Smith's Appeal , 1884 Pa. LEXIS 17 ( 1883 )

Mr. Justice Clark

delivered the opinion of the court, January 7th 1884.

On the 18th of May 1848, Dr. Charles Smith of New Brunswick, New Jersey, having made his last will and testament, died possessed of a large estate, consisting of real and personal property. By his will he bequeathed to Fitz Randolph Smith and Charles Smith Olden, of Princeton, certain personal securities, upon the trust, that the income thereof should be paid to his nephew, Charles Gardiner Smith, during his life, to diaries’ wife, Martha McDowell Smith, in case she should survive him, during her life; after the death of the said Charles Gardiner Smith, and his said wife, that they should apply the income to the support, maintenance and education of the children of his said nephew, until they should severally arrive at the ago of twenty-one years, and as they arrived at that age, respectively, to pay each of said children one equal share of the fund with its accumulations.

Charles Gardiner Smith died on the 2d November 1870, leaving surviving him, a widow, the said Martha McDowell Smith, a citizen of Pennsylvania and five children of whom Geo. G. Smith was one.

George G. Smith who was a citizen of the state of Maryland became insolvent, and on the 22d April 1874, executed a deed of voluntary assignment for the benefit of his creditors, under the laws of that state, to "W. II. McDowell, John Lind McAtee and Theodore Embry. This assignment was duly recorded at the place of the domicile of the assignor, but was never recorded in New Jersey, nor was it recorded in Pennsylvania until in the year 1878.

On the 5th October 1874, Geo. G. Smith joined with his brothers and sisters in an assignment to their mother, Martha McDowell Smith, of all their interest in the fund held in trust by Eitz Randolph Smith and Charles Smith Olden in the state of New Jersey, and on the 15th February 1875, upon a bill in chancery, preferred by Martha McDowell Smith, against the executors of the last will and testament of Dr. Charles Smith, deceased, and against her own children, to which the assignees for creditors were not made parties, the New Jersey Chancery Court ordered and decreed that the.said fund amounting to $59,819.15 should be paid to her; pursuant to this decree the entire fund passed into her hands. At the time of this transfer of the New Jersey fund to Martha McDowell Smith, by her children, she had “ previous actual notice,” of the general assignment for creditors in Maryland; indeed, it cannot be doubted that she had full knowledge of the assignment on and after the 18th June 1874, when she purchased a portion of the assigned estate from the assignees.

At the time of the receipt by Martha McDowell Smith, of this fund from the executors of Dr. Charles Smith, deceased, in February 1875, George G. Smith was indebted to his mother in a large sum of money, perhaps exceeding the amount of'his share; on the 16th November 1874, this indebtedness aggregated $29,885.69, whilst his entire liabilities at the same time exceeded $40,000.

On the 16th February 1878, this bill was filed, setting forth the facts substantially as here stated, and praying for proper relief. The bill was not premature, as it was the clear duty of the court to pursue this fund, restrain its improper conversion, control its investment, and generally, to prevent any maladministration of the trust. Martha McDowell Smith died in the month of February 1880, and L. H. Smith and B. Wolff, executors of her last will and testament, were substituted as defendants.

The assignment of 22d April 1871, for the benefit of creditors of George G. Smith, was a voluntary conveyance ; it was not one made in invitum, or by coercion of law, and being valid, according to its purpose, by the laws of Maryland, it was sufficient of itself to pass the title to the insolvent’s personal estate, wheresoever situate. The law of the domicile regulates the transfer of personal property, and the deed, without record, was effective as against the grantor: Speed v. May, 5 Harris 91; Law v. Mills, 6 Harris 185; Evans v. Dunkelberger, 3 Gr. 134; Lewis v. Barry, 22 P. F. Smith 18.

The fund in controversy, at the date of the assignment for creditors, was in the control of the executors of Dr. Charles Smith, deceased; where invested does not appear, but the argument proceeds upon the assumption that the legal situs of the property was in Pennsylvania.

But the Act of 3rd May 1855 gives a more extended operation to conveyances of this character; it provides : — “Whenever any person making an assignment of his or her estate, situate within this Commonwealth, for the benefit of creditors, shall be resident out of this state, such assignment may be recorded within any county where such estate, real or personal, may be, and take effect from its date.” It cannot be doubted, therefore, that the legal effect of recording the deed of 22d April 1871, in Pennsylvania, in 1878, under this Act, was to add to its force at the common law, and give it full effect from its date, saving the rights accrued to “ bona fide purchasers, mortgagees or creditors, having a lien thereon before the recording, in the same county, and not having had previous actual notice thereof.” As it clearly appears that Martha McDowell Smith had this previous actual notice, she cannot come within this saving clause; she took no title, therefore, to the share of George G. Smith in this trust fund by the transfer of 5th October 1874. The fund has, however, been traced into her hands and as by her decease since the filing of this bill, the time has arrived for distribution, under the will of Dr. Charles Smith, deceased, it is but just that a decree shall be entered for payment of George G. Smith’s share of the trust fund to the assignees for creditors, unless some superior equity intervenes •to prevent such a decree.

It is objected however, that Geo. G. Smith was indebted to his mother at the daté of his general assignment, in a sum, equal to, or greater than his share in the fund found in her hands, and, that, being a citizen of Pennsylvania, she presented-her claims as a creditor, in the proper courts of Maryland, for a distributive share in the assigned estate, when the assignees interposed the bar of the statute of limitations of the latter state, and the lapse of a period of three years only from the time the 'right of action accrued, without suit brought, was there held to be a complete bar, against the allowance of her said claims. The effect of the assignment made by Geo. G. Smith, was to withdraw his property in Pennsylvania, where the statutory limitation is six years, from seizure for debts existing there. It is contended, therefore, that it would be inequitable and unjust to compel her to relinquish the fund iu her hand, in order to its removal into a foreign jurisdiction, where her clear rights may thus be disregarded and defeated by the absolute bar of a foreign statute, and that as a Pennsylvaniacréditor she is entitled to protection against such a result.

In the distribution of the estates of decedents, whose domicile was in a foreign state, it is conceded that the rights of domestic claimants muse be protected here ; they must not be put to the expense or danger of following the home fund into a foreign jurisdiction : the absence or presence of domestic claimants upon the fund determines the action of the court, under the comity of nations; it is not-a question of jurisdiction, in such a case, but merely one of judicial discretion. The same rule has been observed, in the distribution of a fund arising from the transfer of property made under coercion of the law, iu any form, as an assignment in involuntary bankruptcy, or of a fund in the hands of a receiver. In all such cases, the transfer being in invitum, by process abroad, it will be regarded" only so far as it is not inconsistent with the i-ights and claims of our own citizens: Lowry v. Hall, 2 W. & S. 131. But in the case of a voluntary assignment for creditors, no such rule has ever been recognized< in this state; on the contrary, as shown by numerous decisions, and by the provisions of the Act of 1855, a widely different policy has been pursued. If the owner of personal goods or estate in Pennsylvania, may, at the place of his domicile in a foreign state, bona fide and for valuable consideration, dispose of the same, receiving and placing the consideration within his own control, and this he may undoubtedly do, he may certainly with like effect convey his estate to the benefit of his creditors here and elsewhere. As stated by Chief Justice Gibson in Lowry v. Hall, 2 W. & S. 131: “ The voluntary transfer of a chattel by the debtor, if not forbidden in other respects by the law at the place of the situs, is to be as much regarded there or elsewhere as it would be at the place of the domicile.”

Whilst an extra-territorial effect is almost denied to an assignment made compulsorily, to one voluntarily made, ex mero motu, by a failing debtor, full effect is always given, not only in Pennsylvania but in the other states of the Union ; a failing debtor has the right to make such legal disposition of his property among his creditors, as lie may elect. Mr. Justice Story in his Conflict of Laws § 111, says : “It is therefore admitted that a voluntary assignment, by a party, made according to the law of his domicile, will pass the personal estate, whatever may be its locality, abroad as well as at home. The law distinguishes that which results from the exercise of power under the law, from that which comes from the free will of the party ; the former is limited in its effect to the country where the law is in force, whilst the latter is given universal and general operation, under the comity of nations: Speed v. May, supra; Dundas v. Bowler, 3 McLean 397; Livermore v. Jenckes, 21 Howard 126.

As Martha McDowell Smith had acquired no lien upon or proper claim to the trust fund, paid to her by the executors of Dr. Charles Smith, deceased, as against the previous assignment for creditors, we discover no good reason for disturbing the judgment of the court below.

The decree is therefore affirmed, and it is ordered that the costs of this appeal be paid by the appellants.