United States v. Canal Bank, 25 F. Cas. 277

United States v. Canal Bank

25 F. Cas. 277 | U.S. Circuit Court for the District of Maine | 1844

. STORY, Circuit Justice.

Upon this state■ment of the facts, several questions have been suggested. In the first place, whether the United States have any priority, or privilege, in respect to the debts due to them by their debtors, over the debts due to private persons, so as to entitle them to a prior satisfaction, upon any judgments obtained against their debtors, out of the property attached, before other attaching creditors, whose attachments are of an earlier date. In my judgment they have not. It has long since been settled, by the solemn adjudications of the supreme court, that the United States do not possess any general right of priority or privilege over private creditors, for the satisfaction of the debts due t.o them, founded upon any general prerogative, belonging to the government in its sovereign capacity; but that all the priority or privilege, which the government is at liberty to assert, is or must be founded upon some statute, passed by congress, in virtue of its constitutional authority. This was expressly so held in U. S. v. Fisher, 2 Cranch [6 U. S.] 358, 396, and the doctrine has ever since been strictly adhered to. U. S. v. Hooe, 3 Cranch [7 U. S.] 73; Prince v. Bartlett, 8 Cranch [12 U. S.] 431; Thelleson v. Smith, 2 Wheat. [15 U. S.] 396; U. S. v. Howland, 4 Wheat. [17 U. S.] 108; Conard v. Atlantic Ins. Co., 1 Pet. [26 U. S.] 387. It is not here, as it is in England, where the sovereign is entitled, in virtue of his prerogative, to a priority over private creditors, for satisfaction of the debts due to the crown. Com. Dig. “Prerogative,” D, 86; Id. “Debt,” G, 8, G, 9. Four classes of cases only are provided for by Act March 3, 1797, c. 74, § 5 [1 Story’s Laws, 465; 1 Stat. 515]; and the same are in substance re-enacted in the revenue collection act of 1799 (chapter 128, § 65 [1 Story’s Laws, 630; 1 Stat. 670], First, cases where the estate and effects of any deceased debtor in the hands of his executors or administrators, are insufficient to pay his debts. Secondly, cases where the debtor, not having property sufficient to pay all his just debts, has made a voluntary assignment thereof for the benefit of his creditors. Thirdly, cases where the estate and effects of an absconding, concealed, or absent debtor, have been attached by process of law. And, fourthly, cases where the debtor has committed a legal act of bankruptcy. The debtors, in the present case, do not fall within either of these predicaments. But the case of Prince v. Bartlett, 8 Cranch [12 U. S.] 431, is directly in point,' to the very case of conflicting attachments; and decides, that in such a case the private creditor, having the prior attachment on the property, is entitled to a preference over the subsequent attachment of the United States.

In the next place, the question arises, whether an attaching creditor is entitled to satisfaction, out of the real estate of his debtor, against a bona fide purchaser of the same estate, for a valuable consideration, without notice, whose deed is not recorded in the registry of deeds, until after the attachment is made. As an original question, I should have entertained very great doubts, whether the attaching creditor had any such right; at least, unless the purchaser fraudulently, or by gross negligence, withholds his deed from being recorded until after the attachment, and thereby designedly misleads, or actually injures the other creditors of the debtor. My opinion upon this subject, independent of authority, would be, that an attaching creditor, in all cases, except cases of such fraud, or gross negligence, can entitle himself only to the same interests and rights in the estates attached, as the debtor himself has, or would have, at the time of the attachment, against the purchaser. But I understand that, under the local laws of Massachusetts and Maine, (which upon this subject are the same,) it has been held, that the attaching creditor is entitled to a prior satisfaction, out of the real estate attached, if he has not, at the time of the attachment, any notice of the prior unrecorded deed; or if the purchaser has not, with all reasonable diligence procured his deed to be recorded. See Farnsworth v. Childs, 4 Mass. 637; Davis v. Blunt, 6 Mass. 487; Prescott v. Heard, 10 Mass. 60; Priest v. Rice, 1 Pick. 164; Cushing v. Hurd, 4 Pick. 253. See, also, Briggs v. French [Case No. 1,871]; Stanley v. Perley, 5 Greenl. 369. In the present case, it is not suggested, that Hinkley’s deed might not, with reasonable diligence, have been recorded, before the attachment of the tenants was made. Following, therefore, the local decisions upon this subject, which, as a rule of real property, governing many titles in the state, and also as a construction of the nature and operation of local statutes, ought, in my judgment, to be followed, I have no difficulty in saying, that the attachment of the tenants has a priority over the conveyances to Hinkley.

Then, in the next and last place, does it make any difference, that the United States are attaching creditors of Hinkley, and have levied their execution upon the demanded premises? In my opinion it does not. Generally speaking, an attaching creditor is *279deemed to be In the same situation as a second purchaser, according to the decisions in •Massachusetts and Maine; and we all know, that a second purchaser is not affected with •the title of any third persons in the property, of which he has no notice. In the present case, Hinkley’s title was subordinate to that of the tenants, under their prior attachment, and the United States can properly claim, against the tenants, the same rights only that Hinkley himself might claim; for the title of the United States is but a derivative title under Hinkley. The case is not like that of Coffin v. Ray, 1 Metc. [Mass.] 212, where the grantee, under whom the attaching creditor claimed, had notice of the unregistered deed of a prior grantee, and the court held, that as the attaching creditor had no notice of such prior deed at the time of his attachment, although he had before the levy of the execution, he was entitled to hold against the grantee of such prior deed. Here, the United States, at the time of their attachment, either knew, or might have known, of the prior attachment of the defendants, and that Hinkley’s deed was not, at that time, recorded. But whether the United States did know, or might have known, of the prior attachment, of the tenants, or not, is immaterial, since such knowledge in Hinkley could not have given validity to his title, against the prior attachment of the tenants. And if the United States are to be treated as purchasers at all, they must be treated as purchasers of all Hinkley’s rights in the premises, subject to the prior incumbrances thereon. The ease of Coffin v. Ray, supra, certainly goes very far, and places the attaching creditor in a better situation, than that of the grantee, under whom he claims title. But it is distinguishable from the present case in the material circumstances, that in that case, the notice created a mere personal equity, affecting the grantee alone, and thus would deprive him of the right to set up his title, as a bona fide purchaser, without notice, against the prior grantee; whereas, in the present case, the attaching creditor, by his prior attachment, acquired a right in rem, and no personal equity whatsoever applies to him, founded upon notice of Hinkley’s deed, of which the United States could avail themselves.'

Judgment for the tenants.