Van Hook v. Whitlock

| N.Y. Sup. Ct. | Jul 1, 1841

After advisement, the following opinion was delivered:

By the Chief Justice.

The bill in this case was filed by several creditors of The Commercial Insurance Company ofJVew-Ybrk for the purpose of charging the defendants, as stockholders of the same, under the twelfth section of its charter, which declared, that in respect to all debts contracted by the corporation previous to the expiration of its charter, the persons composing the company at the time of its dissolution should be responsible in their individual and private capacity to the extent of their respective shares of stock at the time.

The several debts of the complainants had accrued before the passage of the act of April, 1814, respecting incorporated insurance companies in cases of their insolvency, of which act this company took the benefit in July of the same year, and were discharged from their debts in pursuance of its provisions. The second section of the act makes the assignment under the order of the proper officer, a full discharge not only of the corporation, but also of the president, directors, and stockholders of the company from all debts due at the time of the assignment. The complainants admit that they have received from the assignees, under the act of 1814, several dividends out of the assets of the company, amounting in the whole to fifty-one per cent upon their respective demands. The defendants mainly rely, as a defence to these claims by the creditors of the company, and as exempting them from personal liability: 1st. Upon the statute of limitations, which they set up in analogy to proceedings at law, the case not being one of exclusive equity cognizance ; and 2d. Upon the discharge of the Chancellor under the act of 1814.

I. As to the statute of limitations: A clause in the sixth section of the R. L. 1813, (p. 187,) and the like provision continued in 2. R. S. § 31, (p. 298,) is referred to on this branch of the case. It is found in a section of our act of limitations, that relates to actions, informations, and indictments, sued out and exhibited for forfeitures upon penal statutes, and which provides, that where the forfeiture is given to the people, the limitation shall be two years; if given to any person who shall prosecute, or to the people and any such person, then one year for the person to sue; and in case of default, two years in behalf of the people after the one is ended; and then comes the clause in question, substantially as follows: “And that all actions or informations that shall at any time be sued or exhibited for any forfeiture, or cause upon any statute, the benefit or suit whereof is given, or limited to the party aggrieved, shall be sued, &c. within three years next after the offence or cause of action accrued, and not after.” This particular clause is not found in the 31 Eliz. c. 5, § 5, from which the rest of the section is taken; and the reason of its insertion obviously grew out of a defect in the English statute, which omitted to provide for any limitation where the forfeiture was given to the party aggrieved, 1 Tidd, 14. Willes, 443, (n.) Ld. Raym. 78. We have several penal statutes, where the penalty or forfeiture, instead of being given to the people, or common informer, is limited to the aggrieved party. There are also others penal in their nature, in which the remedy is confined to the party injured; and were it not for this provision, there would be no limitation to the period for bringing these actions. This view gives full operation and effect to the clause without claiming for it the broad construction insisted upon by the learned courts below.

I do not, however, intend to discuss the question, not regarding it material in the view I have taken of the case; but felt bound to present it for the purpose of entering my dissent to the construction attempted to be given to the clause. If it really possesses the sweeping effect claimed, for aught I see, it must present a short bar of three years to every action, and cause of action arising out of and founded upon any statutory regulation: such as suits against heirs, executors and administrators, the presidents and other officers of corporations under the general hanking law, besides many others that might be enumerated. Certainly, the suit is as completely founded upon the statute against the president of the bank, and the creditor is as much aggrieved by the non-payment of his debt by the institution, as can be predicated of the case under consideration; and if the three years’ bar is applicable to the one case, I do not see how it can consistently be denied in the other. But I forbear going into the argument.

II. Jis to the discharge: As all the debts of the complainants accrued before the act of 1814, under which the discharge was granted, the act is clearly inoperative according to the doctrine of Sturges v. Crowninshield, 4 Wheat., 122" court="SCOTUS" date_filed="1819-02-22" href="https://app.midpage.ai/document/bank-of-columbia-v-okely-85267?utm_source=webapp" opinion_id="85267">4 Wheaton, 122, and Ogden v. Saunders, 12 Id. 213, as impairing the obligation of the contract, unless there is some thing in the case that forbids the application of the doctrine of these cases. As I understand the final decision of the court in the case of Ogden v. Saunders, as'delivered by Mr. Justice Johnson, it was intended to hold, that as between citizens of the same state, the insolvent’s discharge is valid as it affects contracts made posterior to the law; but as against citizens of other states it is void, as to all contracts wherever made. Accordingly, a discharge in New-York, under the law of 1801, from a debt contracted in the state with a citizen of Kentucky, after the passage of the act was held void, and in Shaw v. Robbins, 12 Wheaton, 369, n., a like judgment was given. A majority of the court concurred in the opinion of Mr. Justice Johnson, and have since regarded the principles there established as the settled law of the court. 6 Peters, 349 and 635.

Mr. Justice Story, in his commentaries on the constitution, thus states the result of the various decisions: 1st. That they (the state insolvent laws) apply to all contracts made within the' state between citizens of the state; 2d. That they do not apply to contracts made within the state between a citizen of the state and a citizen of another state; and 3d. That they do not apply to contracts not made within the state. In all these cases it is considered, he observes, that the state does not possess a jurisdiction co-extensive with the contract over the parties, and, therefore, that the constitution of the United States protects them from prospective as well as retrospective legislation, 3 Story’s Comm. 256. Still I am not aware that it has been directly determined by any case in the supreme court of the United States, that the discharge would not be a bar against a citizen of another state, where the suit is brought in the court of the state in which it was granted, and upon a contract made therein posterior to the law.

But in Clay v. Smith, 3 Peters 411, the court held, that if the creditor voluntarily makes himself a party to the proceedings under a state insolvent law which discharges the debt, and accepts a dividend declared under the law, he will be bound by his own act, and be deemed to have abandoned this extra territorial immunity. The facts are so imperfectly stated in the report of the case, that no principle can be deduced from the decision, except we may presume that without the assent of the creditor to the proceedings, by coming in and accepting a dividend, the discharge would have been invalid. The principle is not new, as it had been before repeatedly recognized in analagous cases, both in this country and in England. 3 Caines 154. 8 Barn. & Cres. 477. 2 Kent’s Comm,. 393, n. 3d ed. Baldwin’s C. C. R. 296. 2 Peters Dig. 470. In Phillips v. Allan, 8 Barn. & Cres. 477, a discharge under the law of Scotland was set up against a debt contracted in England, which was conceded to be no bar; but the plea averred that the plaintiff appeared in the court in Scotland and opposed the discharge of the defendant, which was relied on as evidence of .his consenting to be bound by that law: That conclusion from the premises, was denied by the court; but it was conceded that if he had taken the benefit of the law by coming in and receiving a distributive share of the property, it would have been otherwise. That would have been such an assent as might have bound him. Our insolvent act recognizes the same principle by declaring that the dischage shall exonerate the insolvent from all debts contracted within the state, &c., owing to persons not residing within it, who shall have united in the petition for the discharge, or shall have accepted a dividend from the estate. 1 R. S. 781, § 30. This ground, therefore, taken by the Chancellor in favor of the defendants, I think, affords a clear and decisive answer to the several demands of the complainants: up-which, alone, I shall vote for an affirmance of his decree.

On the question being put, Shall this decree be reversed ? the members of the court present at the argument unanimously answered in the negative. Whereupon the decree was Affirmed.