United States v. Clark.

over all such monies as should be received by him as such paymaster.

It is contended on the part of the defendant, that Gilbert Stuart did not become a debtor to the United States, until judgment was recovered against him on this bond; or at all events not until suit brought. This I think is not a correct view of the law.

Gilbert Stuart became a debtor to the United States whenever the condition of the bond was broken. The condition of the bond is not to account when called on, but well and faithfully to account; that is, to account according to law, and to pay over the balance. Joseph B. Stuart was bound according to law to account every three months and it appears by the abstracts from the treasury books, that all the charges and credits to Joseph B. Stuart are prior to 15th of June, 1815: At that time, a balance of more than the amount of the bond appeared due by Joseph B. Stuart, as paymaster, to the United States.

It is urged, however, that no balance was struck against him until 29th December, 1819, and that the debt of Joseph B. Stuart did not accrue till then.

But this cannot be so considered. The striking the balance on the treasury books, does not in any sense create the debt, it only ascertains the amount due. The debt is created by the advances made, and Joseph B. Stuart was as much a debtor before the balance was struck as afterwards. The last credit given him was on the 15th of June, 1815, and whatever amount the treasury books then showed due from him, was the debt due, and which he was bound to pay; and not having been paid or accounted for in any manner, the bond became forfeited, both as to the principal and his sureties; and Gilbert Stuart from that time became a debtor to the United States.

United States v. Clark.

But it has been contended, that admitting the priority exists, still no right of action at law accrues to the United States; and on this subject a distinction has been attempted to be drawn between the act of 1797, and the duty act of 1799. The act of 1799 is confined to bonds given to secure duties and has no concern with the act of 1797, and is not to affect the construction of it.

It is said that by the act of 1797, the United States acquire merely a preference, and that this preference is to be exercised through a judgment and execution, and not by any action at law. This construction would render the act nugatory. It has been settled that the priority does not give a lien to the United States; that it does not overreach bona fide purchasers; and therefore the property would seldom be reached by an execution. This therefore cannot be the manner of enforcing the priority.

The act not having prescribed the mode, it is left to the ordinary rules of law to carry the priority into effect, according to the circumstances under which it is sought. If the United States needed the aid of a Court of Equity, they could file their bill, as in compelling the execution of a trust; but if circumstances are not such as to require the interposition of a Court of Equity, then the United States are not obliged to go there.

Suppose the defendant is proved to have received the whole amount of the bond in cash from Gilbert Stuart at the time of the assignment, would the United States be driven into a Court of Equity to recover it? Would not an action for money had and received lie in such a cause? The case is the same, if such a state of facts exists here as shows that the defendant has received money of Gilbert Stuart's estate, under the assignment. If a trustee has received money out of his trust estate which he is bound to pay over to a credi

United States v. Clark.

tor, that creditor may maintain this form of action and may sue at law.

If questions arise as to the rate of distribution among a number of creditors entitled to a portion of the insolvent's estate, then the aid of a Court of Chancery may be necessary. But here the United States have an exclusive right, and are entitled to full satisfaction: of course a resort to a Court of Equity to settle the distribution of the funds cannot be necessary; and if the jury are satisfied that the defendant has received the money in contemplation of law, then there is no need of resort to a Court of Equity, and this form of action at law is maintainable.

The next point to be considered is, whether such a state of facts existed in this case that the priority of the United States attaches.

It has been contended on the part of the plaintiffs, that the concealment of Gilbert Stuart to avoid arrest by creditors, was an act of legal bankruptcy, and that this act alone gives the right of priority to the United States.

There is in this part of the law some little obscurity. The general object of the act is to give a preference to the United States. This presupposes a distribution of the debtor's property. The idea of preference is inapplicable while the property remains in the hands of the debtor and subject to his control. How could such a preference be enforced? Only by the ordinary course of a suit against the debtor and execution thereon, all of which exists by the ordinary course of law, and supposes no preference. A preference necessarily implies that the property is put out of the control of the debtor and to be distributed by others or by operation of law. A mere insolvency so long as the debtor retains the management and control of his property, does not allow of the application of the law. The act looks to a legal insolvency, where the pro-

United States v. Clark.

perty is taken up by the law for distribution among the creditors of the debtor.

There is no difficulty in the construction of the act until we arrive at the last phrase. "legal bankruptcy." What is "legal bankruptcy ?" In 1797, when the act of Congress was passed, we had no bankrupt law; and therefore these words can have no reference to bankruptcy under a bankrupt law. The words seem in their connexion to have reference to the previous cases put in the section, and to point out some legal insolvency or some mode of proceeding by which the property of the debtor is taken out of his hands and to be distributed by others.

I know of no mode of enforcing a preference while the debtor is going on in the management of his own affairs; the only mode of proceeding in such a case is, to commence a suit against the debtor and go on to judgment and execution in the ordinary way. The concealment, therefore, of itself, would not be such a circumstance as to make the act apply and give rise to, the attaching of the priority of the United States, if Gilbert Stuart had remained in the possession and management of his property.

But in this case there has been a voluntary assignment by the debtor of his property, on the 28th August, 1819, within the meaning of the law.

The Supreme Court of the United States have decided, that the assignment must be of all the debtor's property: By which I understand, that it must be an assignment of all, as contradistinguished from a partial assignment, or professedly an assignment of part only of the debtor's property. The case put of a fraudulent omission of a part is not the only exception, but is mentioned, by way of illustration. Where an assignment purports to be general, and is understood and intended so to be, the omissions of a trifling article through mistake or accident, would not surely take the case out of the

United States v. Clark.

act. This would be inadmissible on every sound principle of construction. The true distinction is that which has already been suggested that where the omission does not show that the intention was that the assignment should be a partial one as opposed to a general one, the act applies, and the priority of the United States attaches.

Here the assignment purports on the face of it to be a general one. The schedules are headed "of the real property”— "of the personal property." The vouchers for his debts and all the various descriptions of property of Gilbert Stuart are set out with every possible particularity.

If the assignment does not on its face appear to be general, the onus probandi lies certainly on the United States. But here they have proved the generality of the assignment in the most satisfactory manner. When the assignment was executed, it was given out by the parties to be general. It was understood by John Stuart, junr. the other assignee, and so declared by Gilbert Stuart, that all his property was to be included. John Stuart, junr. tells him that all his property must be included. Gilbert Stuart says that he has done so. The defendant, immediately previous to the assignment, tells John Stuart, junr. that he does not owe Gilbert Stuart a dollar.

The defendant is concluded by all this from now disputing the generality of the assignment, and setting up the omission of the seven thousand four hundred dollars, which he has since acknowledged he owed Gilbert Stuart at the time of the assignment, for the purpose of defeating the priority of the United States. If this debt was reserved by fraud, then the priority is not defeated; if, because it was not deemed a legal debt, but only an honorary one, or was omitted by mistake, then also the priority attached; and in either case the omission of this debt is no objection to the right of priority on this ground.