Relfe v. Rundle (Life Asso. of America v. Rundle) 103 U. S. 226, 26 L. ed. 339; 13 Am. & Eng. Enc. Law, p. 1054; Wheaton, International Law, § 84; Rust v. United Waterworks Co. 17 C. C. A. 16, 36 U. S. App. 167, 70 Fed. 134.

The defendant company being a foreign corporation, the receivership in this state is ancillary to the control exercised over it by the state of New Jersey, which created the corporation, and the North Carolina receiver should be controlled in his distribution of the assets by the incidents and status of the corporation as imposed by the state of its domicil.

Rundle) 103 U. S. 226, 26 L. ed. 339; Fry | the corporation must be determined not by v. Charter Oak L. Ins. Co. 31 Fed. 199; regarding it as a suit by each one of them Republican Mountain Silver Mines v. for the purpose of recovering his debt, as Brown, 24 L. R. A. 778, 7 C. C. A. 412, if he had brought an ordinary civil action 19 U. S. App. 203, 58 Fed. 647; Warner v. wherein the liability would be fixed by judg Delbridge & C. Co. 110 Mich. 590, 34 L. R. ment and enforced by execution, but the A. 701, 64 Am. St. Rep. 367, 68 N. W. 283. cause of action must be considered as one Under the rules of comity, our courts belonging to the creditors, who have the should place the same construction upon right under the statute, if not on generai this statute of New Jersey as does the court principles of equity, to have all the assets of New Jersey. of the concern placed in the possession of the court, through its duly appointed officer, to the end that the rights of all parties therein may be ascertained and distribution made accordingly. It has become the settled rule in this country that the assets of an insolvent corporation constitute a trust fund for the payment of its debts, and the remedy of its creditors by action in the nature of a suit in equity, or by what is called a creditors' bill, to have the assets administered for their benefit, is firmly established. Hill v. Pioneer Lumber Co. 113 N. C. 173, 21 L. R. A. 560, 37 Am. St. Rep. 621, 18 S. E. 107; Merchants' Nat. Bank v. Newton Cotton Mills, 115 N. C. 507, 20 S. E. 765. The cause of action is the right which arises out of the default of the corporation thus to proceed against it for the purpose of applying its property to the satisfaction of its debts, and the subject of the action is the assets themselves which are taken into the custody of the court for the purpose of enforcing the equity of the creditors. It is not like an ordinary action for the recovery of a debt, in which the cause of action is the default of the debtor, and the subject of the action is the claim or debt for which he sues. The latter cannot be maintained by a nonresident against a foreign corporation under § 194, unless the cause of action arose in this state, or the subject of the action has its situs here. So it has been held that, when an ordinary action for the recovery of a debt is brought by a nonresident against a foreign corpora

Murfree, Foreign Corp. pp. 330, 343; Society for Propagation of Gospel v. New Haven, 8 Wheat. 464, 5 L. ed. 662; Rundel v. Life Asso. of America, 10 Fed. 720; Taylor v. Life Asso. of America, 13 Fed. 493; Fry v. Charter Oak L. Ins. Co. 31 Fed. 197; Rust v. United Waterworks Co. 17 C. C. A. 16, 36 U. S. App. 167, 70 Fed. 129; Canada Southern R. Co. v. Gebhard, 109 U. S. 537, 27 L. ed. 1024, 3 Sup. Ct. Rep. 363; Minor, Confl. L. 1901, § 213, p. 529; Bucher v. Cheshire R. Co. 125 U. S. 555, 31 L. ed. 795, 8 Sup. Ct. Rep. 974.

Appeal of Newman and Phillips.

Walker, J., delivered the opinion of the court:

tion, and the cause of action did not arise in the state of the forum, and the subject of the action is not situated there, the court has no jurisdiction, though property in that state belonging to the debtor is attached, as the attachment is ancillary to the main action, and the property upon which it is levied is in no sense the sub

The copper company and the two creditors who have appealed contend that the claim of the state of New Jersey is not provable in this suit, as its cause of action did not arise in this state, and the subject of its action is not situated here, and they rely on the provision of § 194 of the Code. We do not think that section applies in the way indicated by the appellants. The cause of action in this proceed ing is that of the creditors of the copper company, and consists not only in the fail-ject of the action. ure of the company to meet its obligations, but in the suspension of its ordinary business, which entitled the creditors to have its assets placed in the hands of a receiver for the purpose of being applied to the payment of its debts. This proceeding is equitable in its nature, and the jurisdiction of the court in respect to the claims of the creditors of

In our case, however, the proceeding is dírected against the property as a fund held by the corporation in trust for its creditors, and, though they have lien upon the assets of the corporation, but a right of priority in payment over the stockholders, as explained by Mac Rae, J., in Merchants' Nat. Bank v. Newton Cotton Mills, 115 N. C.

no

creditors, even if some of the plaintiffs are nonresidents. The ruling of the court that the claim of the state of New Jersey is provable in this case was in our opinion, correct.

No error.

Appeal of the State of New Jersey.

507, 20 S. E. 765, their suit to subject the | cognizable formerly by courts of equity, as assets to the payment of their claims is it is sufficient for our purpose that in the somewhat analogous to a suit in which it case cited the jurisdiction of the court is is sought to impress property with a trust conceded where a fund is brought under its in behalf of a creditor and to enforce pay-control to be administered for the benefit of ment of his debt out of it; and, so far as the question now being considered is concerned, it is not in principle unlike a suit to foreclose a mortgage, or to have administered in behalf of creditors any property or fund specially set apart by their debtor as a security for their claims. In all such cases where the property is situated in this state suit can be brought here under § 194 of the Code. In the case at bar, when the receiver was appointed and notice was is sued under the order of the court to creditors, those who came in and proved their claims joined with those who had originated the suit in one common cause against the defendant; and while, in a certain sense, the action may be considered as instituted for and in behalf of each of the creditors, it is nevertheless the joint action of all, and it would be strange, indeed, if the jurisdiction of the court in such a case could be made to depend upon what would have been an inherent defect in the cause of action of any one of the creditors if his action had been prosecuted separately and solely for the recovery of a personal judgment to be enforced by an ordinary execution. We cannot adopt the construction suggested by counsel, but must hold, on the contrary, that in a case like this one the jurisdiction of the court must be determined by the gen eral scope of the relief sought, without reference to the character of any particular debt which may be proved before the refIn this connection, the language of the court, speaking by Danforth, J., in McKinney v. Collins, 88 N. Y. 221, and construing similar words in the Code of that state, seem applicable: "It is therefore ap; parent that the phrases 'cause of action' and 'subject of action' are not used interchangeably or as synonyms. It is not easy to define their precise meaning, but it seems apparent they relate not to an action at law, though to one which formerly would have proceeded in equity; the object being to give some specific relief, rather than a simple judgment against a person,—as in an action to cancel a mortgage upon the ground of usury, or to enforce specific performance, or to attain such relief as by the rules of the common law was denied to the suitor in its forum; certainly not an action where the only relief sought was a judgment upon contract for the payment of money." We are not required to assent to the view that the words of the statute should be confined strictly to suits

eree.

In this appeal the question is presented whether the state of New Jersey is entitled to priority or preference over the other creditors, and especially over the lien creditors, in the payment of the debts of the copper company out of its assets which are now in the hands of the receiver. When it was provided by the state of New Jersey that the "annual license fee or franchise tax" should be a preferred debt in case of insolvency, it was evidently the purpose that the words should apply only to such proceedings in insolvency as should be instituted in that state, for we must presume that the legislature did not intend that the statute should have any force beyond the territorial limits of the state, its operation being restricted to those limits except in state by the law of comity. so far as it may be given effect in another McLean v. Hardin, 56 N. C. (3 Jones, Eq.) 294, 69 of the laws of New Jersey, that there is Am. Dec. 740. We find, upon examination of 1901 (Laws 1901, chap. 2, § 73, p. 33), a statute there substantially like the act and strikingly similar in phraseology. It must be conceded that the state of New Jersey had no power to provide how the assets of a corporation situated in this state shall to confer any right of priority upon one of be distributed, or, by force of its statute, her own citizens or upon herself in respect to those assets. They are here, and always have been here, and are subject to the operation of the laws of this state, the lea loci rei sita, or the law of the forum in which they have been sequestered for the benefit of the creditors of the corporation. Hunt v. Gilbert, 54 Ill. App. 491; Kruger v. Bank of Commerce, 123 N. C. 16, 31 S. E. 270. It has been established by the great weight of authority as a part of the settled jurisprudence of this country "that personal property, as against creditors, has locality, and the lex loci rei sita prevails over the law of the domicil, with regard to the rule of preferences in the case of insolvent estates. The laws of other governments have no force beyond their territorial limits, and, if permitted to operate in other

foreign state to seek such portion of the
insolvent estate as the laws of that state
will, upon distribution, give them. The
state will do justice to its own citizens so
far as it can be done by administering upon
property within its jurisdiction, and will
yield to comity in giving effect to foreign
statutory assignments only so far as may
be done without impairing the remedies or
lessening the securities which our laws
have provided for our own citizens." Many
authorities could be cited in support of the
principles thus stated. A few, cnly, will
suffice. Smith, Equitable Remedies of Cred-
itors, 241; Jones, Liens, 2d ed. § 111;
2 Thomp. Corp. § 7064, where the cases are
collected in the notes. A good statement
of the doctrine will be found in Minor, Con-
flict of Laws, p. 12, § 7: "It is natural,"
he says, "and not at all to be reprobated,
that the courts of the forum should refuse
to enforce a foreign law, if to do so would
result in injustice to their own people.
The object of the enforcement of a foreign
law in any case is to mete out as far as
possible exact justice to all concerned, as
well as to give due effect to the laws of
other states. But the first and most im-
portant of these objects fails altogether
when the enforcement of the proper law
would result in injustice and loss to inno-
cent citizens of the forum. As between the
latter and strangers, it is not remarkable
that the courts should elect in a close case
to decide the matter in accordance with the
lex fori, thus giving their fellow citizens
the advantages conferred upon them by the
law under which they live and ordinarily
transact their business. The observance of
comity towards other states cannot reason-
ably be expected at the expense of injus-
tice to residents of the forum, for whose ben-
efit the courts and the law are primarily
instituted. The existence of this exception
to the enforcement of the 'proper law' is
beyond dispute, though its limits
are not
yet precisely defined." In Hornthal v. Bur-
well, 109 N. C. 10, 13 L. R. A. 740, 26 Am.
St. Rep. 556, 13 S. E. 721, Shepherd, J.,
thus states the principle: "The authority
of such laws, however, is admitted in other
states, not exproprio vigore, but ex comi-
tate, and hence it is now very generally
held that, when they 'clash with and inter-
fere with the rights of the citizens of the
countries where the parties to the con-

states, it is upon a principle of comity, and only when neither the state nor its citizens would suffer any inconvenience from the application of the foreign law. Dunlap v. Rogers, 47 N. H. 281, 93 Am. Dec. 433; Harrison v. Sterry, 5 Cranch, 298, 3 L. ed 100; Ogden v. Saunders, 12 Wheat. 214, 6 L. ed. 606. The general rule is beyond question that one state cannot prescribe rule of action for another, but each must exercise its sovereign power within its own sphere, and without exerting any influence upon the course of procedure or the administration of the law in any other jurisdiction. When the courts of a state give effect to a foreign law, it is by courtesy, or what we call in the law comity; and such effect of the law results solely from the exercise of this act of favor, and not from any intrinsic extraterritorial force of the law itself, but because by comity we make it our law. Alvany v. Powell, 55 N. C (2 Jones, Eq.) at page 59. Discussing this question, Story, in his Conflict of Laws, 8th ed. § 414, says: "If there is in such cases a conflict between our own laws and foreigr. laws as to the rights of our citizens. and one of them must give way, our own laws ought to prevail. The most convenient and practical rule is that statutable assignments, as to creditors, shall operate intraterritorially only. If our citizens conduct themselves according to our laws in regard to the property of their debtors found within our jurisdiction, it is reasonable that they should reap the fruits of their diligence, and not be sent to a foreign country to receive such a dividend of their debtors' effects as the foreign laws allow. If each government in cases of insolvency should sequester and distribute the funds within its own jurisdiction, the general result would be favorable to the interest of creditors and to the harmony of nations. This is the rule adopted in all cases of administration of the property of deceased persons, and there is no real difference between the principle of those cases and of cases of bankruptcy." A case very much like ours was presented in Willitts v. Waite, 25 N. Y. 577. "The acceptance of the charter," says the court in that case, "with this provision for a distribution of its effects upon the happening of insolvency cannot operate to give to the transfer the effect of a voluntary conveyance of the assets. The title of the trustees is a statu-tract seek to enforce it, as one or the other tory title, and must defer to the lien acquired by the creditors attaching the property in this state. Creditors within this state, having acquired a lien under our laws upon property within the state, will not be deprived of their lien, and sent to a

of them must give way, those prevailing where the relief is sought must have the preference.'" The learned judge then discusses the matter at length, and shows what are the proper limitations of this law of comity in its practical application to the

Armstrong v. Best. The law of comity in its different phases was considered in the following cases: M'Neil v. Colquhoon, 3 N. C. (2 Hayw.) 24; Moye v. May, 43 N. C. (8 Ired. Eq.) 131; Alvany v. Powell, 55 N. C. (2 Jones, Eq.) 51; Carson v. Oates, 64 N. C. 115; Findley v. Gidney, 75 N. C. 395; Hyman v. Gaskins, 27 N. C. (5 Ired. L.) 267; Stamps v. Moore, 47 N. C. (2 Jones, L.) 80; and the early case of Leake v. Gilchrist, 13 N. C. (2 Dev. L.) at page 85. They all lead us to the conclusion that a foreign creditor cannot, by the operation of any law of his own state, acquire any preference over resident creditors in the administration of assets which are situated here. The property now in the custody of the court has never been in the state of New Jersey, and her laws cannot in any way affect its status or prejudice the rights of resident creditors of the corporation in respect to any liens thereon which they may have acquired. M'Neil v. Colquhoon, 3 N. C. (2 Hayw.) 24.

question there involved. The true principle | plies as between the states, as is shown in was well expressed and illustrated in the case of Olivier v. Townes, 2 Mart. N. S. 93: "The municipal laws of a country," says the court, "have no force beyond its territorial limits, and when another government permits these to be carried into effect within her jurisdiction she does so upon a principle of comity. In doing so care must be taken that no injury is inflicted on her own citizens; otherwise justice would be sacrificed to courtesy, Nor can the foreigner or stranger complain of this. If he sends his property within a jurisdiction different from that where he resides, he impliedly submits it to the rules and regulations in force in the country where he places it. What the law protects it has the right to regulate." So it is in this case. When the copper company was chartered and permitted to migrate from its domicil and conduct its business in this state, where it has acquired property under the protection and operation of the local laws, its assets should in all fairness be held subject to the provisions of those laws in favor of persons who have dealt with it here as a domestic corporation, which is virtually its true character, though in law it is considered as a corporation of New Jersey. Goodwin v. Claytor, 137 N. C. 224, 67 L. R. A. 209, 49 S. E. 173. This court said by Shepherd Ch. J., in Armstrong v. Best, 112 N. C. 62, 25 L. R. A. 188, 34 Am. St. Rep. 473, 17 S. E. 14, quoting from Bank of Augusta v. Earle, 13 Pet. 519, 10 L. ed. 274: "The comity thus extended to other nations is no impeachment of sovereignty. It is the voluntary act of the nation by which it is offered, and is inadmissible when contrary to its policy or prejudicial to its interests." The same principle ap

There is nothing in the sovereignty of New Jersey as a state which entitles her to any special favor in the consideration of the claim she now presents, or which modifies the general rule of comity so as to confer upon her any greater right or privilege than is possessed by the ordinary suitor in our courts. We will extend to her all possible courtesy in the prosecution of her claim, but we cannot be expected to contravene the settled policy of the state, or to sacrifice the interests of our citizens, in doing so. Their rights are fixed by the law, which we could not change if we would. The ruling of the court in this appeal also was correct.

No error.

RHODE ISLAND SUPREME COURT.

Vincenzo DEL PONTE et al.

v.

SOCIETA ITALIANA di M. S. GUGLIEL-
MO MARCONI.

(........R. I.........)

1. A by-law of a mutual benefit society providing for the expulsion of members for defaming members of the directing council, or any member whatsoever, for reaNOTE. For some other cases in this series as to by-laws of benevolent societies, see Moerschbaecher v. Supreme Council, R. L. 52 L. R. A. 281; Langnecker v. Grand Lodge A. O. U. W. 55 L. R. A. 185 (forbidding members to engage in saloon business); and Mazurkiewicz

sons connected with the society, causing dissensions and disorders in the midst of the association, is reasonable.

2. Acts defaming members for reasons connected with the society, causing dissensions and disorders in the midst of the association, within the meaning of a by-law of a secret society, authorizing the expulsion of members, are committed by the publication of an article by members appointed upon a committee to conduct a celebration, charging that they were compelled to resign bev. St. Adelbertus Soc. 54 L. R. A. 727 (forbid. ding members from being connected with society prohibited by particular church).

As to power of such societies to make bylaws generally, see note to Supreme Lodge, K. of P. v. Knight, 3 L. R. A. 409.

APPLICATION for a writ of mandamus ex rel. Meads v. McDonough, & App. Div.

to compel defendant to restore petition- 591, 35 N. Y. Supp. 214, 40 N. Y. Supp. ers to membership. Denied.