Crampton v. Valido Marble Co.

The opinion of the court was delivered by Veazey, J. One important question in this case is whether the assignee in insolvency became invested under the assignment with the same right to recover the value of the marble that was in Salem, New York, as though that marble had been in Vermont when the defendant took it. It is insisted by the defendant’s counsel that the contract as to that marble between the two marble companies, being valid in New York where it was made, the insolvency law of this State cannot “ reach to the impairing or avoiding of that contract.” Section 1820, R. L., provides: “An assignment under order of a court of insolvency shall vest in the assignee all the property of the debtor, real and personal, which he could have lawfully sold, assigned or conveyed, * * *. And the assignment shall by operation of law relate back to the date of the filing of the petition.” * * * Section 1860, R. L., pronounces a transfer like the one in question “void” and gives to the assignee the right to “recover the property or the value thereof from the person so receiving, or so to be benefitted thereby.” — 298 — The contention in this case raises the old question whether an assignment in bankruptcy operates as a complete and valid transfer of all the bankrupt’s movable property in other jurisdictions as well as at home; and thus give the assignee the same rights against purchasers and attaching creditors, in the one case as the other. This question and the question as to the effect of a discharge upon non-resident or foreign creditors who have not submitted to the jurisdiction of the bankruptcy court, have received the most careful consideration of English and American courts and of the ablest legal authors of both countries. The opinions in some American eases contain a review and discussion of all the authorities; as in Ogden v. Saunders, 12 Wheat, 213; Cook v. Moffat, 5 How. 295; Marsh v. Putnam, 69 Mass. (3 Gray) 551. The courts of England maintain the doctrine of the universal operation of an assignment upon all movable property, where-ever situated at the time of the assignment. The courts of this country are divided on the question, but the weight of American authority is considered to be in favor of confining the operation of such assignment to the state where the party is declared bankrupt or insolvent. The discussion of. this vexed question has been so exhaustive, it would be but repetition to again review the cases, or to present the course of reasoning that has led the most eminent jurists to opposite results. On examination of the cases of the United States Supreme Court, where naturally questions growing out of bankruptcy and insolvency laws would receive the most searching investigation, it will be found that the case at bar, so far as the decisions of that court are concerned, is a new one. The parties in this case are both residents of this State. The debtor company owned a marble quarry and mill in this State and another mill in SalemNew York, where some of its marble was sawed. On the day the petition in insolvency was filed, the treasurer of the creditor company, this defendant, took a transfer of certain marble and other property at the — 299 — debtor's mill in tbis State, to apply on its debt, then having-reasonable cause to believe the debtor was insolvent; and the next day he went to Salem and for a like purpose took a like transfer of some of the marble there, and brought it back to his company’s premises in this State. The defendant stands solely on the fact that the contract for the Salem marble was made in New York. No court of that state has intervened. No special law of that state is invoked. No non-resident complains. The controversy is not between residents of different states, nor as to a debt created prior to the enactment of the insolvency law, nor as to the effect of the action of a court in another jurisdiction, touching the same matter. The difference between this case and those in the Federal and Massachusetts reports, is well pointed out in Marsh v. Putman, 69 Mass. (3 Gray), 551. In many of the cases the contention has been between residents of different states. It was so in Ogden v. Saunders, supra, and the question was whether a discharge of a debtor was valid against a creditor who was a citizen of another state. It was decided in the negative. But in the opinion of Justice JOHNSON he says : “ As between its own citizens, what ever be the origin of the contract, there is now no question to be made 'on the effect of such a discharge.” It is to be noted that the court is here invoked to administer a law of this State between its own resident citizens. A quotation from the opinion of Chief Justice Taney in Cook v. Moffat, supra, is pertinent and, as it seems to me sound : “According to established principles of jurisprudence such (insolvent) laws have always been held valid and binding within the territorial limits of the state by which they are passed, although they may act upon contracts made in another country, or upon the citizens of another nation ; and they have never been considered, on that account, as an infringement upon the rights of other nations or their citizens. But beyond the limits of the state they have no force, except such as may be given to them by comity. * * But how far this comity should be extended would be exclu — 300 — sively a question for each state to decide for itself, by its own proper tribunal.” This is but stating in substance that states may pass laws having effect within their respective limits, and binding their own courts, leaving the effect in other states to be determined by their own tribunal. If this assignee were seeking this remedy in New York then the question of comity would arise. It would be for the court there to say whether, upon the ground of comity, it would enforce a plain statutory remedy of this State as against a contract executed in that state between citizens of this State. In Marsh v. Putnam, supra, it was held that a certificate of discharge under the insolvent law of Massachusetts is a bar to an action on a contract between two citizens of that state, though made and to be performed in another state. In Gardner v. Lewis, 7 Gill’s Rep. (Md.) 377, the action was trover under a statute like ours, and upon similar facts, and the court in a rigorous and learned opinion sustained the plaintiff’s right of recovery; holding that their courts were bound to observe and enforce the statutory provisions of their own state, and that a nation will not suffer its own citizens to evade the operation of its own fundamental policy or laws, orto commit fraud, in violation of them, by any acts or contracts made, with that design, in a foreign country, and it will judge for itself how far it will adopt, or how far it will reject, any such act or contracts. We think this is a sound as well as wholesome view of the law. Chief Justice Marshall, in the case of Ogden v. Saunders, supra, said : “ It is a general rule expressly recognized by the court in Sturges v. Crowninshield, that the positive authority of a decision is coextensive only with the facts on which it is made. Subjecting all the reported insolvency cases to this rule I think there is no one in conflict with the two cases last cited from Massachusetts and Maryland. We therefore consider that it is the right and duty of this court to enforce the statute according to its plain terms, and to hold that the defendant company shall not escape liability for an act in fraud of our — 301 — laws upon the plea that it occurred beyond the line of the State. For the purpose of showing the value of the property taken by the defendant, the plaintiff offered to show the price for which the West Rutland Company sold the property to the defendant, and the same was admitted not as conclusive, but to.be considered with the other evidence in the case, and in connection with the fact that it was taken upon a demand against the vendor of the property. To the admission of this evidence the defendant excepted. We hold that the evidence was admissible, to be considered as indicated in the ruling. Price generally, if not always, has more or less reference to value. It must therefore tend in some measure to show value. Its weight is dependent upon the circumstances of the sale. If the sale is usual in all respects, the price would tend more' strongly to show actual value than if the sale is peculiar as in this case ; but it cannot be said that, because it is peculiar, it has no relation to the value. It is hardly conceivable that buyers and sellers should not have value in mind in fixing price. Price cannot in any case be conclusive of value. Yet it is concededly competent to show price as bearing on value in some,cases. Where is the line to be drawn ? It would seem to be better to admit the evidence of price in all cases together with the. circumstances of the sale, and let the evidence be guarded by proper instructions. It is further claimed that the plaintiff cannot recover because no sufficient demand for the return of the property was shown. We think no demand was necessary to entitle the plaintiff to recover. The contract by which the defendant obtained the property was by the statute void. The defendant appropriated the property to its use by a sale and otherwise. There was con-cededly an actual conversion and no power to restore. The harsh rule was early established in this State, unlike the rule in some other states, that where one purchases personal property of a person in possession of it, but who is not the true — 302 — owner and has no right to sell it, and the purchaser takes possession, claiming title to it as owner, and puts it to use, this is an actual conversion and makes him liable in trover to the owner, without any demand or notice, though he purchased in good faith of one whom he supposed to be the owner and entitled to sell it. Riford v. Montgomery, 7 Vt. 411. The case at bar is stronger because here the vendor not only had no right to sell the property to the vendee, to be applied on the debt, thereby giving a preference, but the vendee was chargeable with knowledge of that fact.' There is no necessity of proof of a demand and refusal for the purpose of establishing a conversion, when the conversion is otherwise' established. It is only evidence of a conversion where the party might have delivered the property if he would. Roberts Dig. p. 709. Defendant’s counsel cites Schuman, Assignee, v. Fleckenstein, 15 N. B. R. 224. That action was brought by the assignee of a bankrupt under the U. S. Bankrupt Act (sec. 5128 of the U. S. E. S.) to recover from the defendant the sum of $311, the alleged value of certain property transferred by the bankrupt to the defendant within two months prior to the filing of the petition against him in bankruptcy, contrary to the provision of said action, which is in substance and almost in terms the same as section 1860 of our Eevised Laws. The defendant demurred and for causes of demurrer assigned that the complaint, a code proceeding, did not allege a demand and refusal of the property, or any fact showing its conversion by the defendant. The court sustained the demurrer, holding that an action to recover the value of property can only be maintained when the property itself has been actually or constructively converted to the use of the defendant, and the complaint must therefore allege a conversion' in terms or its legal equivalent, a demand and refusal. Under that decision either is sufficient. Here we have a conversion in fact. Speaking of the action of trover, Chitty (Chit. PI. page 170) puts it in the same way : “A demand and refusal are necessary in all cases when the defendant became in the first instance lawfully possessed of the — 303 — goods; and the plaintiff is not prepared to prove some distinct actual conversion.” So in Triscony v. Orr, 49 Cal. 617, it was held that no distinct and actual conversion being shown, the plaintiff must allege and prove a demand and refusal before he can recover. To the same effect see also Brooks v. McCraken, 10 N. B. R., 466. The proof of demand and refusal constitutes evidence of conversion, or constructive conversion as sometimes called, and is the equivalent of proof of actual conversion, either of which is sufficient to entitle the plaintiff to recover, where the other elements are established. See Tapley v. Forbes, 84 Mass. 20; Larkin v. Hapgood, 56 Vt. 597. We think there was no error in the instructions to the jury as to the rule of damages. It was the value of the property at the time the defendant took it. If the clause that the plaintiff was entitled to recover the value of the dynamo as it stood in the mill was fairly and clearly referrable to the damage done to the insolvent’s other property not taken by the defendant, it would doubtless be error; but we do not so construe it or think it was so understood by the jury. But we do think that the jury by inadvertence included in the special verdict as to the dynamo, the three electric lamps and the cost of setting them up. The correspondence in the figures makes this -very apparent. The amount of this with interest was $171.47. This the plaintiff offers to remit, and asks leave to file a remittitur. This, we think, should be allowed, but the defendant should have costs in this court. Judgment is rendered for the plaintiff for the amount of the judgment below less said sum remitted, with costs, less the defendant’s costs in this court.