Fareira v. Keevil , 18 Mo. 186 ( 1853 )

Scott, Judge,

delivered tbe opinion of tbe court.

This was an action on promissory notes, instituted by Fa-reira against Keevil. Tbe notes were dated at Baltimore in September, 1844, and were for goods furnished in Philadelphia. Fareira was a citizen of Pennsylvania and continued so. Keer-vil was an inhabitant of tbe state of Maryland. Tbe defence to tbe action was, a discharge under tbe insolvent laws of Maryland. It was not shown that Fareira became a party by bis own act to tbe proceedings which resulted in tbe discharge of Keevil.

1. In tbe argument of this case, an attempt was made to show that tbe notes were Maryland contracts, and, consequently, discharged by tbe proceedings in insolvency. Speaking in reference to commercial law only, if the notes were Maryland contracts, they were discharged by tbe certificate of insolvency. By tbe same law, however, some courts bold, that a discharge obtained under insolvent laws, is only operative between citizens of tbe state in which tbe discharge is procured ; that, although the contract may have been created in the state by whose insolvent laws it is discharged, yet the discharge is only operative between citizens of that state, and cannot affect those who reside abroad. Story’s Oonf. of Laws, 340. It maybe assumed, as the international law, that a discharge of a contract, by the law of the place where it is made, is a discharge everywhere, and precludes all consideration of tbe question whether it was made between citizens, citizens and foreigners, or between foreigners.

Whatever may Be the international law on this subject, that law has been controlled by the constitution of the United States, which prohibits any state from passing laws impairing the obligation of contracts, and this question has been put to rest by repeated decisions of the Supreme Court of the United States, where it is maintained-, that a discharge under the insolvent laws of the state where the contract was made, will not operate as a discharge of the contract, unless it was made between citizens of the same state. It cannot discharge a contract made with a citizen of another state. Ogden v. Saunders, 12 Wheat. 358. Boyle v. Zacharie, 6 Pet. 348. Story’s Com. on the Cons. §1384. When the case of Boyle v. Zacharie & Turner came on for argument, an inquiry was made of the court, whether the opinion of Mr. Justice Johnson, delivered in the case of Ogden v. Saunders, 12 Wheat., was adopted by the other judges, who concurred in the judgment in that case. Chief Justice Marshall answered, that the judges who were in the minority of the court, upon the general question as to the constitutionality of state insolvent laws, concurred in the opinion of Mr. Justice Johnson, in the case of Ogden v. Saunders. That opinion is, therefore, to be deemed the opinion of .the other judges, who assented to that judgment. Whatever principles are established in that opinion, are to be considered no longer open for controversy, but the ■settled law of the court. The points established by the case of Ogden v. Saunders are, first, that insolvent laws, discharging the obligation of future contracts, are to be deemed constitutional ; second, that they apply to all contracts made within the state between citizens of the state ; third, that they do not apply to contracts made within the state, between a citizen of a state and a citizen of another state ; fourth, that they do not apply to contracts not made within the state. In all these cases, it is considered that the state does not possess a jurisdiction co-extensive with the contract over the parties, and, therefore, that the constitution of the United States protects them from prospective as well as retrospective litigation. The plaintiff in this action was not a citizen of Maryland, but of Pennsylvania. The insolvent laws, therefore, of Maryland, could not discharge his contract, under the constitution of the United States. It does not appear that the plaintiff voluntarily made himself a party to the proceedings in insolvency, or accepted any dividend declared under them ; he has not, therefore, abandoned his extra-territorial immunity from the operation of the insolvent laws of Maryland. 3 Pet. 411. The other judges concurring, the judgment will be affirmed.