Guarantee Title & Trust Co. v. Title Guaranty & Surety Co.,
224 U.S. 152 (1912)

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U.S. Supreme Court

Guarantee Title & Trust Co. v. Title Guaranty & Surety Co., 224 U.S. 152 (1912)

Guarantee Title & Trust Company v.

Title Guaranty & Surety Company

No. 188

Argued March 5, 1912

Decided April 1, 1912

224 U.S. 152


Under the general rule applicable to all sovereigns, the United States is not bound by the provisions of an insolvency law unless specially mentioned therein.

The Bankruptcy Act of 1867 and the Act of March 3, 1797, 1 Stat. 515, c. 20, now §§ 3467, 3468, 3469, Rev.Stat., by both of which all debts due the United States are given priority over all claims, were in pari materia, and the Bankruptcy Act of 1867 affirmed the Act of 1797. Lewis v. United States, 92 U. S. 618.

The Bankruptcy Act of 1898 was not an affirmation of the Act of 1797 or of Rev.Stat., § 3467, 3468, 3469, and the change of provision in regard to priority indicates a change of purpose in that respect.

Under a beneficent policy which favors those working for their daily bread and does not seriously affect the sovereign, Congress, in enacting the Bankruptcy Law of 1898, preferred labor claims and gave them priority over all other claims except taxes, and the courts must assume a change of purpose in the change of order.

Page 224 U. S. 153

In this case, held that even if a surety company which had paid the debt of the principal to the government was subrogated to the claim of the government and was entitled to whatever priority the government was entitled to, under the Bankruptcy Act of 1898, the claim not being for taxes, but a mere debt, was not entitled to priority in distribution of the bankrupt's assets over claims for labor preferred by the act.

174 F. 385 reversed.

The facts, which involve the construction of the Bankruptcy Act of 1898 in regard to priority of claims of the United States against the bankrupt, are stated in the opinion.

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