United States v. Hack
IN error to the circuit court of the United States for the district of Maryland.
The United States instituted an action of assumpsit against the defendants, in the circuit court of the United States for the district of Maryland. The defendants pleaded non assumpsit, and the case was submitted to the court by the counsel for the plaintiffs and the defendants, on the following statement of facts agreed.
'It is agreed between the parties in this case, by their counsel, that John Stouffer is largely indebted to the plaintiffs on sundry judgments rendered against him on customhouse bonds; that the said John Stouffer was, at the date of the said bonds, and of the rendition of the said judgments, a partner in trade with his brother Jacob Stouffer, and so continued until the execution of the deed of trust hereinafter referred to: that the said John and Jacob Stouffer, becoming embarrassed and insolvent in their affairs, on the 19th day of May 1832, executed a deed of trust to and in favour of the defendants, of all their joint and partnership property, for the benefit of their joint and partnership creditors, having no private or undivided estate; that the said property is not sufficient for the payment of all said creditors, but that the said John Stouffer's undivided half, now in the possession of the said trustees, amounts to nine hundred and seventy-four dollars and seventy-one cents.
'It is also agreed that the amount of the unsatisfied judgments of the United States against the said John Stouffer is, at this date, two thousand one hundred dollars, and upwards, after exhausting his private and individual estate. And the amount now in the possession of the aforesaid trustees, being the proceeds of the said partnership estate, is one thousand nine hundred and forty-nine dollars forty-two cents, one half of which is nine hundred and seventy-four dollars seventy-one cents.
'Upon the foregoing statement of facts, the district attorney contends that the plaintiffs are entitled to receive from the defendants the sum of nine hundred and seventy-four dollars and seventy-one cents, being the proceeds of John Stouffer's undivided half of, in, and to the aforesaid partnership estate, to be applied to the satisfaction of the aforesaid judgments recovered against the said John Stouffer.
'The counsel for the defendants contends that the plaintiffs are not entitled to receive any thing from the defendants in this action, on the ground that the money in their hands is the proceeds of partnership property, the whole of which is inadequate to the entire payment of the partnership debts; and that the plaintiffs are creditors of John Stouffer only, and not of the said partners. The question submitted to this court is, whether the plaintiffs are entitled to recover from the defendants in this case the said sum of nine hundred and seventy-four dollars and seventy-one cents, being one half of the aforesaid partnership estate. It is finally agreed that all errors in pleading be mutually released, and that either party shall have the privilege of prosecuting a writ of error to the supreme court of the United States.'
The circuit court gave judgment for the defendants; and the United States prosecuted this writ of error. The case was argued by the Attorney-General, for the United States. No counsel appeared to argue the cause for the defendants.
For the United States, the Attorney-General contended, that, under the provisions of the acts of congress, the United States, as judgment creditors of John Stouffer, were entitled to be first paid to the extent of his share of the property assigned to the defendants, in preference to the creditors of the partnership; and that the judgment of the court below ought, therefore, to be reversed.
The Attorney-General conceded that, by the general law of partnership, both in the United States and in England, the property of the partnership was first liable to the debts of the firm; and although an execution may go against such effects in favour of a separate creditor of one of the partners, yet the purchaser under such proceedings, could only take the property of the partner subject to such debts. He referred to the authorities on this point in the reports of cases decided in the United States. 1 Gallison 367; 1 Peters's C. C. R. 460; in the matter of Smith, 16 Johnson 102, and the cases in the notes; 15 Mass. Rep. 82; 1 Wendell's Rep. 311; 2 Wendell's Rep. 554.
This being the general law of partnership, and this court having decided in the case of Conard v. The Atlantic Insurance Company, 1 Peters 489, that the priority of the United States does not divest anterior liens, the foundation of the claim of the United States in this case can rest only on the local law of Maryland.
The case of Patterson, 2 Harris and M'Henry 463, arose under the act of the legislature of Maryland, and was decided in 1790. That act is now in force. The act was passed in 1715, chap. 4 of the laws of that year, and it authorizes a debtor to pursue the property of his creditor wherever it may be found. If, in the state of Maryland, a debtor may proceed under this law against partnership property, may not the United States? No case entirely applicable to the case before the court, has been found in the Maryland reports. In a case where the private property of the parties had gone into the partnership effects, would not the rights of the creditors be equal? Suppose an importation of goods liable to duties had been passed over to a partnership, would not the United States have a right to call on the partnership for the unpaid duties?
The Attorney-General stated that he had found this case on the docket of the court; and had felt himself bound to submit it for decision with these remarks.
Mr Justice THOMPSON delivered the opinion of the Court.