Lloyd v. Matthews
155 U.S. 222 (1894)

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U.S. Supreme Court

Lloyd v. Matthews, 155 U.S. 222 (1894)

Lloyd v. Matthews

No. 81

Argued and submitted November 19, 1894

Decided December 3, 1894

155 U.S. 222

Syllabus

In this Court, acting under its appellate jurisdiction, whatever was matter of fact in a state court whose judgment or decree is under review is matter of fact here.

Whenever a court of one state is required to ascertain what effect a public act of another state has in that other state, the law must be proved as a fact.

When in the courts of a state the validity of a statute of another state is not drawn in question, but only its construction, no federal question arises.

The decision by the highest court of the Kentucky that the laws of the Ohio permit an insolvent debtor to prefer a creditor, which was made in a case in which the assignee of the insolvent, a party to the suit contesting the preference, failed to plead the construction given the Ohio statutes by the courts of Ohio or to introduce the printed

Page 155 U. S. 223

books of cases adjudged in the Ohio, or to prove the common law of that state by the parol evidence of persons learned in that law, or to put in evidence the laws of that state as printed under the authority thereof, or a certified copy thereof, raises no federal question.

Hattie A. Matthews held the demand note of E. L. Harper for $5,000, on which the interest had been paid to January 1, 1882. June 21, 1887, Harper was the owner of some shares of stock in the Fidelity Building, Savings & Loan Company of Newport, Kentucky, worth about $5,000, which he, being insolvent, transferred on the morning of that day to Miss Matthews in part payment of the debt by blank endorsement in the building company's book. Afterwards the name of J. H. Otten was inserted as a proper person to obtain the money, and for this reason he was made a party to these proceedings, though having no real interest therein. A few hours after the transfer, Harper made an assignment of all his property for the benefit of his creditors under the insolvent laws of Ohio, and, the person named as assignee failing to qualify, H. P. Lloyd, the present plaintiff in error, was appointed, by the proper court, such assignee. Certain creditors of Harper brought suit in the Chancery Court of Campbell County, Kentucky, on their several debts, and attached the stock as the property of Harper. These cases were consolidated, and while they were pending, September 16, 1887, Miss Matthews and Otten filed their joint petition to be made parties defendant, which was done. They alleged the ownership by Harper of the stock; the transfer by endorsement in the book, which was made an exhibit; that Miss Matthews was a creditor of Harper to an amount equal to the face value of the stock; that the transfer of the stock was made some hours before the execution of the deed of assignment by Harper, and was bona fide, and for a valuable consideration, and passed all Harper's interest; that Harper was a citizen and resident of the State of Ohio at the time of the assignment and theretofore; that

"by the laws in existence at that time in said State of Ohio, debtors had the right to make preferences in the payment of their creditors, either in the deed of assignment or by paying them theretofore, in such a way as they saw proper;"

that

Page 155 U. S. 224

Lloyd had been made a party as assignee, and was claiming the stock as part of Harper's estate, while the plaintiffs in the consolidated cases asserted their claims under the attachments, and praying that the stock be adjudged to Miss Matthews. January 14, 1888, Miss Matthews and Otten filed a joint amended answer, attaching the note as an exhibit, and making this and their former petition a cross-petition. On the same day Lloyd, assignee, filed a reply to the answer and answer to the cross-petition. This pleading contained five paragraphs. The first denied that Harper owed Miss Matthews anything at the time the stock was assigned; admitted that at the time of the execution of the assignment, Harper and Miss Matthews were both citizens and residents of the State of Ohio; denied "that at the time of making said assignment debtors had by the laws of the State of Ohio the right to prefer their creditors in the deed of assignment." The second paragraph asserted that the transfer and conveyance of the stock to Otten by Harper was made for the purpose and with the intent to defraud the creditors of Harper of their just and lawful debts, and that such transfer and assignment was fraudulent and void under and by virtue of section 4196 of the Revised Statutes of the State of Ohio, which provided as follows, to-wit:

"Every gift, grant, or conveyance of lands, tenements, hereditaments, rents, goods or chattels, and every bond, judgment or execution made or obtained with intent to defraud creditors of their just and lawful debts or damages, or to defraud or to deceive the person or persons purchasing such lands, tenements, hereditaments, rents, goods or chattels, shall be deemed utterly void and of no effect."

The third paragraph denied any consideration for the transfer. The fourth alleged the transfer to be fraudulent and done with intent to hinder and delay Harper's creditors. The fifth averred that the transfer was made by Harper with the intent to prefer Miss Matthews, if she was a creditor, which defendant denied, over his other creditors, and was void under section 6343 of the Revised Statutes of the State of Ohio, which reads as follows:

Page 155 U. S. 225

"All assignments in trust to a trustee or trustees, made in contemplation of insolvency with the intent to prefer one or more creditors, shall inure to the equal benefit of all creditors in proportion to the amount of their respective claims, and the trusts arising under the same shall be administered in conformity with the provisions of this chapter."

On May 18, 1888, Miss Matthews filed reply to the original answer and cross-petition of Lloyd, trustee, as follows:

"The defendant Hattie A. Matthews, for reply to answer and cross-petition of H. P. Lloyd, says she admits E. L. Harper was insolvent when he assigned the building association stock to her."

"She admits that he assigned the stock to her with the intention to prefer her to the exclusion of the creditors, but, as was stated in her original pleadings, this was allowable under the laws of Ohio."

"She denies that under the provisions of the laws which are set out in said pleading of Lloyd, to which this is a reply, there is anything which invalidates the transfer of the stock to this defendant, the same involved in the case."

"Wherefore the defendant prays as in her original pleadings, and for general relief."

The chancery court rendered judgment in favor of Lloyd, trustee, for the full value of the stock, amounting as a money demand against the building association to the sum of $4,914.89, and Miss Matthews and Otten appealed to the Court of Appeals of the State of Kentucky, which reversed the judgment of the chancery court and remanded the cause, with directions to render judgment in favor of Miss Matthews in conformity to the opinion. Matthews v. Lloyd, 89 Ky. 625.

To review this judgment, a writ of error from this Court was allowed.

Page 155 U. S. 226

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