Devisme v. Martin
Devisme v. Martin, Wythe 298 (1794),[1] discussed whether the British creditor of a British bankrupt person can try to sue in Virginia to get money that Virginia citizens owed the bankrupt person. Wythe also muses on related topics in bankruptcy law.
Background
British merchants Henry Martin and Co. declared bankruptcy in England. Two of the people Martin owed money to were English merchants Philip Nathaniel Devisme and Henry Smith, but the British bankruptcy court did not assign any of Martin's assets to Devisme or Smith. Devisme and Smith filed a bill with the Virginia High Court of Chancery to collect money that Virginia citizens owed Martin.
The Court's Decision
The Chancery Court dismissed Devisme's and Smith's bill.
Wythe said that because Martin, Devisme, and Smith were all British citizens living in England, they were subject to English law.[2] English law stated that if the bankruptcy court did not assign a bankrupt debtor's assets to a creditor, that creditor cannot try to get payment for its debt by suing the debtor or attempting to get hold of the debtor's assets that are now in other people's hands.
Wythe's Discussion
In a footnote, Wythe takes the opportunity to, as he often did, state his disagreement with English caselaw on a subject.
The subject of Wythe's ire in this case was a doctrine expressed by [Lord Justice Loughborough] in the case Sill v. Worswick,[3] found in Henry Blackstone's Reports. Loughborough said that if a bankrupt English citizen has property outside of England, then the country where that property lies should uphold the assignees' title in that property over any other creditor - that is, if that country has any sense of justice. Loughborough cites the decision of Solomons v. Ross[4] to support this idea.
In Solomons, a Dutch court declared Dutch merchants Deneusvilles bankrupt. At the time of the bankruptcy, Deneusvilles owed £3000 to English merchant Ross. Ross filed suit in the London Mayor's Court and sued English merchant Michael Solomons for £1200 that Michael owed to Deneusvilles. The Mayor's Court found for Ross, and Michael posted a note for the £1200 to Ross. After that decision, Israel Solomons, who was the English agent for the Dutch trustees in charge of Deneusvilles' bankruptcy estate, filed a bill with the English chancery court asking Michael to turn that same £1200 over to Israel for the bankruptcy trustees' use. The chancery court ordered Michael to cancel his note to Ross and instead pay £1200 to Israel for the bankruptcy trustees' use.
Wythe noted that the Solomons case did not state the court's reason for its decision, but he took an educated guess based on Loughborough's opinion in Sill v. Worswick. Loughborough stated that in any country in the world "where law has the semblance of science", the citizenship of the owner, not the location of the property, decides which law governs how personal property is distributed. Therefore, Wythe assumed that Dutch law transfers a bankrupt person's property to trustees so that those trustees could distribute it among the Deneusvilles' creditors. Following Loughborough's principle, the assignment of the Deneusvilles' property thus also included any money due the Deneusvilles in England.
Wythe found Loughborough's statement ambiguous and in need of qualifications.[5] Wythe agreed that the law of the bankrupt person's country of citizenship should apply against other citizens of that country, but did not think that the laws of the bankrupt person's home nation should apply against citizens of different countries.
Thus, Wythe disagreed with the outcome in Solomons, and proceeded to lay out the reasons why:
- Ross, as an English subject, was not subject to Dutch law;
- A creditor has a right to a portion of the bankrupt person's estate equal to the debt that bankrupt person owed, or a percentage of that amount if there is not enough money in the estate to cover all creditors. Wythe noted that both English and Dutch law recognize this principle, since they both assign all the bankrupt person's property to supervisors to distribute among the bankrupt person's creditors;
- If Ross was not subject to Dutch law, then Dutch law cannot deprive him of his right to get what he is due;
- Ross's right to get the money due him was governed by English law, since Ross was an English citizen. Wythe could not find a reason why Dutch law would have priority over English law in an English court on this issue.
Wythe said that the best way to deal with a situation such as that in Solomons would be for all of the people who were assigned the bankrupt person's property place that property into a common fund and have the English court assign a supervisor for that fund to properly distribute it to all the creditors in all the countries.
Wythe also hypothesized that a British subject not living in Great Britain might be able to recover debts the bankrupt person owed him by suing the bankrupt person in the court where the property is located. In such a case, the English subject is not represented by British Parliament and should not be bound by British laws.[6] Furthermore, a British citizen living abroad might not get notice of a debtor's bankruptcy until after the bankrupt debtor's property had already been distributed among the creditors living in England.
References
- ↑ George Wythe, Decisions of Cases in Virginia by the High Court of Chancery with Remarks upon Decrees by the Court of Appeals, Reversing Some of Those Decisions, 2nd ed., ed. B.B. Minor (Richmond: J.W. Randolph, 1852): 298.
- ↑ Wythe cites Page v. Pendleton for this idea.
- ↑ 126 Eng. Rep. 379, 393; 1 H. Bl. 665, 691 (1791).
- ↑ Wythe said that Loughborough's summary of Solomons did not support Loughborough's statement, so Wythe referred to a more detailed description of that case from Folliott v. Ogden, 126 Eng. Rep. 75, 79; 1 H. Bl. 123, 131, note b (1789). As it turns out, Folliott was also in Henry Blackstone's Reports.
- ↑ Wythe (perhaps mockingly) acknowledged that his opinion would not be popular with people "whose veneration for the westmonasterian oracles is equal to the veneration of the antients for the [dodonaean] and [delphic] oracles". Wythe 300.
- ↑ Wythe admitted that English and colonial-era American courts held otherwise, but that did not seem to matter much to him.
