146 U.S. 657 (1892), 33, Huntington v. Attrill

Docket Nº:No. 33
Citation:146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123
Party Name:Huntington v. Attrill
Case Date:December 12, 1892
Court:United States Supreme Court

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146 U.S. 657 (1892)

13 S.Ct. 224, 36 L.Ed. 1123




No. 33

United States Supreme Court

December 12, 1892

Argued April 26, 1892




A bill in equity in one state to set aside a conveyance of property made in fraud of creditors, and to charge it with the payment of a judgment since recovered by the plaintiff against the debtor in another state upon his liability as an officer in a corporation under a statute of that state, set forth the judgment and the cause of action on which it was recovered and also asserted, independently of the judgment, an original liability of the defendant as a stockholder and officer in that corporation before the conveyance. The highest court of the state declined to entertain the bill by virtue of the judgment, because it had been recovered in another state in an action for a penalty, or to maintain the bill on the original liability, for various reasons.

Held that the question whether due faith and credit were thereby denied to the judgment was a federal question, of which this Court had jurisdiction on writ of error.

The question whether a statute of one state which in some aspects may be called penal is a penal law in the international sense, so that it cannot be enforced in the courts of another state, depends upon the question whether its purpose is to punish an offense against the public justice of the state or to afford a private remedy to a person injured by the wrongful act.

A statute making the officers of a corporation who sign and record a false

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certificate of the amount of its capital stock liable for all its debts is not a penal law in the international sense.

Whether a statute of one state is a penal law which cannot be enforced in another state is to be determined by the court which is called upon to enforce it.

If the highest court of a state declines to give full faith and credit to a judgment of another state because in its opinion that judgment was for a penalty, this Court, in determining whether full faith and credit have been given to that judgment, must decide for itself whether the original cause of action was penal in the international sense.

If a judgment for a fixed sum of money, recovered in one state by a creditor of a corporation against one of its officers upon a liability for all its debts imposed by a statute of that state for making and recording a false certificate of the amount of its capital stock, is sued on in a court of another state, and that court declines to enforce the judgment because of its opinion that the original liability was a penalty, the judgment is thereby denied the full faith, credit and effect to which it is entitled under the Constitution and laws of the United States.

In equity. The bill was dismissed by the Court of Appeals of Maryland, to which judgment this writ of error was sued out.

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GRAY, J., lead opinion

MR. JUSTICE GRAY delivered the opinion of the Court.

This was a bill in equity, filed March 21, 1888, in the Circuit Court of Baltimore City by Collis P. Huntington, a resident of New York, against the Equitable Gaslight Company of Baltimore, a corporation of Maryland, and against Henry Y. Attrill, his wife and three daughters, all residents of Canada, to set aside a transfer of stock in that company made by him for their benefit and in [13 S.Ct. 225] fraud of his creditors, and to charge that stock with the payment of a judgment recovered by the plaintiff against him in the State of New York upon his liability as a director in a New York corporation under the statute of New York of 1875, c. 611, the material provisions of which are copied in the margin. *

The bill alleged that on June 15, 1886, the plaintiff recovered, in the Supreme Court of the State of New York, in an action brought by him against Attrill on March 21, 1883, a

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judgment for the sum of $100,240, which had not been paid, secured, or satisfied, and that the cause of action on which that judgment was recovered was as follows: on February 29, 1880, the Rockaway Beach Improvement Company, Limited, of which Attrill was an incorporator and a director, became a corporation under the law of New York, with a capital stock of $700,000. On June 15, 1880, the plaintiff lent that company the sum of $100,000, to be repaid on demand. On February 26, 1880, Attrill was elected one of the directors of the company, and accepted the office, and continued to act as a director until after January 29, 1881. On June 30, 1880, Attrill, as a director of the company, signed and made oath to, and caused to be recorded, as required by the law of New York, a certificate, which he knew to be false, stating that the whole of the capital stock of the corporation had been paid in, whereas in truth no part had been paid in, and by making such false certificate became liable, by the law of New York, for all the debts of the company contracted before January 29, 1881, including its debt to the plaintiff. On March 8, 1882, by proceedings in a court of New York, the corporation was declared to be insolvent, and to have been so since July, 1880, and was dissolved. A duly exemplified copy of the record of that judgment was annexed to and made part of the bill.

The bill also alleged that

at the time of its dissolution, as aforesaid, the said company was indebted to the plaintiff and to other creditors to an amount far in excess of its assets; that by the law of the State of New York, all the stockholders of the company were liable to pay all its debts, each to the amount of the stock held by him, and the defendant, Henry Y. Attrill, was liable at said date, and on April 14, 1882, as such stockholder, to the amount of $340,000, the amount of stock held by him, and was on both said dates also severally and directly liable as a director, having signed the false report above mentioned, for all the debts of said company contracted between February 26, 1880, and January 29, 1881, which debts aggregate more than the whole value of the property owned by said Attrill.

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The bill further alleged that Attrill was in March, 1882, and had ever since remained, individually liable in a large amount over and above the debts for which he was liable as a stockholder and director in the company, and that he was insolvent, and had secreted and concealed all his property for the purpose of defrauding his creditors.

The bill then alleged that in April, 1882, Attrill acquired a large amount of stock in the Equitable Gaslight Company of Baltimore, and forthwith transferred into his own name, as trustee for his wife, 1,000 shares of such stock, and as trustee for each of his three daughters, 250 shares of the same, without valuable consideration, and with intent to delay, hinder, and defraud his creditors, and especially with the intent to delay, hinder, and defraud this plaintiff of his lawful suits, damages, debts, and demands against Attrill arising out of the cause of action on which the aforesaid judgment was recovered and out of the plaintiff's claim against him as a stockholder; that the plaintiff in June, 1880, and ever since was domiciled and resident in the State of New York, and that from February, 1880, to December 6, 1884, Attrill was domiciled and resident in that state, and that his transfers of stock in the gas company were made in the City of New York, where the principal office of the company then was and where all its transfers of stock were made, and that those transfers were, by the laws of New York as well as by those of Maryland, fraudulent and void as against the creditors of Attrill, including the creditors of the Rockaway Company, and were fraudulent and void as against the plaintiff.

The bill further, by distinct allegations, averred that those transfers, unless set aside and annulled by a court of equity, would deprive [13 S.Ct. 226] the plaintiff of all his rights and interests of every sort therein to which he was entitled as a creditor of Attrill at the time when those fraudulent transfers were made, and "that the said fraudulent transfers were wholly without legal consideration, were fraudulent and void, and should be set aside by a court of equity."

The bill prayed that the transfer of shares in the gas company be declared fraudulent and void and executed for the

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purpose of defrauding the plaintiff out of his claim as existing creditor; that the certificates of those shares in the name of Attrill as trustee be ordered to be brought into court and cancelled, and that the shares "be decreed to be subject to the claim of this plaintiff on the judgment aforesaid," and to be sold by a trustee appointed by the court, and new certificates issued by the gas company to the purchasers, and for further relief.

One of the daughters demurred to the bill because it showed that the plaintiff's claim was for the recovery of a penalty against Attrill arising under a statute of the State of New York, and because it did not state a case which entitled the plaintiff to any relief in a court of equity in the State of Maryland.

By a stipulation of counsel filed in the cause, it was agreed that for the purposes of the demurrer, the bill should be treated as embodying the New York statute of June 21, 1875, and that the Rockaway Beach Improvement Company, Limited, was incorporated under the provisions of that statute.

The Circuit Court of Baltimore City overruled the demurrer. On appeal to the Court of Appeals of the State of Maryland, the order was reversed and the bill dismissed. 70 Md. 191.

The ground most prominently brought forward and most fully discussed in the opinion of the majority of the court, delivered by Judge Bryan, was that the liability imposed by section 21 of the statute of New York upon officers of a corporation making a false certificate of its condition was for all its...

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