Holbrook v. Ford

Mr. Justice Magruder delivered the opinion of the court: It is claimed that the decree of the Superior Court is erroneous, because it enures to the benefit of Palmer, the non-resident complainant in the creditor’s bill, rather than to the benefit of Ford, the attaching creditor in the foreign States, who is a resident of the State of Illinois. • Where the controversy is between a foreign receiver, assignee or trustee, and an attaching creditor who resides in the State where the attachment proceeding is instituted, the courts of the latter State will protect its own citizen. This doctrine proceeds upon the ground, that such an official, appointed under the laws of one State, has no extra-territorial right of action except as a matter of comity, and that, as against its own citizens, no State will extend its comity to a receiver, assignee or trustee appointed under the laws of another State. In Heyer v. Alexander, 108 Ill. 385, a voluntary assignment for the benefit of creditors, executed by a resident of Missouri in that State and under its laws, and conveying property in Illinois, was held not to be operative to convey the title, as against creditors resident in Illinois suing by attachment. The contest there was between an attaching creditor resident here, and an assignee under a foreign assignment. In Rhawn v. Pearce, 110 Ill. 350, where creditors residing in Pennsylvania brought an attachment suit in Illinois against their debtor also residing in Pennsylvania, and garnisheed a debt due to said debtor from a firm in Illinois, and trustees, residing in Pennsylvania and appointed by a court in that State and vested by a statute in that State with the title to said debtor’s estate, inter-pleaded in the garnishment proceeding and claimed the property, it was held that the statutory title oí the trustees was inoperative as against the attaching creditors, and that the transfer to the trustees, being by' mere operation of the Pennsylvania statute, could not have any extra-territorial effect, so as to be operative in this State, either against our own citizens, or the citizens of other States. There, the contest was between a foreign statutory trustee without any conveyance by the owner of the property, and a foreign attaching creditor. In May v. First National Bank, 122 Ill. 551, a New York firm made an assignment for the benefit of creditors, executed in conformity with our statute for the conveyance of real estate, and conveying land in Cook County, Illinois, and recorded in the recorder’s office of that County on July 28,1884; on August 22,1884, a bank in Massachusetts commenced an attachment suit against said firm in Cook County, and levied the writ upon said land; the assignee interpleaded and set up the deed of assignment; and it was held that the deed of assignment was valid as against the Massachusetts creditor, it not being in contravention of our laws or public policy. There, the contest was between an assignee in a voluntary assignment executed by a non-resident debtor, and a foreign attaching creditor. To the same effect is Juillard v. May, 130 Ill. 87. In Woodward v. Brooks, 128 Ill. 222, creditors living in Pennsylvania brought attachment in Illinois against their debtor who also lived in Pennsylvania and garnisheed money in Illinois due to said debtor; before the attachment the debtor had made a voluntary assignment for the benefit of creditors valid under the laws of Pennsylvania, and had recorded it in that State •; the assignee inter-pleaded claiming the money in the garnishee’s hands; and it was held, that, “as a voluntary foreign assignment, valid in the State where made is enforced in this State as a matter of comity, our courts will not enforce it to the prejudice of our citizens who may have demands against the assignor; * * * but for all other purposes, and between citizens of the State where the assignment was .made, if valid by the lex loci, it will be carried into effect by the courts of this State.” There, the contest was between a foreign assignee, and attaching creditors resident in the same State with the assignor and where the assignment was made. In the recent case of Townsend v. Coxe, 151 Ill. 62, the controversy was between foreign creditors attaching in this State the property of a foreign corporation, and the assignee in a foreign assignment which was not voluntary, but statutory; and it was held, that such an assignment was not operative in this State as against the attaching creditors. In the case at bar, there is no controversy between any foreign receiver or assignee on the one side, and a domestic creditor on the other. The receiver, here seeking to stop the prosecution of the suits in Nebraska and Missouri by a creditor living in Illinois, is an Illinois receiver appointed by an Illinois court in a proceeding pending in Illinois. It is true, that Palmer is a resident of New York, but he brought suit and .obtained judgment in Illinois, and filed his bill and procured the appointment of a receiver here. But non-resident creditors have the same right to pursue the remedies prescribed by our laws for the collection of debts as resident creditors have. “Once properly in court and accepted as a suitor, neither the law, nor court administering the law, will admit any distinction between the citizen of its own State and that of another.” (Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367). A foreign receiver, holding his office by operation of a foreign law, will not be allowed to maintain a right of action against the assets of an insolvent debtor in this State as against a creditor resident in this State; but no such restriction applies to a receiver appointed by the courts of this State and under its laws, even though such receiver is appointed in a suit instituted by a non-resident creditor. It is sought to distinguish the present case from Sercomb v. Catlin, 128 Ill. 556, upon the alleged ground, that, there, the complainants in the creditor’s bill in which the receiver was appointed were either residents of Illinois, or are not shown to have been non-residents of this State, while here the complainant is a non-resident. We do not think, that any such distinction can be drawn, because the residence of the complainant is immaterial where the receiver is the officer of a court in this State. Nor can any distinction be fairly drawn between this case and the Sercomb case, on the ground that Sercomb, the party enjoined from prosecuting the attachment suit in the District of Columbia, was the representative of a foreign corporation, while, here, Ford, the creditor enjoined from prosecuting the foreign attachments, is a resident of Illinois. The right of a court of equity to restrain the prosecution of a suit in another State is founded upon the fact, that the court is vested with authority over persons within the limits of its jurisdiction and amenable to its process. Here, Ford is a resident of Illinois doing business in Chicago. In the Sercomb case, Sercomb, though the agent of a Connecticut corporation, lived in Illinois, was the business manager of the corporation here, began and controlled the attachment suit in Washington, and was amenable to process in this State. (Dehon v. Foster, 4 Allen, 545 ; Cole v. Cunningham, 133 U. S. 107). But there are several respects in which the facts here differ from those in the Sercomb case. In the first place, the creditor in that case, who instituted the attachment proceeding in the foreign jurisdiction, had full knowledge, before he did so, of the appointment of the receiver in the creditor’s suit in Illinois. Here, although the receiver was appointed ten days before Ford began his attachment proceedings in the foreign jurisdictions, yet Ford had no notice or knowledge of such appointment when he garnisheed the debts due the judgment debtor in Nebraska and Missouri. Such previous knowledge of the appointment of the receiver, or of the insolvency of the principal debtor, has been deemed material in those cases where courts have enjoined the prosecution of foreign suits, or have committed the creditors so prosecuting them for contempt. (Dehon v. Foster, supra; Chaffee v. Quidnick Co. 13 R. I. 442; Vermont & Canada R. R. Co. v. V. C. R. R. Co. 46 Vt. 792). In the second place, the principal debtor in the present case is a foreign corporation. A court in one State may appoint a receiver for a corporation organized in another State and doing business within its own territory and having property there. This may be done, although the courts in the home State of the corporation may have already placed its affairs in the hands of a receiver. (DeBerner v. Drew, 57 Barb. 438; National Trust Co. v. Miller, 33 N. J. Eq. 155; Hunt v. Columbian Ins. Co. 55 Me. 290; Life Association of America v. Fassett, 102 Ill. 315). The receiver appointed in the foreign State will be regarded as ancillary or auxiliary to the receiver appointed in the State to which the corporation owes its creation. (8 Am. & Eng. Enc. of Law, page 408). Hence, we do not consider the fact, that receivers were appointed in New York and New Jersey for the Powerville Felt Roofing Company, Limited, the corporation defendant in the present case, as in any way restricting the right of the courts in this State to appoint a receiver for such defendant, if the other necessary conditions to the appointment of such receiver existed here. The general rule is, that a court of equity will not appoint a receiver for a foreign corporation, where such corporation has no property in the State of the appointing court, and has not appeared or been served with process in the proceeding in which the appointment of the receiver is applied for, and where none of the officers or agents controlling or representing the corporation reside or are to be found in the State of the appointing court. The object of appointing a receiver for a foreign corporation is to preserve its property and effects for the benefit of creditors and shareholders. (Wait on Insolvent Corp. sec. 188; 8 Am. & Eng. Enc. of Law, page 408; Life Ass’n of America v. Fassett, supra; Redmond v. Hoge, 8 Hun, N. Y.) 171; National Trust Co. v. Miller, supra; Shaw v. Shore, 5 L. I. Rep. N. S. Eq. 79; Stafford v. American Mills Co. 13 R. I. 310; H. & St. J. R. R. Co. v. Crane, 102 Ill. 249). In the case at bar, it appears that all the tangible property of the Powerville Felt Roofing Company, Limited, in Cook County, Illinois, was taken by the sheriff under the Eberts' judgment, and is now in the hands of the Chicago Title and Trust Company, a receiver appointed in another proceeding; and that the Company ceased doing business in this State on November 25, 1892, and that, at the time this creditor’s bill was filed, no officer, agent or employe of said Company resided or had any place of business in this State. It furthermore appears from an examination of the record, that the receiver was appointed upon the same day on which the creditor’s bill was filed ; and that the Roofing Company, the judgment debtor, was not served with process, nor did it enter its appearance in the cause, either before such appointment, or at any time thereafter. We do not deem it necessary, however, to hold that there were no assets of the Roofing Company in this State, which would justify the appointment of a receiver. As the receiver • appointed for a foreign corporation must be appointed to take possession of the assets in the State where he is appointed, and acquires title to such assets only, the question arises whether the debts owing to the Roofing Company from the parties in Nebraska and Missouri, can be regarded as property or assets in Illinois. In construing the meaning of the words, “property in this State,” we have held, that, “since the only property right which there can be in a debt is the mere right to receive payment of it, it is impossible that there, can be anything of a tangible nature connected with such right which can occupy locality, and, so, the property right must accompany and remain with the person of the owner of the debt, and, therefore, it cannot be in this State when the domicil of the owner is in another State.” (Cooper v. Beers, 143 Ill. 25). “Contracts respecting personal property and debts are now universally treated as having no situs or locality, and they follow the person of the owner in point of right.” (Story’s Conflict of Laws, sec. 362). Mobilia, inherent ossfbus domini. Wharton on Conflict of Laws, at sec. 363, says: “The remaining theory * * * is that of the lex domicilii of the creditor. This theory is now generally accepted in England and the United States. * * Mobilia sequunter personam is a maxim, * * * peculiarly applicable to debts which have no local site, and which therefore follow the owner.” Here, the debts garnisheed belong to the Powerville Felt Hoofing Company, Limited, which is a corporation organized under the laws of'New York. A foreign corporation has its domicil in the State from which it derives its existence. (8 Am. & Eng. Enc. ■ of Law, page 330, and cases cited). “A corporation is an artificial being, and has no dwelling either in its office, .its warehouses, its depots or its ships. Its domicil is the legal jurisdiction of its origin, irrespective of the residence of its officers, or the place where its business is transacted.” (Merrick v. Van Santvoord, 34 N. Y. 208; B. & O. R. R. Co. v. Glenn, 28 Md. 287; Insurance Co. v. Francis, 11 Wall. 210; State Treasurer v. Auditor General, 46 Mich. 224). The residence of a corporation is the State which creates it. It cannot change its domicil at will, and, although it may be permitted to transact business in another State, it cannot on that account acquire a residence there. (Insurance Co. v. Francis, supra; Dicey on Domicil, page 112; Kirtland v. Hotchkiss, 100 U. S. 419). Inasmuch, therefore, as the debts due to the Roofing Company must be regarded as situated at its domicil, they are located in New York and not in Illinois, and cannot therefore be regarded as passing to appellant as receiver. Even if the residence of the debtors should be regarded as the location of these debts, they would not be property or effects in Illinois, but would be located in Nebraska and Missouri. The commencement of a suit by filing a bill does not constitute Ms pendens until summons or subpoena has been served. (Grant v. Bennett, 96 Ill. 513). Accordingly, it has been held that the lien created by a creditor’s bill only comes into existence by the filing of the bill and service of process. (Hallorn v. Trum, 125 Ill. 247; King v. Goodwin, 130 id. 102; First Nat. Bank v. Gage, 93 id. 172). Here, as there was no service of process upon the Roofing Company, no lien, equitable or otherwise, could have been acquired upon the debts garnisheed by appellee. It is claimed, that, in the ordinary course of the business of the Roofing Company as conducted at its Chicago branch, these debts would have been payable at the Chicago office, and that their situs must be regarded as being in Illinois, because they are thus alleged to have been payable in Illinois. There would be much force in this position if the debts were payable to a doméstic corporation, but it cannot be considered as entitled to much weight here, where the debts are payable to a foreign corporation. (Osgood v. McGuire, 61 N. Y. 524). In the third place, it appears here, that, before a rule was entered upon appellee requiring him to show cause why he should not be committed for contempt, the appellant as receiver had intervened in the garnishment proceedings in Nebraska, and, upon his own application, had been made a defendant in those proceedings, and had been granted the power to appear and assert his rights therein. The suits, which appellee was required to dismiss, were suits in which the receiver had" voluntarily-made himself a defendant. He had, of his own accord, submitted to the jurisdiction of the foreign court with a view of there contesting his rights. It has been held, that, where a party - has been guilty of a contempt of court by bringing suit against a receiver without leave, the contempt is waived by the appearance of the receiver in the suit. (Mulcahey, Jr. v. Strauss, 151 Ill. 70). Contempts have been classified into direct and constructive, the former being" those committed in the presence of the court or so near as to interrupt its proceedings," the latter being those which arise from matters not transpiring in court, but from refusal to obey its orders and decrees that are to be performed elsewhere. Interfering with property in the possession of a receiver is a constructive contempt. (Rapalje on Contempts, secs. 22, 24). Contempts have been still further classified into criminal and civil, the former being acts in disrespect of the court or its process, or tending to bring it into disrepute, or obstruct the administration of justice; the latter being “those quasi contempts which consist in failing to do something which the contemner is ordered by'the court to do for the benefit or advantage of another party to the proceeding before the court.” (Rapalje on Cont. sec. 21). “If the contempt consist in the refusal of a party to do something which he is ordered to do for the benefit or advantage of the opposite party, the process is civil.” (Phillips v. Welch, 11 Rev. 187). In such case “the private party alone is interested in the enforcement of the order, and the moment he is satisfied, the imprisonment terminates.” (Idem). A motion to commit for such a contempt may be answered by showing that the party complaining of it has waived it. “Waiver only applies where the contempt has arisen from breach of an order made in favor of any party not, of course, to contempts of the court itself.” (Oswald’s Contempt of Court, pages 113, 114). In the case at bar, the order of committal because of refusal to dismiss the foreign suits was made for the benefit and advantage of Palmer, the complainant in the creditor’s bill. A receiver under a creditor’s bill is not necessarily a trustee for the benefit of all the creditors, but for the benefit of the creditors in whose behalf he is appointed. (Young v. Clapp, 147 Ill. 176). In his answer to the petition of the receiver, the appellee set up the order of the. foreign court making the receiver a party to the foreign suits at his own request. We are inclined to think, that the answer thereby showed, in connection with the other circumstances heretofore mentioned, a good defense to the motion or petition for an attachment, on the ground that the action of the receiver in submitting to the jurisdiction of the foreign court with a view of having his rights determined there amounted to a waiver of the contempt. It is true, that the mere pend-ency of a suit in one State cannot be pleaded in bar or abatement of a second action in another State even between the same parties, and for the same cause of action. (Allen v. Watt, 69 Ill. 655). The reason for this rule is that the defendant would not be obliged to pay the money twice, since payment at least, if not a recovery in the one suit, might be pleaded puis clarrein continuance to the other suit; and if the two suits should ever proceed pari passu to judgment and execution, a satisfaction of either judgment might be shown in discharge of the other. (Bowne v. Jay, 9 Johns. 221; Walsh v. Durkin, 12 id. 99; Embree v. Hanna, 5 id. 101). But it is manifest, that neither the rule, nor the reason for it, has any application here. That may be a good answer to a motion to commit for contempt which may not be a good defense upon the merits. In the Sercomb case,-the receiver had not'intervened in the foreign suit when the application to commit for contempt was made ; and therefore whatever was there said, inconsistent with the proposition that such an intervention as is shown under the circumstances of the present case can be regarded as a waiver, must be modified to accord with the views here expressed. Where a court of equity is asked to proceed as for a contempt against a creditor, who seeks to reach by attachment or garnishment debts due to an insolvent debtor from persons residing out of the State, it is proper to enquire which of the parties has a paramount right or superior equity to those debts. (Dehon v. Foster, supra). For the reasons here stated, the judgment of the Appellate Court is affirmed, and the decree or order of the Superior Court of Cook County is reversed and the cause is remanded to the latter court for further proceedings in accordance with the views here expressed. Judgment affirmed.