United States v. Herron
| Decision Date | 01 October 1873 |
| Citation | 87 U.S. 251,20 Wall. 251,22 L.Ed. 275 |
| Parties | UNITED STATES v. HERRON |
| Court | U.S. Supreme Court |
ERROR to the Circuit Court for the District of Louisiana; the case being thus:
The Bankrupt Act of 1867—which in its general outlines, as in many of its details, follows (as did prior Bankrupt Acts of the United States passed in 1800 and 1841), the British Bankrupt Acts enacts that a discharge duly granted under the act shall, with the exceptions of debts created by the fraud or embezzlement of the bankrupt or by his defalcation as a public officer, or while acting in any fiduciary character, 'release the bankrupt from all debts, claims, liabilities, and demands which were or might have been proved against his estate in bankruptcy, and may be pleaded . . . as a full and complete bar to all suits brought on any such debts, claims, liabilities, or demands.'1
Under the act the United States may prove its debt, and it has a priority given to it by the act. But it is not mentioned by name as among the creditors whose debts will be released by the certificate which the act authorizes.
This statute being in force the United States brought suit on a bond executed by one Collins, as principal, and Herron and others as sureties. Herron pleaded a discharge under the said Bankrupt Act, and the question, of course, was whether a discharge under the act barred a debt due to the government.
The court below thought that it did, and gave judgment in favor of Herron, whereupon the government brought the case here.
Mr. C. H. Hill, Assistant Attorney-General, for the United States:
It is a familiar principle that no general words—not even 'the most general that can be devised'—divest the sovereign of his rights or remedies. Nothing short of specific and express words can do it. This was old law, in Coke's day, and was asserted by him as such in the Magdalen College Case.2 It has been just assumed by this court, in the Dollar Savings Bank v. United States,3 as plain and as equally applicable to this government, . . . 'applied frequently in the different States, and practically in the Federal courts.' The same thing had been decided years ago by this court in United States v. Knight.4
Applying the principle to the exact matter of the Bankrupt Acts, it has been held from the days of Atkyns down, in Great Britain (from whose Bankrupt Acts all ours have been in the main derived,) as a matter undeniable, that debts due the crown were not barred by a discharge under the acts.5
And the same was decided three-quarters of a century ago, in our own country, in the case of United States v. King,6 in the Circuit Court of the United States as then organized under the Judiciary Act of Mr. Admas; an able tribunal, composed of Mr. Justice Tilghman, afterwards eminent as chief justice of Pennsylvania; Mr. Justice Griffith, one of the most honored lawyers of New Jersey;7 and Mr. Justice Bassett, well known in the annals of Delaware.
The matter in short is too perfectly settled and plain for more argument. The error of court below is palpable.
No opposing counsel.
Proceedings in bankruptcy are deemed to be commenced from the filing of the petition in bankruptcy, either by a debtor in his own behalf or by any creditor against a debtor; and if it appear to the court that the bankrupt has in all things conformed to the requirements of the Bankrupt Act, it is made the duty of the court to grant him a certificate, under the seal of the court, that he be forever discharged from all debts and claims that by said act are provable against his estate, which existed on the day the petition for adjudication was filed, excepting such debts, if any, as are by said act excepted from the operation of a discharge in bankruptcy.8
With the exception of the debts specified in the thirty-third section, the act provides that a discharge duly granted under the act shall release the bankrupt from all debts, claims, liabilities, and demands which were or might have been proved against his estate in bankruptcy.
Collectors of internal revenue taxes are required by law to give bond for the faithful discharge of their duties, and the record shows that Lewis Collins, having been duly appointed to that office for the third district of Louisiana, gave the required bond, and that the present defendant was one of his sureties. Default having been made by the principal, the United States brought an action of debt on his official bond, joining all the sureties with the principal.
They alleged two breaches, as follows: (1.) That the principal did not pay over all the public moneys he received for the use and benefit of the plaintiffs. (2.) That he did not do and perform all such acts and things as were required of him by the Treasury Department.
Service was made and the defendant appeared and pleaded, as a peremptory exception, that on the thirtieth day of May, 1868, he filed his petition in the District Court to be adjudged a bankrupt, and that the court, on the eighteenth of January following, in due course of law, granted him a discharge under the provisions of the Bankrupt Act, in the words and figures set forth in the record, which, as he alleges, is a full and complete bar to the plaintiff's demand. Hearing was had and the court awarded judgment for the defendant and the plaintiffs sued out a writ of error and removed the cause into this court. Since the case was enteted in this court the plaintiffs assign for error that a discharge under the Bankrupt law does not bar a debt due the United States.
1. Debts created by the fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or while acting in any fiduciary character, are not discharged by the certificate required to be given to the bankrupt by the thirty-second section of the Bankrupt Act, nor will any such certificate release, discharge, or affect any person liable for the same debt for or with the bankrupt, either as partner, joint contractor, indorser, surety, or otherwise. Such debts, that is, debts created by the fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or as a fiduciary agent, may be proved, and the dividend thereon, it is provided shall be a payment on account of said debt, but the provision that no such certificate shall release, discharge, or affect any person liable for the same debt, for or with the bankrupt as surety, does not apply to this case, as it is the surety here who pleads the certificate of discharge, and not the principal in the bond set forth in the declaration.9
Instead of that, the question presented by the assignment of error in this court must depend upon other provisions of the Bankrupt Act, when properly construed, in view of the settled rule of construction that the sovereign authority of the country is not bound by the words of a statute unless named therein, if the statute tends to restrain or diminish the powers, rights, or interests of the sovereign.10
Where an act of Parliament is made for the public good, as for the advancement of religion and justice, or to prevent injury and wrong, the king is bound by such act, though not particularly named therein; but where a statute is general, and thereby and prerogative, right, title, or interest is divested or taken from the king, in such case the king is not bound, unless the statute is made to extend to him by express words.11
Acts of Parliament, says Chitty,12 which would divest or abridge the king of his prerogatives, his interest, or his remedies, in the slightest degree, do not in general extend to or bind the king, unless there be express words to that effect. Therefore, says the same learned author, the statutes of limitation, bankruptcy, insolvency, set-off, &c., are irrelevant in the case of the king, nor does the statute of frauds relate to him, which last proposition is doubted by high authority. Exceptions exist to that rule undoubtedly, as where the statute is passed for the general advancement of learning, morality, and justice, or to prevent fraud, injury, and wrong or where an act of Parliament gives a new estate or right to the king, as in that case it will bind him as to the manner of enjoying or using the estate or right as well as the subject.
Debts due to the United States, it is expressly provided, shall be entitled to preference or priority over all other claims except the claims for fees, costs, and expenses of suits and other proceedings under the Bankrupt Act, and for the custody of the bankrupt's property.
Five classes of claims are recognized as claims entitled to priority or preference by the twenty-eighth section of the Bankrupt Act, and the provision is that they shall 'be first paid in full in the following order:' First, fees, costs, and expenses; second, all debts due to the United States and Federal taxes and assessments; third, all debts due to the State in which the proceedings in bankruptcy are pending, and all State taxes and assessments; fourth, wages due to any operative, clerk, or house servant, to an amount not exceeding fifty dollars, for labor performed within the period therein specified; fifth, all debts due to any persons who, by the laws of the United States, are or may be entitled to a priority or preference, in like manner as if the act had not been passed.
Attempt is made in argument to show that the preference given to debts of the United States does not exclude such debts from the operation of the certificate of discharge, because such debts are not named in the proviso annexed to the description of the fifth class of claims entitled to priority and full payment in preference to general creditors, but the court is not able to concur in that proposition, as it is quite clear that the proceedings in bankruptcy would very much embarrass tax collectors without some saving clause in that behalf, and to that end it was provided that 'nothing contained in this act...
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