Glenn v. Clabaugh

Alvey, C. J., delivered the opinion of the Court. This case is in all respects similar to the preceding- cases of Glenn, Trustee vs. Howard, and Glenn, Trustee vs. Savage, except that instead of the defence of final discharge of the defendants under the Bankrupt Law of the United States, as in those cases, we have here the defence that the defendant had duly obtained- a final discharge under the Insolvent Laws of this State, on the 15th of September, 1819, and that the alleged cause of action accrued [67] before the filing of his petition. The plaintiff demurred to this plea, and the demurrer was overruled by the Court below, and judgment was entered for the defendant. The action being for a call upon stock, under the decree of the 14th of December, 1880, as set forth in the declaration, it would seem, upon reason and principle, that the same conclusion reached in the preceding cases should be maintained in this. But the insolvent law of this State, under which the defendant was discharged, makes no special provision for the character of debts to be proved, or as to the mode of proving debts or claims against the insolvent estate. Nor does it provide, as in the bankrupt law, that the discharge shall only operate upon such debts as were proved, or were provable against the insolvent estate. But it provides in the most unqualified terms, that the discharge shall be “from all debts and contracts made before the filing of his petition, and he shall be released from all such debts and contracts, and such discharge and release shall embrace all cases where he is indorser or surety,” &c. These terms are certainly very comprehensive, and anything that falls within the definition of debt or contract, would seem to be embraced by them; and in view of the decisions of the Court in the cases of Berry vs. McLean, 11 Md., 92, State, use of Buckey vs. Culler, 18 Md., 419, and Reynolds vs. Mut. Fire Ins. Co., 34 Md., 280, and especially the two latter cases, it would seem to be doubtful whether a contract of the nature sued on in this case, is not embraced within the operation of a discharge under the’insolvent law of the State. But however this may be, it is very clear that the insolvent discharge can form no bar to the recovery in this case. Here the contract sued on was made with a corporation of the State of Virginia. That corporation derived all its powers of existence, and its franchises, from that State, and there it had its principal office and seat [68] of its governing body. The contract of subscription to its capital stock was to be performed there, as and when required by the president and directors of the company. The law of the State, and of the creation of the corporation itself, fixed the terms of the contract of subscription, and the defendant is conclusively presumed to have contracted with reference to such law. He therefore impliedly subjected himself to such laws of that State as affected the powers and obligations of the corporation, and as prescribed the terms, and the manner of performance, of the contract made with such corporation. Canada Southern R. Co. vs. Gebhard, 109 U. S., 527, 537-8. The plaintiff in this case was not a party to the contract, but is only an officer entrusted with executive powers under a decree of a competent Court of Virginia, made to secure, the performance of the obligations of the corporation, for which the defendant, as a stockholder, is in part bound; and it is not competent to him to invoke the insolvent laws of Maryland to discharge him from that ohligation. The insolvent laws of the State profess to operate upon all contracts, without regard to the residence of the creditors ; but this general provision of the statute is' necessarily qualified by the Constitution of the United States, and by the decisions of the Supreme Court, declaring the meaning and effect of that Constitution upon the legislation of the several States. The State possesses the unquestioned power of passing insolvent laws, if not in conflict with the legislation of Congress upon the subject; but insolvent laws passed by a State can have operation and effect only as between the 'citizens or residents of that State, and can have no effect whatever to discharge contracts made with citizens or persons of other States. In other words, the insolvent laws of one State cannot discharge the contracts of citizens of other States, because such laws have no extra-territorial operation. And such being the case,, it makes no difference whatever that the [69] action for the enforcement of the contract is brought in a Court of the State where the debtor resides, and under whose insolvent laws he has obtained his discharge. The contract not being subject to the operation of those laws, the defendant’s discharge can furnish him no defence, no matter in what Court the suit may be brought. This is the clear purport of the decisions of this Court, as it is of the decisions of the Supreme Court of the United States, made upon this subject; and it is therefore clear that the plea of the insolvent discharge forms no bar to this action, and the demurrer thereto should have been sustained. Frey vs. Kirk, 4 G. & J., 510; Poe vs. Duck, 5 Md., 1; Ogden vs. Saunders, 12 Wheat., 358; Boyle vs. Zacharie & Turner, 6 Pet., 348; Baldwin vs. Hale, 1 Wall., 223, and Baldwin vs. Bank of Newbury, Ib., 234. (Decided 10th March, 1886.) It follows that the judgment of the Court below must be reversed, and the cause remanded for a new trial. Judgment reversed, and cause remanded.