This section is from the book "The Law Of Contracts", by Theophilus Parsons. Also available from Amazon: The law of contracts.
(v) See supra, the chapter on the Law of Place, Vol. II. pp and * 583. (w) That a State insolvent law may
*And further, as a correlative proposition, that no State can, by its municipal law, reach a contract which provide constitutionally for the discharge of all contracts made within the State between its own citizens, is a proposition which may now be considered as established. Ogden v. Saunders, 12 Wheat. 213,368,369; Walsh v. Farrand, 13 Mass. 19; Brigham v. Henderson, 1 Cush. 430; Converse v. Bradley, id. 434, in the note; Babcock v. Westou, 1 Gallia. 168; Baker v. Wheaton, 5 Mass. 509; Smith v. Smith, 2 Johns. 241; Smith v. Parsons, 1 Ohio, 107. So those persons who asseut to the operation of such laws, by participating in proceedings had under them, are bound by such operation. Clay v. Smith, 3 Pet. 411. In Farmers & Mechanics Bank v. Smith, 6 Wheat. 131, a discharge under a Pennsylvania bankrupt act was held not to affect a contract between citizens of that State made previous to the passage of the law. But the proposition that a State insolvent law may operate a discharge of a debt contracted by one of its own citizens with the citizens of another State, when the contract is on its face to be performed within the State granting the discharge, is one which stands by no means without dispute at this day. We think, however, that the weight of authority sustains the proposition, though it cannot be denied that the decisions of courts of the highest character, and the dissent of at least one of the most learned judges in the country from the opinion of his associates, render the future preponderance of authority, to say the least, doubtful. In Blancnard v. Russell, 13 Mass. 1, the defendant, a merchant of New York, was indebted to the plaintiff on account stated for proceeds of goods consigned to him by plaintiff. Subsequently the defendant took advantage of an act for the benefit of insolvent debtors, etc., of the State of New York, and was discharged from all his debts. The plain tiff did not prove his claim, and had no Knowledge of the proceedings save such as he might he charged with from the existence of the statute. The question was, whether, under these circumstances, the certificate of discharge was an effectual bar to the plaintiff's demand ? Par-ker, C. J., said: "We think it may be assumed, as a rule affecting all personal contracts, that they are subject to all the consequences attached to contracts of a similar nature by the laws of the country where they are made, if the contracting party is a subject of, or resident in, that country where it is entered into, and no provision is introduced to refer it to the laws of any other country" It was held, that the certificate was a bar. The cases of Proctor v. Moore, 1 Mass. 199; Baker v. Wheaton, 5 id. 511; Watson v. Bourne, 10 id. 337, will be found in the opinion of Parker, C. J., not to be in conflict with Blanchard v. Russell on this point. In the following cases the court do not recognize the distinction as to place of performance of the contracts, but lay down the doctrine in general terms, that State insolvent laws can only operate upon those who are citizens of the State in which such law is enacted. But it is to be observed, that the circumstances of these cases were such as not to demand a recognition of such distinction. Ogden v. Saunders, 12 Wheat. 213; Shaw v. Bobbins, id. 369, note; Boyle v. Zacharie, 6 Pet. 348, 635; Wood-hull p. Wagner, 1 Baldw. 296; Frey v. Kirk, 4 Gill & J. 509; Springer v. Foster, 2 Story, 387. In the last case, Story, J., said . " The settled doctrine of the Supreme Court of the United States is, that no State insolvent laws can discharge the obligation of any contract made in the State, except such contract is made between citizens of that State" The cases of Braynard v. Marshall, 8 Pick. 196; Betts v. Bagley, 12 id. 572; Agnew v. Platt, 15 Pick. 417, go so far only as to hold, that a discharge in this State will not be an effectual bar to the claim of a creditor of another State, when the contract was not by its terms to be performed in this State. They do not decide the point, when there is such stipulation. The language of the judges in one of these cases, must be held to be uncalled for by the necessities of the case See the strictures of Story, J., on the case of Braynard v Marshall, in his Conflict of Laws. The point has never been directly decided in the Supreme Court of the United States. Dewey, J., in a case cited below. In Parkinson v. Scoville, 19 Wend. 150, the Supreme Court of New York decided the precise point, that an insolvent discharge (discharging the debtor from the payment of all his debts) is an absolute bar to a recovery upon a contract made and to be executed within the State, although the creditor be a non-resident, and neither united in the petition for a discharge, nor accepted a dividend, Bron-8on, J., delivering the opinion of the court. But in the later case of Donnelly v. Corbett, 3 Seld. 500, the New York Court of Appeals held, that where goods had been purchased of merchants in New York, by citizens of South Carolina, and a so far as itself and its own courts are concerned, (x) From this
* is not to be performed * within its sovereignty, excepting note was given, payable in the latter State, upon which a judgment was subsequently obtained in its courts, and the debtor imprisoned, his discharge from his imprisonment and the debt under an insolvent law of South Carolina, was invalid, - four judges agreeing in this opinion, and two dissenting. In Poev. Duck, 5 Md. 1, a contract had been made in Maryland between a citizen of that State and a citizen of another State (the creditor). There was an arguable question as to the place of performance of the contract. The creditor sued upon this contract in the court of Maryland after the discharge of the debtor by the bankrupt law of that State. The court below gave judgment for the plaintiff. In the Court of Appeals, the appellant's counsel contended, that the contract was made and to be performed in Maryland, and chat being a Maryland contract, the discharge of the debtor under the law of that State did not impair its obligation. It was urged on the other hand, that whether the contract was a domestic one or not, the discharge was inoperative as to citizens of other States. The court said: "We think that the judgment of the court below must be affirmed, because the creditor is a citizen of another State, and shall not express any opinion on the question, whether the contract is a Maryland one or not." Pugh v. Bussel, 2 Blackf. 394, and Potter v. Kerr, 1 Md. Ch. 275-281, adopt the same view. But in two recent cases, one relating to a discharge in a foreign country, and the other to a discharge in another State of the Union, the Supreme Court of Massachusetts have come to a different conclusion from that reached in the cases last cited above. In May v. Breed, 7 Cush. 15, which was assumpsit against defendants as acceptors of a bill of exchange, drawn by parties in Boston on defendants at Liverpool, and accepted by them payable at London, the defendants pleaded a' certificate of discharge, under the English bankrupt law, obtained subsequent to the acceptance of this bill. The plaintiffs did not prove their claim, nor had they received a dividend. The case was argued elaborately and learnedly at the bar, and Shaw, C. J., delivered the opinion, examining the authorities, and reaching the conclusion that a discharge under the English bankrupt law of a merchant residing in England, from a debt to a citizen of Massachusetts, contracted and payable in England, is a bar to a subsequent action on the debt in this State, and that whether the creditor proved his debt under the English statute of bankruptcy would make no difference in the effect of the discharge. Scribner r. Fisher, 2 Gray, 43, was assumpsit on promissory notes payable to the plaintiffs, merchants of New York, by the defendant, a citizen of Lowell, in Massachusetts, payable at the Lowell Bank, in Lowell. The defendant pleaded in bar to the action his discharge in insolvency, under the Massachusetts statute, since the making of the notes. The plaintiffs had not proved nor offered to prove their claum. The court held, as a doctrine sanctioned by the spirit of the bankrupt laws, and nowhere contradicted by the decisions of the Supreme Court of the United States, that a certificate of discharge under the insolvent laws of this State is a bar to an action on a contract, made by a citizen of this State with a citizen of another State, who does not prove his claim under those laws, if the contract, by its express terms, is to be performed in this State. From this opinion Mr. Justice Metcalf dissented, coustrained by his view of the decisions of the Supreme Court of the United States, and the authority of Johnson, J, in 12 Wheat. 368, 369, Boyle v. Zacharie, 6 Pet. 348; Marshall, C. .J , Woodhull v. Wagner, Baldw. 300, Springer v. Foster, 2 Story, 387; Story, J., in his Commentaries on the Constitution, vol. 3, sections 1110, 1384; Braynard v. Marshall, 8 Pick. 196. From these cases he deduces the doctrine of the Supreme Court to be "That a State insolvent law is unconstitutional when it affects the rights of citizens of other States, because a State has no authority by such a law to affect their rights." This opinion, it is proper to say, was rendered before the publication of the cases of Donnelly v. Corbett, and Poe v Duck, above cited But it has been affirmed by more recent decisions. Burrall v. Rice, 5 Gray, 539; Capron v. Johnson, 1 id. note In Felch r. Bugtae. 48 Me. 9, it was held, that a discharge of a debtor under the insolvent laws of Massachu* setts, will not bar an action in the courts of Maine, instituted by a citizen of Maine against such debtor who resides in Massachusetts, although the contract was made, and, by its terms, is to be performed in Massachusetts. In the case of Baldwin v. Bank of Newbury, decided by the Supreme Court of the U. S., in January T., 1864, confirming a decision of Clifford, J., the court unanimously decided against the ruling in the Supreme • Court of Massachusetts, in Scribner v. Fisher, and in conformity with the dissenting opinion of Melcalf, J.
 
Continue to: