The United States v. Hooe, Et Al

Citation2 L.Ed. 370,3 Cranch 73,7 U.S. 73
PartiesTHE UNITED STATES v. HOOE, ET AL. *
Decision Date23 February 1805
CourtU.S. Supreme Court

The material facts appearing upon the record are, that Fitzgerald, upon being appointed collector, executed a bond to the United States, on the 10th of April, 1794, with Hooe as surety, in the penalty of 10,000 dollars, for the faithful performance of the duties of his office. In April, 1798, he was found to be greatly in arrears, and upon a final adjustment of his accounts, on the 15th of August, 1799, the balance against him was 57,157 dollars. On the 16th of January, 1799, Hooe having knowledge that Fitzgerald was largely indebted to the United States, but believing that he had sufficient property to discharge the debt, and Fitzgerald being desirous of borrowing money from the bank of Alexandria to meet the drafts of the treasury of the United States, and for other purposes, made a deed of trust to W. and J. C. Herbert, reciting that Hooe had become surety for Fitzgerald, in the bond to the United States, and Fitzgerald proposing, when he should wish to obtain a loan of money from the bank of Alexandria, to draw notes to be indorsed by Hooe, whereby the latter might be liable and compelled to pay the same, and the former being desirous of securing and indemnifying Hooe from all damages, costs and charges which he might at any time thereafter be subject and liable to by reason of any misconduct of Fitzgerald in the discharge of his duty as collector, or for or on account of any notes drawn by him for his particular use and accommodation, and indorsed by Hooe, and negotiated at the bank of Alexandria. The indenture then witnessed, that for those purposes, and in consideration of the trusts and confidences therein after expressed, &c. and of one dollar, &c. Fitzgerald bargained and sold, &c. to the trustees, W. and J. C. Herbert, the real estate therein described, to have and to hold the same to them and the survivor of them, &c. 'in trust, to and for the uses and purposes herein after mentioned, and to and for no other use and purpose whatsoever; that is to say, in case he the said John Fitzgerald shall neglect any part of his duty as collector of the said port of Alexandria,' &c. 'or in case any note or notes so drawn, indorsed and negotiated at the bank of Alexandria, for the particular use and accommodation of him, the said John Fitzgerald, shall not be taken up and discharged by him when the same shall become payable; that in either case, as soon as any demand shall be made upon him, the said R. T. Hooe,' &c. 'for the payment of any sum or sums of money which ought to be paid by the said John Fitzgerald,' &c. then the trustees should, upon notice given them by Hooe, of such demand, proceed to sell the property for ready money, and after paying the expenses of sale, should pay and satisfy the sum or sums of money so demanded of Hooe, either as security for Fitzgerald's due and faithful execution of the office of collector of the said port of Alexandria, or as indorsor of any note or notes so drawn by Fitzgerald, 'and negotiated at the bank of Alexandria for the particular accommodation of the said John Fitzgerald;' and lastly, to pay over to him the surplus. And in further trust that if Fitzgerald should duly keep Hooe indemnified, &c. and should duly pay the several notes which should be so drawn by him and indorsed by Hooe, and negotiated at the said bank, 'for the particular accommodation of him, the said John Fitzgerald, as the same shall become payable,' then the trustees should reconvey, &c.

Hooe had indorsed Fitzgerald's notes at the bank to a large amount, and at the time of his death there were unpaid two notes of 1000 dollars each, and one of 1800 dollars, one of which for 1000 dollars, together with interest upon the whole, amounting to 288 dollars and 94 cents, was afterwards paid by Mr. Keith, one of the executors, in order to prevent a sale of the property under the trust. There was also evidence tending to show that the money borrowed from the bank upon Hooe's indorsement, was applied in discharge of warrants drawn by the treasury upon Fitzgerald.

Fitzgerald died in December, 1799, having by his will directed his real estate to be sold for the payment of his debts. There was no positive evidence of his insolvency.

The bill charged that he died insolvent, and that the United States had a right, in preference to all others, to apply his property to the discharge of the debt, and if there should be a deficiency, to resort to the surety for the balance, as far as the penalty of the bond would justify and that the deed of trust was fraudulent as to the United States.

On the 1st of May, 1802, the injunction was dissolved by consent, and an interlocutory decree entered, ordering the trustees to pay the proceeds of the sale into court, subject to future order, touching the contending claims of the United States and Hooe.

At November term, 1802, the court passed the following decree:

'The objects of the bill filed in this cause were to set aside a deed executed on the 16th of January, 1799, by John Fitzgerald to William Herbert and John Carlyle Herbert, conveying certain property therein mentioned, in trust, for the purpose of indemnifying Robert Townsend Hooe as indorsor of certain notes negotiable in the bank of Alexandria, and as surety of John Fitzgerald in his office of collector of the port of Alexandria; to oblige the said trustees to account with the United States for the said real property, and to compel the executors to account for the personal estate of the said John Fitzgerald, and to pay the same to the United States towards the discharge of the balance due from him; and further to restrain and enjoin the said trustees from making sale of the said real property.'

An injunction for the said purpose was granted by one of the judges of this court, in vacation; and afterwards, viz. at April term, 1802, after the appearance of the defendants, who were of full age, an agreement was made, and entered on the records and proceedings of this court, to the following effect, viz. that so much of the former order of this court, as restrained the defendants, W. Herbert and John C. Herbert, from selling the property in the deed of trust, in the bill mentioned, be discharged; and it was further decreed and ordered, that the said trustees should pay the proceeds arising from the sale of the said property, or of any part thereof, into this court, subject to the future order of the court, touching the contending claims of the United States, and of R. T. Hooe, one of the defendants to the said bill; and now, at November term, 1802, the said cause came on by consent of parties, and by order of the court, on the bill, and on the answers of the defendants, (those of the infants being taken by their guardians, appointed for that purpose) and on the exhibits in the said bill and answers referred to, and on those afterwards admitted, and the arguments of counsel being heard in the said cause, and the same being by the court fully considered; it is the opinion of the court, that the deed of trust, in the said bill mentioned, was made bona fide, and for a valuable consideration, and was fairly executed by the said John Fitzgerald, to indemnify, and save harmless, the said R. T. Hooe, from all loss and damage, by reason of his indorsement of several notes, negotiated at the bank of Alexandria, amounting to the sum of 3,800 dollars, to enable the said John Fitzgerald to pay that sum to the United States; which appears to have been paid accordingly; and also, to indemnify and save harmless, the said R. T. Hooe, against all loss and damage, by reason of his having become bound in a bond, in the penalty of 10,000 dollars, payable to the United States, as security for the said John Fitzgerald's faithful performance and due discharge of the office of collector of the customs, in the district of Alexandria. That there does not appear to have been any fraud in the said parties, or either of them, and that the said deed is not invalidated by any law of the United States.

It is thereupon, by this court decreed and ordered, that the bill in this cause, as to all the defendants, except R. T. Hooe, W. Herbert, and J. C. Herbert, be retained for the further order and decree of this court, and that as to the said defendants, R. T. Hooe, W. Herbert, and J. C. Herbert, the said bill be dismissed with costs to the said defendants. And as to the money which has arisen from the sale of the said real property, the net amount of which is 14,318 dollars and 66 cents, after deducting the charges of the sale, and which has been, by the order of this court, deposited by the clerk thereof, in the bank of Alexandria; this court doth decree and order, that the said clerk do pay the sum of 4,318 dollars and 66 cents, part thereof, to the said trustees, W. Herbert and J. C. Herbert, to be by them applied to the discharge of the sum of 3,127 dollars, due upon certain notes negotiated in the bank of Alexandria, on which the said R. T. Hooe was an indorsor for the said John Fitzgerald; and also to the repayment to the executors of the said John Fitzgerald, of the sum of 1,185 dollars, advanced and paid by them to the bank of Alexandria, for, and on behalf of the said R. T. Hooe, in part payment of the notes negotiated in the said bank, for the said John Fitzgerald, and indorsed by the said ...

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