Thurston v. Rosenfield

• Decision Date: 31 March 1868
• Citation: 42 Mo. 474
• Parties: CHARLES M. THURSTON et al., Plaintiffs in Error, v. ISAAC ROSENFIELD, JR., et al., Defendants in Error.
• Court: Missouri Supreme Court

42 Mo. 474

CHARLES M. THURSTON et al., Plaintiffs in Error,

v.ISAAC ROSENFIELD, JR., et al., Defendants in Error.

Supreme Court of Missouri.

March Term, 1868.

Error to St. Louis Circuit Court.

Sharp & Broadhead, for plaintiffs in error.

I. The real estate owned by Rosenfield, and situate in Missouri, could only be conveyed according to the laws of Missouri. The contract, it is true, was made in New York, but the property is in Missouri and under its peculiar and exclusive jurisdiction. Although, as a general proposition, a contract valid by the law of the place where it is made is valid everywhere, yet this is subject to many exceptions. 1. If the contract concern real property, the American will is firmly established that the lex rei sitæ, and not that of the place of the contract, is to prevail. (Story Confl. Laws, §§ 363-5; id. 424, 431.) The lex rei sitæ is to prevail in relation to all dispositions of immovable property. (Story Confl. Laws, §§ 445, 423; United States v. Jonah Crosby, 7 Cranch, 115; Bur. on Ass. 360.) 2. A contract even in regard to personal property, when it contravenes the law of the place where it happens to be situate, or when it is repugnant to the policy of the State, is invalid. (1 Green. 326; 2 Mas. 157; 12 Wheat. 259; Frazier v. Fredericks, 4 Zabriskie, 166; Story Confl. Laws, 244; 5 La. 295; Zipeey et al. v. Thompson et al., 1 Gray, Mass., 245; Smith v. Union Bank of Georgetown, 5 Pet. 518.) The case in 1 Gray, 245, was the case of an assignment made in New York giving preferences of property in Massachusetts, where by law such preferences were invalid. The court, n delivering its opinion, says: “The law of New York proprio vigore cannot obtain here. It derives its effect only from the will of comity, and that will refuses to give force to the laws of other States which directly conflict with the policy of our own. No comity can require us to give force to an assignment made in another State which is not only against our well-settled policy, but against our direct legislation.” Judge Story says: “In regard to voluntary assignments with preferences, they must, as to their validity and operation, be governed by the lex loci contractus. But it is a very different question whether they shall be permitted to operate upon property locally situated in another country, whether movable or immovable, by whose laws such a conveyance would be treated as a fraud upon the unpreferred creditors.” (Story's Confl. of Laws, ed. 1852, p. 423; Bur. on Ass. 366.)

If this assignment had been made in Missouri, the provision in the deed giving preferences would be void. In other words, such contracts are in violation of the public policy and against the express law of Missouri. Will our courts enforce it? It is a very narrow view of the subject to say that our own statute only applies to contracts made in Missouri. This is true. But it declares what the laws of Missouri are; and the property being in this State, the courts of Missouri will give force and effect to the contract according to those laws. If the plaintiffs were citizens of this State, there would be no hesitation about it, for it has been so decided. (Bryan v. Brisbin, 26 Mo. 423.) But we see no reason why a stranger should be placed in a worse condition than one of our own citizens.

In this case it appears from the petition that the attachment was levied on the real estate on the 24th, and the deed of assignment on the 25th of May, 1866, one day after. The attachment was a lien to a certain extent on the property, and places the plaintiffs on the same footing with a resident creditor. (5 La. 295.) This lien was liable to be destroyed by the subsequent recording of the deed of assignment, but it gave the plaintiffs a standing in court which ought to give them the right to ask the enforcement of the contract according to the laws of Missouri.

Gantt, for defendants in error.

I. Defendants' deed of assignment must be executed, as far as the administration of the fund is concerned, according to the rights of the parties to it, as ascertained by the law of the place where it was made, and of which all the parties now attempting to challenge it are residents. The provisions of our statute touching assignments (R. C. 1855, p. 210) which were in force when this assignment was made were intended as a substitute for an insolvent or bankrupt law, and the operation of the deed of assignment made in New York must be tested by the law of New York. To the extent that it conveys real property in this State, it must, of course, be conformable to our statutes. But there is no contest respecting the passing of this title to the assignees. The only dispute is as to the trusts with which the legal title is clothed. The question is, to whose use does this title inure? Defendants in error say that the money arising from reducing the trust fund into money must be applied secundum formam facti. The plaintiffs deny this, alleging that the provisions of the deed on this point are nullities by force of our statute respecting assignments. Turning to that act to ascertain what it declares on this head, we see that the 39th section of the act applies in terms to assignments made ““hereafter” in this State. It was the first legal provision by virtue of which preferences in favor of selected creditors were forbidden in Missouri. Repeatedly in the absence of such prohibition the courts of this State have recognized the validity of such preferences. In other words, they have declared that there is no principle of natural equity known to the system of jurisprudence of this country which militates with the giving of such preferences. It results, then, that preferences are valid unless they are forbidden by our statute; and they are not forbidden by our statute unless the deed of assignment was “made in this State” after the act of 1855 took effect, and while it was in operation. As it is part of the case that the deed of assignment was not “made in this State,” it seems impossible to render the point under examination more clear than it is upon its mere presentment.

II. Our statute on the subject of assignments was only intended to govern the administration of the effects of an insolvent resident in Missouri, or at least having creditors residing here. If persons residing elsewhere, and owing debts to persons not residents of Missouri, make assignments elsewhere, our courts will only look into them so far as they affect real estate in Missouri. If they are competent to convey the title to such real estate, no contest respecting the administration of the fund arising from the conversion of the real estate into money will be entertained in this State, on the ground that the mode of its distribution among a number of contending creditors is provided by the deed of assignment and recognized by the law of the State where the deed was made. Although, in its broadest terms, and indeed according to the natural import of the language employed, the first section of the act embraces every mortgage, every deed of trust, etc., such has never been the construction which the act has received. It has been held to mean only such assignments as are made in view of insolvency; such as, in the absence of a bankrupt law, may partially supply the place of such legislation. But such an act, intended to form a substitute for an insolvent or bankrupt law, has no application to cases where the deed was executed abroad, where the insolvent is a non-resident, all his creditors non-resident; and the only circumstance giving our courts any hold of the matter is that the non-resident held land in Missouri.

By the scope of the whole legislation on this subject, from 1841 (Sess. Acts 1840-1, p. 13 et seq.) to 1855, it is plain that assignments made by an insolvent, or debtor in failing circumstances, who resides here, are the only cases for which our statutes make provision. The language employed in section 39, p. 210, R. C. 1855, industriously uses the expression “hereafter made in this State.” Though this is the first time when this marked qualification occurs in terms, it is submitted that the inference of such a qualification existing antecedently and inherent, in the nature of the thing, is...