or other contract good in the place where made is good everywhere. These principles are conceded. It must also be conceded that they determine this case, unless for some reason it can •be regarded as an exception. It is suggested,' although not very strenuously urged, that we ought to regard the facts of this case as showing that the assignment was in reality, although not made under any insolvent law, statutory, and as such within the principle of those cases in which this court has held that insolvency proceedings under the laws of other states do not affect debts due .from our citizens to the insolvent. Upton v. Hubbard, 28 Conn., 274; Paine v. Lester, 44 Conn., 196.

We think this is not a statutory proceeding in the sense claimed by the plaintiffs. We do not understand that the assignment act of New York attempts to deal with the nature and effect of the assignment, but simply prescribes the duties of the assignor and regulates the mode of administering the trust. It is in no sense an insolvency proceeding prescribed by statute, but is a proceeding instituted by the assignor for the benefit of such persons only as he may please to name.

The finding is that “ the said assignment and transfer * * * was not made under norm pursuance of any bankrupt or insolvent law of the state of New York, and was an exercise by the defendants of their right at common law to assign and transfer their property.” This is explicit, and leaves no room for construction. There is absolutely no ground for saying that it is an insolvency proceeding, and not an exercise of a common law right. We must therefore have reference to the distinction between the assignment in this case and those made in the course of insolvency or bankruptcy proceedings. That distinction is clearly recognized in Upton v. Hubbard and Paine v. Lester, supra. Also in Crouse v. Phoenix Ins. Co., 56 Conn., 176.

That distinction is substantial and real. In Upton v. Hubbard the court was asked to give effect to the insolvent law of Massachusetts in this state ; but the court declined to do so, deciding in favor of the attaching creditor. Paine v. Lester turned upon the very distinction now under consideration. Even in that case Pabk, C. J., thought that the assignment ought to have been held valid. In Crouse v. Phoenix Ins. Co. this court gave effect to the insolvency proceedings in the state of New York so far as it affected a debt due from the insurance company to a citizen of New York, mainly on the ground that the company by virtue of its compliance with the provisions of a law of that state, had in law become also a citizen of that state, and as such had been sued there and had been compelled to pay the debt to the assignee. Surely that case cannot be regarded as an authority for denying the validity of the assignment in this case.

By giving effect to a common law conveyance made by the party we do not import into this state the local statute law of another state, but simply give effect to a principle of law of general application in all the states, as we believe; in this state as well as in New York. The principle is too firmly established and too important to be departed from or shaken. A departure by one state even would introduce great confusion and seriously affect the commercial interests of the country.

But we are asked to make an exception to the rule on the ground that the assignment giving a preference to creditors contravenes the policy of our insolvent law, which forbids preferences and seeks to divide the assets ratably among creditors. In a legal sense it cannot be said that a contract, made in the state of New York, in strict conformity to the laws of that state, and by citizens of that or other states, contravenes the policy of our law. Our statute was not enacted for such contracts and takes no cognizance of them. Such contracts may dispose of property in a manner not allowed by our law; but that does not concern us; and is certainly not a sufficient reason for giving our statute an extra-territorial jurisdiction, especially in a case between citizens of other states, the effect of which would be to deprive parties of vested rights.

This contract affects neither citizens of this state nor property in the state. The garnishees have no interest in this question, and, for the purposes of this case, the debts owing by them have no situs in this state. Comity certainly does not require us to avoid this contract, for it is not a case for the application of that principle. If it was a mere question, not of right, but of policy, whether we would allow a foreign administrator or other officer deriving authority from, foreign laws to sue, as such, in our courts, we might well exercise a discretion and allow it in proper cases; but when we are asked to go further and arbitrarily deprive parties of rights acquired under valid contracts, we must see stronger reasons for it than any existing in this case.

There is no error in the judgment appealed from.

In this opinion the other judges concurred.