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Adams v. Storey.
certificate obtained pursuant to the bankrupt system, if any such there be, of the several countries in which his creditors may happen to reside. If the rule be not laid down precisely in these terms, such are its import and effect, and such, or something like it, is the practice which is very fast introduce ing itself, under the sanction of it. If this be so, how is an American merchant, who may be indebted in several countries abroad, in case of misfortune, ever to get disentangled from his debts? No proceedings under the bankrupt laws of the United States, if there be any, nor in conformity with the insolvent provisions of his own state, can do him any good. If he remains in his own country, trusting to the validity of such proceedings, perpetual imprisonment must be his doom, if his foreign creditors shall be as unrelenting as this rule is well calculated to render them; for no power there, it is said, can relieve him against this class of demands, but upon full payment of them, without a violation of the contract made abroad, or a disregard of the comity, due from one nation to another. According to this doctrine, he has no alternative left, but that of going to the different countries where he may be indebted, and there submitting to the proceedings established for the relief of unfortunate traders. And yet it is not perceived how his foreign creditors will be gainers by exposing him to so great a hardship; for if he shall commence his career of insolvency, as he naturally will do, in his own state, the assignment of his estate made there, will leave nothing for the creditors abroad, it being admitted, that by it the whole of his property, wherever it may be, will pass. In like manner, a debtor who shall fail, and have creditors of this description in different parts of the union, will have to make a tour of the United States before he can commence business again, in order to seek relief under the insolvent system of each state. Is it not more reasonable to suppose, as the case most undoubtedly is, that every contract, wherever made, must pro
Adams v, Storey.
ceed on an expectation, that the parties shall perform it according to the terms, if they are able, but if there shall be an inability in either to fulfil his part of the agreement, that then the other party shall be placed on as good, but not on a better footing, as to any remedy which he may seek for its breach or non-performance, as those who may reside in the country of the debtor? This, in case of insolvency, I should regard as a performance of the contract, secundum legem loci contractus, unless it were shown, that some different stipulation in the event of insolvency had been entered into, which is not pretended, and probably never did form a part of any contract, where no specific security was taken; and if it did, would hardly be enforced to the prejudice of other creditors.
If a remedy against the person of an insolvent debtor be allowed to his creditors abroad, which is denied to a domestic creditor, what is it but to give the former a preference over the latter, which neither justice will sanction, nor the lex loci in any case expect? On this subject I had an opportunity of expressing an opinion many years ago, in one of the cases which has now been cited. To that opinion I adhere, and shall adhere until a different rule shall be presented by a tribunal which has a right to control and direct the judgment of this Court. I then stated, that a surrender of all the bankrupt's effects, under the laws of the state in which he permanently resided, ought to operate as a discharge from his creditors in every part of the world; and will now add, without any regard to the Court or country in which the action against him may be prosecuting. Whatever fault may be found with this opinion, I am mistaken if it will not be found to conform with the sentiments and practice of commercial men, and to be for the benefit of trade, that it should be so. Merchants generally believe, that if their debtors abroad, no matter how the debt was contracted, or when payable, be regularly discharged by the bankrupt, or any other law of the state in which
Adams v. Storey.
they reside, and his estate be divided among all his creditors, they are exonerated every where. The rule so often cited from Huberus and Casaregis, has no application to such a case. When the latter speaks of contracts territorial and exterritorial, it is most manifest that he means nothing more, than that a contract made in one country is not to be construed by the laws of another. Now the difficulty is, to find out what the lex loci contractus has to do with the case of a future insolvency, or how the law of one country can differ from that of another in this respect. It is presumed to be law every where, that a man is to pay according to his contract; but if he be unable to pay any where, what then has the lex loci to do with the case? Is it part of that law, or is it any part of the contract, express or implied, that no government upon earth shall be allowed to interfere for his protection in case of misfortune and insolvency; or if it does, that such protection shall not extend beyond the limits of the state in which he lives, and not even there, as is contended in this case? Is it not for the advantage of foreign creditors, and will it not comport better with the interest of all parties, that when an insolvency occurs, they shall be placed on an equal footing with domestic creditors ? It may be ruinous to the debtor, but of what advantage will it be to his absent creditor, to have him consigned to a prison during life, without any right to a participation on his part, in the property in the hand of assignees; for it has not yet been pretended, although this might as well be proved by the lex loci, that the creditor abroad has a right to a dividend of his estate, and to the body of the debtor in the bargain. If care be not taken, the great solicitude which has recently been discovered for creditors in other countries, will produce decisions, if such have not already been made, which, in case of bankruptcy, will do them more harm than good. The truth is, all that amity, good faith, the contract of the parties, and the lex loci, if it has any thing to do with
Adams v. Storey.
the question can require, is, that their interests and rights shall not be postponed, or in other words, that they shall be as well taken care of as those of other creditors. Yet the Court of King's Bench, in Smith and Buchanan, went on the sole ground of the lex loci, when it decreed on the inefficacy of a discharge in Maryland against the claim of a British creditor. " It is impossible," says Lord Kenyon,“ that a contract made in one country is to be governed by the laws of another." It is also remarked in this case, that it might as well be contended, that if the state of Maryland had enacted that no debts due from its own subjects, to the subjects of England, should be paid, the English creditor would be bound by it. A law of this kind would not have been enforced by any Court of this country; but between the iniquity and injustice of such a statute, and one which placed the British on a level with the American creditor, this Court perceives no resemblance; while the one is calculated to excite the just indignation of any man, the other is well entitled to universal approbation. If, in all its provisions, it did not resemble the bankrupt laws of England, its effect in producing an equal division of the insolvent's estate was the same. It ought not to pass unnoticed, that at the very moment of rendering this judgment, the Court admits that an assignment under the act of Maryland, would vest the property of the bankrupt, wherever it might be, in his assignees. If so, it would seem to follow, that the debtor himself ought to be discharged; for, if the law takes from him, and against his consent, his property every where, and secures it even from the pursuit of a foreign creditor, why should it not be allowed to offer a protection equally extensive to his person? Or, why should he be placed in the very awkward situation of being liable to imprisonment abroad, when, in that very country, he may have more than property enough to satisfy the demands of his foreign creditor, but which has been placed out of his reach by an assignment previously made
Adams v. Storey.
under the laws of his own state? And it may here be remarked, that the universal effect which is given to such assignments is not among the least of the advantages which foreign creditors derive from the bankrupt or insolvent laws of the country where their debtors reside. It prevents the creditors near him, and who will be first apprized of his misfortunes, and of the nature and situation of his property, from laying attachments on many parts of it, to the prejudice of those at a distance. This case will be dismissed with only one other observation. The merchants of the United States have never supposed that they can proceed in their own Courts against British bankrupts, if found here, merely because the debt may have been contracted and payable on this side of the Atlantic; they receive and are satisfied with the dividend made in England; but if they shall hereafter make the attempt and succeed, it is to be hoped that the Court which shall sustain so novel a pretension, will have more courtesy than to compare the bankrupt laws of England, which are perhaps as perfect as such a system can well be, with an act of parliament, which should prohibit to American citizens the recovery of their just demands against British subjects. In the case of Van Raugh and Van Arsdaln in the Supreme Court of this state, we are only told that the question had been decided ten years before, but what the case referred to was, or on what ground the decision was placed, does not appear. In Smith and Smith however, the Court refers to the decision in East, and assigns the same reason that is there given, and which has already been remarked on.
But this Court is desired and expected to advance one step beyond all the decisions which have yet been made on this subject. Hitherto, an unfortunate debtor, even if he had heard of the few cases which have been mentioned, might think himself safe if he would but confine himself within the limits of his own state. He might confidently expect protection against the pursuit of every creditor without regard to