Baldwin v. Buswell

The opinion of the court was delivered by Redfield, J. These two cases were argued together, and involve the same question. Has the assignee of an insolvent debtor under the Act of 1876, a right to the possession of property of the debtor, as against an attaching creditor ? This act was passed while the national bankrupt law was in force ; and it is claimed that state legislation on this subject was a nullity, Because the whole ground had been occupied by an act of Congress. But the courts of last resort long since definitively settled that under the Constitution the national legislation on this subject was not exclusive, and that the state and national legislatures had concurrent jurisdiction. It would seem to follow that state legislation on this subject is valid and operative, except so far as it is supplanted and brought in conflict with the act of Congress; and so far its functions are suspended but not repealed. Ogden v. Saunders, 12 Wheat. 213. It is conceded that by that case and numerous decisions of that court since, the several States may lawfully legislate upon this subject, and provide for the distribution of the property of insolvent debtors, and for their discharge upon the surrender of their property. And, if the national legislature enacts a general bankrupt law, it suspends the operation of state laws, so far as they may be incompatible. But it is insisted in these cases that the law of this State was enacted while the National Bankrupt Act was in full operation, and therefore had no subject-matter to which it could apply, and was nugatory and void. If the enactment of a national bankrupt act .did not annul the pre-existing insolvent laws of the several States, but left them operative so far as compatible with the national legislation, and suspended so far as in conflict with it, it would seem, by parity of reasoning, a necessary sequence that while the National Bankrupt Act was in force, the state legislature might infuse into an insolvent law such [63] vitality, though measurably dormant, as was not inconsistent with the act of Congress; and this view is sustained by authority. We are not called upon to decide that the discharge of a debt evidenced by a contract in existence at the time the Insolvent Act of 1876 was passed, under the provisions of that act, would be valid ; nor, whether such discharge is forbidden by the Federal Constitution, as “ impairing the obligation of contracts.” . No such question arises in this case. The only question submitted is, whether it is competent for the Legislature to provide that, in case a debtor has not sufficient property to pay all his debts, it shall be equitably distributed to all his creditors. Our attachment law is a method of enforcing payment of a debt; it authorizes a creditor to seize on mesne process the property of his alleged debtor, “ on suspicion of debt,” and hold it to respond a contingent judgment. Its provisions are peculiar to a few New England States, unknown to the common law and to the other States of the Union. It has often been abused and used as an instrument of wrong and oppression, and the alleged debtor has sometimes, after expensive litigation, established that he was not the debtor, but the creditor, and found himself stripped of his property • and without redress, as in Abbott v. Kimball, 19 Vt. 551. Yet, the Legislature has the undoubted right to keep in force laws allowing the seizure of the alleged debtor’s property before any debt is established. It has never been questioned, therefore, so far as I know, that the Legislature might, at its pleasure, alter or abolish the attachment law, and provide other methods of appropriating a debtor’s property to the payment of his debts. In 1867 our Legislature undertook to modify the attachment law, and provided that when an attachment was made, all other creditors of the same debtor might file their claims and share in the proceeds of the property. This law, in its detail, was so complicated that it soon died out, but its constitutionality was never disputed. Contracts derive their obligation from the act of the parties: when such obligation becomes operative, it cannot be “ impaired ” by state legislation. But attachments are a part of the remedies provided by law to be called into use when contracts are broken. Contracts are inviolable ; but the means of enforcement and the methods of redress, [64] when contracts are broken, are matters of legislation. Marshall, O. J., says, in Ogden v. Saunders, supra, “ that the obligation of a contract is not identified with the means which government may furnish to enforce it; and that a prohibition to pass any law impairing it, does not imply a prohibition to vary the remedy; nor does a power to vary the remedy imply a power to impair the obligation derived from the act of the parties.” It is said that the lex loci is a part of the contract. Undoubtedly the legal character and binding force of a contract, are to be determined by the law of the place where the contract is made ; but the methods of redress — the legal remedy which a creditor may have in case of a broken contract — are no part of the obligation. The doctrine is tersely stated by Thompson, J., in Ogden v. Saunders, supra, quoting from Harrison v. Sterry, 5 Cranch, 298 : “ The law of a place where a contract is made, is, generally speaking, the law of the contract; that is, it is the law by which the contract is expounded. But the right of priority forms no part of the contract itself. It is extrinsic, and is rather a personal privilege, dependent on the laws of the place where the property lies, and where the court sits which decides the cause.” Where by the law of the place of contract, certain species of contracts have prior and superior claims to satisfaction, such as contracts between landlord and tenant, contracts for mechanics’ labor, or labor upon public works, or debts evidenced by bonds and specialties, it has been held that such priority and privilege is subject always to modification or repeal, at the pleasure of the legislature, without touching upon this provision of the Federal Constitution. Stockings. Hunt, 3 Denio, 274; Morse v. Goold, 1 Kernan, 281, 288; Edwards v. Kearzey, 6 Otto, 595, 610. In Bigelow v. Pritchard, 21 Pick. 169, all the points involved in this case were fully considered and decided. This decision is entitled to special force in this State. It involved substantially the same insolvent law; the contract sued, in which the attachment was made, subsisted when the insolvent act was passed ; the case was carefully considered, and decided by an able court; and we concur in both the reasoning and the conclusion of the [65] court. See Stone v. Tibbetts, 26 Me. 112; Morse v. Goold, 1 Kernan, 281. There was no absolute priority which this creditor could rightfully claim by attachment at the time this insolvent act was passed. By the law of the land, at the time the contract was made, the attaching creditor, in case of insolvency, was bound to release his attachment and surrender the property attached to the assignee for just and equal distribution among all the creditors; and this was made so by the paramount legislation of Congress, under the Federal Constitution. The attaching party, therefore, is placed in no worse condition by keeping the bankrupt law substantially in force through State legislation after it has been repealed by Congress. His rights, so far as anything is complained of in this case, were the same at the time the contract was made, as at the time of the attachment. Kilborn v. Lyman, 6 Met. 299; Ward v. Proctor, 7 Met. 318. It is conceded that a law may be in conflict with the Constitution in some of its provisions, and valid in other respects. Whether the Court of Insolvency could discharge a debt created by contract having its origin prior to the passage of the act, without full payment, we do not decide, as that question is not raised in the case. My own strong impression is, that such discharge would be invalid. Nor do we determine that all the debts originated in contracts before the passage of the act. My own' impression is that the debt of the Barton National Bank had its origin at the date of the note that is sued and upon which the attachment was made. The judgment of the court is, that the attachments must yield to the provisions of the insolvent law and the claims of the assignees under it. Many cases have been pressed upon our attention in which the Supreme Court of the United States have held that the exemption laws of some of the States are invalid as to existing contracts, and unconstitutional. But we think these decisions have little application to the present cases. Such exemption laws substantially forbid all resort to the debtor’s property to enforce payment, and thus rendered the debt valueless — they destroyed the contract in essence and value. That court held that the body of the debtor, and a reasonable amount of his property, may be made [66] exempt, but not all he has and hopes to have. This law forbids the seizure of all a debtor’s property by one creditor, and compels an equal distribution of the property among all the creditors. It exempts nothing, but declares that equality is “ evenhanded justice ”; and this, we think, is not forbidden by the Constitution. Such judgments in the respective cases, as is provided by the stipulation of the parties, are to be entered by the clerk. Powers, J., dissented.