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United States v. John Mott.

Two hundred and thirty dollars of the assigned property had been received by Coulter, and Scribner and Hitchcock were indebted for a part which they had purchased of the assignees. The residue was received by Mott and Williams.

A cross bill had been filed in the cause by Mott and Williams, for the purpose of bringing Coulter's executors directly before the Court, but it was never brought to a hearing, in consequence of the suit's being compromised on the coming in of the Master's report at the next term.

R. TILLOTSON, D. A. for the complainants.

J. O. HOFFMAN and H. WHEATON for the defendants, Mott and Williams, insisted

1. That the assignment here was not a voluntary assignment within the meaning of the act of 1797. It was made by Blanche under such circumstances as showed that it was not an act of consent on his part, but of absolute necessity.

2. That the nature of the transaction rebutted every presumption of fraud. The only motive of the parties was a desire to benefit the United States and the sureties on the bond, instead of defrauding them. It was also an assignment for a new and valuable consideration.

3. The priority of the United States does not attach until the insolvency of the debtor is testified by some overt act." In this case the first act which would be so considered, was the execution of the assignment, and the equity of Mott and Williams was older than the assignment.

4. Coulter, by becoming a party to the assignment, was estopped from denying its validity. Yet this suit is manifestly by the procurement of his executors, to reverse the order of the trusts in their favour.

5. The Court are bound to look at the relative equities of the defendants. The United States can resort to the property

a 2 Cranch Rep. 381.

United States v. John Mott.

of Coulter as well as the assigned property. But Mott and Williams, although as against Coulter they are entitled to hold the assigned property, yet if deprived of this, they are without any remedy against his estate. It is precisely analogous to the case of two funds, where a Court of Equity will compel a party who can resort to either, to proceed so as not to injure another party who can resort to one only. And this rule applies as well to the crown as to individuals.

That the estate of Coulter was amply sufficient to pay the debt due to the United States, is admitted by their suffering judgment to pass against them by default. If they had not sufficient assets, they should have pleaded the fact.

For these reasons it was insisted, that the Court ought not to make a decree against Mott and Williams, until the United States should have taken out execution and levied on the estate of Coulter; or that they should make a decree in favour of the United States, directly against the executors of Coulter; or that, in the event of a decree's being made against Mott and Williams, one should also be made in their favour against the estate of Coulter.

D. B. OGDEN, G. GRIFFEN, and B. HAIGHT for the defendants, Prior and Hornblower, replied,

That the doctrine of election between two funds did not apply it might, had both funds belonged to Blanche. If it did apply, however, as against a surety the Court would not turn the United States round. It does not appear that there is any other fund than the assigned property. Non constat that Coulter's executors have any of their testator's property. At any rate, there is no evidence that the fund is adequate. Besides, Coulter's executors are not before the Court so that

b 1 Vern. 445. 10 Mod. 488. Amb. 614. 8 Ves. 388. 391. 9 Ves. 209.
c 9 Yes. 388.

United States v. John Mott.

a decree of the kind asked for,' can be made against them. They are brought here to answer only for the property assigned by Blanche. It is admitted, that Mott and Williams have no remedy at law against Coulter's estate, and a Court of Equity will not charge a surety any further than he is chargeable at law. If Coulter were answerable here for the effect of his covenant in the assignment, that covenant is only to execute the trusts and not to indemnify Mott and Williams. Besides, it is evident Coulter became a party to the assignment, under a mistake as to the facts. He, as well as the rest, supposed that the property would be sufficient to pay all Blanche's debts-or the other parties deluded him into the assignment by such a representation. If the doctrine of election between two funds were not inapplicable here, a case cannot be produced where the property of the principal debtor has been left, and that of a surety resorted to. But the assignment is illegal and void; and if for one purpose, it is for all, and no body can claim under it. It is a fraud upon the United States. It also creates a preference, which equity discountenances. Equality among creditors is equity. Equity will not decree the performance of an unjust agreement. Nor will it indirectly lend its aid to an agreement of which it will not decree a specific performance. If Coulter was bound by the assignment to indemnify Mott and Williams, they can sue his executors for whatever they may be obliged to pay the United States.

LIVINGSTON, J. Whether the United States are entitled to the priority, which it is the object of their bill to establish, and which is the first question arising out of the pleadings, is one of no difficulty, considering the decisions which. have already been made on the fifth section of the act, to provide more effectually, for the settlement of accounts between

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United States v. John Mott.

the United States and receivers of public money, passed the 3d March, 1797.

The words of this section, as far as they bear on the present case, are, that "where any revenue officer, or other person, hereafter becoming indebted to the United States, by bond or otherwise, shall become insolvent, the debt due the United States shall be first satisfied; and the priority hereby established shall be deemed to extend, as well to cases in which a debtor, not having sufficient property to pay all his debts, shall make a voluntary assignment thereof, as to cases in which an act of legal bankruptcy shall be committed."

The debt of Blanche to the United States being admitted, as also the execution by him of the deed, bearing date the 20th of May, 1816, it remains only to examine the character of this instrument, and the situation of the grantor at the time of its execution. If he had not then sufficient property to pay all his debts, and if it were a voluntary assignment of his property-which has been decided to mean all the debtor's property, the right of preference in the United States must necessarily follow.

It was argued by all parties as if it were necessary, that the assignment should appear to be for the benefit of all the creditors of the insolvent. This would be necessary if these bonds were for the payment of duties, in which case the assignment must not only be voluntary, but for the benefit of creditors, which words are not found in the act which governs the present case-But if the counsel are right and the Court be mistaken in this respect, and the assignment, to give rise to the priority here claimed, ought to be for the benefit of creditors or of all the creditors, there will be no difficulty in fixing on it this characteristic also.

That the assignment, although for a valuable consideration, was voluntary within the meaning of the act of Congress, that is, made freely and without any legal compulsion, is not

United States v. John Mott.

denied. There is some controversy whether it included all the property of the debtor, without which, under the decision in the case of the United States against Hoe and others, a priority would not attach, unless indeed it should appear, that for the purpose of evading the provisions of the law, a trifling part of the estate had been omitted.

If the Court had nothing for its guide but the assignment itself, it would not be a very forced construction of the instrument, taken altogether to regard it as a conveyance of all the debtor's property. It is professedly so of all his personal estate, without any exception, and it also comprises, as appears by the recitals, all his real estate in New-Jersey and New-York. This taken in connexion with the object of the assignment, would leave but little room to suppose that there might be lands elsewhere than in the states of New-York and New-Jersey, which were not included in this deed.

But whatever doubt might otherwise rest on this part of the case, it is dispelled by the following testimony produced by the United States, who have very properly taken on themselves the burthen of proving the fact; the deed not being as explicit as it might have been. Besides other witnesses who were well acquainted with the situation of Blanche, and who establish the fact, in a manner which ought to be satisfactory, the debtor himself has been examined as a witness,-and settles beyond controversy, that the deed did cover the whole of his property.

It is objected that Blanche is interested: but whatever feeling he may have, it must in point of interest be unimportant to him whether the United States succeed in this suit, and if they do, whether they are paid out of the estate assigned to Mott, Vanderbilt, and Coulter, or out of the private property of the latter. If the United States fail in this action, he continues their debtor-if they be paid out of the assigned property, his debt to Mott and Williams will be revived pro tanta;

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