Page images
[ocr errors]

twelve hours. Because the company would Even in the absence of the constitutional pronot transport the whole Dewin family on two vision upon the subject, no one would claim tickets, the jury kindly gave the twenty-seven for any state the power to establish “uniform months old infant a douceur of $750. But laws on the subject of bankruptcies throughout eight into two was something the supreme the United States,” for the manifest reason court could not work out, and they were that the jurisdiction of each state is limited by therefore forced to reverse the judgment. The its own boundaries. However, it is well settled conductor, said the court, did no more than that the states have ample authority to pass his duty. There was no ground for the re bankrupt laws (or insolvent laws, which are covery of vindictive damages, and no actual the same in substance), and administer them damages were proven, and the court could in the state courts, so long as there is no connot perceive on what ground the judgment flicting federal law upon the subject, and procould be sustained.- In City of Elgin v. vided they are so formed as not to contravene Renwick, 86 Ill. 498, the plaintiff, after dark,

that provision of Section 10, Article I, of the while walking along a sidewalk at a fast rate,

Federal Constitution, which declares that no was thrown down, by stepping into a hole in

state shall pass any “ law impairing the oblithe walk, and received personal injury. He

gation of contracts.” Sturgis v. Crownintestified that he had no knowledge of the de

shield, 4 Wheat. 122; Baldwin v. Hale, 1 fect, and was using care. The evidence also

Wall. 223 ; Baldwin v. Bank of Newberg, Id. showed paralysis following the accident, which 234. Any further restrictions upon state leghad continued for five or six months under

islation affecting this subject must be sought judicious treatment, and also tended to show

in the state constitutions. that a rupture was caused by the fall, although

But by the provision that state laws shall not there was some evidence tending to show

impair the obligation of contracts, the states that plaintiff had a rupture before the acci

are shorn of jurisdiction with respect to one of

the most essential features of all such statutes, dent. A verdict for $3,000 was sustained by the supreme court, BREESE, J., dissenting,

and one which has become almost inseparable however, on the ground that the damages

from our ideas of a bankrupt law--that diswere excessive.

charging the insolvent debtor from liability
without the consent of his creditors. A law

which simply enables a debtor to escape by ob-

taining the consent, express or implied, of his
creditors bears very little resemblance to the
bankrupt laws with which we have become famil-

iar. The involuntary provisions of the national CONSTITUTIONAL LIMITATIONS_IMPAIRING OBLI

act lately repealed may be approximately imitaGATION OF CONTRACT.

ted by state legislatures in every feature, exThe power conferred upon Congress by the

cept that which contemplates a discharge of Eighth Section of Article I, of the Constitution the debtor; but it is difficult to imagine a statof the United States, to establish “uniform laws ute so constructed as to discharge an insolvent on the subject of bankruptcies throughout the debtor from liability upon his own petition, United States," was not intended as a prohibtion without the creditor's consent, or to force his of the exercise of jurisdiction, upon the subject consent to such discharge, that would not imof bankruptcy and insolvency, by state legis- | pair the obligation of the contract from which latures and state courts, in the sense that the the liability arose. states might not provide such laws as would be In the case of Farmers & Mechanics' Bank operative within their own jurisdiction, sub- v. Smith, 6 Wheat. 131, Chief Justice Marshall ject to certain other constitutional restrictions. | takes the broad ground that an act of the But in so far as the effects of such laws are in state legislature providing for the discharge of tended to be general and uniform in their ope a debtor from all liability for debts contracted ration upon the relative rights or liabilities of previous to his discharge, on surrendering his citizens of different states, in their business property for the benefit of his creditors, is a intercourse with each other, the power of Con- law impairing the obligation of contracts, gress is practically exclusive upon the subject. ' without considering whether the debt was con



tracted prior or subsequent to the act, and that C. 296, where it is decided that the discharge the rule applies to contracts between residents of a debtor under the insolvent law of Pennof the same state and between residents of dif- sylvania would not protect him, even from ferent states, in the same manner and to the arrest or civil process, for a debt payable in same extent. But elsewhere it has been held New York, or to a citizen of that state. that a state law discharging a debtor from lia The immunity from the operation of local bility on future contracts entered into and to be insolvent laws enjoyed by a non-resid performed within the state where the law was itor, in so far as they attempt to discharge his in force, was constititutional. Donnely v debtor, is one, of what value soever it may be, Corbett, 7 N. Y. 500; Watson v. Tarpley, Id. which he can waive. By making proof of his 517. So, where a promissory note was made claim, and participating in the distribution of payable in the State of Massachusetts, the estate of the insolvent, he voluntarily subthe court of last resort of that state held mits himself to the jurisdiction of the court, that its payment would be subject to the and by implication assents in advance to the provisions of their insolvent laws, regardless | discharge of his debtor, subject only to the of the place where the note was made or the conditions prescribed by the law of the forum. citizenship of the payee or holder. Burrall v. Clay v. Smith, 3 Peters, 411. But where the Rice, 5 Gray, 539; Scribner v. Fisher, 2 Gray, non-resident creditor does not participate in 43; Capron v. Johnson, 5 Gray, 539, (note.) the proceedings, nor accept the dividends deSee, also, Savage v. Marsh, 10 Met. 594 ; clared in the proceedings under the state law, Clark v. Hatch, 7 Cush. 455 ; Bank of Ten an attempt to discharge the debtor is clearly nessee v. Horn, 17 How. 57, 161; Peale v. an impairment of the obligation of the conPhipps, 14 How. 368. And, by the same tract. The obligation which the law imposes court, it was held that a negotiable promis upon the debtor is to perform wbat he has by sory note made in that state, without any spe his contract undertaken, and any law that purcific place of payment, but negotiated in good | ports to release him from this obligation is faith before maturity to a resident of another within the constitutional inhibition. And the state, would not be affected by a discharge of jurisdiction which is denied to the state courts the maker under the insolvent laws of Massa has reference not only to the person over chusetts. Houghton v. Maynard, 5 Gray, whom, or the territory within which, it is 552; Dinsmore v. Bradley, Id. 487. See, sought to be exercised, but to the subject-matalso, Frey v. Kirk, 4 Gill & J., (Md.) 509. ter—the antecedent debt. Therefore, a suit The principle upon which these cases are so

brought by the foreign creditor in the courts decided is that the contract is governed, in all of the state where the discharge had been prethat relates to its enforcement, by the law of

viously granted, would not be barred, upon the the place where it is to be performed, and is

ground that by so bringing his action the credpresumed to be made with reference to the laws itor submitted his claim to the jurisdiction in force there at the time. Marsh v. Putnam, where the validity of the discharge was recog3 Gray, 551. In pursuance of this doctrine, nized. Hicks v. Hotchkiss, 7 Johns., Ch. it was held in the case last cited that a debt 197; Van Hook v. Whitlock, 26 Wend. 431; due from one citizen of Massachusetts to an- | Soule v. Chase, 39 N. Y. 342. So it was held other, contracted and payable in another state, that a statute of Alabama providing for the would be subject to the insolvent laws of the distribution of the estate of decedents judistate where the contract was made and the cially declared to be insolvent, and prohibitproceedings had ; and a dicharge of a debtor

ing suits against the personal representatives there obtained would bar an action for the after such declaration of insolvency, would same debt in Massachusetts. The distinction not abate a suit in the federal court by a citibetween the operation of local insolvent or

zen of another state, unless the creditor had bankrupt laws upon demands between citizens

| voluntarily become a party to the insolvency of the same state where the debt is payable, proceedings. The law of the state could not and between citizens of different states, or be so construed as to force him to submit his which are payable elsewhere than where the claim to the courts of Alabama to have his proceedings are had, is partially recognized in rights adjudicated. the case of Woodhull v. Wagner, 1 Baldw. C. In the cases cited above-particularly those

decided in the state courts—it will be noticed ges v. Crowninshield, 4 Wiieat. 122 ; and, as that much stress is laid upon the question of we have already noticed, Chief Justice Marthe place wherein the contract is to be per shall lays down the same doctrime in Farformed, and wherein the contractor resides. mer's & Mech’s Bank v. Smith, 6 Wheat. The place of performance may control so as 131, with equal emphasis, and without any of to discharge the debtor, when the debt is | the qualifications by which some of the state contracted subsequent to the passage of the | courts have sought to surround the constitulaw authorizing the discharge, especially where tional restriction upon the powers of their own the creditor was within the state at the time legislative bodies. of making the contract, or where there are There is no doubt that the states may pass other reasons for holding the eontract subject and administer laws providing for the assignto all the laws of that state, than a purely ment of the assets of insolvent debtors, and technical presumption. But when the law is, their pro rata distribution between creditors, by its express terms, or by necessary impli

and even that further prosecution of debts due cation, retroactive in its operation, and is in- participating creditors shall be prohibited. tended to apply as well to prior as to subse For these laws contain an element of implied quent transactions, it matters not where the assent, which renders them unobnoxious to parties live, or the contract is to be performed. the objection that they impair the obligation No presumption can arise that an agreement of contracts. The obligation of a contract is entered into between parties, subject to the can not be said to be impaired by a law which provisions of a law not yet enacted, and which provides that the obligation may be discharged is beyond the authority of the legislature. If | by the voluntary act of the obligee. But the construction of the constitutional prohibi when the statute undertakes, either directly tion is such as to restrict its application to or indirectly, to coerce the creditor into contracts antecedent to the law, and not to ex- | acquiescence or participation, it is open to all tend it to all contracts not themselves prohib the objections that may be urged against the ited, or surrounded with special restrictions, most open and flagrant violations of the Fed. still the language of the constitution is such as eral Constitution. to protect existing contracts between citizens As to laws which are calculated to affect of the same state as well as those between the obligation of the contract, and those merely citizens of the different states. No such acci touching the remedy, we shall endeavor to dental circumstance as the local habitation of draw the distinctions between them in a futhe citizen, so long as he resides within the ture number of the JOURNAL.

W. United States, can subject him to a local ju

(To be continued.) risdiction with sufficient power to impair his rights under the fundamental law of the general government. Nor can a choice of such HOMESTEAD EXEMPTION – PROCEEDS OF residence be tortured into an assent to the ex

SALE UNDER TRUST DEED. ercise of powers prohibited to the states by the Constitution of the United States. It will

CASEBOLT v. DONALDSON. be noticed, by a comparison of the cases cited, that the state courts are much more liberal, in

Supreme Court of Missouri, April Term, 1878. the construction of their own bankrupt and insolvent laws, than Federal Courts. The Su Hon. T. A. SHERWOOD, Chief Justice.

66 WM. B. NAPTON, preine Court of the United States has decided

16 WARWICK HOUGH, Į Associate Justices. in round terms that a state insolvent law, grant

" John W. HENRY, ing an absolute discharge to the debtor without the creditor's consent, is a law impairing

1. WHBRE A JUDGMENT DEBTOR HAS EXECUTED the obligation of a contract, and is therefore a deed of trust on his homestead, and the same is sold void, as being in contravention of the consti

under the deed, the proceeds of such sale, in the

hands of a purchaser thereat, in excess of debts secured tutional prohibition of such laws. Boyle v.

by trust deed, and costs of sale, are not subject to Zacharie, 6 Pet. 635. The same principle is homestead rights of debtor, and are liable to garnish

ment by a judgment creditor of the owner of such announced and elaborated in the case of Stur



2. THE FACT THAT THE JUDGMENT CREDITOR bad | stated, was entitled to it as against Donaldson and caused the levy on such homestead of an execution is Farris. When the execution in favor of Casebolt sued on his judgment, and had purchased the land at a was levied upon the land in qnestion, Paul did not sale thereunder, will neither destroy nor suspend such designate under Section 2 of the Homestead Act right of garnishment. Neither is such right of gar

the part thereof to which the exemption should nishment contingent upon such judgment creditor re

apply; nor did the sheriff, as provided in that linquishing the title to the homestead acquired by his execution sale. The money arising from the sale un

section, appoint three appraisers to fix the der trust deed in excess of debt secured thereby on the

location and boundaries of such homestead. No debtor's homestead, is the debtor's money, and such attention whatever was paid, either by the sheriff judgment creditor has the same right to subject it to or the defendant in the execution, to the provisions garnishment for the balance due as any other judg. 1 of the homestead law. The homestead is a statument creditor.

tory right-a strictly legal right-and while the 3. THE HOMESTEAD RIGHT IS A STATUTORY RIGHT 1 act should be liberally construed to effectuate its a strictly legal right, and while tbe act should be lib. benign purpose, yet equitable principles, other than erally construed, yet equitable principles other than those recognized by the act, can not be invoked by those recognized by the act can not be invoked by one any one claiming a homestead right. claiming a homestead right. The judgment debtor

The statute confers the right, and states the cirhaving voluntarily conveyed the land in which he had a homestead right, the money realized by a sale under

- cumstances under which it shall exist; and if a that conveyance can not be treated as land, much less

very liberal construction of its terms will not emas a homestead. It is “the dwelling-house and land, brace the claimant's demand, it can not be adrents, issues and profits” which are exempt, and the mitted. provisions of the act for setting out the homestead “by

The first section provides: “The homestead metes and bounds," forbid the idea of a homestead ex

of every housekeeper or head of a family, conemption in anything but real estate.

sisting of a dwelling-house and appurtenances, APPEAL from Ray Circuit Court:

and the land used in connection therewith, not ex

ceeding the amount and value herein limited, which HENRY, J., delivered the opinion of the court: is or shall be used by such housekeeper or head of

a family as such homestead, shall, together with C. T. Garner & Son, for respondent; Donaldson

the rents, issues, and products thereof, be ex& Farris, for appellants.

empt, etc.” George Casebolt obtained a judgment against It is the dwelling-house and land, and rents, isJohn B. Paul in the Circuit Court of Clinton sues and products which are exempt; nothing else., County, and had an execution issued thereon, di If one who has acquired a homestead in 160 acres rected to the sheriff of Ray County, which was of land sell off ten acres, or exchange it for cattle, levied upon the W. half of the N. E. quarter of | it certainly could not be maintained that such catsection No. 2, Township No. 53, of Range 26 in | tle would be exempt from execution under the said county, the property of said Paul, upon which, homestead act. Or, if he sell the whole homestead with his family, he resided. The land was sold and invest the proceeds in a stock of dry goods, or under the execution, and was purchased by Case- | any other personal property, to trade on, could he bolt in February, 1876,

claim a homestead exemption in such personal Paul executed a deed conveying the said land to property? While the object was to secure, not only Thomas J. Dodd, as trustee to secure the payment to the head of a family, but to all the members of of a note for $200, held against him by Donaldson the family, a home to live in, yet, if the head of a and Farris. Whether the judgment in favor of family see proper to do so, the law does not preCasebolt or the deed of trust was prior in date, vent him from converting the homestead into capdoes not appear, nor is it essential.

ital to trade with, or other property which he may On the 28th day of January, 1876, Dodd sold the prefer to hold. If he sell his homestead, and inland in pursuance of the terms of the deed of trust, vest the proceeds in wild lands for speculation, and Donaldson and Farris purchased at the price there is no provision of the statute which would of $550, and after satisfying their debt and the exempt them from liability for any debts he may expenses, they owed, of said purchase-money, owe, no matter when contracted. $299.75.

There is nothing in the act protecting the proCasebolt had a garnishment served on Donald- ceeds of the sale of a homestead against creditors' son and Farris, in order to subject the amount demands, except as provided in sections 9, 10 and due from them to the payment of the balance of 11; and the provisions " for setting out the his judgment. They answered interrogatories set homestead by metes and bounds" by the ting forth the foregoing facts, and alleging that sheriff when he levies an execution by the probate Paul claimed the money under the homestead law, court, when the head of a family dies- and whenand denying Casebolt's right to the money, unless ever, in any proceedings at law or in equity, it behe relinquished his claim to the land under the ex comes necessary to sever, or set out any homestead ecution sale. Paul filed an interplea, claiming from other real estate, forbid the idea of a homethe money under the homestead law.

stead exemption in anything but real estate. The The questions presented are, whether the home tenth section provides for the sale of a homestead stead law exempted this money from Casebolt's right whenever the dwelling-house and land in execution, and if not, whether Casebolt, having connection therewith exceed the value mentioned in purchased the same land, and claiming it as above the first section, and a severance of the homestead

would greatly depreciate the value of the residue 4. ESTOPPEL.—Where a city subscribes to the capof the premises, or be of great inconvenience to ital stock of a railroad company, formed by the conthe parties interested, either in the homestead or

solidation of two or more companies, and issues its such residue. The court on petition is required to

bonds to such company in payment of the subscrip

tion; in a suit upon the bonds, the city is estopped to make such orders as may be equitable and needful,

deny the corporate existence of the company so formand, if such homestead be sold, the court may con

| ed, or the validity of the proceedings for the consolitrol the investment of the proceeds in a new home dation. stead, or their payment out of court, as in cases of 5. WHERE PART OF CONTRACT IS ULTRA VIRES, the funds of married women.

WHOLE CONTRACT NOT VOID.--If, in the exercise of In this case no homestead was ever set out to the its undoubted powers, a corporation makes a contract, interpleader. He voluntarily conveyed the prop some stipulation of which is in excess of its powers, erty in which he had a homestead right, to secure

this does not avoid the whole contract is, after rejectthe debt he owed the garnishees. Under that

ing such stipulation, there remains a good execution

of the powers granted; and if a corporation having deed the property was sold. He could not, if he

authority to issue bonds "bearing interest at the rate would, have prevented that sale. The land was con

of six per cent." issue them bearing ten per cent., they verted into money, and that money can not be are valid obligations for the principal and six per cent. treated as land, much less as a homestead. Courts interest. of equity sometimes treat money as land, but such 6. INTEREST.-Where a statute prescribes a rate of principles can not be invoked by one who claims interest and simply forbids the taking of more, and under our homestead law.

more is contracted for, the contract is good for what If he has a right, the statute alone gives it. If might be lawfully taken, and void only as to the exits terms, liberally interpreted, do not give him

cess. a right, he has none.

7. WHERE AUTHORITY IS GIVEN “to any incorIn regard to the point made by them, the garnishees bad no right to the money as against Case

capital stock of a railroad company, such authority is bolt, notwithstanding Casebolt bought the same

not limited to towns and cities incorporated at the

date of the passage of the act. land under his execution, and claimed title to it. Whereever the title may have been, the $299.75 belonged to Paul. Paul could have sued the gar

This action is brought to recover on over-due innishees and recovered the money, although Case

terest coupons, cut from negotiable bonds issued bolt may have acquired a perfect title by his pur

by the city of Clarendon to the Arkansas Central chase at the execution sale; and Casebolt has the

Railway Company, in payment of a $15,000 subsame right that any other judgment creditor would

scription made by the city to the capital stock of have had on garnishment proceedings to recover

said company. The following is a copy of one of the money from the garnishee. The judgment of

the bonds: the circuit court in favor of plaintiff against the

State of

Arkansas. garnishees and interpleader, was for the right No. 17. City of Clarendon. $500. party, and, all agreeing, it is affirmed.

$15,000 subscription to the Arkansas Central Railway.

Know all men by these presents that the city of

Clarendon, in the State of Arkansas, in conformity RAILWAY AID BONDS-CONSOLIDATION OF

to the will of a majority of the legal voters of the COMPANIES-ULTRA VIRES.

said corporation, as expressed at an election held in accordance with the laws of the said State of

Arkansas, on the 25th day of July, A. D. 1871, auLEWIS v. CITY OF CLARENDON.

thorizing said city to subscribe fifteen thousand

dollars to the capital stock of the Arkansas Central United States Circuit Court, Eastern District of Railway Company, for value received, hereby Arkansas, April Term, 1878.

promise to pay to the Arkansas Central Railway

Company or bearer the sum of five hundred dollars, Before Hon. HENRY C. CALDWELL, District Judge.

lawful money of the United States of America, on 1. A MUNICIPAL CORPORATION CAN NOT SUB the first day of January, A. D. 1882, at the NaSCRIBE to the capital stock of a railroad company and tional Park Bank, in the city of New York, with issue its bonds in payment of such subscription, unless interest thereon at the rate of ten per cent. per the power so to do has been expressly conferred by annum, payable semi-annually, on the first days of law.

April and October in each year, at the National 2. EFFECT OF CONSOLIDATION OF COMPANIES. – Park Bank, New York, on the presentation and When two or more railroad companies are consoli surrender of the annexed coupons as they severally dated, the consolidated company succeeds to and pos

become due and payable. sesses all the franchises, rights, privileges and immu

In witness whereof, the said city of Clarendon bas nities of the several companies of which it was formed.

caused this bond to be signed by the Mayor, and 3. RIGHT TO RECEIVE SUBSCRIPTION PASSES TO

attested by the Recorder, and the seal of said CONSOLIDATED COMPANY. - The right granted to a

city to be hereunto affixed, on this first day of railroad company by its charter to receive municipal

January, A. D. 1872. subscription to its capital stock, payable in bonds, is a right and privilege that, upon its consolidation with

B. N. D. TANNEHILL, Mayor. another company, passes to the consolidated company, I PARKER C. EWEN, Recorder.

« PreviousContinue »