STATE INSOLVENT LAWS-DISCHARGE UNDER.-A discharge under a state insolvent law s no bar to an action by a citizen of another state who did not appear or take part in the insolvency proceedings.

The opinion states the facts.

Rothchild & Baum, for the plaintiffs.

Ellis & Judge, for the defendant.

SABIN, J. In April, 1883, plaintiffs, then and now citizens of the State of California, residing at the city of San Francisco, brought this action in the seventh district court, for the county of Washoe, state of Nevada, against defendant, then and now a resident of said county, to recover one thousand one hundred and eighty-eight dollars and four cents, on account of goods by them sold and delivered to defendant, at said city of San Francisco, on or about October 8, 1881. By an amended complaint, duly filed, plaintiffs reduced their demand on the same cause of action to the sum of one thousand and sixty dollars and seventy-six cents, and prayed judgment accordingly. Defendant demurred to the amended complaint, and, pending that demurrer, the case was removed to this court.

In this court the demurrer was overruled, and defendant given time to plead. Thereupon defendant filed his answer in this court, setting up his discharge in insolvency under the state statute, duly issued and granted July 28, 1883, by the said district court of Washoe county, and that the same was so granted while this action was pending in said court, and that plaintiff's demand was ineluded in said discharge.

To this answer plaintiffs demur, on the ground that the matters So pleaded constitute no defense to this action.

Upon the argument of this demurrer, it was admitted that plaintiffs did not appear in said insolvency proceedings, instituted by defendant, did not prove their demand against defendant, or in any way share or participate in the distribution of ary estate, by defendant, surrendered for the benefit of his creditors. answer virtually admits these facts, as it alleges that all of defendant's creditors, "excepting plaintiffs," took part in said insolvency proceedings.

The

The question, then, reised by this demurrer, is simply this: What, if any, extra-territorial force or effect have state insolvent laws?

If these laws. have no force or effect beyond the limits of the state, and are applicable only to contracts between citizens of the state made. subsequent to the passage of the insolvent laws, then the matters pleaded in the answer are no bar to plaintiffs' recovery in this action.

It would seem, from an examination of the authorities on this subject, both national and state, that there is little or no ground for argument upon this question.

The case of Sturges v. Crowninshield, 4 Wheat., 122, involving the subject of state insolvent laws, and their force and effect, was decided in 1819, followed by the case of McMillan v. McNeil, decided the same year.

From that time to the present, a period of more than sixty years, there has been an unbroken line of decisions, both national and state, which are decisive of this question.

In Baldwin v. Hale, 1 Wall., 223, the court, adopting the views of Mr. Justice Story, says: "His views, as to the result of the various decisions of this court is, that they establish the following propositions: 1. That state insolvent laws may apply to all contracts within the state between citizens of the state. 2. That they do not apply to contracts made within the state between a citizen of the state and a citizen of another state. 3. They do not apply to contracts not made within the state." And the court holds that: "insolvent laws of one state cannot discharge the contracts of citizens of other states, because they have no extra-territorial operation, and, consequently, the tribunal sitting under them, unless in cases where a citizen of such other state voluntarily becomes a party to the proceeding, has no jurisdiction in the case. Legal notice cannot be given, and, consequently, there can be no obligation to appear, and, of course, there can be no legal default."

In addition to the authorities cited by Mr. Justice Clifford in this opinion, see also, 1 Wall., 234; 6 Wheat., 131; 12 Id., 213; 14 Peters, 67; 5 How., 295; 20 Id., 170; 39 N.Y., 342; 44 Id., 597; 3 Selden, 500; 74 Maine, 156; 54 Vt., 493, and cases there cited; 55 Vt., 187; 130 Mass., 503; 134 Id., 488; 9 Allen, 27; Abb. Nat. Dig., Vol. 3, p. 48-9.

In the cases above cited every phase of the question here involved is fully discussed, and a review of them is unnecessary here, since little can be added thereto, and nothing can weaken or overthrow their binding authority.

In Ogden v. Sanders, 12 Wheat., 213, the court holds that a discharge granted under a state law, "as against citizens of other states, is invalid as to all contracts," and to the same effect in 5 How., 309, a certificate of discharge under an insolvent will not bar an action brought by a citizen of another state on a contract made with him."

The fact that plaintiffs were prosecuting this action in the state court, at the time and in the same court which granted the discharge here pleaded, is of no consequence. That fact could not give the state court jurisdiction over plaintiffs in the insolvency proceedings, and any order of that court, made in such proceedings, affecting plaintiffs' rights in this action, was void: 20 How., 170; Hyde et al. v. Stone, 14 Peters, 67.

In Hills et al. v. Carlton, 74 Me., 156, plaintiffs, citizens of Massachusetts, brought suit, upon an account, against defendant, a citizen of Maine, in the state court. After suit brought, and while the same was pending, defendant procured his discharge in insolvency, and pleaded the same in defense to plaintiffs' action. It was held to be no bar to plaintiffs' right of recovery.

In Sturges v. Crowninshield, supra, the court say: "Every bankrupt or insolvent system in the world must partake of the character of a judicial investigation. Parties whose rights are affected are entitled to a hearing. Hence, any bankrupt or insolvent system professes to summon the creditors before some tribunal to show cause against granting a discharge to the bankrupt. But on what principle can a citizen of another state be forced into the courts of a state for this investigation? The judgment to be passed is to prostrate his rights, and the subject of those rights the constitution exempts him from the jurisdiction of the state tribunals, without regard to the place where the contract may originate.

The case of Bedell et al. v. Scruton, 54 Vt., 493, is directly in point on this subject.

The court say: "It must now be regarded as settled beyond question that a discharge granted by a state court of insolvency is no bar to the claim of a non-resident creditor, who does not take part in the insolvency proceedings or submit himself in any way to the jurisdiction of the insolvency tribunal; nor is the rule affected by the place where the contract is made or to be performed, or the forum in which it is sought to be enforced. The debt attends the person of the creditor, and unless he is within the jurisdiction of the court, no discharge granted by it can affect his rights. It is a question of citizenship, and state courts and state laws are powerless to affect the rights of non-resident creditors by any jurisdiction they may have or exercise over the person of the debtor, or by any proceedings in rem affecting the debt itself."

The demurrer to the answer is sustained, and defendant will be given till next rule day to plead further if he shall so desire.

DISTRICT COURT, DISTRICT OF CALIFORNIA.

SERODINO ET AL. v. THE BARK MABEL, ETC.

WALSTON ET AL V. THE SAME.

REED V. THE SAME.

December 15, 1884.

SALVAGE SERVICES--COMPENSATION TO SALVORS.-The services of the libellants, after a review of the facts, held to have been a salvage service, but not one of a high degree of merit, for which compensation should be awarded as stated in the opinion.

LIBELS for salvage service. The opinion states the facts.

W. H. Cook, proctor for libellant Serodino et al.
Milton Andros, proctor for libellant Walston et al.
Daniel 1. Sullivan, proctor for libellant Reed.
Page & Eells, proctors for the claimants.

HOFFMAN, D. J. In the month of September last, towards the close of the whaling season, the bark "Eliza," while endeavoring to make her way out of the Arctic ocean, became involved in the ice in the vicinity of the Sea Horse islands. At the distance of from five to six miles from her was the bark" Mabel" which having been overtaken by a similar misfortune had been abandoned by her crew, who, as was afterwards ascertained, had succeeded in reaching the shore.

The master of the "Eliza," renouncing all hope of extricating his vessel, attempted to secure the safety of himself and his crew by the same expedient. After some seven or eight days passed on the ice, and in endeavoring to find clear water, the party (with the exception of four of the number), "seeing no hope ahead," returned to the "Eliza." Four of the seamen were so disabled by swollen feet and fatigue, that they took refuge on board the deserted "Mabel." The master, believing that his only chance of safety lay in being able to survive the rigors and dangers of an arctic winter on board his own vessel, promptly addressed himself to making such preparations for his long imprisonment as were possible. With this view a party was sent to the "Mabel" to bring from her such provisions as could be transported, on their return the men asked permission to make a second trip for the same object. This having been given, they started for the "Mabel" on the afternoon of September 27th, intending to remain on the "Mabel" all night and to return to the "Eliza" in the morning. During the night noises. were heard which appeared to indicate that the ice was moving or breaking up, and in the morning they found that the ice had broken up between the "Mabel" and the " Eliza," and that between the two vessels a lane of broken ice and water had opened. As they had no boats their return to the "Eliza" was hopelessly cut off. The two vessels were still in sight of each other but as the day wore on they contined to drift in opposite directions, and towards nightfall were out of sight of each other.