Source: https://supreme.justia.com/cases/federal/us/254/73/
Timestamp: 2019-04-22 08:25:18+00:00

Document:
Justia › US Law › US Case Law › US Supreme Court › Volume 254 › United States v. National Surety Co.
United States, and this construction is in harmony with a familiar rule of subrogation under which a surety liable only for part of a debt does not become subrogated to remedies available to the creditor unless he pays the whole debt or it is otherwise satisfied. P. 254 U. S. 75.
creditors. The Surety Company proved for the $3,150, and claimed that, under Revised Statutes, § 3468, [Footnote 2] it was entitled to a share in the distribution of the estate pro rata on an equality with the government. The net assets of the estate were less than the amount of the government's claim. The referee sustained the contention of the Surety Company, and his order was affirmed both by the district judge and by the Circuit Court of Appeals for the Eighth Circuit, 262 F. 62. The case comes here on writ of certiorari. 252 U.S. 577. The single question presented is whether, in the distribution of the bankrupt's estate, the United States has priority over the Surety Company.
"a surety pays the United States the money due upon . . . [a] bond, such surety . . . shall have the like priority for the recovery . . . of the moneys . . . as is secured to the United States."
"Sec. 3466. Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied, and the priority hereby established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate or effects of an absconding, concealed, or absent debtor are attached by process of law as to cases in which an act of bankruptcy is committed."
"Sec. 3468. Whenever the principal in any bond given to the United States is insolvent, or whenever, such principal being deceased, his estate and effects which come to the hands of his executor, administrator, or assignee, are insufficient for the payment of his debts, and, in either of such cases, any surety on the bond, or the executor, administrator, or assignee of such surety pays to the United States the money due upon such bond, such surety, his executor, administrator, or assignee, shall have the like priority for the recovery and receipt of the moneys out of the estate and effects of such insolvent or deceased principal as is secured to the United States, and may bring and maintain a suit upon the bond, in law or equity, in his own name, for the recovery of all moneys paid thereon."
Sheldon on Subrogation (2d ed.) § 127; Pomeroy, Equity Jurisdiction (4th ed.) § 2350; 25 R.C.L. 1318; Peoples v. Peoples Bros., 254 F. 489, 491-492; United States Fidelity & Guaranty Co. v. Union Bank & Trust Co., 228 F. 448, 455; National Bank of Commerce v. Rockefeller, 174 F. 22, 28.

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