Mr. Justice FIELD not being present at the argument of this case took no part in the decision.

HARLAN, J., dissenting. The Canada Southern Railway Company is a corporation created and organized under the laws of the dominion of Canada. It was given, by its charter, power to borrow in Canada or "elsewhere," at a rate of interest not exceeding 8 per cent. per annum, such sums of money as might be necessary to complete, maintain, or work its railway; to issue bonds therefor, payable eitber in currency or in sterling, at such place, within Canada "or without," as might be deemed advisable; to sell the same at such prices or discount as might be deemed expedient or necessary; and to hypothecate, mortgage, or pledge the lands, tolls, revenues, and other property of the company for the payment of the said sums and the interest thereon. In pursuance of the authority thus conferred, the company, in 1871, issued its bonds in the customary form of negotiable securities, and made them payable in the year 1906, at the office of the Union Trust Company in the city of New York, with interest at the rate of 7 per cent. per annum, coupons being given for such interest. These bonds, with their interest, were secured by a deed of trust to William L. Scott and Kenyon Cox, citizens of the United States, conveying to them, and their successors in the trust, the railway of the company, its lands, tolls, revenues, present and future, property, effects, franchises, and appurtenances. That deed declared that the bonds, and also the rights and benefits arising therefrom, should pass by delivery. In 1873 the company issued certain bonds, of the denomination of $105 each, for the purpose of funding unpaid coupons. They were made payable, principal and interest in gold, at the office of the Union Trust Company in the city of New York. In order to effect this arrangement for funding, the latter company was made a trustee to deliver the bonds of $105 each to the parties surrendering the unpaid coupons. Of some of these bonds defendants in error, who are citizens of New York, became the holders. They were delivered to them at the city of New York Upon their non-payment at maturity, the present suits at law were brought in one of the courts of that state, and judgment asked for the amount of the bonds. The railway company appeared, and upon its petition the suits were removed into the circuit court of the United States for the southern district of New York. In the latter court an answer was filed, to which the plaintiff demurred. The demurrer being sustained and the company declining to answer further, judgment was rendered for the amount due on the bonds in suit.

What is the defense which my brethren have declared to be sufficient to deprive the plaintiffs of their right to judgment? That the company had paid the bonds in suit, in whole or in part? No. That, by the terms of the contract, it was discharged from liability to pay them? By no means. Its defense is placed wholly upon ar

act of the parliament of Canada, ratifying a certain scheme or ar rangement, which is inconsistent with the contract between the parties, and to which a large minority of the bondholders and stockholders have never given their assent. That scheme provided for the surrender of the old bonds, bearing 7 per cent. interest, and the suh. stitution of other bonds, maturing at a later date, and bearing a less rate of interest-3 per cent. for the first three years, and 5 per cent. thereafter, the interest on the new bonds being guarantied by the New York & Hudson River Railroad Company. To this scheme the circuit court finds as a fact that the plaintiffs never assented. They stood, as they had the right to do, upon their contract with the company. But the parliament of Canada declares that this scheme "shall be deemed to have been assented to by all the holders of the original first mortgage bonds of the company," and that this arrangement "shall be binding upon all the holders of the first and second mortgage bonds and coupons and bonds for interest thereon respectively, and upon all the shareholders of the company."

This defense, asserting the power of a foreign government, by its legislation, to destroy the contract rights of citizens of the United States, was well characterized, as it seems to me, by the learned circuit judge who tried this case, as a most extraordinary one to be made in a country where the obligation of contracts against impairment by legislative enactment, as well as the rights of persons and property, are carefully guarded by constitutional provisions. In this country, no state can pass any law impairing the obligation of contracts; the constitution of the United States forbids such legislation. And the principle is founded in justice, independently of this constitutional provision. The statute of Canada here relied on disregards this principle, and openly and in terms impairs the obligation of the contract which each holder of these bonds has with this foreign railway company. It assumes, without a hearing and without the consent of those who hold its bonds, to discharge the railway company from all liability thereon. If any state in this Union should assume to pass a law with reference to a railway corporation she had created, requiring the holders of its bonds, for which they had paid value, to surrender them and take in their place others of less value, and payable at a different time, our courts, federal and state, would be constrained, by their obligation to support the constitution of the United States, to declare such legislation to be in conflict with that instrument. More than that, a citizen of Canada, or even a railway corporation of that dominion, could have the benefit, in our courts, of the constitutional inhibition upon state laws impairing the obligation of contracts.

In the Sinking-fund Cases, 99 U. S. 718, we said that while the United States are not included within the constitutional prohibition which prevents states from passing laws impairing the obligation of contracts, yet "equally with the states they are prohibited from de

priving persons or corporations of property without due process of law. They cannot legislate back to themselves, without making compensation, the lands they have given this corporation to aid in the construction of its railroad. Neither can they by legislation compel the corporation to discharge its obligations in respect to the subsidy bonds otherwise than according to the laws of the contract already made in that connection. The United States are as much bound by their contracts as are individuals. If they repudiate their obligations, it is as much repudiation, with all the wrong and reproach that term implies, as it would be if the repudiator had been a state, or a municipality, or a citizen. No change can be made in the title created by the grant of the lands, or in the contract for the subsidy bonds, without the consent of the corporation.

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But the laws of Canada, by the judgment now rendered, are given effect here, to the injury of our own citizens, notwithstanding those laws arbitrarily deprive them of their contract rights. This railroad company, under express authority conferred by its charter, executed bonds payable, as we have seen, in New York, and secured them by mortgage executed to citizens of the United States. It sent them to this country for sale and our people invested their money in them. Intrenched behind the arbitrary edict of a foreign government, it now says to American holders of its bonds that it will not comply with its contract; that if they do not surrender those securities and take others of less value they shall not receive anything.

It is claimed by my brethren that the Canada statute provides a scheme which, in its practical effect, resembles a composition in bankruptcy. It seems to me that there are several answers to this suggestion: (1) It does not purport to be a scheme of bankruptcy in the sense of the word "bankruptcy" as used either in England or America. (2) It is unlike a composition in bankruptcy in this: that whereas a composition is never had except upon notice, so that creditors may have their day in court, with opportunity to show that the proposed composition should not be made, here, no such opportunity was given to the holders of this company's bonds, in any court or other tribunal, to show that the arrangement which the Canadian parliament sanctioned ought not, in justice, to be made; but the arrangement was, by legislative enactment, made absolutely binding upon every bondholder and stockholder, even those who are citizens of other countries. It is said that the Canadian scheme is practically nothing more than might be accomplished in foreclosure proceedings instituted in one of our own courts by or at the instance of the assenting bondholders. My answer is that all bondholders and stockholders have their day in court in such proceedings; and when, upon the judicial sale of a railway and its appurtenances, they fail to realize the full amount of their claims, they are not deprived of their property without due process of law.

Reference is made by the court to the act of the English parliament

which authorizes such arrangements to be effected through courts of chancery. But, in such proceedings, all interested have their day in court, with opportunity to show that the proposed scheme should not receive judicial sanction. In my judgment, the discharge in Canada, by statute, of this foreign railway company from all obligation to pay these bonds according to their terms-whatever may be the binding force of such legislation upon persons resident in that country, or upon those who may assert their rights under the original contract in the courts of Canada-can have no extraterritorial effect; certainly none as to persons who reside in a different state or country, where the contract is to be performed, and in the courts of which it becomes the subject of litigation.

In Baldwin v. Hale, 1 Wall. 223, it was held that a discharge obtained under the insolvent law of one state of the Union is not a bar to an action on a note, even when given in and payable in the same state, the party to whom the note was given having been and being of a different state. Story, in his Conflict of Laws, says that should a state provide that the discharge of an insolvent debtor under her own laws was a discharge of all his contracts, even of those made in a foreign country, such a discharge, although binding upon the courts of that state, would, or might be, mere nullities in other countries. Section 348. Chancellor KENT, referring to state insolvent laws, in operation when there is no national bankrupt statute, says:

"The discharge under a state law is no bar to a suit on a contract existing when the law was passed, nor to an action by a citizen of another state in the courts of the United States, or of any other state than that where the discharge was obtained. The discharge under a state law will not discharge a debt due to a citizen of another state who does not make himself a party to a proceeding under the law. It will only operate upon contracts made within the state between its own citizens or suitors, subject to state power. The doctrine of the supreme court of the United States, in Ogden v. Saunders, 12 Wheat. 213, is that a discharge under the bankrupt law of one country does not affect contracts made or to be executed in another." 2 Kent, 392, 393.

Such is the unvarying current of authority in this country. If a discharge by an insolvent law of one of the United States does not affect the contract rights of citizens of another state, how much stronger is the case where, by the terms of the contract, it is to be performed in a state or country other than that in which the discharge is granted. My brethern suggest, if I do not misapprehend their opinion, that the parties here suing must be understood to have purchased these bonds with reference to the power which the Canadian government has over corporations of its own creation. But this view, it seems to me, overlooks the principle, founded, says Story, in natural justice-and applicable here, even if the bonds in suit had been purchased and delivered in Canada-that "where the contract is, either expressly or tacitly, to be performed in another place than where made, the rule is, in conformity with the presumed intention of the parties, that the contract, as to its validity, nature, obligation, and interpretation, is to be gov

erned by the law of the place of performance." Confl. Laws, § 280; Andrews v. Pond, 13 Pet. 65; Cook v. Moffat, 5 How. 307. Why should it not be presumed that the parties to these contracts made them with reference as well to that principle as to another principle which is thus forcibly stated by Kent:

"The laws of other governments have no force beyond their territorial limits; and if permitted to operate in other states, it is upon a principle of comity and only when neither the state nor its citizens would suffer any inconvenience from the application of the foreign law." 2 Kent, 406.

Story announces the same doctrine in the following language: "And even in relation to a discharge according to the laws of the place where the contract is made, there are (as we have seen) some necessary limitations and exceptions ingrafted upon the general doctrine which every country will enforce, whenever those laws are manifestly unjust, or are injurious to the fair rights of its own citizens. It has been said by a learned judge with great force: As the laws of foreign countries are not admitted ex proprio vigore, but merely ex comitate, the judicial power will exercise a discretion with respect to the laws, which they may be called upon to sanction; for should they be manifestly unjust, or calculated to injure their own citizens, they ought to be rejected. Thus, if any state should enact that its citizens should be discharged from all debts due to creditors living without the state, such a provision would be so contrary to the common principles of justice that the most liberal spirit of comity would not require its adoption in any other state.""

In 1 Burg. Col. & For. Laws, 5, the author says:

"It is established as a principle of international jurisprudence that effect should be given to the laws of another state whenever the rights of a litigant before its tribunals are derived from, or are dependent on, those laws, and when such recognition is not prejudicial to its own interests or the rights of its own subjects."

The same view is thus expressed by another American author:

"It [the state] must consult sound morals and the interests and public polIcy of its own people, and if to enforce the laws of another state or country would lead to their infringement, it would be treacherous to its own duties to lend aid to their execution." 1 Daniel, Neg. Inst. § 866.

In Smith v. Buchanan, 1 East, 6, 11, the question was whether a discharge of an English contract under an insolvent act of the state of Maryland, where the debtor resided, was a bar to a suit upon that contract in the courts of England. The point was there made that the discharge under the laws of Maryland was analagous and equiv alent to a certificate of bankruptcy in England; and having been issued by a competent jurisdiction in the case of subjects of Maryland residing there at the time, though it had not the binding force of law in England, yet the courts there should give effect to it "by adoption and the courtesy of nations." But to that argument the court, speaking by Lord KENYON, said: "This is the case of a contract lawfully made by a subject in this country, which he resorts to a court of justice to enforce; and the only answer is that a law has been made