295 F. 331 (D.Or. 1923), United States Fidelity & Guaranty Co. v. Bramwell

Citation:295 F. 331
Party Name:UNITED STATES FIDELITY & GUARANTY CO. v. BRAMWELL, Superintendent of Banks for State of Oregon.
Case Date:October 01, 1923
Court:United States District Courts, 9th Circuit, District of Oregon

Page 331

295 F. 331 (D.Or. 1923)



BRAMWELL, Superintendent of Banks for State of Oregon.

United States District Court, D. Oregon.

October 1, 1923

Page 332

Dey, Hampson & Nelson and Geo. L. Buland, all of Portland, Or., for plaintiff.

John P. Kavanaugh, of Portland, Or., and H. C. Merryman, of Klamath Falls, Or., for defendant.

BEAN, District Judge.

The laws of the United States provide that, where any person indebted to the United States is insolvent, the debt due it shall be first satisfied (R.S. Sec. 3466 (Comp. St. Sec. 6372)), and that, where the principal in any bond given the United States is insolvent, a surety who pays the money due on the bond shall have like priority as the United States (R.S. Sec. 3468 (Comp. St. Sec. 6374)). With this law in force, the United States, through the superintendent of the Klamath Indian reservation, caused to be deposited from time to time in the First State & Savings Bank of Klamath Falls moneys received by such officer from the sale of tribal land, pasturage and trespass on tribal lands, rent and trespass on allotted lands, sale of Indian allotments, and other miscellaneous moneys, and the bank, with plaintiff as surety, executed and delivered to the United States a bond in the penal sum of $100,000 as security for such deposits and interest thereon.

On January 28, 1922, there was so on deposit in the name of the superintendent the sum of about $95,000. On that day the bank was insolvent, and the state superintendent of banks took charge of its assets for the purpose of liquidation. Thereafter the plaintiff paid the United States the amount of such deposit and interest, amounting to $96,932.30, and duly presented for preference in the liquidation proceedings a claim for the amount so paid. The preference was denied, but the claim was allowed as a general claim. The plaintiff thereupon commenced this suit for a decree requiring the state superintendent of banks to pay its claim in full prior to the payment of unsecured and unpreferred creditors of the bank.

The position of the defendant is that the statute giving the United States priority was designed to protect the public revenues, so that the government could sustain its burdens and pay its obligations, and since the debt here in question was for money held by the United States for the use and benefit of the Indians residing...

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