Frey v. Kirk , 4 G. & J. 509 ( 1832 )

Archer, J.,

delivered the opinion of the court.

The following questions are presented by the various hills of exception in the record.

1st. Is the defendant’s discharge under the insolvent laws of Maryland, a bar to the plaintiff’s recovery of an absolute judgment?

2nd. Is the defendant protected by the statute of limitations? and if so, is the acknowledgment such as would be sufficient to take the claim out of the operation of the statute?

In relation to the first question, the case presents the following facts. The contract was made between citizens of different States. The plaintiff resided in Pennsylvania, and the defendant in Maryland, and the contract which bears date in 1816, was payable in Pennsylvania, at the Chester County Bank. By the act of the general Assembly of Maryland, passed at December session, 1818, the benefit of the insolvent laws of Maryland was authorized to be extended to the defendant, without his obtaining the assent of two-thirds of his creditors.

We shall examine this question in two aspects. First, without any reference to the act of 1818, and looking solely at the ability of our laws to discharge the defendant from his contract, made subsequent to the passage of such laws; and secondly, as to the efficacy of the discharge in barring the recovery of the debt, contracted anterior to the passage of the special act of insolvency passed in the year 1818.

The insolvent laws of this State profess to operate upon all claims, whether, the creditors are residents of other States or not, and no matter where the contracts are to be performed ; and if this cause were to be determined by our legislation solely, the plaintiff could not be entitled to any other than a qualified judgment.

The plaintiff, however, relies upon his rights as a citizen of another State, secured to him by the constitution of the United States, and contends, that however general may be the phraseology of our laws, they can have no operation upon his claim; and several decisions in the Supreme Court of the United States are relied upon to sustain this proposition. It has been a subject of great regret, that the determinations of the tribunal of the last resort upon this perplexing question, have been so unsatisfactory, and to use the language of one of the judges of the Supreme Court, that “ they assume as much the shape of a compromise, as of a legal adjudication.” But however we may lament this, if it can be ascertained with certainty, the conclusions to which that court has arrived, as it is more especially its province to determine such questions, we shall feel ourselves constrained to yield to them the deference demanded by the peculiar sphere in which it moves, under the constitution and the laws.

Whatever doubt may heretofore have existed, with regard to the law settled in the cases of Ogden and Saunders, 12 Wheat. 213, and Shaw and Robhins, Ib. 369, arising from the diversified views taken by the judges in pronouncing their judgments, it appears by the late case of Boyle vs. Zachary and Turner, 6 Peters S. C. R, 634, that the ultimate opinion pronounced by Mr. Justice Johnson, is to be considered as final and conclusive of the law upon this subject, and Chief Justice Marshall, in 6 Peters, 348, declares, ££ that whatever principles are established in that opinion, are to be considered as no longer open for controversy, but the' settled law of the court.”

Looking then, to the ultimate opinion of Mr. Justice Johnson, as giving the law upon this subject, and not considering it, as in any manner, to be limited or restrained in its interpretation, by his general views expressed in his first opinion in the same case, we consider, that so far as the question before us is to be aifected by that judgment, the following principles are clearly dedueible. 1st. That the States possess power to pass bankrupt laws. 2. That such laws, although constitutional in their action upon the rights of their own citizens, are unconstitutional when they affect the rights of citizens of other States. The case then before the court, presented the question, whether the discharge of a debtor under a State insolvent law, would be valid against a creditor or citizen of another State. The inferior tribunal had determined the invalidity of a discharge under such circumstances, and in affirming the judgment, the learned judge declares, the purport of the judgment to be this, i£ that as between citizens of the same State, a discharge of a bankrupt by the laws of that State, is valid as it affects posterior contracts; that as against creditors, citizens of other States, it is invalid as to all contracts.” And in speaking of the important results growing out of the limitation of the power of the States over contracts, to the controversies of their own citizens, after they become the subject exclusively of judicial cognizance, he declares, “that the States cannot proceed one"step further without exercising a power incompatible with the acknowledged power of the other States, or of the United States, and with the rights of the citizens of the other States.” Acting in conformity with this opinion, and the views of it thus expressed, the Supreme Court decided the case of Boyle vs. Zachary and Turner, 6 Peters, 635, in which it was adjudged, that a discharge under the insolvent laws of Maryland, was inefficacious in relieving the debtor from a contract to be performed in Louisiana. These determinations are decisive against the operation of the discharge here pleaded against the plaintiff’s contract, as it was to be performed in Pennsylvania, unless as has been supposed, the opinion of the Supreme Court gives countenance to the idea, that there is a different constitutional rule operating in the United States Courts, and in the courts of the State where the debtor is sued, and by whose laws he is discharged.

Whatever may have been the views expressed by the learned judge, whose last opinion has become the law of the land, in his first opinion in Ogden and Saunders, we consider them as impliedly abandoned, or at least as not having been adopted by the court; for the views upon this subject in his first opinion, are not only not reiterated, but general conclusions are drawn, without the qualifications to which the first opinion would have led, and the last opinion is adopted by the court as the settled law. And if it were otherwise, we should feel some difficulty in sanctioning the doctrine, that a creditor, by pursuing his debtor by suit in the courts of the State granting the discharge, thereby stripped himself of any rights secured, to him by the constitution of the United States, or in any manner waived them. Entertaining these views, we are compelled to decide, that the defendant’s discharge did not protect him against an absolute judgment.

This determination renders it unnecessary to present any views, in relation to the operation of the special act of insolvency, passed for the defendant’s release in the year 1818, subsequent to the date of the contract, and dispensing with the assent of creditors.

The next question submitted by the various prayers in the record is, whether the cause of action is barred by the statute of limitations?

The act of 1715, ch. 23, gave, by its third section, to persons beyond the seas at the time of the accrual of the cause of action, liberty to bring their actions within the respective times prescribed by the second section, after their coming within the State. The act of 1818, ch. 210, repealed the exceptions or savings in this statute in favor of persons beyond seas.

If this repealing statute is unconstitutional, the plaintiff’s claim, standing under the exception in the law of 1715, would not be barred by limitations, as there is no evidence in the record, that the plaintiff had been at any time within the State, from the formation of the contract, or at its accrual. •

This cannot now be considered as an open question in this court. The constitutionality of the repealing law, was determined at the last June term, in the case of the Slate use of Krenkel vs. Hoppe and Hammer, in which the court adjudged, that after the repealing law, all persons beyond seas had the same time to bring their actions, as they would have had, if they had resided here, and the causes of aetion had accrued on the day of the passage of the law—and they gave such an interpretation to the act, as placed all suitors, foreign and domestic, upon the same footing. The unlimited latitude granted to persons beyond seas, was considered by the legislature as unreasonable, and it could constitute no actual grievance, or just cause of complaint, if they were reduced to the same standard as our own citizens. Placing such a construction upon the act of 1818, it was clearly, neither a violation of any constitutional obligations of the State, for no obligation of contract was at all violated or impaired; nor was it an infringement of any principle of natural justice, as affecting the foreign creditor, for the same law governed his contract, which operated on all other contracts.

More than three years having elapsed after the passage of the law of 1818, ch. 216, before the institution of the suit, the statutory bar of limitations defeated the plaintiff’s recovery, unless the evidence adduced by him shall be deemed sufficient to remove the bar and of this, we shall now inquire.

The evidence on this branch of the case is detailed in the bill of exceptions. It is unnecessary to advert to it here with particularity. In substance it is an admission that the cause of action was unpaid, and a refusal to pay, because the defendant was discharged bv the insolvent laws.

Every acknowledgment to tañe a case out of the statute, should be of such a character, as that an implied promise may arise therefrom. It should therefore, in the language of Oliver and Gray, be the admission of a present subsisting debt. And although it was admitted in effect, that the debt was unpaid, the defendant relies upon his discharge under the insolvent law, to prevent its coercive payment. Taking the admission with the qualification which he has urged, it could not be construed into the admission of a present subsisting debt, for, if the excuse were true, instead of its being the admission of a present subsisting debt, it would be equivalent to a declaration that the debt was discharged. It is true, the admission is accompanied with an excuse, that leaves the moral obligation to pay in full force, yet taken altogether, it wants the essential ingredient demanded in Olí ver and Gray; it is not the admission of a subsisting debt, but a denial of its existence as such.

Nor can it be answered, that the discharge was unconstitutional and void, and be inferred from this, that the admission was therefore of a subsisting debt; for the acknowledgment must be taken altogether, and no evidence can be received, to turn what is a denial of an existing liability, into the acknowledgement of a debt, by showing, that he either was not discharged by the insolvent laws, or that his discharge was inefficacious.

From the preceding views, it follows, that the court below were right in granting the third and fourth prayers in the first bill of exceptions, but were in error in granting the first prayer in said bill of exceptions; and were also in error in granting the second prayer therein contained, because, although the discharge of Frey under the insolvent laws, was inoperative as regards the plaintiff’s claim, yet the court went too far in their instruction to the jury, if they believed the defendant was indebted to the plaintiff, that therefore the plaintiff was entitled to recover.

The court below were in error in the opinion by them expressed, and in the direction by them given in the second bill of exceptions. It also follows, that the court were right in rejecting the prayer made by the defendant’s counsel in the fourth bill of exceptions, and in the opinion expressed by them therein.

judgment reversed.