Oakey v. Bennett

Mr. Justice McLEAN delivered the opinion of the court. A writ of error to the District Court of the United States for Texas brings this case before us. Under the forms of procedure in Texas,- an action was commenced by petition, on the 25th of January, 1847, by the plaintiff, for the recovery of a house and lot in the city of Galveston, Texas, described in the plan of said city, number thirteen, in block six hundred and eighty-one. The plaintiff gave in *43 evidence a deed from the proprietors of the city for the lot in controversy to James S. Holman, dated 1st June, 1840. The same lot, on the 3d of April, 1843, was conveyed to William Hall, by Snydor, the attorney of Holman. The purchase was made by Hall, some time before the deed was executed, and he entered into the possession of the lot, made improvements thereon, and continued to occupy it until his death. The defendant lilies has been in possession of the lot since the death of Hall. On the 9th of February, 1843, William Hall (“ late of Galveston, Texas ”) filed his petition for the benefit of the bankrupt law, in the District Court of the United States for the Eastern District of Louisiana, and on the 10th of March following he was declared a bankrupt. A schedule of his assets was filed, among which was the lot now in controversy. Francis B. Conrad, of the city of New Orleans, was appointed. his assignee, who gave bond as required. The assignee, on application to the District Court, obtained an order for the sale of the house and lot, and they were sold, in pursuance of such order, to Oakey, the plaintiff, on the 18th of June, 1845, to whom a deed was executed on the same day by the assignee. Before the commencement of the suit, in 1844, Hall died, and Bennett, the defendant, was appointed his administrator . in Texas. Process was issued against him, and also against ■ lilies, the person in possession, Who refused to recognize the right of the plaintiff. In his answer Bennett avers, that the petition and the matters and things therein set forth are not sufficient in law, &c., and he prays judgment, &c. And for further answer he states, that Hall departed -this life before the annexation of. Texas to the- United States, and that administration of his estate was duly granted to the defendant. That he proceeded in the discharge of his duties, and he exhibits accounts against the estate of Hall, by himself and other citizens of Texas, which were allowed by the Probate Court, amounting to-the sum of $ 1,811, before any conveyance of the'house and lobby the assignee of Hall was set. up ov registered in Galveston County, as the law required. And he'avers that there is no property to satisfy the debts of the estate, except the house and lot in controversy. Many points were raised, on which bills of exception were taken to the rulings of the court, in the progress of the trial, but the validity of the deed of the assignee to the plaintiff is the great question in the case. There can be no doubt, the proceedings in bankruptcy being regular and bona fide, that the property of the bankrupt, within *44 the appropriate jurisdiction, became, vested by the act of Congress in his assignee. At the time of the decree of bankruptcy, and until a short time before the sale and conveyance of the property in question to the plaintiff, Texas was an independent republic, and in every respect a foreign state to the government of the United States. In this country there is some diversity of opinion among the State courts, whether a bankrupt law, in regard to personal property, has an extra-territorial operation. That it has such operation is a doctrine which seems to be well settled in England by numerous decisions, and particularly in the Royal Bank of Scotland v. Cuthbert, (1 Rose’s Bankrupt Cases, Appendix, 462, and 2 Rose’s Cases, 291)) in which Lord Eldon said: One thing is quite clear, that there is not in any book any dictum or authority that would authorize me to deny, at least in this place, that an English commission passes, as with respect to the bankrupt and his creditors in England, the personal property he has in Scotland or in any foreign country.” It is held in England, that an assignment of personal property under the bankrupt law of a foreign country passes all such property and debts owing in England; that an attachment of such property by an English creditor, with or without notice, after such an assignment, is invalid. And the doctrine is there established, that an assignment Under the English bankrupt law transfers the personal effects of the bankrupt in foreign countries. But an attachment by a foreign creditor, not subject to British laws, under the local laws of a foreign country, is held valid. The principle on which this doctrine rests is, that the personal estate is held as. situate in that country where the bankrupt has his domicile. A statutable conveyance of property cannot strictly operate beyond the local jurisdiction. Any effect Which may be given to it beyond this does not depend upon international law, but ■ the principle of comity; and national comity does not require any government to give effect to such assignment, when it shall impair the remedies or lessen the securities of its. own citizens. And this is the prevailing doctrine in’ this country. A proceeding in rem against the property of a foreign bankrupt, under our local laws, may be maintained by creditors,, notwithstanding the foreign assignment. But .it is an admitted principle in all countries whére the common law prevails, whatever views may be entertained in regard to personal property, that- real estate can be tionveyed only under the territorial Jaw. The rule is laid down clearly and concisely by Sir William Grant, in Curtis v. Hutton,: 14, *45 Yes. 537,541, where he says, “ The validity of every disposition of real estate must depend upon the law of the country in which that estate is situated.” The samé rule prevails generally in the civil law. Boullenois, John Voet, Christinseus, and others, (cited in Story, Conflict of Laws, 359, 360,) say, “ As a general rule, movable property is governed by the law of the domicile, and real property by the law of the situs rei.” . This doctrine has been uniformly recognized by the cqurts of the United States, and by the courts of the respective States. The form of conveyance adopted by each State for the transfer of real property must be observed. This is a regulation which belongs to the local sovereignty. It is 'argued that the entire interest in the property in dispute passed, under the bankruptcy, to the assignee- of Hall; and that, it being sold under the order of the District Court to the plaintiff, the title is vested in him, the same as if the conveyance had been executed by Hall. . On the appointment and qualification of the assignee, the property of the bankrupt, under the act of Congress, became vested in him, for the benefit of the creditors of the bankrupt. But there was' no assignment in fact made by Hall. He made application for relief under the law, and may be said to be a voluntary bankrupt; but there was no other assignment of his effects than that which resulted fiom the operation of the law. As, under the Constitution, Congress exercised an exclusive jurisdiction over the subject of bankruptcy, the same rule of procedure extended throughout the TJnion. But the act of Congress could have no extra-territorial effect. Texas was an independent republic at the time of the decree in bankruptcy, and consequently no claim under it, even as regards personal property, in that republic, could be made, except on the ground of comity. And on our own principles this could not be done, to the injury of local creditors. Hall in his lifetime might have conveyed this property by observing the forms adopted by Texas. But the assignee took no legal estate in the. premises under the bankrupt law; and consequently he could not convey such axi estate to-the plaintiff. No proposition would seem to be clearer of doubt than this. It is believed that no sovereignty has, at any time, assumed the power, by legislation or otherwise, to regulate the distribution or conveyance' of real estate in a foreign government. There is no pretence that this government, through the agency,.of a bankrupt law, could subject the real property in Texas, or in any other foreign government, to the payment of debts. This can only be done by the laws of the sovereignty where'such property may be situated. *46 It is said that Texas, by an act of the 17th of March, 1841, has recognized the validity of foreign bankrupt laws. There is nothing in that act which can affect the question now under consideration. It merely provides, that where relief has been given under any foreign bankrupt or insolvent law to an individual who has surrendered his property, and who afterwards shall become a citizen of Texas, he shall be considered as discharged from his debts,, unless fraud be shown. But if the assignee had power to. convey the property, there would be two fatal objections to the title of the plaintiff. The deed is not executed according to the form required by the laws of Texas for the conveyance of real estate. Under such an instrument the fee does not pass. And in the second place, if the deed were operative to convey the fee, the property would be. subject to satisfy the claims of the Texas creditors of Hall. Administration of his estate was granted -to Bennett, whc took upon himself the trust, and made returns to the court of the debts of Hall, amounting, as above stated, to the sum of eighteen hundred dollars, before he had any notice of the bankrupt proceeding. And it is averred that these creditors trusted Hall, knowing he possessed the property in controversy. Ben? nett, it is insisted, represents only the rights of thq deceased, and, the right to this property having become dives.ted by the decree in bankruptcy, he can set up no objection to the plaintiff’s title; This position is not sustainable. The- administrator represents the rights of creditors, and as regards this controversy must be considered as standing in their stead. He is responsible to the court for the faithful administration of all the assets of the deceased within - the jurisdiction under which he acts. The creditors who have substantiated their claims were not subject to the decree of bankruptcy. From, the property which Hall was known to possess in Texas, it -is alleged they gave hi® credit, and a conveyance of the property, under the circumstances, could only be held valid by a disregard of the rights of the Texas creditors. This, we suppose, could not receive the sanction of the courts of that State. Whether advantage could - be taken of this in the present procedure, if the deed to the plaintiff conveyed the fee, it is unnecessary to determine. The annexation of Texas to the United States long after the decree of bankruptcy, and a short time before the deed by the assignee was made to the plaintiff, does not affect the question. At the time the decree in bankruptcy was pronounced, there was no jurisdiction over this property;. and the subsequent annexation cannot enlarge that jurisdiction. The rights of creditors were fixed by the decree. *47 We deem it unnecessary to examine the other exceptions, as we are all of the opinion, that the title to the property in controversy did not pass to the assignee, under the decree in bankruptcy. The judgment of the District Court is, therefore, affirmed. Order. This cause came on to be heard'on the transcript of the record from the District Court of the United States for the District of Texas, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this court, that the judgment of the said District Court in this cause be, and the same is hereby; affirmed, with costs.