Barnett v. Kinney

SWEET, J. On the twenty-third day of November, 1887, M. H. Lipman, a citizen of Utah, doing business at Salt Lake City, made an assignment to plaintiff herein in trust for all his creditors. The deed of assignment carried with it certain personal property situated in Hailey, Alturas county, Idaho territory, to wit, a stock of goods and merchandise. It is admitted that at the time the assignment was made said Lipman was insolvent; that in all respects the assignment was made in conformity with the laws of Utah territory; and that, under said deed of assignment, the creditors of said assignor were divided into classes, certain classes being designated as preferred cred — 742 — itors, and said assignee being instructed by said deed of assign-ruent to observe said preferences in settling the liabilities of the assignor as fast as the sale of said merchandise enabled him to do so. On the twenty-fifth day of November,. 1887, plaintiff, ■as said assignee, took possession of the said stock of goods situated in Hailey, in said Alturas county and Idaho territory, having first caused to be duly recorded in said county the said deed of assignment. On the following day, to wit, the twenty-sixth day of November, 1887, defendant herein, then the duly qualified and acting sheriff of said Alturas county, levied upon and took possession of said goods under and by virtue of a writ of attachment issued out of the district court of the second judicial district of Idaho territory, in and for said Alturas county, in an action wherein the St. Paul Knitting Works Company, a corporation, was plaintiff, and the said M. H. Lipman was defendant. On the twelfth day of December, 1889, plaintiff commenced an action in said court against the defendant herein for the recovery of the possession of said goods and chattels, or for the sum of $5,000, the value thereof, in case a delivery of the same could not be had. Plaintiff obtained judgment in the lower court, took possession of said goods, and thereupon proceeded to sell the same, realizing therefrom the sum of $4,000. Defendant appealed from said judgment, and the as-signee now holds said sum of money subject to the final determination of this litigation. By a careful examination of the findings of the lower court, we find that the issues here presented are clearly and distinctly set forth. They are, in brief, to recapitulate, as follows: - The assignor, at -the time of making said assignment, was a nonresident of this territory. The assignment was made in strict conformity with the laws of Utah territory, of which he was a citizen. The attaching creditor was also a nonresident of Idaho, and it is conceded that said Lipman was justly indebted to said corporation in the sum of $1,992; that at the time the writ of attachment was levied the assignee was in possession of the goods; 'and that the deed of assignment had been duly recorded in said county; also that the defendant was the duly qualified and acting sheriff of said Alturas county. — 743 — The legal question involved is as follows: May a nonresident make an assignment, with preferences, of personal property situated in this territory, that will be valid as against a nonresident attaching creditor? And this question further involves the effect, first, of possession by the assignee when the attachment is levied; .second, the rule of comity between the states; and, third, the effect of the attaching creditor being a resident or a nonresident of the territory. We premise a discussion of these questions with the remark that a decision by the United States supreme court is binding upon us, and that whenever any issue presented here has been clearly and distinctly settled by said court, we need look no further. We will first take up the question of citizenship, and we submit it in this form: Will the courts of this territory concede to any of its citizens any rights or privileges under its attachment laws not extended to any citizen of the United States who is a nonresident of the territory? The attachment laws of this territory give no preferences as between resident and nonresident attaching creditors. Therefore, under the rule laid down in Green v. Van Buskirk, 7 Wall. 151, we must consider the matter settled. It is there held that the rights of the attaching creditor are not at all affected by the question of citizenship. In Sheldon v. Blauvelt, a case recently decided by the supreme court of South Carolina, reported in 29 S. C. 453, 7 S. E. 593, the same conclusion is reached. The statute of South Carolina with reference to assignments by insolvent debtors is the same, in effect, as are the provisions of our own statute, and the facts involved in the case just cited are precisely the same as those presented in the case at bar. Section 2, article 4 of the -constitution reads as follows: ’“The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states.” We think that the decision before alluded to in 7 Wall., in which this article is construed as affecting the rights of nonresident citizens in eases similar to this, applies to the facts as they are here presented; and under that decision, as well as under Sheldon v. Blauvelt and the authorities therein cited, we must conclude that the nonresidence of the attaching creditor in this ease could not in any manner prejudice his rights, and .that he was entitled to the same privi — 744 — leges that, under tbe same circumstances, would be accorded to any citizen of Idaho. In reaching this conclusion we are following what we conceive to be the rule laid down by the supreme court of the United States; and the wisdom of the principle thus enunciated by our highest court is as unquestionable as its authority. When once a citizen has been accepted by any court of the United States as a suitor, it does not seem to be in accordance either with the principles of Justice, or with common fairness, or with common honesty between man and man, to question him as to the particular state in which he may reside, and then give or refuse him what the court would deem to be justice if the suitor were a citizen of our own state, but deny him this supreme right if the fact is developed that he is a citizen of another state. In Atherton v. Ives, 20 Fed. 897, the court follows this doctrine, and concludes a vigorous indorsement of the principle in these words: “We think .such a distinction should never be drawn by a court, unless compelled to do so by legislative will clearly expressed. It may be that the legisla^ ture of a state has the power to exercise such a ‘patriarchal and provident sovereignty,’ but this court will not assume such as the legislative will.” In concluding our discussion of this principle, we will say that the pointed declaration just quoted meets with the hearty approval of this court, and in the absence of a positive statutory enactment, we do not think the court justified in asldng the citizen who seeks the beneficial protection of its laws whence he came, with a view of administering the law accordingly. The principle of comity between states, or to what extent laws governing the transfer of property in one state will be respected by a sister state, is the next question to be considered. The courts of the country have differed very much on this proposition. Nevertheless, it is conceded by all that one state is not bound to accept the transfer laws of another state affecting property located within its borders. It is useless for us to discuss the question. The rule is laid down for our guidance by the supreme court of the United States in Green v. Van Buskirk, 7 Wall. 151. The language of the court is as follows: “And this principle of comity always yields when the — 745 — laws and policy of the state where the property is located has prescribed a different rule of transfer with that of the state where the owner lives.” In Atherton Co. v. Ives, 20 Fed. 895, 896, the court also indorses this rule. The only question remaining in this connection is, was the assignment made by Lipman, under the laws of Utah territory, contrary to a clearly expressed statute or to the settled policy of this territory? We think it was contrary to both. Com' mencing with section 5875, the statute designates how an insolvent debtor may proceed in this territory in proving his insolvency, and the necessary steps to be taken to complete the transfer and sale of his property for the benefit of his creditors. Under this act, an assignee, chosen by the creditors (and let us remark that these creditors may be residents or nonresidents) is appointed by the court. The assignee thus appointed must dispose of the property of the insolvent for the benefit of all the creditors, share and share alike, preferences or priority being strictly forbidden. Section 5932 is as follows : “No assignment of any insolvent debtor otherwise than as provided in this title is legal or binding on creditors.” The assignment made by Lipman was in direct conflict with the provisions of this statute, and one of its most important provisions, to wit, that which prohibits preferences. It was urged by the respondent that, if this rule were applied to the case at bar, a nonresident of Idaho doing business in the territory could not make an assignment of property within the jurisdiction of the territory. This may be true, but the resident insolvent is not permitted under this law to prefer any creditor in this territory over any creditor out of the territory; and we do not think a nonresident insolvent, doing business in Idaho, ought to be permitted to make an assignment giving preferences to nonresidents of the territory over residents of the territory in which he is doing business, and the laws of which he invokes to protect his property, and maintain for him the same rights and privileges that are extended to any citizen of the territory. A nonresident, being entitled to the same right under our law as a citizen of the territory, may invoke the same principles. While this point was urged by the respondent, we think it was carried a little too far. The courts of this territory would, — 746 — we believe, respect the assignment of a nonresident doing business in Idaho, if made in accordance with its laws. In other words, if Mr. Lipman’s assignment had been made for the benefit of all his creditors, share and share alike, we believe, under the principle of comity, it would have been respected, as it would not have been contrary to the laws or the policy of this-territory. In holding that this assignment was invalid as against attaching creditors, we are following the rule already quoted, and feel bound so to do; yet we -do not hesitate to say that the rule meets with our approval. 'Persons doing business with residents of this territory should know what laws govern the transfer of property. By having one uniform principle applicable alike to all property situated in this territory, whether of residents or nonresidents, every person doing business within the territory, and every nonresident doing business with persons residing in the territory, may know, before extending credit or locating property within the jurisdiction of our laws, what laws will govern the transfer of that property, whose Tights may attach and how they may attach; and it gives to our business community a stability and character that we believe to be not only desirable, but almost necessary, to free and advantageous commercial intercourse with distant states lying to the east and to the west of us. Before passing to a consideration of the next principle involved, w-e add the further suggestion that sheriffs and other officers of like character in the territory have a right to understand whether or not, in proceeding- under our laws, and in accordance therewith, they are protected by them. In this case the sheriff proceeded regularly and in accordance with the laws of Idaho; yet he is subjected to a suit for damages, because he did not understand and proceed in accordance with the laws of Utah, or in pursuance of transactions executed in harmony with those laws, but in direct violation of our own. Counsel for respondent urged with a great deal of strength and persistency the fact that plaintiff was in possession of the goods at the time of the seizure by defendant under the writ of attachment. It is also averred' by counsel for respondent that defendant had actual notice of the contents of the deed of assignment, and the possession thereunder by plaintiff. This — 747 — point was urged with a great deal of ability, and numerous authorities cited relating, perhaps indirectly, thereto. It does not seem to be a serious question. It is entirely regulated by the statute. If we do not recognize the principle of comity, for the. reasons before stated, we must proceed under our own statute. This statute declares in the most positive terms that any assignment made with preferences shall not be legal or binding as against creditors. This being true, of what effect was this possession under and by virtue of an assignment that was clearly invalid? The attaching creditor was under no obligations to respect it. Indeed, the law distinctly declares that it was not valid as to him, and hence the mere fact of his possession under an invalid instrument is not material. May a person violate the positive mandates of a statute, and then claim protection as against the complainant, because the latter knew of the former’s violation of the law? Nor do we see that the question of a voluntary or an involuntary assignment is entitled to consideration in passing upon the merits of the issue involved. No general assignment can be made in this territory, voluntary or otherwise, giving preferences. Therefore, we do not see that the fact of this assignment having been voluntary on the paid of Lipman has any bearing whatever on this case. We must conclude, therefore, that the court below erred in holding such assignment to be valid as against attaching creditors of the assignor, and the possession of the defendant under said writ of attachment to have been unlawful. Let the judgment be reversed, and the cause remanded to the lower court, with instructions to enter judgment for the defendant in accordance herewith.