United States v. Fisher

• Citation: 2 A.F.T.R. 2161,6 U.S. 358,2 Cranch 358,2 L.Ed. 304
• Parties: The UNITED STATES v. FISHER et al. Assignees of Blight, A Bankrupt.*
• Decision Date: 01 January 1805
• Court: United States Supreme Court

6 U.S. 358

2 L.Ed. 304

2 A.F.T.R. 2161

2 Cranch 358

The UNITED STATES v. FISHER et al. Assignees of Blight, A Bankrupt.^*

Supreme Court of the United States

Term 1805

[2 Cranch 385]

MARSHALL.

In all cases of insolvency or bankruptcy of a debtor of the United States, they are entitled to priority of payment out of his effects.

Error from the circuit court of the district of Pennsylvania.

The action was instituted to try two questions, all the necessary facts being conceded to bring the law before the court. The questions were,

1. Whether an attachment laid by the United States, on property of the bankrupt in the hands of the collector of Newport in Rhode Island, after the commission of bankruptcy had issued, is available against the assignees?

2. Whether the United States are entitled to be first paid and satisfied, in preference to the private creditors, a debt due to the United States by Peter Blight, as endorser of a foreign bill of exchange, out of the estate of the bankrupt in the hands of his assignees?

The opinion of the court below was in favor of the defendants upon both points, and a bill of exceptions was taken by the United States.

Dallas (attorney of the United States for the district of Pennsylvania) for the plaintiffs in error.

1. As to the particular right of the United States under the attachment. The title of the assignees is good against all who are bound by the bankrupt act. But we say the United States are not bound by that act. This exemption is not claimed as matter of prerogative as in England, but by reason of an express legislative exception.

By the 62d § of the Bankrupt law, of 4th April 1800, vol. 5, p. 82, it is enacted, "that nothing contained in this law, shall in any manner affect the right of preference to prior satisfaction of debts due to the United States, as secured or provided by any law heretoforepassed, nor shall be construed to lessen or impair any right to, or security for, money due to the United States, or to any of them."

Congress had a right to declare, that the act should not affect a public debt. Have they done it? The words contemplate, 1. The right of preference existing by prior laws; 2. The general right to, or security for any money due to the United States. The effect of this section is, that the bankrupt act shall in no manner affect the right of the United States to recover any money due to them. To say then that the commission of bankruptcy, should prevent the United States from attaching the effects of the bankrupt, is in direct repugnance to the section. This exception in favor of the United States, was not necessary to prevent the certificate from being a bar to their claim; nor to protect a lien actually existing; as a mortgage, & c. because the United States not being named in the body of the act are not bound by it. Thus in England, upon the same principle the king is not barred by the certificate. Such were also the decisions upon the Pennsylvania bankrupt law in the courts of that state, by which it was uniformly adjudged that the state was not bound. A mortgage, or other specific lien was sufficient to protect itself. The section, therefore, could have no use but that of declaring expressly, that so far as relates to the debt due to the United States, the right, the security and the remedy should all remain unimpaired by any thing contained in that law. This principle was decided by the circuit court, in the case of the United States v. King, Wallace's Reports, p. 13, in which the court held, that in the case of a legal bankruptcy, the right of the United States remained unimpaired. As far as the claim of the United States was concerned, the assignment under the commission of bankruptcy, did not transfer the property. If the claim of the United States was by matter of record, the assignees were bound to take notice of it, and if the effects came to their hands, they held in trust for the United States until the claim was discharged; so if the claim was by matter in pais, if the assignees had notice they were bound by it, and could not distribute until the claim was satisfied.

The whole title of the assignees depends upon the statute; if then the assignment under the statute is set up to prevent the United States from getting the money, it is in direct violation of the 62d section.

2. As to the general right of the United States to priority of payment in all cases.

The United States are bound to maintain the public credit, and to pay all their debts, as well those due before as since the present constitution. They must have all necessary powers incident to that duty; among these is the authority to purchase bills, and to enter into negotiations for making remittances to foreign countries. They are not bound to freight a ship with specie.

Every fiscal system ought to have two objects; certainty in the collection of the revenue, and fidelity in its expenditure. Hence the necessity of priority in collecting the public debts; of surety for the conduct of public officers; and of a guard against the failure of the public debtors.

With this view it is enacted by the act of July 11, 1798, § 12, vol. 4, p. 196, that the supervisors, inspectors and collectors, should give bond with surety for the faithful performance of their duty. And by the 15th section of the same act, the amount of all debts due to the United States by any supervisor, or other officer of the revenue, is declared to be a lien upon his lands and those of his surety, from the time when a suit shall be instituted for the recovery of the same.

The debtors of the United States may be arranged in 3 classes;

1. Debtors on credit for public dues.

2. On receipt of public money.

3. On purchases or contracts.

1. Debtors on credit for public dues, were, 1. For import duties. 2. For internal taxes.

By the act of 31st July 1789, § 21, (Vol. 1, Childs' edition, p. 47,) it is provided that "in all cases of insolvency, or where any estate in the hands of executors or administrators, shall be insufficient to pay all the debts due from the deceased, the debt due to the United States on any such bond " (i.e. for the payment of duties) "shall be first satisfied." The act of August 4, 1790, § 45, (same book, p. 221) has the same provision.

By the act of 2d of May 1792, § 18, (vol. 2, Childs' edition, p. 78,) in cases of insolvency the surety who pays the debt due to the United States, on any bond given for duties on goods imported, shall have the same priority of payment out of the effects of the insolvent, as the United States would have had by virtue of the 44th (45th) section of the act of 4th of August 1790. And it is further declared "that the cases of insolvency in the said 44th (45th) section mentioned, shall be deemed to extend as well to cases in which a debtor, not having sufficient property to pay all his or her debts, shall have made a voluntary assignment thereof, for the benefit of his or her creditors, or in which the estate and effects of an absconding, concealed, or absent debtor shall have been attached by process of law, as to cases in which an act of legal bankruptcy shall have been committed."

Thus as early as 1792 the priority in the case of bonds given for duties on goods imported was complete. The only addition afterwards made, was by the 65th section of the act of March 2d, 1799, vol. 4, p. 386, which makes executors and administrators personally liable if they pay away the assets without first satisfying the debt due to the United States.

2. As to debtors for internal taxes.

The duties on distilled spirits are to be secured by bond. March 3, 1791, vol. 1, p. 311, sec. 17. But this act gave no priority on such bonds.

The duties on snuff and sugar were also to be secured by bond. June 5, 1794, vol. 3, p. 98, sec. 11, but no priority is given by this act.

It is difficult to conceive why the United States should have made this distinction between debts due for duties on goods imported, and on spirits distilled &c. There certainly was no reason for it. The legislature saw the defect, and in 1797 passed the act upon which the present question depends, and which gives the United States a priority of payment in all cases whatsoever.

The 5th sec. of the 3d of March 1797, vol. 3, p. 423, is that on which we rely. It is in these words, "And be it further enacted, that where any revenue officer, or other person, hereafter becoming indebted to the United States by bond or otherwise, shall become insolvent, or where the estate of any deceased debtor, in the hands of executors or administrators, shall be insufficient to pay all the debts due from the deceased, the debt due to the United States shall be first satisfied; and the priority hereby established shall be deemed to extend as well to cases in which a debtor, not having sufficient property to pay all his debts, shall make a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor, shall be attached by process of law, as to cases in which an act of legal bankruptcy shall be committed."

Before this act was passed, the only preference existing was in the case of a custom-house bond. The cases not provided for, were; 1. Revenue officers. 2. Accountable agents. 3. Debts on bond, or contract.

The act of 1797 embraces them all. It includes all persons who should thereafter become indebted to the United States, by bond, or otherwise, and who should become insolvent.

Peter Blight after the date of the act did become indebted to the United States otherwise than by bond, and has become insolvent. He is therefore within the plain and express words of the act. No language can make the case clearer. There is nothing doubtful in the words themselves, nothing ambiguous, nothing to be explained, and therefore no room for construction. But the gentlemen have chosen to resort to other parts of the act, and even to other acts, not to explain what wasambiguous, but to render ambiguous what was plain, not to remove, but to create a doubt, not...