« ForrigeFortsett »
twelve hours. Because the company would not transport the whole Dewin family on two tickets, the jury kindly gave the twenty-seven months old infant a douceur of $750. But eight into two was something the supreme court could not work out, and they were therefore forced to reverse the judgment. The conductor, said the court, did no more than his duty. There was no ground for the recovery of vindictive damages, and no actual damages were proven, and the court could not perceive on what ground the judgment could be sustained.In City of Elgin v. Renwick, 86 Ill. 498, the plaintiff, after dark, while walking along a sidewalk at a fast rate, was thrown down, by stepping into a hole in the walk, and received personal injury. He testified that he had no knowledge of the defect, and was using care. The evidence also showed paralysis following the accident, which had continued for five or six months under judicious treatment, and also tended to show that a rupture was caused by the fall, although there was some evidence tending to show that plaintiff had a rupture before the accident. A verdict for $3,000 was sustained by the supreme court, BREESE, J., dissenting, however, on the ground that the damages were excessive.
STATE INSOLVENT LAWS.
CONSTITUTIONAL LIMITATIONS-IMPAIRING OBLIGATION OF CONTRACT.
The power conferred upon Congress by the Eighth Section of Article I, of the Constitution of the United States, to establish "uniform laws on the subject of bankruptcies throughout the United States," was not intended as a prohibtion of the exercise of jurisdiction, upon the subject of bankruptcy and insolvency, by state legislatures and state courts, in the sense that the states might not provide such laws as would be operative within their own jurisdiction, subject to certain other constitutional restrictions. But in so far as the effects of such laws are intended to be general and uniform in their operation upon the relative rights or liabilities of citizens of different states, in their business intercourse with each other, the power of Congress is practically exclusive upon the subject.
Even in the absence of the constitutional provision upon the subject, no one would claim for any state the power to establish "uniform laws on the subject of bankruptcies throughout the United States," for the manifest reason that the jurisdiction of each state is limited by its own boundaries. However, it is well settled that the states have ample authority to pass bankrupt laws (or insolvent laws, which are the same in substance), and administer them in the state courts, so long as there is no conflicting federal law upon the subject, and provided they are so formed as not to contravene that provision of Section 10, Article I, of the Federal Constitution, which declares that no state shall pass any "law impairing the obligation of contracts." Sturgis v. Crowninshield, 4 Wheat. 122; Baldwin v. Hale, 1 Wall. 223; Baldwin v. Bank of Newberg, Id. 234. Any further restrictions upon state legislation affecting this subject must be sought in the state constitutions.
But by the provision that state laws shall not impair the obligation of contracts, the states are shorn of jurisdiction with respect to one of the most essential features of all such statutes, and one which has become almost inseparable from our ideas of a bankrupt law--that discharging the insolvent debtor from liability without the consent of his creditors. A law which simply enables a debtor to escape by obtaining the consent, express or implied, of his creditors bears very little resemblance to the bankrupt laws with which we have become familiar. The involuntary provisions of the national act lately repealed may be approximately imitated by state legislatures in every feature, except that which contemplates a discharge of the debtor; but it is difficult to imagine a statute so constructed as to discharge an insolvent debtor from liability upon his own petition, without the creditor's consent, or to force his consent to such discharge, that would not impair the obligation of the contract from which the liability arose.
In the case of Farmers & Mechanics' Bank v. Smith, 6 Wheat. 131, Chief Justice Marshall takes the broad ground that an act of the state legislature providing for the discharge of a debtor from all liability for debts contracted previous to his discharge, on surrendering his property for the benefit of his creditors, is a law impairing the obligation of contracts, without considering whether the debt was con
tracted prior or subsequent to the act, and that the rule applies to contracts between residents of the same state and between residents of different states, in the same manner and to the same extent. But elsewhere it has been held that a state law discharging a debtor from liability on future contracts entered into and to be performed within the state where the law was in force, was constititutional. Donnely v Corbett, 7 N. Y. 500; Watson v. Tarpley, Id. 517. So, where a promissory note was made payable in the State of Massachusetts, the court of last resort of that state held that its payment would be subject to the provisions of their insolvent laws, regardless of the place where the note was made or the citizenship of the payee or holder. Burrall v. Rice, 5 Gray, 539; Scribner v. Fisher, 2 Gray, 43; Capron v. Johnson, 5 Gray, 539, (note.) See, also, Savage v. Marsh, 10 Met. 594; Clark v. Hatch, 7 Cush. 455; Bank of Tennessee v. Horn, 17 How. 57, 161; Peale v. Phipps, 14 How. 368. And, by the same court, it was held that a negotiable promissory note made in that state, without any specific place of payment, but negotiated in good faith before maturity to a resident of another state, would not be affected by a discharge of the maker under the insolvent laws of Massachusetts. Houghton v. Maynard, 5 Gray, 552; Dinsmore v. Bradley, Id. 487. See, also, Frey v. Kirk, 4 Gill & J., (Md.) 509. The principle upon which these cases are so decided is that the contract is governed, in all that relates to its enforcement, by the law of the place where it is to be performed, and is presumed to be made with reference to the laws in force there at the time. Marsh v. Putnam, 3 Gray, 551. In pursuance of this doctrine, it was held in the case last cited that a debt due from one citizen of Massachusetts to another, contracted and payable in another state, would be subject to the insolvent laws of the state where the contract was made and the proceedings had; and a dicharge of a debtor there obtained would bar an action for the same debt in Massachusetts. The distinction between the operation of local insolvent or bankrupt laws upon demands between citizens of the same state where the debt is payable, and between citizens of different states, or which are payable elsewhere than where the proceedings are had, is partially recognized in the case of Woodhull v. Wagner, 1 Baldw. C.
C. 296, where it is decided that the discharge of a debtor under the insolvent law of Pennsylvania would not protect him, even from arrest or civil process, for a debt payable in New York, or to a citizen of that state.
The immunity from the operation of local insolvent laws enjoyed by a non-resident creditor, in so far as they attempt to discharge his debtor, is one, of what value soever it may be, which he can waive. By making proof of his claim, and participating in the distribution of the estate of the insolvent, he voluntarily submits himself to the jurisdiction of the court, and by implication assents in advance to the discharge of his debtor, subject only to the conditions prescribed by the law of the forum. Clay v. Smith, 3 Peters, 411. But where the non-resident creditor does not participate in the proceedings, nor accept the dividends declared in the proceedings under the state law, an attempt to discharge the debtor is clearly an impairment of the obligation of the contract. The obligation which the law imposes upon the debtor is to perform what he has by his contract undertaken, and any law that purports to release him from this obligation is within the constitutional inhibition. And the jurisdiction which is denied to the state courts has reference not only to the person over whom, or the territory within which, it is sought to be exercised, but to the subject-matter-the antecedent debt. Therefore, a suit brought by the foreign creditor in the courts of the state where the discharge had been previously granted, would not be barred, upon the ground that by so bringing his action the creditor submitted his claim to the jurisdiction where the validity of the discharge was recognized. Hicks v. Hotchkiss, 7 Johns., Ch. 197; Van Hook v. Whitlock, 26 Wend. 431; Soule v. Chase, 39 N. Y. 342. So it was held that a statute of Alabama providing for the distribution of the estate of decedents judicially declared to be insolvent, and prohibiting suits against the personal representatives after such declaration of insolvency, would not abate a suit in the federal court by a citizen of another state, unless the creditor had voluntarily become a party to the insolvency proceedings. The law of the state could not be so construed as to force him to submit his claim to the courts of Alabama to have his rights adjudicated.
In the cases cited above-particularly those
decided in the state courts-it will be noticed that much stress is laid upon the question of the place wherein the contract is to be performed, and wherein the contractor resides. The place of performance may control so as to discharge the debtor, when the debt is contracted subsequent to the passage of the law authorizing the discharge, especially where the creditor was within the state at the time of making the contract, or where there are other reasons for holding the contract subject to all the laws of that state, than a purely technical presumption. But when the law is, by its express terms, or by necessary implication, retroactive in its operation, and is intended to apply as well to prior as to subsequent transactions, it matters not where the parties live, or the contract is to be performed. No presumption can arise that an agreement is entered into between parties, subject to the provisions of a law not yet enacted, and which is beyond the authority of the legislature. If the construction of the constitutional prohibition is such as to restrict its application to contracts antecedent to the law, and not to extend it to all contracts not themselves prohibited, or surrounded with special restrictions, still the language of the constitution is such as to protect existing contracts between citizens of the same state as well as those between citizens of the different states. No such accidental circumstance as the local habitation of the citizen, so long as he resides within the United States, can subject him to a local jurisdiction with sufficient power to impair his rights under the fundamental law of the general government. Nor can a choice of such residence be tortured into an assent to the exercise of powers prohibited to the states by the Constitution of the United States. It will be noticed, by a comparison of the cases cited, that the state courts are much more liberal, in the construction of their own bankrupt and insolvent laws, than Federal Courts. The Supreme Court of the United States has decided in round terms that a state insolvent law, granting an absolute discharge to the debtor without the creditor's consent, is a law impairing the obligation of a contract, and is therefore void, as being in contravention of the constitutional prohibition of such laws. Boyle v. Zacharie, 6 Pet. 635. The same principle is announced and elaborated in the case of Stur
ges v. Crowninshield, 4 Wheat. 122; and, as we have already noticed, Chief Justice Marshall lays down the same doctrime in Farmer's & Mech's Bank v. Smith, 6 Wheat. 131, with equal emphasis, and without any of the qualifications by which some of the state courts have sought to surround the constitutional restriction upon the powers of their own legislative bodies.
There is no doubt that the states may pass and administer laws providing for the assignment of the assets of insolvent debtors, and their pro rata distribution between creditors, and even that further prosecution of debts due participating creditors shall be prohibited. For these laws contain an element of implied assent, which renders them unobnoxious to the objection that they impair the obligation of contracts, The obligation of a contract can not be said to be impaired by a law which provides that the obligation may be discharged by the voluntary act of the obligee. But when the statute undertakes, either directly or indirectly, to coerce the creditor into acquiescence or participation, it is open to all the objections that may be urged against the most open and flagrant violations of the Fed. eral Constitution.
As to laws which are calculated to affect the obligation of the contract. and those merely touching the remedy, we shall endeavor to draw the distinctions between them in a future number of the JOURNAL.
2. THE FACT THAT THE JUDGMENT CREDITOR bad caused the levy on such homestead of an execution issued on his judgment, and had purchased the land at a sale thereunder, will neither destroy nor suspend such right of garnishment. Neither is such right of garnishment contingent upon such judgment creditor relinquishing the title to the homestead acquired by his execution sale. The money arising from the sale under trust deed in excess of debt secured thereby on the debtor's homestead, is the debtor's money, and such judgment creditor has the same right to subject it to garnishment for the balance due as any other judgment creditor.
3. THE HOMESTEAD RIGHT IS A STATUTORY RIGHT a strictly legal right, and while the act should be liberally construed, yet equitable principles other than those recognized by the act can not be invoked by one claiming a homestead right. The judgment debtor having voluntarily conveyed the land in which he had a homestead right, the money realized by a sale under that conveyance can not be treated as land, much less as a homestead. It is "the dwelling-house and land, rents, issues and profits" which are exempt, and the provisions of the act for setting out the homestead "by metes and bounds," forbid the idea of a homestead exemption in anything but real estate.
APPEAL from Ray Circuit Court:
HENRY, J., delivered the opinion of the court:
C. T. Garner & Son, for respondent; Donaldson & Farris, for appellants.
George Casebolt obtained a judgment against John B. Paul in the Circuit Court of Clinton County, and had an execution issued thereon, directed to the sheriff of Ray County, which was levied upon the W. half of the N. E. quarter of section No. 2, Township No. 53, of Range 26 in said county, the property of said Paul, upon which, with his family, he resided. The land was sold under the execution, and was purchased by Casebolt in February, 1876.
Paul executed a deed conveying the said land to Thomas J. Dodd, as trustee to secure the payment of a note for $200, held against him by Donaldson and Farris. Whether the judgment in favor of Casebolt or the deed of trust was prior in date, does not appear, nor is it essential.
On the 28th day of January, 1876, Dodd sold the land in pursuance of the terms of the deed of trust, and Donaldson and Farris purchased at the price of $550, and after satisfying their debt and the expenses, they owed, of said purchase-money, $299.75.
Casebolt had a garnishment served on Donaldson and Farris, in order to subject the amount due from them to the payment of the balance of his judgment. They answered interrogatories setting forth the foregoing facts, and alleging that Paul claimed the money under the homestead law, and denying Casebolt's right to the money, unless he relinquished his claim to the land under the execution sale. Paul filed an interplea, claiming the money under the homestead law.
The questions presented are, whether the homestead law exempted this money from Casebolt's execution, and if not, whether Casebolt, having purchased the same land, and claiming it as above
stated, was entitled to it as against Donaldson and Farris. When the execution in favor of Casebolt was levied upon the land in question, Paul did not designate under Section 2 of the Homestead Act the part thereof to which the exemption should apply; nor did the sheriff, as provided in that section, appoint three appraisers to fix the location and boundaries of such homestead. No attention whatever was paid, either by the sheriff or the defendant in the execution, to the provisions of the homestead law. The homestead is a statutory right-a strictly legal right-and while the act should be liberally construed to effectuate its benign purpose, yet equitable principles, other than those recognized by the act, can not be invoked by any one claiming a homestead right.
The statute confers the right, and states the circumstances under which it shall exist; and if a very liberal construction of its terms will not embrace the claimant's demand, it can not be admitted.
The first section provides: "The homestead of every housekeeper or head of a family, consisting of a dwelling-house and appurtenances, and the land used in connection therewith, not exceeding the amount and value herein limited, which is or shall be used by such housekeeper or head of a family as such homestead, shall, together with the rents, issues, and products thereof, be exempt, etc."
It is the dwelling-house and land, and rents, issues and products which are exempt; nothing else. If one who has acquired a homestead in 160 acres of land sell off ten acres, or exchange it for cattle, it certainly could not be maintained that such cattle would be exempt from execution under the homestead act. Or, if he sell the whole homestead and invest the proceeds in a stock of dry goods, or any other personal property, to trade on, could he claim a homestead exemption in such personal property? While the object was to secure, not only to the head of a family, but to all the members of the family, a home to live in, yet, if the head of a family see proper to do so, the law does not prevent him from converting the homestead into capital to trade with, or other property which he may prefer to hold. If he sell his homestead, and invest the proceeds in wild lands for speculation, there is no provision of the statute which would exempt them from liability for any debts he may owe, no matter when contracted.
There is nothing in the act protecting the proceeds of the sale of a homestead against creditors' demands, except as provided in sections 9, 10 and 11; and the provisions "for setting out the homestead by metes and bounds" by the sheriff when he levies an execution-by the probate court, when the head of a family dies-and whenever, in any proceedings at law or in equity, it becomes necessary to sever, or set out any homestead from other real estate, forbid the idea of a homestead exemption in anything but real estate. The tenth section provides for the sale of a homestead right whenever the dwelling-house and land in connection therewith exceed the value mentioned in the first section, and a severance of the homestead
would greatly depreciate the value of the residue of the premises, or be of great inconvenience to the parties interested, either in the homestead or such residue. The court on petition is required to make such orders as may be equitable and needful, and, if such homestead be sold, the court may control the investment of the proceeds in a new homestead, or their payment out of court, as in cases of the funds of married women.
In this case no homestead was ever set out to the interpleader. He voluntarily conveyed the property in which he had a homestead right, to secure the debt he owed the garnishees. Under that deed the property was sold. He could not, if he would, have prevented that sale. The land was converted into money, and that money can not be treated as land, much less as a homestead. Courts of equity sometimes treat money as land, but such principles can not be invoked by one who claims under our homestead law.
If he has a right, the statute alone gives it. If its terms, liberally interpreted, do not give him a right, he has none.
In regard to the point made by them, the garnishees had no right to the money as against Casebolt, notwithstanding Casebolt bought the same 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 garnishees and recovered the money, although Casebolt may have acquired a perfect title by his purchase at the execution sale; and Casebolt has the same right that any other judgment creditor would have had on garnishment proceedings to recover the money from the garnishee. The judgment of the circuit court in favor of plaintiff against the garnishees and interpleader, was for the right party, and, all agreeing, it is affirmed.
RAILWAY AID BONDS-CONSOLIDATION OF
LEWIS v. CITY OF CLARENDON.
United States Circuit Court, Eastern District of Arkansas, April Term, 1878.
Before Hon. HENRY C. CALDWELL, District Judge.
1. A MUNICIPAL CORPORATION CAN NOT SUBSCRIBE to the capital stock of a railroad company and issue its bonds in payment of such subscription, unless the power so to do has been expressly conferred by law.
2. EFFECT OF CONSOLIDATION OF COMPANIES. When two or more railroad companies are consolidated, the consolidated company succeeds to and possesses all the franchises, rights, privileges and immunities of the several companies of which it was formed.
3. RIGHT TO RECEIVE SUBSCRIPTION PASSES TO CONSOLIDATED COMPANY.- The right granted to a railroad company by its charter to receive municipal subscription to its capital stock, payable in bonds, is a right and privilege that, upon its consolidation with another company, passes to the consolidated company.
4. ESTOPPEL.-Where a city subscribes to the capital stock of a railroad company, formed by the consolidation of two or more companies, and issues its bonds to such company in payment of the subscription; in a suit upon the bonds, the city is estopped to deny the corporate existence of the company so formed, or the validity of the proceedings for the consolidation.
5. WHERE PART OF CONTRACT IS ULTRA VIRES, WHOLE CONTRACT NOT VOID.--If, in the exercise of its undoubted powers, a corporation makes a contract, some stipulation of which is in excess of its powers, this does not avoid the whole contract if, after rejecting such stipulation, there remains a good execution of the powers granted; and if a corporation having authority to issue bonds "bearing interest at the rate of six per cent." issue them bearing ten per cent., they are valid obligations for the principal and six per cent. interest.
6. INTEREST.-Where a statute prescribes a rate of interest and simply forbids the taking of more, and more is contracted for, the contract is good for what might be lawfully taken, and void only as to the ex
7. WHERE AUTHORITY IS GIVEN "to any incorporated town or city" in a county to subscribe to the capital stock of a railroad company, such authority is not limited to towns and cities incorporated at the date of the passage of the act.
This action is brought to recover on over-due interest coupons, cut from negotiable bonds issued by the city of Clarendon to the Arkansas Central Railway Company, in payment of a $15,000 subscription made by the city to the capital stock of said company. The following is a copy of one of the bonds: State of
No. 17. City of Clarendon. $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 to the will of a majority of the legal voters of the 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, authorizing said city to subscribe fifteen thousand dollars to the capital stock of the Arkansas Central Railway Company, for value received, hereby promise to pay to the Arkansas Central Railway Company or bearer the sum of five hundred dollars, lawful money of the United States of America, on the first day of January, A. D. 1882, at the National Park Bank, in the city of New York, with interest thereon at the rate of ten per cent. per annum, payable semi-annually, on the first days of April and October in each year, at the National Park Bank, New York, on the presentation and surrender of the annexed coupons as they severally become due and payable.
In witness whereof, the said city of Clarendon has caused this bond to be signed by the Mayor, and attested by the Recorder, and the seal of said city to be hereunto affixed, on this first day of January, A. D. 1872.
B. N. D. TANNEHILL, Mayor. PARKER C. EWEN, Recorder.