28 F. Cas. 399 | U.S. Circuit Court for the District of Rhode Island | 1828
There is no controversy as to the facts in this case; and the whole resolves itself into mere questions of law. I pass over all the grounds insisted upon by way of laches on the part of the officers of the government, for the decisions of the supreme court have fully settled them.
The first ground insisted on by way of de-fence is, that the act of 1817, c. 197 [3 Story’s Laws, 1622; 3 Stat 350, c. 24], is a complete discharge of the first bond as to all sums received after the second bond was executed. The statute provides, “that every person now in service, or who may hereafter be appointed, shall, instead of the bond required by the act, to which this is a supplement, enter into a bond with two or more sufficient sureties, in the penalty of $25,000 conditioned for the faithful discharge of all his duties as purser in the navy of the United States, which sureties shall be approved,” &c. My opinion is, that the argument is well founded. The new bond 25 to be given instead of. that is, in the place or room of, the old bond, and not in addition to the latter. It is a complete substitute for, and not a supplementary security to, the former.. To construe the act otherwise, would be a plain departure from the meaning of the terms, and, as I think, also from its true object and Intent. From the time the second bond was given, I am therefore of opinion, that the first bond was functus officio, as to future responsibilities for future advances. Then as to the payment made to the district attorney by the administrator of Bourne. Generally speaking, the debtor has a right to make the application of payments, as he chooses; if he omits so to do, the creditor, having different debts, may make the application to which he pleases. If neither party makes any application, the law will adjust it by its own notions of the equity and justice of the particular ease. It is plain, that the officers of the treasury department had no power to make an absolute application of the present payment by the administrator, to the liquidatioii of the last balance, unless the law justifies it upon general principles. If either party had a right to direct the application, it was the administrator of Bourne; and if applied according to his direction, it goes to the reduction of the first balance. But I doubt, exceedingly, whether an administrator is subrogated in this respect to all the rights, which the debtor himself would have, if living. Especially do I doubt it, in case the estate is insolvent. When a debtor here dies insolvent, all his estate is distributable among his creditors, pro rata, with the exception of certain privileged creditors having priorities, such as the United States, the state, and creditors for charges of the last sickness, and of the funeral of the party. In such cases of administration, it seems to me, that all the demands of each creditor form one consolidated debt, and that the payments made, are to be pro rata upon the whole, to be applied in the same way towards the discharge of the whole. The administrator has no right, at the instance, or for the benefit, of third persons, to direct the payment to be applied on account of any particular debt. He is bound to pay, on all debts, a pro rata sum. If this be so as to ordinary creditors, the circumstance, that the United States have a priority, does not change the duty imposed by law; for if the assets are not sufficient to pay all the debts due to the United States, the same reason applies, that is, that the payment shall be pro rata on alL The administrator acts, not for himself, nor for sureties, nor upon personal preferences, but as l a trustee for the benefit of all the creditors pari passu. And I think the law requires him in the execution of the trust, to distribute the burthen and the benefits equally among all the creditors, without preferences^ and without prejudice to the rights of any sureties. Upon these principles, my opinion is, that the sum paid by the administrator ought to be applied, as of right, to both balances, discharging each pro rata, in the portion which the respective amounts bear to the whole sum paid. Perris v. Roberts, 1 Vem. 34, proceeded on principles which afford a just analogy.
But another ground of defence supercedes, or rather, renders the former unimportant. It appears, that the accounts of the treasury have run on, from time to time, ever since his. first appointment, charging him with advances made, and crediting him with disbursements. Balances have been struck from time to time; and the balances have been again carried forward to the debit side of the new accounts. It is, therefore, the common case of a running" account, where there are various debits and credits on each side, and the question is, in such a posture of things, where there has been no specific application made of any payments, by either party, to any specific items, how the payments thus passed Into general account are to be deemed, in point of law, to have been applied. My opinion is,
I have had occasion to consider this point in the case of Postmaster General v. Furber, (Me.) 1827, and to the opinion there given I deliberately adhere.
My judgment is, that, as the credits carried into the general account of Bourne, for disbursements since the second bond was given, far exceed those due by him to the United States, the parties to the first bond are discharged from any responsibility thereon. The bill must therefore be dismissed. Bill dismissed accordingly.
NOTE BY JUDGE STORY.
United States vs. January & Patterson.
(Supreme Court of the United States, February Term, 1813.)
This ease, as reported in 7 Cranch [11 U. S.] 572, is inaccurately given, as to the facts apparent on the record; and I therefore transcribe them from the bill of exceptions, upon which alone the opinion of the supreme court proceeded. It was an action on a bond of the 25th of August, 1797, and the pleadings were as stated in 7 Cranch [11 U. S.]. The suit was commenced on the 20th of November, 1804. At the trial, the attorney for the United States gave in evidence an account of the United States against Arthur, taken from the books in the supervisor’s office, containing the debits and credits of Arthur. The debits, beginning on the 30th of September, 1797, and extending to the 30th of June, 1802, amounted to $30,-584.99%. The credits, beginning on the 30th of June,- 1798, and ending on 30th of June, 1802, amounted to $14,403.84, leaving a balance due to the United States of $16,181.15%. There was a deduction afterwards made of an erroneous allowance of commissions, of $970.86; and subsequent allowances of credits received between March, 1804, and July, 1805, of $573.77%. So that the ultimate balance, stated as due to the United States on that account, was $16,578.23%. There was also given in evidence, a separate account drawn off from the supervisor’s books, containing the debits and credits of Arthur from the time of his appointment, until he executed a second bond to the United States with Patterson alone, as his security (on the 23d of March, 1799. which was sued, and is the case reported in 7 Cranch [11 U. S.] 575). This account presented on the debit side $9,034.13%, and after deducting the credits, $2,554.23, left a balance due to the United States, of $6,479.90%. The second bond aforesaid was also read in evidence, and also an account drawn off by the supervisor from his general account, as the debits and credits against the said Arthur, after the date of the said bond. In this account the debits up to the 15th of November, 1803, were $21,-550.86, and the balance due, after deducting the credits, was $9,701.24.
The defendants then offered in evidence, the deposition of James Hughes, taken on the 11th of May, 1811, which was objected to as improper evidence, but the objection was overruled by the court. It was as follows: “This deponent says, he aid, as attorney for Thomas January; apply to Major Morrison,' supervisor in Lexington, at his office, some years ago. the precise time he cannot now recollect, but he is confident it must have been before the judgment entered in the Kentucky district court, in the suit. United States against Arthur & Patterson (i. e. on the second bond), in order to obtain information from the said Morrison respecting the said January's responsibility and danger of being made liable, as a security in a bond for John Arthur as collector of excise, bearing date, as appears from the bond, the 25th day of August, 1797. This deponent believes he was requested by January to bring a suit against the said .Morrison to compel him either to give up the bond, or give the said January a receipt or discharge against it; and that this deponent wished to understand from the said Morrison, what was the said January’s situation before he took any such measure, or whether such measure was necessary. The said Morrison informed the deponent, that John Arthur had paid a sufficient sum to discharge that bond; and that what he had paid should be so applied. This answer was reported to the said January, with which he appeared satisfied; and this deponent was himself of opinion he was safe.” • Signed J. Hughes.
The objections stated to the admission of the deposition on the record were, (1) because the said deposition did not go to prove, that the said Arthur had discharged the condition of the bond in suit; (2) because it only went to prove a promise on the part of the supervisor to appropriate the payments, and not an actual appropriation; (3) because it did not appear, that Arthur had given any directions to the supervisor, how to apply his payments, or that the supervisor had ever made his election to appropriate them differently from the account current; (4) because the said Arthur & Patterson were not present and assenting to the arrangement promised to be made by the supervisor; (5) because it was an attempt by bare parol to impeach the words (accounts?) of the supervisor; (6) because the words (accounts?) of the supervisor were the best and only evidence of the application made by the supervisor, and ought not to be impeached or contradicted by a promise of the supervisor to do' an act out of the line of his duty, and contrary thereto. But the court overruled the objections, and the deposition was permitted to go to the jury as evidence, for the purpose of showing that the bond was paid and discharged.
The attorney for the United States then introduced Morrison (the supervisor) as a witness, who deposed, “that he had a recollection of James Hughes, calling upon him as the attorney of January, and conversing with him about the bond now sued upon. But that he did not believe, that he had ever told said Hughes, that he would appropriate the payments to the discharge of the bonds upon which the suit is brought. That the payments, which had been made by Arthur, if applied to the. bond now sued upon, would discharge it: but that he had never made any other appropriation, as he recollected, than that stated in the accounts above alluded to; although he might have said, and he believed he had frequently told the defendant, January, and others, that the whole of January’s bond would be paid off, if the payments that were made by
The defendants then called one “James Coleman, formerly a clerk in the supervisor’s office, who deposed, that the defendant, January, several times called at the office on the subject of his bond, expressed his uneasiness about its remaining out, and his desire to get it up. That the supervisor assured him, that Arthur had paid enough to discharge that bond, and that he might make himself easy; but refused to give up the bond, because ■ he thought such bonds ought to remain as vouchers in his office.” The record then proceeds: “This being the whole of the testimony delivered on both sides, the attorney for the United States moved the court to instruct the jury, that the election and promise of the supervisor to James Hughes, stated in his deposition, unless the said promise was fulfilled by some act of appropriation of the payments, by the supervisor, was not of itself an appropriation of the payments. But the court overruled the motion of the attorney, and, on motion of the defendants, instructed the jury, that if they believed that the supervisor had made the election and promise, as stated in the deposition of James Hughes, that it was a declaration of his election, how the payments made by Arthur should be applied; and that whether a formal entry in the books, of their appropriation, corresponding with that election, were made or not. was immaterial, and that the jury ought to consider the appropriation as made.” To which opinion an exception was taken.
Such is the record; and upon this posture of the ease several observations arise to explain the opinion of the court: (1) The cause was submitted without argument; and therefore no points could arise before the court, except such as were apparent on the record. (2) Now upon the record the only points were, first, the admissibility of Hughes’s deposition; and, second. the instruction of the court with reference to that deposition. (3) No point was made as to the effect of payments and credits made on general account in an account current between the parties. But the whole cause seems to have proceeded upon the assumption, that but for the special election and promise of the supervisor, the payments made and credited upon general account would not have extinguished the antecedent items of debt, so as to have discharged the first bond on which January was surety. The point not having been maae, could not intentionally have been decided by the supreme court. (4) There was no evidence, that in the slightest degree tended to -show that Arthur, at or before the time when the payments or credits were made by the supervisor in his books, directed any special appropriation of them: or that he did not intend that they should be placed to general account. On the contrary, Morrison expressly swore, that no such directions had ever been given until long afterwards, and after the suit was brought on the first bond. And Hughes’s testimony, which applies to a period long after all the payments were made, and passed in the account current on general account, only goes to show, that the supervisor at that time elected and promised, that the payments and credits should be applied to the discharge of the antecedent debt; not that he had already so applied them. But the point did arise, whether, when no special appropriation had been made by either party at the time of the payments, but they had been passed to general account, without objection, on the account current, a public officer could, by his subsequent election or promise, change or alter the appropriation from the general account already made, to a special account. Some of the objections taken to the admissibility of Hughes’s deposition relate to this point.
If the opinion of the court is examined with reference- to the facts above stated, and the points made on the record, it will at once be seen, that there was no decision made on the point often supposed to have been ruled in this case, viz. that payments made on general account do not (as in common cases) go to ex-' tinguish antecedent items of debt according to the order of time, when the account is with a public officer of the United States. The judge, who delivered the opinion of the court, after referring to the rule of law,, that the debtor may, if he pleases, at the time direct the application of payments, and if he does not, the creditor may direct it; and if neither does, the law will make the application, proceeded to state, that the majority of the court were of opinion, “that the rule adopted in ordinary cases is not applicable to a case circumstanced as this is, where the receiver is a public officer not interested in the event of the suit, and who receives on account of the United States, where the payments are indiscriminately made, and where sureties under distinct obligations are interested.”
If I understand this declaration correctly, it must, with reference to the facts in the case, mean, that where payments have been indiscriminately made, and carried to general account with officers of the United States, the debtor has no right subsequently to direct or alter, the appropriation so made, to any other account or purpose. Neither has the officer acting for the United States a right to assent to or to make such subsequent appropriation. He has no authority to change, on behalf of the United States, the state of any payment as it is first applied on general account, ft is then added: “It will be generally admitted, that moneys arising due and collected, subsequently to the execution of the second bond, cannot be applied to the first bond, without manifest injury to the surety on the second bond, and vice versa.” I understand this to be no more than an argument from inconvenience; and not an assertion, that all moneys collected subsequently to the second bond are, if passed to general account, to be applied, not to the discharge of the first, but of the second bond. It is then added: “Justice between the different sureties can only be done by reference to the collector’s books; and the evidence, which they, contain may be supported by parol testimony, if any in possession of the parties interested.”
I understand from this declaration, that the books of the collector are to furnish the evidence as to the debits and credits, whether on general account, or on special account or aonro-priation; and that parol evidence is admissible to support that evidence; but not to contradict it. At least the latter position, if not stated nor implied, is not disaffirmed. The decision was, “that the circuit court erred in the opinion given.” That is, that the circuit court erred in
Now this opinion of the circuit court embraces two points: (1) That the supervisor had a right after such payments upon general account, to make a special application of them to the first bond; (2) that his promise to Hughes, was an election to make such special application, and . amounted without any further act done to an actual Application according to his promise. The decision of the supreme court negatives both propositions, and goes no farther. The language of the judge must be construed with reference to them. There is no record of the form of the judgment of reversal, or mandate in this ease. In U. S. v. Nicoll, 12 Wheat. [25 U. S.] 505, 511, this case of U. S. v. January, 7 Cranch [11 U. S.] 572, was referred to by the court in its opinion, as in point to show, that as to credits after a second bond given, it was at the election of the government to apply them to either account. This is doubtless true, where the debtor makes no other application at the time of the payments or credits. But if the government carry them to general account, it is presumed, that it was not intended to say, that they could afterwards be altered to a special account, by the government, so as to affect sureties.
[In truth the same point was substantially decided by the supreme court in the case of U. S. v. Kirkpatrick, 9 Wheat. [22 U. S.] 720, and further discussion of it would seem to be unnecessary.]
