US SUPREME COURT DECISIONS

The right of priority of payment of debts due to the government is a prerogative of the Crown of England, well known to the common law. It is founded not so much upon any personal advantage to the sovereign as upon motives of public policy to secure an adequate revenue to sustain the public burdens and discharge the public debts.

The claim of the United States to priority does not stand upon any sovereign prerogative, but is exclusively founded on the actual provisions of our own statutes. The same policy which governed in the case of the royal prerogative may be clearly traced in their statutes, and as that policy has mainly a reference to the public good, there is no reason for giving to them a strait and narrow interpretation. Like all other statutes of this nature, they ought to receive a fair and reasonable interpretation according to the just import of their terms.

The priority of payment out of the estates of insolvents in favor of the United States was, under the statutes of the United States, first applied to bonds for the payment of duties and to persons engaged in commerce.

The term "due," as applied to debts, is sometimes used to express the mere state of indebtment, and then it is equivalent to "owed" or "owing." And it is sometimes used to express the fact that the debt has become payable.

The priority of the United States extends as well to debts by bonds for duties which are payable after the insolvency or decease of the obligor as to those actually payable or due at the period thereof.

In the strictest sense, the bond for duties is debitum in praesenti,

although, looking to the condition, it may be properly said to be solvendum in futuro. It is in this sense that the legislature is to he understood in the use of the words "debt due to the United States." Wherever the common law would hold a debt to be debitum in praesenti, solvendum in futuro, the statutes giving the United States priority embrace it just as much as if it were presently payable.

The facts of the case upon which the question submitted to this Court arose were as follows:

William H. Lippett, a merchant of Wilmington, North Carolina, was, on 14 October, 1828, indebted to the United States and to sundry persons, and among others to the State Bank of North Carolina, and on that day he made a general assignment of all his property to Talcott Burr in trust to pay his creditors. The assignment directed that the sum of $16,612.47 chanrobles.com-red

Page 31 U. S. 30

should be paid to particular creditors, and that the residue of the property assigned should be appropriated to the payment of bonds for duties to the United States. At the time of the assignment, Mr. Lippett had given bonds to the United States for duties on merchandize amounting to $7,486.86, of which bonds but one only, amounting to $419.97, was due and unpaid when the assignment was executed.

In the cause in the circuit court, the question arose

"whether the priority to which the United States are entitled in case of a general assignment made by the debtor of his estate for the payment of debts comprehends a bond for the payment of duties executed anterior to the date of the assignment, but payable afterwards."

Upon this question the judges differed in opinion, and, on motion of the attorney of the United States, the point of law on which the disagreement arose was stated under the direction of the said judges and certified under the seal of the court to the Supreme Court of the United States, to be finally decided. chanrobles.com-red

Page 31 U. S. 34