U.S. Supreme Court McMillan v. McNeill, 17 U.S. 4 Wheat. 209 209 (1819)
McMillan v. McNeill
17 U.S. (4 Wheat.) 209
ERROR TO THE DISTRICT
COURT OF LOUISIANA
A state bankrupt or insolvent law which not only liberates the person of the debtor but discharges him from all liability for the debt, so far as it attempts to discharge the contract, is repugnant to the Constitution of the United States, and it makes no difference in the application of this principle whether the law was passed before or after the debt was contracted.
A discharge under a foreign bankrupt law is no bar to an action in the courts of this country on a contract made here.
This was a suit brought by McNeil, the plaintiff below, against McMillan, the defendant below, to recover a sum of money paid for the defendant's use, under the following circumstances:
McMillan, residing in Charleston, South Carolina, transacting business there as a partner of the house of trade of Sloane & McMillan, of Liverpool, on 8 October and 9 November, 1811, imported foreign merchandise, on which he gave bonds at the custom house, with McNeill and one Walton as sureties. These bonds were payable 8 April and 9 May, 1812, and were paid, after suit and judgment, by McNeill on 23 August and 23 September, 1813. Sometime afterwards, McMillan removed to New Orleans, where, on 23 August, 1815, the District Court of the First District of the State of Louisiana, having previously taken into
consideration his petition under a law of the State of Louisiana, passed in 1808, praying for the benefit of the cessio bonorum and a full and entire release and discharge as well in his person as property from all debts, dues, claims and obligations then existing, due, or owing by him, the said McMillan, and it having appeared fully and satisfactorily that the requisite proportion of his creditors, as well in number as amount, had accepted the cession of his goods and had granted a full entire discharge as well with respect to his person as to his future effects, it was then and there ordered, adjudged, and decreed by the said court that the proceedings be homologated and confirmed and that the said McMillan be acquitted, released, and discharged, as well his person as his future effects, from the payment of any and all debts, dues and demands, of whatever nature due and owing by him previous to the day of the date of the commencement of said proceedings, to-wit, previous to 12 August, 1815. The house of trade of Sloane & McMillan, of Liverpool, having failed, a commission of bankruptcy issued against both the partners in England on 28 September, 1812, and on 28 November, 1812, they both obtained certificates of discharge, signed by the commissioners and sanctioned by the requisite proportion of creditors in number and value and confirmed by the Lord Chancellor of Great Britain, according to the bankrupt laws of England.
On 1 July, 1817, the present suit was instituted by McNeill, describing himself as a citizen of South Carolina, against McMillan, described as a citizen of Louisiana,
in the District Court of the United States for the District of Louisiana (having circuit court powers), to recover the sum of $700, which McNeill had paid, under the judgments on the custom house bonds, in South Carolina. To this suit, McMillan pleaded in bar his certificates under the Louisiana and English bankrupt laws, to which plea the plaintiff below demurred, the defendant joined in demurrer, and the court gave judgment for the plaintiff, from which judgment the cause was brought by writ of error to this Court.
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the Court that this case was not distinguishable in principle from the preceding case of Sturges v. Crowninshield.
That the circumstance of the state law under which the debt was attempted to be discharged, having been passed before the debt was contracted, made no difference in the application of
the principle. And that as to the certificate under the English bankrupt laws, it had frequently been determined and was well settled that a discharge under a foreign law was no bar to an action on a contract made in this country.