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indemnify him from his responsibility as surety, and to secure him from his existing and future endorsements for the mortgagor at bank ; and the mortgage was held valid against the claim of the United States, although the collector was, in point of fact, unable to pay all his debts at the time the mortgage was given, and although the mortgagee knew, when he took the mortgage, that the mortgagor was largely indebted to the United States.
Afterwards, in Harrison v. Sterry, it was held, that in the distribution of a bankrupt's effects, the United States were entitled to their preference, although the debt was contracted by a foreigner in a foreign country, and the United States had proved their debt under a commission of bankruptcy. Though the law of the place where the contract is made, be, generally speaking, the law of the contract, yet the right of priority forms no part of the contract. The insolvency which was to entitle the United States to a preference, was declared, in Prince v. Bartlett, to mean a legal and known insolvency, manifested by some notorious act of the debtor, pursuant to law. This was giving to the world some reasonable and definite test by which to ascertain the existence of the latent and dangerous preference given by law to the United States. In this last case, the effects of an insolvent debtor, duly attached in June, were considered not to be liable to the claim of the United States, on a custom-house bond given prior to the attachment, and put in suit in August following. The private creditor had acquired a lien by his attachment, which could not be devested by process on the part of the United States subsequently issued. Nor will the lien of a judgment creditor, duly perfected, be displaced by the mere priority of the United States. The word insolvency, in the acts of Congress, of 1790, 1797, and 1799, means a legal insolvency, and a mere state of insolvency, or inability in a debtor to pay all his debts, gives no right of preference to the United States, unless it be accompanied by a voluntary assignment of all the property, for the benefit of creditors, or by some legal act of insolvency. If, before the right of preference has accrued, the debtor has made a bona fide conveyance of his estate to a third person, or has mortgaged the same to secure a debt, or if the property has been seized under an execution, the property is devested from the debtor, and cannot be made liable to the United States.*
a 5 Cranch, 289.
6 8 Crunch, 431.
The United States have, accordingly, a preference as creditors, to the extent above declared, in four cases, viz. (1.) In the case of the death of the debtor without sufficient assets ; (2.) bankruptcy or legal insolvency, manifested by some act pursuant to law; (3.) a voluntary assignment by the insolvent of all his property, to pay his debts; (4.) in the case of an absent, concealed, or absconding debtor, whose effects are attached by process of law. The priority was intended to operate only where, by law, or by the act of the debtor, his property was sequestered for the use of his creditors ; and it is proper that this prerogative right of the United States should be strictly construed, and precisely defined, for it is in derogation of the general rights of creditors.
The government was a privileged creditor, under the Roman law, and entitled to priority in the payment of debts. The cessio bonorum was made subject to this priority. This is generally the case, in all modern bankrupt and insolvent laws. In England, the king's claim is preferred to that of a subject, provided the king's process was commenced before the subject had obtained judgment. As to the fiscal lien of the government of the United States, it was held, in Harris v. Dennie," that the government had a lien on goods imported, for the payment of duties accruing on them, and not secured by bond; and that the United States were entitled to the custody of the goods until the duties were paid or secured, and any attachment of the goods under state process, during such custody, was void. On the other hand, it was held, that the government had no general lien on the goods of the importer, for duties due by him upon other importations."
a Thellusson v. Smith, 2 Wheaton, 399. Conard v. The Atlantic Insurance Company, 1 Peters' U. S. Rep. 386.
b Watkins v. Otis, 2 Pickering, 102. c Stat. 23 Hen. VIII. ch. 39.
2. The next question which called forth a construction from every part of the government, as to the implied powers of Congress, was, whether Congress had power to incorporate a bank. In the year 1791, the secretary of the treasury had recommended the institution of a national bank, as being of primary importance to the prosperous administration of the finances, and of the greatest utility in the operations connected with the support of public credit. But the bill for establishing a bank was opposed in the house of representatives, as not authorized by the constitution. It was contended, that the government of the United States was limited to the exercise of the enumerated powers, and that the power to incorporate a bank was not one of them, and, if vested in the government, it must be an implied power; and it was contended, that the power given to Congress to pass all laws necessary and proper to execute the specified powers, must be limited to means necessary to the end, and incident to the nature of the specified powers. On the other hand, it was urged in favour of the bill, that incidental, as well as express powers, necessarily belonged to every government, and that when a power was delegated to effect particular objects, all the known and usual means of effecting them passed as incidental to them; and it was insisted, that a bank was a known and usual instrument, by which several of the enumerated powers of government were exercised. After the bill had passed the two houses of Congress, the question touching its constitutionality was agitated with equal ability and ardour in the executive cabinet. The secretary of state, and the attorney general, conceived that Congress had transcended their powers, but the secretary of the treasury maintained the opposite opinion. Their respective opinions were founded on a train of reasoning, denoting great investigation of all the leading and fundamental principles of the constitution, and they were submitted to the consideration of the President of the United States. It was argued against the constitutionality of the act, that the power to incorporate a bank was not among the enumerated powers, and to take a single step beyond the boundaries specially drawn around the powers of Congress, would be to take possession of an undefined and undefinable field of power; that though Congress were authorized to make all laws
Congress may create a bank.
a 3 Peters' U.S. Rep. 292.
b Jo Maryland, by statute, passed in 1778, the commencement of a suit by the state against a public debtor, created a lien on the lands of the debtor, and a preference over all other creditors, who had not, prior to the commencement of the suit, secured a lien by judgment, mortgage, or otherwise. Davidson y. Clayland, 1 Harr. & Johns. 546.
As to the lien of judgments obtained by individuals in the federal courts, it was decided in the Circuit Court of the U.S. in New York, in November, 1829, in the case of Konig v. Bayard, that judgments in the Circuit and District Courts of New-York were a lien upon lands as against subsequent purchasers from the time they were regularly docketed, according to the practice of those courts, and that the usage of docketing those judgments had prevailed since 1795. The same doctrine was assumed in reference to judgments in the federal courts in Pennsylvania, in tlie case of Conard v. Atlantic Ins, Co. 1 Peters' U. S. Rep. 386 ; and the principles contained in this last case were reviewed and confirmed, in Conard v. Nicoll, 4 Peters' U. S. Rep. 291.
proper for carrying into execution the enumerated powers, they were confined to those means which were necessary, and not merely convenient. It meant those means without which the grant of the power would be nugatory, and that if such a latitude of construction was allowed, as to give to Congress any implied power on the ground of conveVOL. I.
nience, it would swallow up all the list of enumerated powers, and reduce the whole to one phrase. On the other hand, it was contended, that every power vested in a government was, in its nature, sovereign, and gave a right to employ all the means fairly applicable to the attainment of the end of the power, and not specially precluded by specified exceptions, nor contrary to the essential ends of political society; that though the government of the United States was one of limited and specified powers, it was sovereign with regard to its proper objects, and to its declared purposes and trusts; that it was incident to sovereign power to erect corporations, and, consequently, it was incident to the United States to erect one, in relation to the objects intrusted to its management; that implied powers are as completely delegated as those which are expressed, and the power of erecting a corporation may as well be implied as any other instrument or means of carrying into execution any of the specified powers; that the exercise of the power in that case had a natural relation to the lawful ends of the government; and it was incident to the sovereign power to regulate, and to employ all the means which apply with the best advantage to that regulation ; that the word necessary, in the constitution, ought not to be confined to those means, without which the grant of power would be nugatory, and it often means no more than necdful, requisite, useful, or conducive to, and that was the true sense in which the word was used in the constitution. The relation between the measure and the end, was the criterion of constitutionality, and not whether there was a greater or less necessity. or utility. The infinite variety, extent, and complexity, of national exigencies, necessarily required great latitude of discretion, in the selection and application of means; and the authority intrusted to government ought, and must be exercised, on principles of liberal construction.
President Washington gave these arguments of his cabinet a deliberate and profound contemplation, and it termi-