Boyle v. Zacharie (31 U.S. 635)

APPEAL from the circuit court of the United States for the district of Maryland.

The bill filed by the appellant in the circuit court, stated, among other matters, that certain persons at New Orleans, trading under the firm of Vincent, Nolte & Co. having attached a brig belonging to the plaintiff, for a debt alleged by them to be due from said plaintiff, and which brig was consigned to the defendants, they the said defendants became security for the complainant on the said attachment, and the same having been ultimately decided against the complainant, the defendants paid the amount of the debt and expenses, amounting to three thousand one hundred and thirteen dollars and eighty cents. That on the 31st day December 1819, the complainant obtained a final discharge under the insolvent laws of Maryland; and that afterwards, to wit, at the May term 1821 of the said circuit court, the defendants obtained a judgment against him for the said sum of three thousand one hundred and thirteen dollars and eighty cents, which judgment was entered upon the docket of said court, and agreed to be so received, subject to the legal operation of the discharge of the complainant under the said insolvent laws of Maryland. That execution had been sued out upon said judgment, and a writ of fieri facias had been placed in the hands of the marshal of the district, with directions to levy the same on property acquired by the complainant subsequently to his so obtaining his final discharge under the insolvent laws aforesaid, notwithstanding the said entry on the docket of its being confessed, and the confession being received, subject to the legal operation of the insolvent laws of Maryland. That besides the above facts, the defendants had also caused to be issued out of some court in Louisiana, an attachment upon the same debt or claim, against the complainant, and had laid the said attachment in the hands of persons indebted to the complainant in a large amount, which persons had refused to pay any part of the debts due by them to the complainant, in consequence of the laying of said attachment in their hands. The bill further stated, that by the provisions of the insolvent laws of Maryland, the complainant was entitled to be protected in the enjoyment of all property acquired by him since the date of his discharge under the said insolvent laws; except such as he might have acquired by gift, descent, or in his own right by bequest, devise or in any course of distribution; and that he had not since his discharge aforesaid, acquired any property in any of the modes thus specified. And further, that no property whatever of which the complainant was possessed, or to which he had any title, could be lawfully taken in execution under the said judgment, until a scire facias, containing proper averments of the acquisition of property by him in some one of the above mentioned modes, should be first issued, and the facts found to be true, either by confession, or by verdict of a jury, or otherwise according to law. And the bill prayed an injunction to be granted restraining and prohibiting the defendants from levying their execution: and the injunction to that effect was granted and served in due form.

The answer of the defendants, the appellees, stated that in the latter part of the year 1818, the complainant consigned to them at New Orleans a brig called the Fabius, and that they procured a freight for her to Liverpool; that after the cargo was actually laden on board of her, and she was about to sail, she was attached at the suit of Vincent, Nolte and Company, for a debt due to them by the complainant, and they, the defendants, and one Richard Relff, with a view to the benefit of the complainant, became security for the complainant and procured the release of the brig. The complainant approved of their acts, and undertook and promised to indemnify them for any loss they might sustain on his account. He afterwards gave the defendants a security for their liability, on the 1st day of May 1819.

The contract of indemnity was as follows: 'I will see Messrs Zacharie and Turner paid whatever sum they have to pay Vincent, Nolte and Company, on account of a bill drawn by them on Hugh Boyle for disbursements of the ship Mohawk, original bill amount, five thousand four hundred and fifty-one dollars, of which the said Hugh Boyle paid three thousand dollars: the balance, the said Hugh Boyle contends, is not due to Vincent, Nolte and Co. When decided it shall be paid.

'Baltimore, 1st May 1810.'

Hugh Boyle, the complainant, and Lemuel Taylor, soon after this circumstance, became insolvent, and the defendants afterwards paid to Vincent, Nolte and Company, the sum of three thousand one hundred and thirteen dollars and eighty cents, the amount of the judgment obtained by them against the complainant.

The defendants further stated that they afterwards instituted a suit in the circuit court of the United States for the district of Maryland against the complainant, and obtained judgment against him for the amount so paid by them on his account, and proceeded thereon as stated in the complainant's bill. They say that the discharge of the complainant, by the insolvent laws of the state of Maryland, does not prevent their having the full benefit of the execution issued against the complainant's property, which has been acquired to a large amount since the discharge, all of which is liable for the payment of his dobts.

The court granted the injunction as prayed for.

The answer admits the issuing of the attachments in New Orleans against the supposed property of the complainant, but states that the defendants in the same denied having any funds, and the proceedings were dismissed.

On the 19th of May 1829 the cause was set down for final hearing in the circuit court, and after argument it was decreed that the injunction should be dissolved; and the complainant's bill was dismissed. From this decree the complainant appealed to this court.

The case was argued by Mr Wirt, for the appellant; and by Mr Scott, for the appellees.

For the appellant it was contended:

1. That the appellant having been finally discharged under an insolvent law of the state of Maryland, passed and in force at a period of time previous to the making of the contract on which the suit at law was instituted, the injunction properly issued for restraining the further execution of process which had been levied upon property acquired by the plaintiff in error, subsequently to his said discharge; and that the decree passed upon a final hearing ought not to have dissolved said injunction.

2. That the insolvent law of Maryland, although it discharged both the person of the debtor, and his acquisitions of property made after his discharge under the law, is not a law impairing the obligation of contracts, so far as respects debts contracted subsequent to the passage of such law, provided such contract was to be executed or performed in the state of Maryland.

3. That the bill and answer, and the proceedings filed with them, show that this contract was to be executed or performed in the state of Maryland; and that if these proceedings left the fact doubtful as to the place where the contract was to be performed, the injunction should have been continued for further proof.

4. That the court of chancery ought to have referred it to a commissioner to inquire and report, whether the complainant had or had not sustained injury by the attachments in New Orleans.

It was argued for the appellant, that the creditors of Boyle had submitted to the insolvent laws of Maryland by instituting the suit in that state, and by the terms in which the judgment was entered. Cited, Clay v. Smith, 3 Peters, 411.

Maryland was the place of the contract, or where, at least, it was to be performed. It was immaterial where the contract was made, if it was to be performed in Maryland.

As to the rule in fixing the place of the contract, Lanusse v. Barker, 3 Wheat.; De Wolf v. Johnson, 10 Wheat.; 7 Harris and Johnson, 399, were cited.

The contract in this case was not consummated until it was ratified by Boyle in Maryland. The consignees had become security for the consignor, an act not within the scope of their authority, and not binding on the consignor until he ratified it. As therefore the contract was not complete until confirmed, and as this was done in Maryland, it was a Maryland contract. If the appellees had not given the security to enable the brig to proceed, they would not have been liable for neglecting it.

This is the general rule as to all contracts growing out of correspondence. The place of payment contemplated was Baltimore. It was there that the same was to be carried into execution. Cited, Huberus de Conflictu Legum; 3 Dall. 374, note; Beg. Dig.; 3 Mass. Rep. 77; 5 Mass. Rep. 509; 6 Mass. 157; 12 Mass. 4; 2 Mass. 84; 13 Mass. 153; 15 Mass. 354.

If the contract had been made in New Orleans, and so considered by the appellees, it would have borne interest at the rate of ten per cent. But the declaration states it to have been made in Maryland, and the rate of interest is that of Maryland. This is an admission, that it was a Maryland contract; and therefore to be regulated by her laws. This is equivalent to suing in a state court; and the question in the case will turn on the construction of the agreement by which the judgment was entered.

It is considered, that the taking of the judgment in the form in which it was entered, was an agreement that the parties should be bound by the law of Maryland; and would take only what that law gives, and according to the operation of the law.

It is a common practice in Maryland to take a judgment in a suit against one who has been discharged as an insolvent debtor, subject to the discharge. This is equivalent to that practice.

Mr Scott, for the appellees, assumed, that this case having been set down for final hearing by the complainant upon the bill and answers, the facts set forth in the answers must be taken as true; and he relied on the case of Leeds v. Marine Insurance Company of Alexandria, 2 Wheat. 380, 383.

He also contended, that the discharge of Boyle, under the insolvent laws of Maryland, did not affect the right of the plaintiffs at law to a judgment, or to an execution upon that judgment; because the act of the general assembly of Maryland, passed at December session 1816, ch. 221, sec. 5, which grants a final discharge to insolvent debtors, was a law impairing the obligation of contracts, and in violation of the first article, tenth section of the constitution of the United States. He relied upon the following authorities, Lanusse v. Barker, 3 Wheat. 102, 146; Consequa v. Fanning, 3 Johnson's Cases, 610; Thompson v. Ritcham, 8 Johnson's Rep. 189, 193; Blanchard v. Russell, 13 Mass. Rep. 18; Coolidge v. Poor, 15 Mass. Rep. 427, for the purpose of showing lex loci contractus: and also upon Sturges v. Crowninshield, 4 Wheat. 122, 197, 193; M'Millan v. M'Neill, 4 Wheat. 209; Farmers and Mechanics Bank of Pennsylvania v. Smith, 6 Wheat. 131; Ogden v. Saunders, 12 Wheat. 213, as to the validity of the discharge. And he contended that the memorandum made upon the judgment, 'subject to the legal operation of the defendant's discharge under the insolvent laws of Maryland,' gave to Boyle no other benefit from his discharge, than if it had been pleaded at length; and that the discharge was no release to Boyle from the claim of the defendants.

He also contended, that the attachments, mentioned in the proceedings in the cause, formed no bar to the right of the plaintiffs at law to an execution upon their judgment; and he relied on Runer v. Marshal, 1 Wheat. 215; Bowne v. Joy, 9 Johnson, 221; Wash v. Durkin, 12 Johnson, 99. And in reply to the fourth point of the appellant's counsel 'that the court of chancery ought to have referred it to a commissioner to inquire and report whether the complainant had sustained injury by the attachments at New Orleans,' he showed by the answer of the defendants, that the proceedings in the attachment, laid in the hands of Breedlove, Bradford and Robinson, had been instituted at the instance and request of Boyle himself; and that, in that case, and also in the proceedings in the attachment against Ambrose Nelson, there were no funds in the hands of the garnishees liable to be affected by those proceedings. He also contended that Boyle had sustained no injury by those proceedings, and that there was no evidence upon which the appellant could rely, to show that he had been injured by them; and that even if he had been injured, that his remedy was before another tribunal, and not in a court of equity; and that he must establish the quantum of injury in a court of law before he could claim a set off on that account in a court of equity; and that the appellant was without any defence; and that the injunction was properly dissolved, and the bill dismissed.

Mr Justice STORY delivered the opinion of the Court.