Mississippi Mills Co. v. Ranlett

The facts necessary to be considered are these: Messrs. Ranlett & Co., the defendants, had made a cessio bonorum under the insolvent law of the state of Louisiana, which had been accepted by the court before which the proceeding was pending, but no syndic had been appointed and no possession taken in behalf of the creditors. At this stage of the proceeding the plaintiff, who is a citizen of the state of Mississippi, sued out a writ of attachment in the circuit court of the United States in this state, and under his writ the marshal seized the property, the same being in the possession of *195the defendants. The matter comes np on a motion of the syndic to release the seizure, on the ground that, inasmuch as the cession had been accepted by the court, according to the provisions of the insolvent law of the state, the property had vested in the creditors. Those provisions are as follows: “From and after such cession and acceptance all the property of the insolvent debtor mentioned in the schedule shall fully vest in his creditors.” Kev. St. La. § 1791. So far as actual possession affects the question, the facts are with the plaintiff, for the marshal found the property in the possession of the defendant, seized it and holds it. The case is, therefore, free from any embarrassment arising from any possible disputed possession between tiie officers of tills court and the court in which the insolvent case is pending. It is to be further observed that the law of the state of Louisiana, exclusive of the insolvent law of the state, requires tradition or delivery of personal property in order to transfer title. So that the sole point to be decided is whether the insolvent law, in and of itself, without any other investiture of title, the possession remaining in the debtor, removes the property beyond the reach of a creditor who is a citizen of another state. If that law operates upon such a creditor, the property, by the court’s mere acceptance of the cession, was completely vested, though no possession had been taken, and must bo surrendered to the syndic now appointed, to be administered under the insolvent law; if, on the other hand, that law is not operative upon such a creditor, there is nothing to prevent, and it becomes a manifest duty that this court should hold the property seized, and subject it to the payment of the debt of the attaching creditor.

The cases upon the general subject are numerous, but for the most part they deal with questions-remote from the one before the court. The solution of this question stands with but little advance since the decision of Ogden v. Saunders, 12 Wheat. 213, which as late as Baldwin v. Hale, 1 Wall. 223, after an elaborate discussion, was, so far as relates to this matter, reiterated without qualification. The principle stated in both these casos, and in the last recognized as unqualified and unquestioned law, is: “When, in the exercise of their power to enact insolvent laws, states pass beyond their own limits and the rights of their own citizens, and act upon the rights of citizens of other states, there arises a conflict of sovereign power and a collision with the judicial powers granted to the United Stales, -which render the exercise of such a power incompatible with the rights of other states.and with the constitution of the United States.” I am unable to perceive how there should be doubt or hesitation in deducing the law of this case from the principle thus enunciated and adhered to. If any attempt on the part of a state “to act upon the rights of a foreign citizen he so opposed to the sovereign and the judicial powers of the United States as to be incompatible witli the rights of other states and with the constitution of the United States, ” *196then it must follow that, so long as the insolvent court relies exclusively upon the words of the insolvent law, at,any stage of its procedure, short of actual, physical-possession, or such a state of facts as by the general law of' the state are tantamount to physical possession, as against the process of the United States court, issued at the instance of a foreign creditor, the title of the syndic must be nugatory.

Mr. Justice Woodbury, in Towne v. Smith, 1 Wood. & M. 136, with reference to this very question, says: “The actual seizure of the property of the bankrupt in another government or country, before his assignees take possession of it, creates a lien upon it in favor of a foreign creditor, which will be sustained;” and again upon the same page, says: The circuit court of the United States, sitting in Massachusetts, “is as different a tribunal from those belonging to .Massachusetts alone as the court of any other state.” Nor do we obtain any qualification of this rigid doctrine from the federal statute, that the rules of property in the several states- control the courts of the United States sitting therein, for that statute contains an exception which removes this whole question from its dominion. That statute is as follows: “The laws of the several states, except'when the constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States where they apply.” Eev. St. § 721. Indeed, the statute, by its exception, declares that all state laws—be they insolvent laws, or laws prescribing rules of property, or of any other character—cease to be binding upon the federal courts whenever the constitution of the United States otherwise requires or provides.

The leading cases have arisen where only the validity of the debt- or’s discharge was involved. But the conclusion that until the state insolvent court has possession, its proceedings cannot afteet the nonresident creditor, follows as conclusively with respect to exemption from process, or respite, or stay, or any intermediate action. In Haydel v. Girod, 10 Pet. 283, where the plaintiff, a resident creditor, had not been notified, and a respite and stay had been granted and were pleaded, the court say: “The plaintiff was in no sense made a party to the proceedings, and, consequently, his rights are in no respect affected by them.” A fortiori must this be true where, as here, with reference to a party, the^court had no authority to decree or proceed; for in Gilman v. Lockwood, 4 Wall. 411, the court say, “unless in cases where a citizen of another state voluntarily becomes a party to the proceedings, the state tribunal has no jurisdiction of the case.”

Many eases have been cited by the counsel for the defendant, but they cannot avail to shake the settled law as thus explicitly declared by the supreme tribunal of the land.

There are numerous cases where the settlement of the estates of insolvent deceased persons has, by the same tribunal, been declared *197to he exclusively vested in the appropriate state courts. It seems to me this large class of cases only affirm what is the universal law, and necessarily so, that the estates of the dead must he settled by the local mortuary courts, and that this is equally true whether they be solvent or insolvent. The jurisdiction in these cases springs not from the insolvency, but from the death, and the law which regulates is not an insolvent law, hut a law controlling the administration of successions.

The case of Bank of Tennessee v. Horn, 17 How. 159, I have carefully considered. The point presented and decided seems to have been that a misdescription of real estate in the schedule of the insolvent debtor did not prevent its passing to the creditors by the cession. The contest was between a purchaser from the syndic under a sale ordered by the court of insolvency and those claiming title by a purchase under a judgment rendered in the United States circuit court after, the cession. When we observe that the chief justice in giving the opinion of the court says, “the validity of the insolvent law of Louisiana has been fully recognized in the case of Peale v. Phipps, 14 How. 368,” and further, that that case is placed upon the ground (page 374) that “while the property remained in the custody and possession of one court no other court had the right to interiore with it,” it seems that it should be inferred that in the case of Bank v. Horn the syndic had possession at the time of the rendition of the judgment in the circuit court, and prior to any attempt to seize under it.

In the case presented here the plaintiff is in possession, and both as respects title and possession his right is absolute but for a right which, if it exists at all, comes from the inherent force of a state insolvent law, which, unaccompanied by possession, is, as to this plaintiff, like an extraterritorial bankrupt or insolvent law, and according to the summary of authorities in Booth v. Clark, 17 How. 322, (decided at the same term with the case of Horn v. Bank, supra,) gives to the foreign assignee no title as against local creditors who attach. The constitution of the United States operates within as well as without the state which enacts insolvent laws. No state laws in conflict with it can be rules of property. The doctrine of comity between the federal and state courts lias been constantly extending in recognition and clear and rigid enforcement; but the rules of law as expounded in Ogden v. Saunders, supra, are, as it seems to me, unchanged. In accordance with that case, in this forum’ at least, the possession of a foreign citizen under an attachment must prevail against the syndic who claims merely by the declaratory force of a state insolvent law. A mere declaration in a statute, which is by the settled adjudications inoperative against a party domiciled as is the plaintiff, cannot oust this court of administration of the property, which is, consistently with all the rules of judicial comity, in its possession.

The rule must be denied.