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which authorizes such arrangements to be effected through courts of chancery. But, in such proceedings, all interested have their day in court, with opportunity to show that the proposed scheme should not receive judicial sanction. In my judgment, the discharge in Canada, by statute, of this foreign railway company from all obligation to pay these bonds according to their terms—whatever may be the binding force of such legislation upon persons resident in that country, or upon those who may assert their rights under the original contract in the courts of Canada–can have no extraterritorial effect; certainly none as to persons who reside in a different state or country, where the contract is to be performed, and in the courts of which it becomes the subject of litigation.
In Baldwin v. Hale, 1 Wall. 223, it was held that a discharge obtained under the insolvent law of one state of the Union is not a bar to an action on a note, even when given in and payable in the same state, the party to whom the note was given having been and being of a different state. Story, in his Conflict of Laws, says that should a state provide that the discharge of an insolvent debtor under her own laws was a discharge of all his contracts, even of those made in a foreign country, such a discharge, although binding upon the courts of that state, would, or might be, mere nullities in other countries. Section 348. Chancellor KENT, referring to state insolvent laws, in operation when there is no national bankrupt statute, says:
“The discharge under a state law is no bar to a suit on a contract existing when the law was passed, nor to an action by a citizen of another state in the courts of the United States, or of any other state than that where the discharge was obtained. The discharge under a state law will not discharge a debt due to a citizen of another state who does not make himself a party to a proceeding under the law. It will only operate upon contracts made within the state between its own citizens or suitors, subject to state power. The doctrine of the supreme court of the United States, in Ogden v. Saunders, 12 Wheat. 213, is that a discharge under the bankrupt law of one country does not affect contracts made or to be executed in another." 2 Kent, 392, 393.
Such is the unvarying current of authority in this country. If a discharge by an insolvent law of one of the United States does not affect the contract rights of citizens of another state, how much stronger is the case where, by the terms of the contract, it is to be performed in a state or country other than that in which the discharge is granted. My brethern suggest, if I do not misapprehend their opinion, that the parties here suing must be understood to have purchased these bonds with reference to the power which the Canadian government has over corporations of its own creation. But this view, it seems to me, overlooks the principle, founded, says Story, in natural justice—and applicable here, even if the bonds in suit had been purchased and deliv. ered in Canada—that “where the contract is, either expressly or tacitly, to be performed in another place than where made, the rule is, in conformity with the presumed intention of the parties, that the contract, as to its validity, nature, obligation, and interpretation, is to be gove
erned by the law of the place of performance." Confl. Laws, $ 280; Andrews v. Pond, 13 Pet. 65; Cook v. Moffat, 5 How. 307. Why should it not be presumed that the parties to these contracts made them with reference as well to that principle as to another principle which is thus forcibly stated by Kent:
“The laws of other governments have no force beyond their territorial limits; and if permitted to operate in other states, it is upon a principle of comity and only when neither the state nor its citizens would suffer any incon. venience from the application of the foreign law.” 2 Kent, 406.
Story announces the same doctrine in the following language :
“And even in relation to a discharge according to the laws of the place where the contract is made, there are (as we have seen) some necessary limitations and exceptions ingrafted upon the general doctrine which every country will enforce, whenever those laws are manifestly unjust, or are injurious to the fair rights of its own citizens. It has been said by a learned judge with great force: •As the laws of foreign countries are not admitted ex proprio vigore, but merely ex comitate, the judicial power will exercise a discretion with respect to the laws, which they may be called upon to sanction; for should they be manifestly unjust, or calculated to injure their own citizens, they ought to be rejected. Thus, if any state should enact that its citizens should be discharged from all debts due to creditors living without the state, such a provision would be so contrary to the common principles of justice that the most liberal spirit of comity would not require its adoption in any other state.'"
In 1 Burg. Col. & For. Laws, 5, the author says:
"It is established as a principle of international jurisprudence that effect should be given to the laws of another state whenever the rights of a litigant before its tribunals are derived from, or are dependent on, those laws, and when such recognition is not prejudicial to its own interests or the rights of its own subjects.”
The same view is thus expressed by another American author:
"It (the state) must consult sound morals and the interests and public policy of its own people, and if to enforce the laws of another state or country would lead to their infringement, it would be treacherous to its own duties to lend aid to their execution." 1 Daniel, Neg. Inst. § 866.
In Smith v. Buchanan, 1 East, 6, 11, the question was whether & discharge of an English contract under an insolvent act of the state of Maryland, where the debtor resided, was a bar to a suit upon that contract in the courts of England. The point was there made that the discharge under the laws of Maryland was analagous and equivalent to a certificate of bankruptcy in England; and having been issued by a competent jurisdiction in the case of subjects of Maryland residing there at the time, though it had not the binding force of law in England, yet the courts there should give effect to it “by adoption and the courtesy of nations." But to that argument the court, speaking by Lord KENYON, said: "This is the case of a contract lawfully made by a subject in this country, which he resorts to a court of justice to enforce; and the only answer is that a law has been made
in a foreign country to discharge these defendants from their debts on condition of their having relinquished all their property to their creditors." “But how,” said he, “is that an answer to a subject of this country, suing on a lawful contract made here? How can it be pretended he is bound by a condition to which he has given no assent, either express or implied ?” "In America," adds Story, referring to that case, “the same doctrine has obtained the fullest sanction.” Story, Confl. Laws, $ 342. So also in Bartley v. Hodges, 1 Best & S. 375, where the defendant pleaded, in a court of England, an insolvent discharge under the laws of Victoria, a British colony. The court said: "No case has been cited to show that a discharge under the insolvent laws of Victoria is an answer to an action here, brought by an English subject on a bill of exchange drawn and payable in England.
It is true that the colony of Victoria is not a foreign country in one sense of the word, yet its laws are the laws of that colony only.
It might as well be said that the laws of the state of Maryland would apply here.” So also in Phillips v. Allan, 8 Barn. & C. 477, it was held that an insolvent discharge under the laws of Scotland was no bar to an action brought by an Eng. lish subject in a court in England on a debt contracted in England, although it appeared that the English creditor had appeared in the Scottish proceedings for the purpose only of opposing the discharge.
The case, then, before us, is one in which a foreign railway corpo ration pleads in discharge of its liability to pay its negotiable securities held by citizens of the United States, and which were delivered and are payable in this country, not that it had paid such securities; not that there had been a composition in bankruptcy embracing these claims; not that any court had given its sanction to the scheme in question; but that a statute of a foreign country, without the consent of those who did not approve such scheme, and without giving an opportunity before any authorized tribunal to show that such scheme ought not to be ratified, had absolved it from liability to meet its contract engagements. This defense my brethren feel obliged, upon grounds of international comity, to sustain. Thus, an American court denies to American holders of foreign railway securities what an English court would not deny to English holders of American railway securities. An English court would not permit the rights of Englishmen, growing out of a contract between them and a foreign corporation, which is to be performed in England, to be injuriously affected by foreign laws in violation of the terms of that contract. I fully concur in what the circuit judge said:
“If any of our own states had passed such an act as the one under consideration, it would bave been the duty of the courts of that state to treat it as an 'ınlawful exercise of power; and certainly it cannot be expected that this court will tolerate legislation by a foreign state which it would not sanction if passed here, and which, if allowed to operate, would seriously prejudice the rights of a citizen of this state. Comity can ask no recognition of such unjust foreign legislation, and the case falls under the qualifications of a general rule, which prescribes that when the foreign law is repugnant to the fundamental principle of the lex fori, it will be ignored."
The principles for which I contend are not affected, in their application to this case, by the circumstance that the legislation of Canada relates to the contracts of a quasi public corporation and not to contracts wholly between individuals. For, in determining whether a statute impairs the obligation of a contract, within the meaning of our constitution, it must be conceded that that instrument protects such obligation against•legislative impairment as well in cases of contracts with railway corporations as of contracts between individuals. It is equally clear that debts held against such corporations are prop. erty of which the citizen may not be deprived without due process of law. We said in Pritchard v. Norton, 106 U. S. 132, [1 SUP. Ct. REP. 102,] that “a vested right of action is property in the same sense in which tangible things are property, and is equally protected against arbitrary interference. Whether it springs from contract or from the principles of the common law, it is not competent for the legislature to take it away." Railway corporations are, undoubtedly, public instrumentalities employed by government to accomplish public purposes. But in this country the legislative department may not, under the guise of regulating such corporations, arbitrarily deprive creditors of the benefit of their claims against them, or impair the obligation of contracts which individuals have with them. This, perhaps, would not be disputed were this a contest between American citizens, or even citizens of Canada, and an American railway corporation.
As I do not think that a foreign railway corporation is entitled, upon principles of international comity, to have the benefit, in our courts—to the prejudice of our own people and in violation of their contract and property rights—of a foreign statute which could not be sustained had it been enacted by congress or by any one of the United States, with reference to the negotiable securities of an Amer. can railway corporation; and, as I do not agree that an American court should accord to a foreign railway corporation the privilege of repudiating its contract obligations to American citizens, when it must deny any such privilege, under like circumstances, to our own railway corporations, i dissent from the opinion and judgment of the court.
(109 U. S. 678)
PROVIDENCE & N. Y. S. S. Co. v. HILL MANUF'G Co.
(December 17, 1883.)
LIABILITY OF SHIP-OWNERS FOR LOSS OR DAMAGE TO Goods-POWER OF CON.
GRESS TO PASS THE ACT OF 1851–PROCEEDINGS IN DISTRICT COURT.
Proceedings in the district court of the United States, under the act of 1851, (9 St.
635,) to limit the liability of ship-owners for loss or damage to goods, supersede all other actions and suits for the same loss or damage in the state or federa)
courts, upon the matter being properly pleaded therein. The effect of such proceedings in superseding other actions and suits does not de
pend upon the award of an injunction by the district court, but upon the object and intrinsic character of the proceedings themselves, and the express language
of the act of congress. The power of congress to pass the act of 1851, and of this court to prescribe the
rules adopted in December term, 1871, for regulating proceedings under the
act, reaffirmed. Loss and damage by fire on board of a ship are within the relief of the third, as well
as the first, section of the act. Goods transported by steamer from Providence to New York were injured by fire
on board the vessel at her dock in the latter place, and suits for damage were commenced against the owners of the steamer in New York and Boston; there. upon proceedings were instituted by such owners in the district court of the United States for New York, under the act of 1851, to limit their liability; held, that said proceedings, properly pleaded and verified, superseded the actions in other courts, and that it was error to proceed further therein.
In Error to the Supreme Judicial Court of the Commonwealth of Massachusetts.
Moorfield Storey and Jos. H. Choate, for plaintiffs in error. S. A. B. Abbott and J. G. Abbott, for defendant in error. BRADLEY, J. The writ of error in this case brings up for consideration a judgment of the supreme judicial court of Massachusetts ren. dered in an action brought by The Hill Manufacturing Company against the Providence & New York Steamship Company as common carriers, to recover damages for the loss of certain goods delivered by the plaintiffs to the defendants at Providence, Rhode Island, to be transported to the city of New York; which goods, it is alleged, were, by the negligence of the defendants, burned and injured by fire. The loss is stated to have occurred in May, 1868; the action was commenced in September, 1870. The defendants first put in an answer denying the allegations of the declaration ; but averring that if the goods were delivered to them for the purpose stated, they were delivered to and received by them to be transported to the city of New York over Long Island sound, (not being river or inland naviga. tion,) and were safely transported to New York in their steamship Oceanus, and that the damage, if any, was caused by fire happening to said steamship at her dock in New York, and said fire was not caused by the neglect or design of the defendants, who were the owners of said steamship, but occurred without their privity or knowl