Court Opinion

ID: 8814457
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:14:01.504673+00
Date Added: 2024-06-11T17:04:24.959042
License: Public Domain

HOOK, Circuit Judge
(dissenting). Section 3466 of the Revised statutes, which provides that “whenever any person indebted to the United States is insolvent * * * the debts due to the United States shall be first satisfied,” is a statulory adoption for this country of a public policy which has prevailed in England from a very early day. The right is one of preference in the sovereign over the claims of all private persons, .and is of universal application. No other statute should be construed to impair or lessen it, unless the intention to do so is clearly manifested.
With the above in mind, let us look at section 3468, R. S., which provides that—
“Whenever the principal in any bond given to the United States is insolvent, * * * and * * * any surety on the bond * * * pays to the United *66States the money due upon such bond, such surety * * * shall have the like priority. * * * ”
This is no more than a statutory declaration of the equitable doctrine of subrogation in favor of sureties. See United States v. Ryder, 110 U. S. 729, 4 Sup. Ct. 196, 28 L. Ed. 308. There is nothing in the_ language employed or in the decisions of the courts-applying it to indicate that it should be given a more enlarged construction. In the case of private rights subrogation is not allowed to work loss or injury to a lien or preferred creditor whose claim has not been wholly discharged, although the surety may have paid in full his obligation for part of it. See National Bank of Commerce v. Rockefeller, 98 C. C. A. 8, 174 Fed. 22, by this court. Much less should it be allowed to impair or lessen the sovereign preferential right of the government. In Reg. v. O’Callaghan, 1 Ir. Eq. 439, it was held that the surety of a person indebted to the government who pays the indebtedness does not succeed to the government’s right of priority, if there be a further amount owing it, though on a different account.
My Brothers say that such a construction of section 3468 is contrary to its express language and would deprive it of efficacy. It might be said that a contrary construction lessens materially the unqualified language of section 3466. I think, however, both sections' may be construed to give each full effect according to its terms. That should always be done, if possible. The government’s priority by section 3466 is over all private claims. The right given by section 3468 to the surety who pays his obligation in full is a “like priority”; that is to say, a priority over all private claims. But there is nothing in this to imply, and it does not follow, that the surety is thereby raised to an equal or pro rata status with the government as regards an unpaid demand it holds against the common debtor or his estate, whether on the same or another account. Statutes declaratory of old principles of public policy or of the common law should receive the old constructions, and in that way apparent inconsistencies may be avoided.
In think the order of the trial court should be reversed.