The circuit court has jurisdiction, on a bill in equity filed by
the United States against the debtor of their debtor, they claiming
a priority under the Act of 1799, c. 128, s. 65, notwithstanding
the local law of the state where the suit is brought allows a
creditor to proceed against the debtor of his debtor by a peculiar
process at law. The circuit courts of the union have chancery
jurisdiction in every state; they have the same chancery powers,
and the same rules of decision in all the states.
The United States is not entitled to priority over other
creditors under the Act of 1799, c. 128, s. 65, upon the ground of
the debtor having made an assignment for the benefit of creditors
unless it is proved that the debtor has made an assignment of all
his property.
Where the deed of assignment conveys only the property mentioned
in the schedule annexed and the schedule does not purport to
contain all the property of the party who made it, the
onus
probandi is thrown on the United States to show that the
assignment embraced all the property of the debtor.
Upon a bill filed by the United States, proceeding as ordinary
creditors against the debtor of their debtor for an account,
&c., the original debtor to the United States ought to be made
a party and the account taken between him and his debtor.
This was a bill in equity filed in the name of the United States
in the court below, stating that several judgments had been
obtained by the United States on duty bonds against Shoemaker &
Travers, and Jacob Shoemaker, and their sureties, amounting to the
sum of $5,292, which judgments were obtained in the District Court
of Pennsylvania at the February term of 1808, and upon which
executions
Page 17 U. S. 109
had issued which remained in the marshal's hands unsatisfied;
that after the execution of the duty bonds, but before they were
payable, to-wit, on 6 December, 1806, Shoemaker & Travers
became insolvent within the true intent and meaning of the act "to
regulate the collection of duties on imports and tonnage;" that on
1 February, 1808, goods, effects, money and credits of Shoemaker
& Travers to the amount of $6,000 had come to the hands of
Howland & Allen which, the bill alleged, they refused to
subject to the executions of the United States; it prayed that they
might be compelled to account for and deliver up these goods,
&c., in satisfaction of the claim of the United States, and for
an injunction in the meantime to restrain them from disposing of,
paying away, or in any manner applying the goods, &c.,
aforesaid, to any other object. The injunction was accordingly,
awarded.
An amendment to the bill stated that after the debts to the
United States accrued by bond as aforesaid, and after Shoemaker
& Travers had become insolvent, to-wit, on 6 December, 1806,
they made a voluntary assignment by deed of all their property for
the benefit of their creditors within the true intent and meaning
of the act of Congress aforesaid, and an exemplified copy of the
deed of assignment was annexed to the amended bill. The deed
recited that the parties being justly indebted to divers persons,
whose names are mentioned in a list thereto annexed, and unable at
present to pay the said debts, they assign to trustees therein
mentioned
Page 17 U. S. 110
all and singular the estate and effects contained in a schedule
annexed, in trust to pay the debts due the enumerated creditors,
and first that due to the United States. The schedule was entitled
"Schedule of property assigned by Shoemaker & Travers, and
Jacob Shoemaker, to the creditors of Shoemaker & Travers," and
contained many items of property, and among others, the proceeds of
the cargo of the brig
Deborah, which vessel was then at
sea and belonging to Howland & Allen but had been chartered by
Shoemaker & Travers.
Howland & Allen by their answer admitted the receipt, on 1
January, 1807, of 4,000 Spanish dollars, the property of Shoemaker
& Travers, and which the master of the Deborah had received in
Guadeloupe for Shoemaker & Travers, but insisted on their right
to apply it to an unliquidated debt of greater amount (composed of
freight, demurrage, damages, &c., the particulars of which were
detailed by the answer), due, as alleged, from Shoemaker &
Travers to them, and applied, by an entry in their books, to the
credit of Shoemaker & Travers at the time of the receipt of the
money aforesaid. They insisted, therefore, on the right of
retaining it. To this answer there was a general replication, and
the depositions of several witnesses were taken.
The court below decreed that the said Shoemaker & Travers
were and are indebted to the United States, and that they became
insolvent and made an assignment as alleged in the bill, and that
there was an outstanding unsettled demand existing in their favor
at the time of their insolvency against the
Page 17 U. S. 111
defendants arising from the voyage of the brigantine
Deborah, and which is still unsettled and unpaid, but the
court was not satisfied that the defendants, being merely debtors
to said insolvents, are by law liable to this process, and
thereupon decreed that the said bill be dismissed. From this decree
the present appeal was taken.
Page 17 U. S. 114
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the
Court.
The bill in this case was filed by the United States in the
Circuit Court of the District of Massachusetts to recover from the
defendants a sum of money in their hands alleged to be the money of
Jacob Shoemaker and Charles R. Travers, merchants and partners, who
are stated to be insolvents and to be indebted to the United States
for duties.
It appears that Shoemaker & Travers, on 6 December, 1806,
executed an indenture in which, reciting that they are justly
indebted to divers persons whose names are expressed in a list
thereto annexed and are unable at present to pay the said debts,
they assign to trustees therein mentioned all and singular the
estate and effects contained in a schedule annexed, in trust to pay
the debt due to the enumerated creditors, and first that due to the
United States. The schedule contains many items of property, and
among others the proceeds of the
Page 17 U. S. 115
cargo of the
Deborah, then at sea. The
Deborah
was the property of Howland & Allen, and on her coming into
port, her master delivered to her owners a sum of money which he
had received at Guadeloupe for Shoemaker & Travers, and which
is in the schedule annexed to the deed of assignment already
mentioned. At the hearing, the circuit court dismissed the bill on
the opinion that it was not sustainable. From this decree, the
United States has appealed to this Court, and now insists 1. that
it is a case in which a court of equity has jurisdiction; 2. that
the United States is entitled to priority, this being a case within
the provisions of the act of Congress.
On the first point, no difficulty would be found had the proper
parties been before the court. A trust exists, and an account would
be proper to ascertain the sum due from Howland & Allen to
Shoemaker & Travers. The case, even independent of these
circumstances, would be proper for a court of chancery but for the
act of Massachusetts which allows a creditor to sue the debtor of
his debtor. Still the remedy in chancery, where all parties may be
brought before the court, is more complete and adequate, as the sum
actually due may be, there in such cases ascertained with more
certainty and facility, and as the courts of the Union have a
chancery jurisdiction in every state, and the Judiciary Act confers
the same chancery powers on all and gives the same rule of
decision, its jurisdiction in Massachusetts must be the same as in
other states.
Page 17 U. S. 116
This being a case of which a court of chancery may take
jurisdiction, we are next to inquire whether it is one in which the
United States is entitled to priority. This depends on the fact
whether the deed of assignment executed by Shoemaker & Travers
was a conveyance of all their property. The words of the deed,
after reciting the motives which led to it and the consideration,
are "have granted, &c., and by these presents, do grant," "all
and singular the estate and effects which is contained in the
schedule hereunto annexed, marked A." The caption of the schedule
is, "Schedule of property assigned by Shoemaker & Travers, and
Jacob Shoemaker to the creditors of Shoemaker & Travers." The
deed, then, conveys only the property contained in the schedule,
and the schedule does not purport to contain all the property of
the parties who made it. In such a case, the presumption must be
that there is property not contained in the deed, unless the
contrary appears. The
onus probandi is thrown on the
United States.
It is contended for the United States that the clause which
gives the power to sell, by using the words "all the property of
them, the said Shoemaker & Travers, and Jacob Shoemaker,"
indicates clearly that this deed does convey all their property.
But these words are explained and limited by those which follow so
as to show that the word "all" is used in reference to the
schedule, and means all the property in the schedule. The
depositions do not aid the deed. The question whether the whole
Page 17 U. S. 117
property is assigned is still left to conjecture, and this,
being the fact on which the preference of the United States is
founded, ought to be proved. Not being proved, the Court is of
opinion this is not a case in which it can be claimed.
But the United States is the creditor of Shoemaker &
Travers, and has a right, as creditor, to proceed against their
property in the hands of Howland & Allen. It has a right to so
much of that property as remains after the debt due to Howland
& Allen shall be satisfied. But to ascertain this amount, an
account between Holland & Allen and the debtors to the United
States should be taken, and the persons against whom the account is
to be taken should be parties to the suit. Although if they cannot
be found within the district of Massachusetts, the process of the
court cannot reach them, still they may appear without coercion. At
any rate, an account ought to be taken, since the matter
controverted between the parties is more proper to be stated by a
master than to be decided in court without such report.
The decree is to be reversed and the cause remanded with
directions to allow the plaintiffs to amend the bill and make new
parties. The United States, will, of course, be at liberty to take
testimony showing the assignment to be of all the property of the
parties who made it.
DECREE. This cause came on to be heard on the transcript of the
record of the Circuit Court for the District of Massachusetts, and
was argued by counsel,
Page 17 U. S. 118
on consideration whereof this Court is of opinion that the
circuit court erred in dismissing the bill of the plaintiffs and
that its decree ought to be reversed, and it is hereby reversed and
annulled, and it is further ordered that the said cause be remanded
to the said circuit court with directions to allow the plaintiffs
to amend their bill and make new parties.
