Security Trust Co v. Dodd

• Decision Date: 11 April 1899
• Docket Number: No. 188,188
• Citation: 43 L.Ed. 835,173 U.S. 624,19 S.Ct. 545
• Parties: SECURITY TRUST CO. v. DODD et al
• Court: U.S. Supreme Court

173 U.S. 624

19 S.Ct. 545

43 L.Ed. 835

SECURITY TRUST CO.

v DODD et al.

No. 188.

April 11, 1899.

This was an action originally instituted in the district court for the Second judicial district of Minnesota, by the Security Trust Company, as assignee of the D. D. Merrill Company, a corporation organized under the laws of Minnesota, against the firm of Dodd, Mead & Co., a partnership resident in New York, to re over the value of certain stereotyped and electrotyped plates for printing books, upon the ground that the defendants had unlawfully converted the same to their own use. The suit was duly removed from the state court to the circuit court of the United States for the district of Minnesota, and was there tried. Upon such trial the following facts appeared:

The D. D. Merrill Company having become insolvent and unable to pay its debts in the usual course of business, on September 23, 1893, executed to the Security Trust Company, the plaintiff in error, an assignment under and pursuant to the provisions of chapter 148 of the Laws of 1881 of the State of Minnesota, which assignment was properly filed in the office of the clerk of the district court. The trust company accepted the same, qualified as assignee, took possession of such of the property as was found in Minnesota, and disposed of the same for the benefit of creditors, the firm of Dodd, Mead & Co. having full knowledge of the execution and filing of such assignment.

At the date of this assignment the D. D. Merrill Company was indebted to Dodd, Mead & Co. of New York, in the sum of $1,249.98, and also to Alfred Mudge & Sons, a Boston co-partnership, in the sum of $126.80, which they duly assigned and transferred to Dodd, Mead & Co., making the total indebtedness to them $1,376.78.

Prior to the assignment the D. D. Merrill Company was the owner of the personal property for the value of which this suit was brought. This property was in the custody and possession of Alfred Mudge & Sons at Boston, Mass., until the same was attached by the sheriff of Suffolk county, as hereinafter stated.

The firm of Alfred Mudge & Sons was, prior to March 8, 1894, informed of the assignment by the Merrill Company, and at about the date of such assignment a notice was served upon them by George E. Merrill to the effect that he (Merrill) took possession of the property in their custody for and in behalf of the Security Trust Company, assignee aforesaid.

On March 8, 1894, Dodd, Mead & Co. commenced an action against the D. D. Merrill Company in the superior court of the county of Suffolk upon their indebtedness, caused a writ of attachment to be issued, and the property in possession of Mudge & Sons seized upon such writ. A summons was served by publication in the manner prescribed by the Massachusetts statutes, although there was no personal service upon the Merrill Company. The Security Trust Company, its assignee, was informed of the bringing and pendency of this suit, and the seizure of the property, prior to the entering of a judgment in said action, which judgment was duly rendered August 6, 1894, execution issued, and on September 27, 1894, the attached property was sold at public auction to Dodd, Mead & Co., the execution creditors, for the sum of $1,000.

Upon this state of facts the circuit court of appeals certified to this court the following questions:

'First. Did the execution and delivery of the aforesaid deed of assignment by the D. D. Merrill Company to the Security Trust Company, and the acceptance of the same by the latter company, and its qualification as assignee thereunder, vest said assignee with the title to the personal property aforesaid, then located in the state of Massachusetts, and in the custody and possession of said Alfred Mudge & Sons?

'Second. Did the execution and delivery of said assignment and the acceptance thereof by the assignee, and its qualification thereunder, in the manner aforesaid, together with the notice of such assignment which was given, as aforesaid, to Alfred Mudge & Sons prior to March 8, 1894, vest the Security Trust Company with such a title to the personal property aforesaid on said March 8, 1894. that it could not on said day be lawfully seized by attachment under process issued by the superior court of Suffolk county, Massachusetts, in a suit instituted therein by creditors of the D. D. Merrill Company, who were residents and citizens of the state of New York, and who had notice of the assignment, but had not roven their claim against the assigned estate nor filed a release of their claim?' 27 C. C. A. 685, 82 Fed. 1005.

E. S. Durment, for plaintiff in error.

James E. Markham, Albert R. Moore, and George W. Markham, for defendants in error.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.

This case raises the question whether an assignee of an insolvent Minnesota corporation can maintain an action in the courts of Minnesota for the conversion of property formerly belonging to the insolvent corporation, which certain New York creditors had attached in Massachusetts, and sold upon execution against such corporation. The question was also raised upon the argument how far an assignment executed in Minnesota, pursuant to the general assignment law of that state, by a corporation there resident, is available to pass personal property situated in Massachusetts, as against parties resident in New York, who, subsequent to the assignment, had seized such property upon an attachment against the insolvent corporation.

The assignment was executed under a statute of Minnesota, the material provisions of which are hereinafter set forth. The instrument makes it the duty of the assignee 'to pay and discharge, in the order and precedence provided by law, all the debts and liabilities now due or to become due from said party of the first part, together with all interest due and to become due thereon, to all its creditors who shall file releases of their debts and claims against said party of the first part, according to chapter 148 of the General Laws of the State of Minnesota for the year 1881, and the several laws amendatory and supplementary thereof; and, if the residue of said proceeds shall not be sufficient to pay said debts and liabilities and interest in full, then to apply the same, so far as they will extend, to the payment of said debts and liabilities and interest, proportionately on their respective amounts, according to law and the statute in such case made and provided; and if, after the payment of all the costs, charges, and expenses attending the execution of said trust, and the payment and discharge in full of all the said debts of the party of the first part, there shall be any surplus of the said proceeds remaining in the hands of the party of the second part, then, third, repay such surplus to the party of the first part, its successors and assigns.'

The operation of voluntary or common-law assignments upon property situated in other states has been the subject of frequent discussion in the courts, and there is a general consensus of opinion to the effect that such assignments will be respected, except so far as they come in conflict with the rights of local creditors, or with the laws or public policy of the state in which the assignment is sought to be enforced. The cases in this court are not numerous, but they are all consonant with the above general principle. Black v. Zacharie, 3 How. 483; Livermore v. Jenckes, 21 How. 126; Green v. Van Buskirk, 5 Wall. 307; Hervey v. Locomotive Works, 93 U. S. 664; Cole v. Cunningham, 133 U. S. 107, 10 Sup. Ct. 269; Barnett v. Kinney, 147 U. S. 476, 13 Sup. Ct. 403.

But the rule with respect to statutory assignments is somewhat different. While the authorities are not altogether harmonious, the prevailing American doctrine is that a conveyance under a state insolvent law operates only upon property within the territory of that state, and that with respect to property in other states it is given only such effect as the laws of such state permit, and that, in general, it must give way to claims of creditors pursuing their remedies there. It passes no title to real estate situated in another state. Nor, as to personal property, will the title acquired by it prevail against the rights of attaching creditors under the laws of the state where the property is actually situated. Harrison v. Sterry, 5 Cranch, 289, 302; Ogde v. Saunders, 12 Wheat. 213; Booth v. Clark, 17 How. 322; Blake v. Williams, 6 Pick. 286; Osborn v. Adams, 18 Pick. 245; Zipcey v. Thompson, 1 Gray, 243; Abraham v. Plestoro, 3 Wend. 538, overruling Holmes v. Remsen, 4 Johns. Ch. 460; Johnson v. Hunt, 23 Wend. 87; Hoyt v. Thompson, 5 N. Y. 322; Willetts v. Waite, 25 N. Y. 577; Kelly v. Crapo, 45 N. Y. 86; Barth v. Backus, 140 N. Y. 230, 35 N. E. 425; Weider v. Maddox, 66 Tex. 372, 1 S. W. 168; Rhawn v. Pearce, 110 Ill. 550; Catlin v. Silver-Plate Co., 123 Ind. 477, 24 N. E. 250. As was said by Mr. Justice McLean in Oakey v. Bennett, 11 How. 33, 44: 'A statutable conveyance of property cannot strictly operate beyond the local jurisdiction. Any effect which may be given to it beyond this does not depend upon international law, but the principle of comity; and national comity does not require any government to give effect to such assignment when it shall impair the remedies or lessen the securities of its own citizens. And this is the prevailing doctrine in this country. A proceeding in rem against the property of a foreign bankrupt, under our local laws, may be maintained by creditors, notwithstanding the foreign assignment.' Similar language is used by Mr. Justice Story in his Conflict of Laws (section 414).

The statute of Minnesota, under which this assignment was made, provides in its first section that any insolvent debtor 'may make an assignment of all his unexempt property for the equal benefit of all his bona fide creditors, who...