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U.S. Supreme Court


208 U.S. 570

No. 63.

Argued December 10, 11, 1907.
Decided February 24, 1908.

Mr. F. C. Winkler, Messrs. Winkler, Flanders, Bottum, & Fawsett for plaintiff in error.

[208 U.S. 570, 573]   Mr. Joseph B. Doe and Augustus C. Umbreit in propria persona for defendant in error.

[208 U.S. 570, 574]  

Mr. Justice Day delivered the opinion of the court:

The Disconto Gesellschaft, a banking corporation of Berlin, Germany, began an action in the circuit court of Milwaukee county, Wisconsin, on August 17, 1901, against Gerhard Terlinden and at the same time garnisheed the First National Bank of Milwaukee. The bank appeared and admitted an indebtedness to Terlinden of $6,420. The defendant in error Umbreit intervened and filed an answer, and later an amended answer.

A reply was filed, taking issue upon certain allegations of the answer, and a trial was had in the circuit court of Milwaukee county, in which the court found the following facts:

Upon the facts thus found the circuit court rendered a judgment giving priority to the levy of the Disconto Gesellschaft for the satisfaction of its judgment out of the fund attached in the hands of the bank. Umbreit then appealed to the supreme court of Wisconsin. That court reversed the judgment of the circuit court, and directed judgment in favor of Umbreit, that he recover the sum garnisheed in the bank. 127 Wis. 651, 115 Am. St. Rep. 1063, 106 N. W. 821. Thereafter a remittitur was filed in the circuit court of Milwaukee county and a final judgment rendered in pursuance of the direction of the supreme court of Wisconsin. This writ of error is prosecuted to reverse that judgment. At the same time a decree in an equity suit, involving a fund in another bank, was reversed and remanded to the circuit court. This case had been heard, by consent, with the attachment suit. With it we are not concerned in this proceeding.

No allegation of Federal rights appeared in the case until the application for rehearing. In this application it was alleged that the effect of the proceedings in the state court was to deprive the plaintiff in error of its property without due process of law, contrary to the 14th Amendment, and to deprive it of certain rights and privileges guaranteed to it by treaty between the Kingdom of Prussia and the United States. The supreme court of Wisconsin, in passing upon the petition for rehearing and denying the same, dealt only with the alleged invasion of treaty rights, overruling the contention of the plaintiff in error. 127 Wis. 676, 115 Am. St. Rep. 1063, 106 N. W. 821. It is well settled in this court that it is too late to raise Federal questions review- [208 U.S. 570, 578]   able here by motions for rehearing in the state court. Pim v. St. Louis, 165 U.S. 273 , 41 L. ed. 714, 17 Sup. Ct. Rep. 322; Fullerton v. Texas, 196 U.S. 192 , 49 L. ed. 443, 25 Sup. Ct. Rep. 221; McMillen v. Ferrum Min. Co. 197 U.S. 343, 347 , 49 S. L. ed. 784, 787, 25 Sup. Ct. Rep. 533; French v. Taylor, 199 U.S. 274, 278 , 50 S. L. ed. 189, 192, 26 Sup. Ct. Rep. 76. An exception to this rule is found in cases where the supreme court of the state entertains the motion and expressly passes upon the Federal question. Mallett v. North Carolina, 181 U.S. 589 , 45 L. ed. 1015, 21 Sup. Ct. Rep. 730; Leigh v. Green, 193 U.S. 79 , 48 L. ed. 623, 24 Sup. Ct. Rep. 390.

Conceding that this record sufficiently shows that the supreme court heard and passed upon the Federal questions made upon the motion for rehearing, we will proceed briefly to consider them.

The suit brought by the Disconto Gesellschaft in attachment had for its object to subject the fund in the bank in Milwaukee to the payment of its claim against Terlinden. The plaintiff was a German corporation and Terlinden was a German subject. Umbreit, the intervener, was a citizen and resident of Wisconsin. The supreme court of Wisconsin adjudged that the fund attached could not be subjected to the payment of the indebtedness due the foreign corporation as against the claim asserted to the fund by one of its own citizens, although that claim arose after the attachment by the foreign creditor; and, further, that the fact that the effect of judgment in favor of the foreign corporation would be, under the facts found, to remove the fund to a foreign country, there to be administered in favor of foreign creditors, was against the public policy of Wisconsin, which forbade such discrimination as against a citizen of that state.

Alien citizens, by the policy and practice of the courts of this country, are ordinarily permitted to resort to the courts for the redress of wrongs and the protection of their rights. 4 Moore, International Law Dig. 7; Wharton, Confl. L. 17.

But what property may be removed from a state and subjected to the claims of creditors of other states is a matter of comity between nations and states, and not a matter of abso- [208 U.S. 570, 579]   lute right in favor of creditors of another sovereignty, when citizens of the local state or country are asserting rights against property within the local jurisdiction.

In the elaborate examination of the subject in that case many cases are cited and the writings of leading authors on the subject extensively quoted as to the nature, obligation, and extent of comity between nations and states. The result of the discussion shows that how far foreign creditors will be protected and their rights enforced depends upon the circumstances of each case, and that all civilized nations have recognized and enforced the doctrine that international comity does not require the enforcement of judgments in such wise as to prejudice the rights of local creditors and the superior claims of such creditors to assert and enforce demands against property within the local jurisdiction. Such recognition is not inconsistent with that moral duty to respect the rights of foreign citizens which inheres in the law of nations. Speaking of the doctrine of comity, Mr. Justice Story says: 'Every nation must be the final judge for itself, not only of the nature and extent of the duty, but of the occasions on which its exercise may be justly demanded.' Story, Confl. L. 33.

The doctrine of comity has been the subject of frequent discussion in the courts of this country when it has been sought to assert rights accruing under assignments for the benefit of creditors in other states as against the demands of local creditors, by attachment or otherwise in the state where the property is situated. The cases were reviewed by Mr. Justice Brown, [208 U.S. 570, 580]   delivering the opinion of the court in Security Trust Co. v. Dodd, 173 U.S. 624 , 43 L. ed. 835, 19 Sup. Ct. Rep. 545, and the conclusion reached that voluntary assignments for the benefit of creditors should be given force in other states as to property therein situate, except so far as they come in conflict with the rights of local creditors, or with the public policy of the state in which it is sought to be enforced; and, as was said by Mr. Justice McLean in Oakey v. Bennett, 11 How. 33, 44, 13 L. ed. 593, 597, 'national comity does not require any government to give effect to such assignment [for the benefit of creditors] when it shall impair the remedies or lessen the securities of its own citizens,'

There being, then, no provision of positive law requiring the recognition of the right of the plaintiff in error to appropriate property in the state of Wisconsin and subject it to distribution for the benefit of foreign creditors as against the demands of local creditors, how far the public policy of the state permitted such recognition was a matter for the state to determine for itself. In determining that the policy of Wisconsin would not permit the property to be thus appropriated to the benefit of alien creditors as against the demands of the citizens of the state, the supreme court of Wisconsin has done no more than has been frequently done by nations and states in refusing to exercise the doctrine of comity in such wise as to impair the right of local creditors to subject local property to their just claims. We fail to perceive how this application of a wellknown rule can be said to deprive the plaintiff in error of its property without due process of law.

Upon the motion for rehearing the plaintiff in error called attention to two alleged treaty provisions between the United States and the Kingdom of Prussia, the first from the treaty of 1828 [8 Stat. at L. 378] and the second from the treaty of 1799 [8 Stat. at L. 162]. As to the last- mentioned treaty the following provision was referred to:

Article one of the treaty of 1828 between the Kingdom of Prussia and the United States is as follows:

This treaty is printed as one of the treaties in force in the compilation of 1904, p. 643, and has undoubtedly been recognized by the two governments as still in force since the formation of the German Empire. See Terlinden v. Ames, 184 U.S. 270 , 46 L. ed. 534, 22 Sup. Ct. Rep. 484; Foreign Relations of 1883, p. 369; Foreign Relations of 1885, pp. 404, 443, 444; Foreign Relations of 1887, p. 370; Foreign Relations of 1895, pt. 1, 538.

Assuming, then, that this treaty is still in force between the United States and the German Empire, and conceding the rule that treaties should be liberally interpreted with a view to protecting the citizens of the respective countries in rights thereby secured, is there anything in this article which required any different decision in the supreme court of Wisconsin than that given? The inhabitants of the respective countries are to be at liberty to sojourn and reside in all parts whatsoever of said territories in order to attend to their affairs, and they shall enjoy, to that effect, the same security and protection as [208 U.S. 570, 582]   the natives of the country wherein they reside, upon submission to the laws and ordinances there prevailing. It requires very great ingenuity to perceive anything in this treaty provision applicable to the present case. It is said to be found in the right of citizens of Prussia to attend to their affairs in this country. The treaty provides that for that purpose they are to have the same security and protection as natives in the country wherein they reside. Even between states of the American Union, as shown in the opinion of Mr. Justice Brown in Security Trust Co. v. Dodd, supra, it has been the constant practice not to recognize assignments for the benefit of creditors outside the state, where the same came in conflict with the rights of domestic creditors seeking to recover their debts against local property. This is the doctrine in force as against natives of the country residing in other states, and it is this doctrine which has been applied by the supreme court of Wisconsin to foreign creditors residing in Germany. In short, there is nothing in this treaty undertaking to change the well-recognized rule between states and nations which permits a country to first protect the rights of its own citizens in local property before permitting it to be taken out of the jurisdiction for administration in favor of those residing beyond their borders.

The judgment of the Circuit Court of Milwaukee County, entered upon the remittitur from the Supreme Court of Wisconsin, is affirmed.

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