269 U.S. 483 (1926), 192, Bramwell v. United States Fidelity & Guaranty Company

Docket Nº:No.192
Citation:269 U.S. 483, 46 S.Ct. 176, 70 L.Ed. 368
Party Name:Bramwell v. United States Fidelity & Guaranty Company
Case Date:January 11, 1926
Court:United States Supreme Court
 
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Page 483

269 U.S. 483 (1926)

46 S.Ct. 176, 70 L.Ed. 368

Bramwell

v.

United States Fidelity & Guaranty Company

No.192

United States Supreme Court

Jan. 11, 1926

Argued November 23, 1925

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

1. Indebtedness of a bank for Indian moneys, individual and tribal, deposited with it by the Superintendent of an Indian Reservation and secured by a bond given by the bank to the United States is an indebtedness to the United States within Rev.Stats. § 3466. P. 487.

2. Section 3466, Rev.Stats., is to be liberally construed in favor of the United States. Id.

3. The Priority Act extends to all debts due the United States from insolvent living debtors when their insolvency is shown in one of the ways specified in § 3466. P. 487.

4. The specified ways include all cases in which the insolvent debtor makes a voluntary assignment of his property, without regard to the purpose or manner of the assignment, and all in which an act of bankruptcy is committed under the laws of a state or a national bankruptcy law, and the Act does not expressly require that the debtor should be divested, or that the person on whom is imposed the duty to pay the United States first, shall have become invested, with the title to the debtor's property. P. 488.

5. An act may be "an act of bankruptcy" within § 3466 although the debtor, being a bank, is excepted from the operation of the Bankruptcy Law. P. 489.

6. Construed together, §§ 3466 and 3467 mean that a debt due the United States is required first to be satisfied when possession and control of the insolvent's estate are given to any person charged with the duty of applying it to payment of the debts of the insolvent as the rights and priorities of creditors may be made to appear. P. 490.

7. Where the property and business of an Oregon bank were placed, through a resolution of its directors, in the exclusive possession and control of the state Superintendent of Banks to be administered and disposed of for the benefit of creditors pursuant to Oregon Ls. §§ 6220-6223, under which the Superintendent performs the function of assignee, receiver, or trustee for the liquidation of the debts

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of the insolvent, held that, within the meaning of the Priority Act, there was a voluntary assignment, and also an act of bankruptcy within the definition of the Bankruptcy Law. P. 490.

8. General expressions in an opinion are to be taken in connection with the case under consideration. P. 489.

299 F. 705 affirmed.

Appeal from a decree of the circuit court of appeals which affirmed a decree of the district court (295 F. 331) in favor of the Guaranty Company in its suit to require the Oregon Superintendent of Banks to pay first, out of the assets of an insolvent bank, a debt to the United States which had been assigned to the plaintiff.

Page 485

BUTLER, J., lead opinion

MR. JUSTICE BUTLER delivered the opinion of the Court.

January 28, 1922, the Superintendent of the Klamath Indian Reservation had on deposit with the First State & Savings Bank of Klamath Falls, Oregon, $96,000, Indian moneys, individual and tribal. The bank had given a bond to the United States, with appellee as surety, to secure the payment of the deposit. It was insolvent,

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and, on that day, suspended payment. Because of its condition, the board of directors passed a resolution giving full control of its affairs to appellant. Pursuant to the laws of the state, he took possession and control of its property and business for the purpose of liquidation. Appellee paid the amount of the deposit to the superintendent of the reservation, and received from the United States an assignment of its claim against the bank, and appellee has the priority, if any, that belonged to the United States. R.S. § 3468. It claimed that, under R.S. § 3466, it should be paid in full out of the bank's assets prior to any payment on account of unsecured or unpreferred claims. Appellant denied priority, but allowed the claim as one not preferred. Appellee brought this suit in the District Court of Oregon to enforce priority. The decree went in its favor (295 F. 331), and was affirmed by the circuit court of appeals. 299 F. 705. The case is here on appeal. Section 241, Judicial Code.

Section 3466 provides:

Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied, and the priority hereby established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed.

Section 3467 provides:

Every executor, administrator, or assignee, or other person, who pays any debt due by the person or estate from whom or for which he acts before he satisfies and pays the debts due to the United States from such person or estate shall become answerable in his own person and estate for the debts so due to

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the United States, or for so much thereof as may remain due and unpaid.

[46 S.Ct. 177] It was admitted that the total value of the bank's assets was less than its debts, and that it was insolvent. Section 6221, Oregon Laws; National Bankruptcy Act of July 1, 1898, c. 541, § 1, 30 Stat. 544. The lower courts rightly held that the amount owed by the bank on account of the deposit in question was a debt due to the United States.

Appellee is entitled to priority if, within the meaning of § 3466, the bank made a voluntary assignment of its property or committed an act of bankruptcy.

That section is to be liberally construed. In Beaston v. Farmers' Bank, 12 Pet. 102, Mr. Justice McKinley, speaking for the Court, said (p. 134):

All debtors to the United States, whatever their character, and by whatever mode bound, may be fairly included within the language used . . . And it is manifest that Congress intended to give priority of payment to the United States over all other creditors in the cases...

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