GILMAN
v.
LOCKWOOD
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A New York citizen sued a Wisconsin resident to recover on a promissory note executed in Wisconsin, and the defendant pleaded a discharge in insolvency under Wisconsin's insolvent laws. The Supreme Court held that a state's insolvent discharge cannot bar an action by a citizen of another state who did not participate in the insolvency proceedings, because state insolvency laws lack extraterritorial effect and courts exercising such jurisdiction cannot bind non-resident creditors who were not parties to the proceedings.
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Mr. Justice CLIFFORD delivered the opinion of file court.
Amended plea of the defendant admitted, as the declaration alleged, that the plaintiff, when the note was made and delivered, was a citizen of the State of Few York; and that the defendant was a citizen of the State of Wisconsin, where the note is dated and was executed. Action was assumpsit to recover the amount of a certain promissory note, described in the notice of claim annexed to the declaration. Defendant pleaded his discharge in insolvency from all his debts prior to the commencement of the action under the insolvent laws of the State where he resides, and where the contract was executed between the parties. Plaintiff demurred specially to the plea, and the defendant joined in demurrer. Causes of demurrer shown were :
First. That the plea tendered an immaterial issue.
Second. That the insolvent court exceeded its jurisdiction in attempting to determine the rights of the plaintiff under this contract, as he was a citizen of another State, and never became a party to the proceedings in insolvency.
Third. That the discharge in insolvency set up in defendant’s plea is nugatory, because the insolvent law of the State as to the plaintiff is unconstitutional and void.
Circuit Court overruled the demurrer and rendered judgment for the defendant; whereupon the plaintiff sued out this writ of error and removed the cause into this court.
State legislatures may pass insolvent laws, provided there be no act of Congress establishing a uniform system of bankruptcy conflicting with their provisions, and provided that the law itself be so framed that it does not impair the obligation of contracts. Certificates of discharge, however, granted under such a law, cannot be pleaded in bar of an action brought by a citizen of another State in the courts of the United States, or of any other State than that where the discharge was obtained, unless it appear that the plaintiff proved his debt against the defendant’s estate in insolvency, or in some manner became a party to the proceedings. Insolvent laws of one State cannot discharge the contracts of citizens of other States; because such laws have no extra territorial operation, and consequently the tribunal sitting under them, unless in cases where a citizen of such other State voluntarily becomes a party to the proceedings, has no jurisdiction of the case.*
Unquestionably, the decision in those cases controls the present case, and renders further remarks upon the subject unnecessary. Demurrer should have been sustained.
Judgment REVERSED with costs, and the cause remanded for further proceedings in conformity to the opinion of this court.
*
Baldwin v. Hale, 1 Wallace, 223; Baldwin v. Bank of Newbury, Id. 234.
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Cole v. Cunningham, 133 U.S. 107 (U.S. 1890)…if they make themselves parties to proceedings under these insolvent laws, by accepting dividends, becoming petitioning-. creditors, or in some other way appearing and assenting to the jurisdiction. Baldwin v. Hale, 1 Wall. 223; Gilmam v. Lockwood, 4 Wall. 409. In New York an attachment is obtained on application- to a judge of the Supreme Court, or a county judge, affidavit being. made as to the validity of the claim and the grounds .of - the attachment, and a bond furnished with sufficient sureties. Th…
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Int'l Shoe Co. v. Pinkus, 278 U.S. 261 (U.S. 1929)…or extends to persons or property outside its jurisdiction or conflicts with the national bankruptcy laws. Sturges v. Crowninshield, 4 Wheat. 122. Ogden v. Saunders, 12 Wheat. 213, 369. Baldwin v. Hale, 1 Wall. 223, 228, et seq. Gilman v. Lockwood, 4 Wall. 409. Denny v. Bennett, 128 U. S. 489, 497-498. Brown v. Smart, 145 U. S. 454, 457. Stellwagen v. Clum, 245 U. S. 605, 613. The Arkansas statute is an insolvency law. It is so designated in its title (Acts of Arkansas, 1897) and in the revision. C. 93,…
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Denny v. Bennett, 128 U.S. 489 (U.S. 1888)…mand. But it is said that this statute of Minnesota is void under the principles laid down by this court in the cases of Sturges v. Crowninshield, 4 Wheat. 122; Ogden v. Saunders, 12 Wheat. 213; Baldwin v. Hale, 1 Wall. 223, and Gilman v. Lockwood, 4 Wall. 409. The proposition lying at the foundation of all these decisions is, that a statute of a State, being without force ' in any other State, cannot discharge a debtor from a debt held by a citizen of such other State. One of the best statements of the d…
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