146 U.S. 657, [1903] A.C. 150 (1903)
In March 1888, Collis P. Huntington, a resident of New York, filed a bill in equity in the Circuit Court of Baltimore City.1 He sued Henry Y. Attrill, his wife and three daughters, all residents of Canada, and the Equitable Gas Light Company of Baltimore, a Maryland corporation. The bill sought to set aside transfers of stock in the gas company that Attrill had made for the benefit of his family members. It also sought to charge that stock with payment of a judgment Huntington had recovered against Attrill in New York.
On June 15, 1886, Huntington recovered a judgment for $100,240 in the Supreme Court of the State of New York.2 He had commenced the action on March 21, 1883. The judgment was based on Attrill's conduct as a director of the Rockaway Beach Improvement Company, Limited. This was a New York corporation formed on February 29, 1880, with a capital stock of $700,000. On June 30, 1880, Attrill signed and recorded a certificate stating that the entire capital stock had been paid in, although no part had been paid. Huntington had lent the company $100,000 on June 15, 1880. The company was declared insolvent and dissolved by a New York court in March 1882.3
In April 1882, Attrill acquired a large amount of stock in the Equitable Gas Light Company of Baltimore.4 He transferred 1,000 shares into his name as trustee for his wife and 250 shares into his name as trustee for each of his three daughters. The transfers were made in New York without valuable consideration. Huntington's bill alleged that the transfers were made with intent to delay, hinder and defraud his creditors, including the claim that later became the New York judgment. The transfers were fraudulent under the laws of both New York and Maryland.
The Circuit Court of Baltimore City overruled a demurrer filed by one of Attrill's daughters.5 On appeal, the Court of Appeals of Maryland reversed the order and dismissed the bill. A writ of error was allowed by the Chief Justice of the Court of Appeals of Maryland.6 The ground was that the decision denied a right claimed under the Constitution and statutes of the United States. The Supreme Court of the United States granted review after argument on April 26, 1892.7
Whether the Court of Appeals of Maryland denied full faith and credit to the judgment recovered by Huntington against Attrill in New York?8
The Full Faith and Credit Clause, implemented by the Act of May 26, 1790 (Rev. Stat. § 905), requires that the judgment of a court of one State shall have the same faith and credit in every court within the United States as it has by law or usage in the courts of the State from which it is taken.9 This obligation applies unless the underlying cause of action is penal in the international sense.10
Yes. The Court of Appeals of Maryland denied full faith and credit to the judgment recovered by Huntington against Attrill in New York.11 The Maryland court held that the judgment was for a penalty under the New York statute.12 Therefore, it could not be enforced in Maryland. This was despite the fact that the judgment was conclusive evidence of the debt in New York. The decision led to the dismissal of the bill seeking to set aside the fraudulent transfers of stock in the Equitable Gas Light Company.
The established facts show that the judgment for $100,240 was recovered in New York on June 15, 1886. It was based on Attrill's false certificate as director. The Maryland court refused to give it effect in the equity proceeding filed in March 1888.
The Court of Appeals of Maryland denied full faith and credit to the New York judgment.13
Related opinions on this issue
Chief Justice Fuller dissented on the ground that the Maryland court gave all the force and effect to the judgment in question to which it was entitled.14 He observed that the pleadings were confined to the equities arising out of the original cause of action and that full faith and credit were accorded to the judgment as matter of evidence.15 Fuller concluded that no Federal question was involved and the writ of error should be dismissed, as the Maryland court was entitled to decide whether the obligation was a proper foundation for relief in equity.16
Whether the liability imposed by section 21 of the New York statute of 1875 upon corporate directors for signing a false certificate of capital stock paid in was penal in the international sense?17
A statute is penal in the international sense only if its purpose is to punish an offence against the public justice of the State, rather than to afford a private remedy to a person injured by the wrongful act.18 The test is whether the wrong sought to be redressed is a wrong to the public or a wrong to the individual.19
No. The liability imposed by section 21 of the New York statute of 1875 was not penal in the international sense.2021 The statute makes officers who sign a false certificate liable for all debts of the corporation contracted while they are officers.22 It provides a civil remedy to creditors measured by the amount of their debts.23 As applied to the established facts, Attrill signed the false certificate on June 30, 1880.24
This led to his liability for Huntington's loan of $100,000 made on June 15, 1880, and the judgment recovered thereon.25 This creates a private right for the creditor rather than a punishment for a public wrong.26 It is similar to other remedial statutes that have been enforced across jurisdictions.27
The liability imposed by section 21 of the New York statute of 1875 was not penal in the international sense.