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Statement of the Case.

COLE v. CUNNINGHAM.

ERROR ΤΟ THE SUPREME JUDICIAL COURT OF THE STATE OF MASSACHUSETTS.

No. 74. Submitted November 6, 1889. - Decided January 20, 1890.

The Constitution of the United States, in proper cases, permits equity courts of one State to control persons within their jurisdiction from prosecuting suits in another State.

It is no violation of that provision of the Constitution of the United States which requires that full faith and credit shall be given in each State to the judicial proceedings of every other State, if a court in one State, (in which proceedings have been begun, under a general insolvent law of the State, to distribute the estate of an insolvent debtor among his creditors,) enjoins a creditor of the insolvent, (who is a citizen of the same State, and subject to the jurisdiction of the court,) from proceeding to judgment and execution in a suit against the insolvent in another State, begun by an attachment of his property there, after knowledge of his embarrassment and actual insolvency, which property the insolvent law of the State of the debtor's residence requires him to convey to his assignee in insolvency, for distribution with his other assets - there being nothing in the law or policy of the state in which the attachment is made, opposed to those of the State of the creditor and of the insolvent debtor.

THE case, as stated by the court, was as follows:

Daniel C. Bird, a citizen and inhabitant of Massachusetts, unable to meet his bills at maturity, suspended payment March 2, 1885, being at the time indebted to Butler, Hayden & Co., a copartnership composed of Charles S. Butler and N. F. T. Hayden, citizens and residents of Massachusetts, doing business in that State. On the night of the 4th or 5th of March, 1885, Butler, Hayden & Co. were informed by Bird that he had stopped payment, and that the firm of Aaron Claflin & Co., of New York, were indebted to him in a considerable sum for goods consigned by him to that firm to be sold on his account, and upon which Claflin & Co. had made advances but not to their full value. March 6th, Butler, Hayden & Co. executed an assignment of their claims against Bird to one Fayerweather, a resident of the State of New York, which assignment was made without consideration, and without previous communication with Fayerweather. March 11th and March 25th two

Statement of the Case.

actions were commenced in New York in the name of Fayerweather on the claims of Butler, Hayden & Co. against Bird as defendant, and the firm of Claflin & Co. were summoned as garnishees. March 13, 1885, a meeting of Bird's creditors was held, and a committee appointed to investigate his affairs and make a report. On the 20th of March a second meeting of Bird's creditors was held, at which a report was submitted by the committee. April 23, 1885, a proposal for composition under the statutes of Massachusetts in that behalf was filed by Bird, returnable May 4th. May 20th, the composition proposal having been withdrawn, regular proceedings in insolvency were continued therein, and June 1, 1885, Richard Cunningham and Henry Tolman, Jr., were duly appointed assignees in insolvency of the estate of said Bird by the court of insolvency for the county of Plymouth, Massachusetts. Hayden, of Butler, Hayden & Co., was present at one of these creditors' meetings. The suits in New York were brought in a court of competent jurisdiction, and the attachments and proceedings were regular and in conformity with the laws of New York; they are still pending, and no judgment has yet been obtained therein.

On the 19th of June the assignees in insolvency brought a bill in equity in the Supreme Judicial Court for the county of Suffolk, in the State of Massachusetts, against Butler and Hayden, copartners as Butler, Hayden & Co., praying that Butler, Hayden & Co., their agents, servants, attorneys, and solicitors, might be enjoined and restrained from proceeding to further continue the suits against Bird, begun by them in the name of Fayerweather, and from attempting to collect by suit or otherwise, in the name of Fayerweather or any other person, for their own benefit, from Claflin & Co., any money or other thing on account of the claim against Bird; that they be ordered to refrain from further prosecuting the suits in New York, in which Claflin & Co. were summoned as garnishees; or that they be ordered to transfer to the assignees all their right, title and interest by, or under, or on account of their claim pretended to have been assigned to Fayerweather, so that the assignees may have, as the effect of said order, full

Statement of the Case.

right to receive all money due from Claflin & Co. without any hindrance or interference upon the part of Butler, Hayden & Co. therewith; and a prayer for general relief.

Butler, Hayden & Co. answered the bill, denying any knowl edge of Bird's insolvency, and claiming that the assignment to Fayerweather was made in good faith, and that the rights of Fayerweather, as a citizen of New York, under said assignment cannot be in any way affected by the insolvency of Bird; and afterwards amended the answer, and claimed that even if the assignment to Fayerweather was invalid, the attachment proceedings in New York were regular, and gave a valid lien on the property attached; and that, by the Constitution of the United States, the rights and interests gained by the attachments in New York cannot be taken away by the courts of Massachusetts without violating the provision that full faith and credit must be given in each State to the judicial proceedings of every other State.

The case was heard by a single judge upon certain agreed facts and additional evidence, and reserved by him for the consideration of the full court. It was stipulated "that either party may refer to the statutes of the United States, the statutes of the State of New York, and the several decisions of the State of New York, with the same effect as if the same were regularly introduced in evidence." The Supreme Judicial Court found, in addition to the matters herein before stated, that it was fairly proven from the evidence "that the defendants, with full knowledge that Bird was insolvent, anticipating that there might be proceedings in insolvency in this State, and intending to secure to themselves, to the exclusion of other creditors, the avails of the debt owing to Bird by Claflin & Co., made the transfer of their claims to Fayerweather, and that the suits in New York now carried on in his name are subject to their control and conducted for their benefit. The attachments made in New York by process of garnishment are to be treated, so far as the defendants are concerned, as made by them." The court concluded its opinion, which is certified as a part of this record, and is reported in 142 Mass. 47, thus:

Citations for Plaintiffs in Error.

"In the case at bar it is true that the defendants had made their attachment through Fayerweather in New York before there had been an assignment in insolvency in this State actually executed, but this was done with full knowledge on their part that the debtor, Bird, was embarrassed and had suspended payment, and necessarily with intent to avoid the effect of the assignment, so far as the property attached was concerned. As residents of this State, they cannot be allowed to this extent to defeat the operation of the assignment, and thus to obtain a preference over other creditors resident here. They are within the limits of the jurisdiction of this court, and amenable to its process, and should be enjoined from prosecuting a suit the effect of which, if successful, will be to work a wrong and injury to other residents of the State."

The court thereupon entered a decree for the injunction prayed for, and Butler, Hayden & Co. sued out a writ of error from this court.

Mr. Henry D. Hyde and Mr. M. F. Dickinson, Jr., (with whom was Mr. Hollis R. Bailey on the briefs,) for plaintiffs in error, cited: Christmas v. Russell, 5 Wall. 290, 300; Green v. Van Buskirk, 7 Wall. 139, 145; Warner v. Jaffrey, 96 N. Y. 248, 259; Sartwell v. Field, 68 N. Y. 341; Dunlop v. Patterson Fire Ins. Co., 74 N. Y. 145; Anthony v. Wood, 29 Hun, 239; McGinn v. Ross, 11 Abb. Pr. (N. S.) 20; Hibernian Nat. Bank v. Lacombe, 84 N. Y. 367, 385; Jenks v. Ludden, 34 Minnesota, 486; Kidder v. Tufts, 48 N. H. 121, 126; Paine v. Lester, 44 Connecticut, 196, 204; Rhawn v. Pearce, 110 Illinois, 350; Kelly v. Crapo, 45 N. Y. 86; Fuller v. Cadwell, 6 Allen, 503; Crapo v. Kelly, 16 Wall. 610; Hervey v. R. I. Locomotive Works, 93 U. S. 664; Taylor v. Carryl, 20 How. 583; Cooper v. Reynolds, 10 Wall. 308; Pennoyer v. Neff, 95 U. S. 714; Whipple v. Robbins, 97 Mass. 107; S. C. 93 Am. Dec. 64; American Bank v. Rollins, 99 Mass. 313; Garity v. Gigie, 130 Mass. 184; Wallace v. McConnell, 13 Pet. 136, 151; Nicoll v. Spowers, 105 N. Y. 1; Keller v. Paine, 107 N. Y. 83, 90; Bicknell v. Field, 8 Paige, 440; Harris v. Pullman, 84 Illinois, 20; Dehon v. Foster, 4 Allen,

Opinion of the Court.

545; Dehon v. Foster, 7 Allen, 57; Lawrence v. Batcheller, 131 Mass. 504.

Mr. Eugene M. Johnson, for defendants in error, cited: Dehon v. Foster, 4 Allen, 545; Keyser v. Rice, 47 Maryland, 203; Quidnick Co. v. Chaffee, 13 R. I. 367; Snook v. Snetzer, 25 Ohio St. 516; Vermont & Canada Railroad v. Vermont Central Railroad, 46 Vermont, 792, 797; Great Falls Manfg. Co. v. Worster, 23 N. H. 462; Bushby v. Munday, 5 Madd. 297, 307; Beckford v. Kemble, 1 Sim. & Stu. 7; Attwood v. Banks, 2 Beavan, 192; Hill v. Turner, 1 Atk. 515; Glascott v. Lang, 3 Myl. & Cr. 451; Hope v. Carnegie, L. R. 1 Ch. 320; Ex parte Tait, L. R. 13 Eq. 311; In re Chapman, L. R. 15 Eq. 75; Sartwell v. Field, 66 N. Y. 341; Massie v. Watts, 6 Cranch, 148; Phelps v. McDonald, 99 U. S. 298; Corbett v. Nutt, 10 Wall. 464; Penn v. Lord Baltimore, 1 Ves. Sen. 444; Watkins v. Holman, 16 Pet. 25.

MR. CHIEF JUSTICE FULLER delivered the opinion of the court.

The question to be determined is, whether a decree of the Supreme Judicial Court of Massachusetts, restraining citizens of that commonwealth from the prosecution of attachment suits in New York, brought by them for the purpose of evading the laws of their domicil, should be reversed upon the ground that such judicial action in Massachusetts was in violation of Article 4, sections 1 and 2 of the Constitution of the United States, which read as follows:

"SEC. 1. Full faith and credit shall be given in each State to the public acts, records and judicial proceedings of every other State. And the Congress may by general laws prescribe the manner in which such acts, records and proceedings shall be proved, and the effect thereof.

"SEC. 2. The citizens of each State shall be entitled to all privileges and immunities of citizens in the several States."

The act of May 26, 1790, 1 Stat. 122, now embodied in § 905 of the Revised Statutes, after providing the mode of authenticating the acts, records and judicial proceedings of the States, declares :

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