Rhodes v. Borden

McKinstry, J. The action is upon promissory notes made by defendant payable to plaintiff) and delivered to the latter’s agent in Fresno County; no place of payment specified. At the trial it was shown that the plaintiff) from a date long prior to the making of the notes, had been a citizen and continuously a resident of Alabama. The notes were made subsequently to the enactment of the insolvent law of this State. The only question is whether the discharge of defendant from his debts, under that law, is a bar to the action.

In the year 1812 it was determined by the Supreme Court of New York that discharge under the insolvent law of that State was a bar to a suit brought in the New York courts on a contract wherever made. (Penniman v. Meigs, 9 Johns. 325.) And in 1816, the Supreme Court of Massachusetts decided that a discharge under the bankrupt law of a State where the contract was made, and of which the debtor was a citizen, was a good bar to an action upon such contract in another State where the creditor resided. (Blanchard v. Russell, 13 Mass. 1; 7 Am. Dec. 106.)

Sturges v. Crowninshield, 4 Wheat. 122 (A. D. 1819), concludes all doubt of the proposition that a State insolvent law, as far as it attempts to provide for the discharge of a party, as to future acquisitions of property, from debts contracted previously to the enactment of the law, is unconstitutional, because violative of the obligation of such contracts. It is equally settled that insolvent laws providing for a discharge of debts contracted subsequent to their passage do not violate the obligation of contracts. (Ogden v. Saunders, 12 Wheat. 213.)

In Suydam v. Broadnax (A. D. 1840), it was held by the Supreme Court of the United States that the certificate of discharge, under a State insolvent law, cannot be pleaded in bar of an action brought by a citizen of another State in the Circuit Court of the United States. (14 Peters, 67.)

The same court decided in 1857 that the jurisdiction of the courts of the United States over controversies arising between citizens of the United States, cannot be impaired by the laws of the States, which prescribe the modes of redress in their own [9]courts, or which regulate the distribution of their judicial power. (Hyde v. Stone, 20 How. 170.)

The decisions in the two cases last referred to seem to have turned on the proposition that the act of Congress to establish the judicial courts of the United States, gives to the Circuit Courts original cognizance of all suits of a civil nature, and the right to a citizen of one State to sue a citizen of another State in such courts; that it was intended to give suitors, having a right to sue in the Circuit Courts, remedies co-extensive with that right; and that the remedies would not be so, if any proceedings under an act of State legislation, to which the plaintiff was not a party, exempting a person of such State from suit, could be pleaded to abate a suit in the Circuit Court. But in Ogden v. Saunders, supra (A. D. 1827), the action being one brought in the Circuit Court of the United States by a citizen of Kentucky against a citizen of Louisiana, it had been said by the Supreme Court that a certificate of discharge, under an insolvent law of a State, could not 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.”