| U.S. Circuit Court for the District of Rhode Island | Jun 15, 1828
Some of the questions intended to be discussed in this case have been already settled by the recent decisions of the supreme court. In the first place the point, upon which the cross bill is founded, is, whether this claim of the Crarys was assignable, and if assignable in its own nature, whether it passed under the assignment., by force of the insolvent act, to the assignees. Upon that I need say no more, than that Comegys v. Vasse, 1 Pet. [26 U. S.] 143. has completely settled the doctrine in the affirmative. I have not the least difficulty, therefore, in saying, that the cross bill of Frederick Crary must be dismissed.
Then as to another point, viz. that the discharge of Peck from imprisonment, by the secretary of the treasury', under the act o.f congress of the 24th of June, 1812, c. 104, was a discharge of his sureties from- the judgment obtained against them. The act of congress, after authorizing the discharge of Peck from imprisonment upon his executing an assignment of his estate under the direction of the secretary of the treasury, provides, ‘'that any estate, real or- personal, which the said William Peek may hereafter acquire, shall be liable to be taken in the same manner, as if he had not been imprisoned and discharged.” The sole object of the act was a discharge of the party from imprisonment, and not a discharge of the judgment itself, upon which he was committed in execution. The debt was to remain in full force as to all intents and purposes, except imprisonment of the party. The case, therefore, falls within the authority of U. S. v. Stanbury, 1 Pet. [20 U. S.] 573; and the judgment was not discharged in favour of Peck, and consequently not discharged in favour of his sureties. .
Then upon the general merits, what are the objections to a recovery on the part of the United States? The money received by Hunter, as assignee of the Crarys under the award, was received for, and was distributable among, their creditors according to the priority, as established by law. Smith had paid a .custom-house bond, as surety for the Crarys, to the amount of $2,125, in May, 1808, and to this amount he was entitled to the same priority, which the United States would have possessed, if the bond had remained unpaid. That is the express provision of the 65th section of the revenue collection act of 1799, c. 128 [1 Story’s Laws. 630; 1 Stat. 676, c. 22]. Hunter being also the assignee of Smith, must, by operation of law, be deemed to hold so much of the fund, as this priority of Smith attached to, as part of Smith’s estate. In this view, the priority of the United States upon their judgment and debt against Smith re-attached to the same fund, as part of Smith’s estate in the hands of his assignee, which was distributable among his creditors, independently' of the special assignment made by Smith, when he was discharged from his imprisonment. There is no pretence to say, that this discharge operated any satisfaction of that judgment.
Then it is suggested, that by the act of 24th of May, 1824, c. 140, § 2, creating five millions of stock, and appropriating the proceeds of it to the payment of the claimants, to whom money was awarded under the treaty with Spain, the United States reserved and secured to themselves the right or power to withhold the allotted compensation from their debtors, unless the amount due to the United States was first deducted or paid; and that full payment was made to Hunter, the as-signee, without claiming or making any suc-1) deduction. This certainly does not vary the legal rights of the United States, for the fund received is still to be distributed according to law among the creditors; and here the United States are -creditors, and have a right of priority of payment. The mere omission to withhold pay'ment was no legal waiver of right of priority; still less an extinguishment of the debt. The clause alluded to is as follows: “Provided also, that in all cases, where the person or persons, in whose name, or for whose benefit and interest, the aforesaid awards shall be made, shall be in debt and in arrears to the United States, the secretary of the treasury shall retain the same out of the amount of the afox-esaid awards in the first instance, and a warrant or certificate, as the case ma.v be, shall issue only for the balance.” The omission of the secretary to do his proper duty under this act. if there was any, which, as Smith, and not the Crarys, was the debtor, may be doubted, proceeded from mere mistake, and from want of a due knowledge of all the facts, and cannot prejudice the general rights of the United States, derived from other laws, or extinguish the debt due to them. The fund so received by the assignee, Hunter, must still be distributed according to law among the creditors. And we have already seen, that through Smith’s priority on the estate of the Crarys the priority of the United States attaches to that part of the fund belonging to Smith in Hunter’s hands, and must -be distributed accordingly. The United States ai'e therefore entitled to a decree for an account; and a reference must be made to a master to ascertain and report accordingly.