17 U.S. 122 (1819), Sturges v. Crowninshield

Citation:17 U.S. 122, 4 L.Ed. 529
Case Date:February 17, 1819
Court:United States Supreme Court

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17 U.S. 122 (1819)

4 L.Ed. 529




United States Supreme Court.

February 17, 1819

THIS was an action of assumpsit, brought in the Circuit Court of Massachusetts, against the defendant, as the maker of two promissory notes, both dated at New York, on the 22d of March 1811, for the sum of $771.86 each, and payable to the plaintiff, one on the 1st of August, and the other on the 15th of August 1811. The defendant pleaded his discharge under 'an act for the benefit of insolvent debtors and their creditors,' passed by the legislature of New York, the 3d day of April 1811. After stating the provisions of the said act, the defendant's plea averred his compliance with them, and that he was discharged, and a certificate given to him, the 15th day of February 1812.

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To this plea, there was a general demurrer and joinder. At the October term of the circuit court, 1817, the cause came on to be argued and heard on the said demurrer, and the following questions arose, to wit:

1. Whether, since the adoption of the constitution of the United States, any state has authority to pass a bankrupt law, or whether the power is exclusively vested in the congress of the United States?

2. Whether the act of New York, passed the 3d day of April 1811, and stated in the plea in this case, is a bankrupt act, within the meaning of the constitution of the United States?

3. Whether the act aforesaid is an act or law impairing the obligation of contracts, within the meaning of the constitution of the United States?

4. Whether plea is a good and sufficient bar of the plaintiff's action?

And after hearing counsel upon the questions, the judges of the circuit court were opposed in opinion thereupon; and upon motion of the plaintiff's counsel, the questions were certified to the supreme court, for their final decision.

February 8th.

Daggett, for the plaintiff, argued: 1. That since the adoption of the constitution, no state has authority to pass a bankrupt law, but that the power is exclusively vested in congress. The 8th section of the 1st article of the constitution is wholly employed in giving powers to congress. Those powers had hitherto been in the state legislatures or in the people; the people now thought fit to vest them in congress.

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The effect of thus giving them to congress, may be fairly inferred from the language of the 10th article of the amendments to the constitution, which declares, that 'the powers, not delegated to the United States by the constitution, nor prohibted by it to the states, are reserved to the states respectively, or to the people.' The expression is in the disjunctive; not delegated nor prohibited. The inference is, therefore, fair, that if a power is delegated, or prohibited, it is not reserved. Every power given by the constitution, unless limited, is entire, exclusive and supreme. The national authority over subjects placed under its control, is absolutely sovereign; and a sovereign power over the same subject cannot co-exist in two independent legislatures. Uniform laws on the subject of bankruptcies are contemplated in the constitution; the laws of the different states must be, of course, multiform; and therefore, not warranted by the constitution. The same clause which provides for the establishment of uniform laws on the subject of bankruptcies, provides also for 'a uniform rule of naturalization.' In the first clause of the same section, it is declared, that 'duties, imposts and excises shall be uniform throughout the United States;' and in the 9th section, it is further declared, that 'no preference shall be given, by any regulation of commerce or revenue, to the ports of one state over those of another.' In the last three cases, it is admitted, that congress alone can legislate; and by the same reasoning, congress only can make laws on the subject of bankruptcies. It is a national subject; and therefore, the power over it is in the national

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government. Before the adoption of the constitution, partial laws were enacted by the states, on the subject of foreign commerce, of the commerce between the states, of the circulating medium, and respecting the collection of debts. These laws had created great embarrassments, and seriously affected public and private credit; one strong reason for a national constitution was, that these alarming evils might be corrected. The constitution provides this remedy; it takes from the states the power of regulating commerce, the power of coining money, and of regulating its value, or the value of foreign coin. It prohibits, in terms, the issuing of paper money, the making anything but gold and silver a tender in the payment of debts. It provides for the establishment of national courts, extends the judicial power to controversies between citizens of different states, and between the citizens of the respective states and foreign subjects or citizens: and yet it is urged, that it leaves in the states the power of making laws on the subject of bankruptcies, whereby contracts may be destroyed. If the convention had intended that congress and the state legislatures might legislate on this subject, we should expect to see the powers of these respective sovereignties expressed, and a definition of them, at least, attempted. We might expect this, because, in several cases in the constitution, it appears that this course had been pursued.: § 4, art. 1; § 8, art. 1; compared with § 2, art. 2; § 9, art. 1; § 10, art. 1; § 1, art. 2; § 3, art. 4, and art. 5, furnish instances of powers of this character. It is said,

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that the power in question is not declared to be exclusive in congress. We answer, nor is any power so declared, except that of legislating for the ten miles square, the seat of government. It is said, again, that the exercise of this power is not prohibited to the states. Nor is the power to provide for the punishment of piracy and other crimes committed on the high seas; nor of making a rule of naturalization; nor of the regulating the value of coin; nor of securing to authors and inventors the exclusive right to their writings and discoveries, prohibited. Yet, who doubts that legislation by the states on those subjects is opposed to the spirit of the constitution? It is also objected, that congress are vested with the power of laying and collecting taxes; and yet, this power is rightfully exercised by the states. This is admitted, and we contend, that comparing the 8th and 10th sections of art. 1, there is a strong implication of a reservation of power, in this case, to the states. In the 8th section, granting powers to congress, taxes, duties, imposts and excises are specified; in the 10th section, prohibiting the exercise of powers by the states, the word taxes is omitted, undoubtedly, by design. Besides, there is no incompatibility in the exercise of this power by the two sovereignties; and we concede, that upon the true principles of the constitution, the powers not prohibited to the states, nor in their nature exclusive, still remain in the states. It will be argued, that, if congress declines to exercise the power of making laws on the subject of bankruptcies, the states may exercise it. But we contend, that the whole subject is intrusted

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to the national legislature; and if it declines to establish a law, it is to be considered as a declaration, that it is unfit that such a law should exist: and much stronger is the inference, if, as in 1805, congress repeal such a law. It will, perhaps, be asked, if this construction of the constitution be correct, how it is, that so many states, since the adoption of the constitution, have passed laws on the subject of bankruptcies. On examination, it will appear, that no acts, properly called bankrupt laws, have been passed in more than four or five of the states. There are, indeed, insolvent laws, by which the bodies of debtors, in one form or another, are exempted from imprisonment, in nearly all the states. Rhode Island had an act in existence, when the constitution was adopted, by which the debtor might, on application to the legislature, be discharged from his debts. In New York, a law of the same character has been in operation, since the year 1755, and also in Maryland, for a long period. In Pennsylvania, a bankrupt law operating only in the city and county of Philadelphia, existed for two or three years; and in Connecticut, the legislature has often granted a special act of bankruptcy, on applications of individuals. But in all the other states, their laws on this subject have been framed with reference to the exemption of the body from imprisonment, and not to the discharge of the contract. In Massachusetts, the idea has prevailed so extensively, that the power of congress is exclusive, that no bankrupt law was ever passed by the legislature of that state. [a]It cannot be denied,

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that if congress exercise this power, the states are divested of it. But what species of power is this? Laws made by independent legislatures, expire by their own limitation, or are repealed by the authority which enacted them. Here, however, is a novel method of destroying laws. They are not repealed; do not cease by their own limitation; but are suspended by the interference of another independent legislature. It is difficult, upon this construction, to define this power of the states.

2. The act of the state of New York, pleaded in this cause, is a bankrupt law, within the meaning of the constitution of the United States. By this law, on the application of any person imprisoned or prosecuted for a debt; or, on the application of any creditor of a debtor imprisoned, or against whom an execution against his goods and chattels hath been returned

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unsatisfied, he having given sixty days' notice thereof, proceedings may be had before certain tribunals by the act established, whereby...

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