Heath & Milligan Mfg. Co. v. Union Oil & Paint Co.

• Citation: 83 F. 776
• Parties: HEATH & MILLIGAN MANUF'G CO. v. UNION OIL & PAINT CO.
• Decision Date: 20 November 1897
• Court: U.S. District Court — Eastern District of Wisconsin

83 F. 776

HEATH & MILLIGAN MANUF'G CO. v. UNION OIL & PAINT CO.

United States Circuit Court, E.D. Wisconsin.

November 20, 1897

David S. Rose, for petitioners.

Miller Noyes, Miller & Wahl, for plaintiff.

SEAMAN District Judge.

This action is founded upon an indebtedness alleged to have been contracted prior to April 30, 1897, when the enactment in question came into effect. The writ of attachment was issued and the levy made September 9, 1897, upon an affidavit on behalf of the plaintiff that the indebtedness was fraudulently contracted by the defendant. Within 10 days thereafter the defendant executed an assignment for the benefit of creditors in accordance with the statute, thus bringing the case within the general terms of Acts 1897, c 334, that, upon the making of an assignment by a debtor within 10 days after the levy of an attachment, the attachment and levy 'shall be dissolved, and the property attached or levied upon shall be turned over to such assignee or receiver. ' Therefore the prayer of the petition must be granted, unless the act is inoperative upon this attachment because it is founded upon contracts entered into before the passage of the act. If application of the statute to such state of facts impairs the obligations of the contract, it is clearly to that extent in conflict with the constitution of the United States, and this involves an inquiry which must be governed by the rules of construction which prevail in the courts of federal jurisdiction. The decisions of the supreme court are both numerous and instructive as to various classes of legislation which are thus inhibited. They clearly establish the doctrine that taking away substantial remedies for enforcement of the contract, without substituting or leaving an adequate remedy in their place, impairs the obligation equally with legislation touching the express terms of the contract; and the opinions define such impairment in broad terms,-- as in Bronson v. Kinzie, 1 How. 311, 317, 'by burdening the proceeding with new conditions and restrictions, so as to make the remedy hardly worth pursuing,'-- apparently covering in their general scope the effect produced by this enactment, when it is considered in all its bearings, with the restrictions imposed for obtaining benefit under the assignment.

Upon the argument of the case at bar it was stated that the question of the constitutionality of this statute was pending in the supreme court of Wisconsin, as affecting execution liens made under judgment by confession entered within 10 days before an assignment, upon judgment notes and antedating the law, and that an early decision was expected. In view of the important interests involved, and of the salutary rule that an act of the legislature 'must be beyond all reasonable doubt unconstitutional before the court would so declare it' (Sinking Fund Cases, 99 U.S. 700), and of the value, at least strongly persuasive, of a decision by that court either to raise or to solve the possible doubt, I deemed it proper to await such decision before finally taking up the inquiry. The opinion of the court by Mr. Justice Pinney was recently handed down in the case referred to (Bank v. Schranck, 73 N.W. 31), holding that the act impairs the obligations of the contract in question, and it states the rule of decision pronounced by the supreme court of the United States in the following comprehensive terms:

'That the test as to whether a contract has been impaired is whether its value has by legislation been diminished. It is not, by the constitution, to be impaired at all. This is not a question of degree, or manner or cause, but of encroaching in any respect on its obligation; dispensing with any part of its force.'

It is contended that the case at bar is distinguishable because the interference is with an attachment, and not with the execution of a judgment, which was...