William Hunter, Appellant v. the United States, Appellees

• Citation: 5 Pet. 173,8 L.Ed. 86,30 U.S. 173
• Parties: WILLIAM HUNTER, APPELLANT v. THE UNITED STATES, APPELLEES
• Decision Date: 01 January 1831
• Court: United States Supreme Court

30 U.S. 173

5 Pet. 173

8 L.Ed. 86

WILLIAM HUNTER, APPELLANT v. THE UNITED STATES, APPELLEES.

January Term, 1831

APPEAL from the circuit court for the district of Rhode Island.

The appellant, William Hunter, was the assignee of Archibald Crary and Frederick Crary, under the insolvent law of Rhode Island. The Crarys obtained the benefit of that law in June 1809. William Hunter was duly appointed one of their assignees, and is now the sole surviving assignee. One Jacob Smith had, as surety in a custom house bond, been compelled to pay to the United States for the Crarys, about two thousand one hundred and twenty-five dollars. This payment was made in May 1808. Jacob Smith soon afterwards became himself insolvent, viz. in October 1809; obtained the benefit of the same insolvent law: and William Hunter is now his sole surviving assignee. Jacob Smith and one William M'Gee were sureties for William Peck as collector of taxes for the Rhode Island district, and the United States obtained a judgment for a large sum, viz. thirteen thousand five hundred and eight dollars, against the principal and sureties in August 1811. The suit was commenced in May of the same year. Upon his commitment to prison, by force of the execution issued in his case, Smith petitioned the then secretary of the treasury for relief; in which petition he stated, that he was reduced to poverty, that he had obtained the benefit of the Rhode Island insolvent law, and surrendered all his property as compelled by that law to his assignee. He states in that petition, that his own insolvency was hurried, if not occasioned by his having paid considerable sums on account of suretyship at the custom house; and in particular this very sum of two thousand some hundred dollars for the Crarys, in the year 1809. Upon this full statement of the case, relief was granted him, and he was discharged from prison in compliance with a warrant from the treasury, on the 17th day of October 1811.

Before his discharge, Smith executed an assignment of his property to the United States. The assignment purports to convey all and the same property, which was conveyed by his previous assignment under the insolvent law. He recites and includes his sworn inventory under the insolvent law, and refers to his demand against the Crarys.

After the release of Smith, the surety, the United States in 1812 imprisoned Peck, the delinquent principal; and congress discharged him from that imprisonment, upon his assignment and conveyance of all his estate, real and personal which he then owned or might be entitled to. This was done on the 12th of June 1812.

In July 1824, under the peculiar circumstances of delay, difficulty, and embarrassment, set forth in the answer, the assignee of the Crarys recovered and received from the United States under their treaty with Spain, and in conformity to statutes by them enacted, the sum of money as stated in the bill, and as admitted in the answer.

The appellant in his answers contended, that so much of this sum as by operation of law belonged to Smith, he, as the assignee of Smith, was bound to pay over to the ascertained creditors of Smith, for whose benefit the assignment under the state insolvent law was made. In the original bill the claim of the United States was rested upon the assignment made to them by Smith: but afterwards an amended bill was filed, in which their right to payment of the whole amount of the judgment against Smith is asserted on their right of priority under the laws of the United States.

The circuit court of Rhode Island give a decree in favour of the United States, and the defendant appealed to this court.

The case was argued by Mr Hunter for the appellant; and by Mr Berrien, attorney general, for the United States.

For the appellant it was contended,

1. That so far as the claim of the United States rests upon the assignment made to them by Smith, it is unavailing; as Smith had when the same was executed nothing to convey. That assignment was nominal and voluntary, and is opposed to a previous assignment well known to the United States, and referred to in the assignment to the United States.

2. So far as the claim of the United States is made to depend on the law of priority, that law is not applicable to this case.

3. If the law of priority is applicable to such a case as this, it has been by various, deliberate and definite acts on the part of the United States, waved and renounced.

4. The release of Peck the principal by the act of congress is, combined with the circumstance of the case, a release of Smith, the surety.

5. The absence of all demand on the part of the United States for so many years implies a relinquishment of their claim, and subjects it to such imputations of staleness and after thought, as are incompatible with the principles of benignity, policy and justice, which actuate courts of justice.

There is no equity in the plaintiff's bill, and an unwarrantable resort to a chancery jurisdiction.

Mr Hunter argued that the original bill and the amended bill set up different grounds of claim. The original bill cannot be suppressed, and must be taken into view by the court; as it shows the ground of the claim of the United States to have been exclusively the assignment made by Jacob Smith in 1811, under the law authorizing the discharge of Smith by the secretary of the treasury.

The suit by the United States against Smith as surety of Peck was commeneed in May 1811, and judgment obtained and execution issued the same year. The bill states the insolvency of Smith in 1811. Smith had paid for the Crarys the amount which the United States ask to recover, and this was one of the known causes of his insolvency, and so represented in his petition for a discharge. The bond of Peck to the United States, in which Smith was surety, was signed some years before; and when Smith was discharged by the state insolvent code, nothing was due to the United States by him. Thus, when the claim of the United States was established, the claim of Smith on the Crarys had passed under his assignment made in 1808, and belonged to his creditors at the time of his discharge.

The acts of congress, which give the United States a right to priority of payment, apply to debts due at the time of the insolvency of their debtors. To sustain the right of priority there must be a debt actually due.

When the judgment against Jacob Smith was obtained by the United States, he had no property upon which this ascertained, and not until then existing, debt to the United States could attach; all his property had passed from him under the insolvent law of Rhode Island, and belonged to his creditors. The date of the inventory, 1809, fixes the period of the insolvency; and from that time in judgment of law, as well as according to the provisions of the Rhode Island statute, the assignee of the insolvent is deemed in possession. These principles are also recognized in The United States vs. Bryan and Woodcock, 9 Cranch, 374; 3 Peters's Condens. Rep. 436. The United States vs. Fisher, 2 Cranch, 258; 1 Peters's Condens. Rep. 421.

There was no notice to the assignee under the insolvent law, of the claim of the United States. The want of notice of this claim is fatal. The lien of the United States is a latent invisible claim. The act of taking the assignment is evidence that the claim of priority did not exist; it superseded the right of priority: both cannot stand together.

The priority of the United States was also waved by the payment of the money to the assignee of Crary under the award of the commissioners of the United States, acting under the Florida treaty. The lien of the United States was at common law, and the act of congress relative to payments made under the Florida treaty, authorised the United States to retain for money due to them by those whose claims were allowed by the commissioners. They did not retain this money, and thus they relinquished their rights. They had a full knowledge of this claim belonging to their debtor Smith, and that it had passed to his assignee under the insolvent law; and therefore no allegation of mistake can be made. Cited Jacob and Walker, 262. 1 Gallison, 392.

The release of Peck, the principal, was a release of Smith as his surety: after that release the surety could not proceed against him. After the judgment on the bond the parties to that judgment became co-debtors; and the release of Peck from imprisonment was an extinguishment of the whole debt due upon the judgment. 2 Dane's Ab. 651. 2 Dall. 373. 3 Serg. and Rawle, 465, 6. 13 Mass. 148. 16 Mass. 581. 8 Mass. 40. 6 Term Reports, 525. 2 Bro. Chan. Rep. 164. 2 Ves. Jun. 540. 17 John. 384. 13 John. 174. 16 John. 77. 10 John. 587, 174, 383. 15 John. 435. 6 Ves. 607. 6 Dow, 238.

The delay of the United States to proceed against their principal debtor, Peck, discharges the surety. The principle of nullum tempus, will not protect the claim of the United States. Here there has been more than delay; acts have been done which show the purposes of the delay, and that it was the purpose to discharge the surety. The bond was executed in 1802; no suit was instituted until 1811, and this bill was not filed until 1825. On principles of peace, acquiescence and security, a release will be presumed. Then all these combine with laches and positive acts. The assignee of Smith has been permitted to procure the payment of the claim under the treaty.

The United States have a clear remedy at law, and connot therefore proceed in a court of chancery. By this proceeding the defendant is deprived of a trial by jury, and is subjected to heavy expenses. No discovery was required, and the claim of the United States rests upon testimony in their own possession; as all they seek to recover would be obtained, if any claim exists, in an action for money had and received, that form of action should have been resorted to. The provisions of the judiciary act, which require that...