1. Indebtedness of a bank for Indian moneys, individual and
tribal, deposited with it by the Superintendent of an Indian
Reservation and secured by a bond given by the bank to the United
States is an indebtedness to the United States within Rev.Stats. §
3466. P. 269 U. S.
2. Section 3466, Rev.Stats., is to be liberally construed in
favor of the United States. Id.
3. The Priority Act extends to all debts due the United States
from insolvent living debtors when their insolvency is shown in one
of the ways specified in § 3466. P. 269 U. S.
4. The specified ways include all cases in which the insolvent
debtor makes a voluntary assignment of his property, without regard
to the purpose or manner of the assignment, and all in which an act
of bankruptcy is committed under the laws of a state or a national
bankruptcy law, and the Act does not expressly require that the
debtor should be divested, or that the person on whom is imposed
the duty to pay the United States first, shall have become
invested, with the title to the debtor's property. P. 269 U. S.
5. An act may be "an act of bankruptcy" within § 3466 although
the debtor, being a bank, is excepted from the operation of the
Bankruptcy Law. P. 269 U. S.
6. Construed together, §§ 3466 and 3467 mean that a debt due the
United States is required first to be satisfied when possession and
control of the insolvent's estate are given to any person charged
with the duty of applying it to payment of the debts of the
insolvent as the rights and priorities of creditors may be made to
appear. P. 269 U. S.
7. Where the property and business of an Oregon bank were
placed, through a resolution of its directors, in the exclusive
possession and control of the state Superintendent of Banks to be
administered and disposed of for the benefit of creditors pursuant
to Oregon Ls. §§ 6220-6223, under which the Superintendent performs
the function of assignee, receiver, or trustee for the liquidation
of the debts
Page 269 U. S. 484
of the insolvent, held
that, within the meaning of the
Priority Act, there was a voluntary assignment, and also an act of
bankruptcy within the definition of the Bankruptcy Law. P.
269 U. S.
8. General expressions in an opinion are to be taken in
connection with the case under consideration. P. 269 U. S.
299 F. 705 affirmed.
Appeal from a decree of the circuit court of appeals which
affirmed a decree of the district court (295 F. 331) in favor of
the Guaranty Company in its suit to require the Oregon
Superintendent of Banks to pay first, out of the assets of an
insolvent bank, a debt to the United States which had been assigned
to the plaintiff.
Page 269 U. S. 485
MR. JUSTICE BUTLER delivered the opinion of the Court.
January 28, 1922, the Superintendent of the Klamath Indian
Reservation had on deposit with the First State & Savings Bank
of Klamath Falls, Oregon, $96,000, Indian moneys, individual and
tribal. The bank had given a bond to the United States, with
appellee as surety, to secure the payment of the deposit. It was
Page 269 U. S. 486
and, on that day, suspended payment. Because of its condition,
the board of directors passed a resolution giving full control of
its affairs to appellant. Pursuant to the laws of the state, he
took possession and control of its property and business for the
purpose of liquidation. Appellee paid the amount of the deposit to
the superintendent of the reservation, and received from the United
States an assignment of its claim against the bank, and appellee
has the priority, if any, that belonged to the United States. R.S.
§ 3468. It claimed that, under R.S. § 3466, it should be paid in
full out of the bank's assets prior to any payment on account of
unsecured or unpreferred claims. Appellant denied priority, but
allowed the claim as one not preferred. Appellee brought this suit
in the District Court of Oregon to enforce priority. The decree
went in its favor (295 F. 331), and was affirmed by the circuit
court of appeals. 299 F. 705. The case is here on appeal. Section
241, Judicial Code.
Section 3466 provides:
"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 and 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."
Section 3467 provides:
"Every executor, administrator, or assignee, or other person,
who pays any debt due by the person or estate from whom or for
which he acts before he satisfies and pays the debts due to the
United States from such person or estate shall become answerable in
his own person and estate for the debts so due to
Page 269 U. S. 487
the United States, or for so much thereof as may remain due and
It was admitted that the total value of the bank's assets was
less than its debts, and that it was insolvent. Section 6221,
Oregon Laws; National Bankruptcy Act of July 1, 1898, c. 541, § 1,
30 Stat. 544. The lower courts rightly held that the amount owed by
the bank on account of the deposit in question was a debt due to
the United States.
Appellee is entitled to priority if, within the meaning of §
3466, the bank made a voluntary assignment of its property or
committed an act of bankruptcy.
That section is to be liberally construed. In Beaston v.
12 Pet. 102, Mr. Justice McKinley,
speaking for the Court, said (p. 37 U. S.
"All debtors to the United States, whatever their character, and
by whatever mode bound, may be fairly included within the language
used . . . And it is manifest that Congress intended to give
priority of payment to the United States over all other creditors
in the cases stated therein. It therefore lies upon those who claim
exemption from the operation of the statute to show that they are
not within its provisions. . . . As this statute has reference to
the public good, it ought to be liberally construed.
States v. State Bank of North Carolina,
6 Pet. 29.
As this question has been fully decided by this Court, other
authorities need not be cited."
The Bankruptcy Act does not give the United States priority as
to debts, but that Act does not apply to banks, and there has been
no Act of Congress indicating any change of purpose as to debts due
from them to the United States. Cf. Davis v. Pringle,
268 U. S. 315
268 U. S.
-318; Sloan Shipyards v. United States Fleet
Corporation, 258 U. S. 549
258 U. S. 574
Guarantee Co. v. Title Guaranty Co., 224 U.
, 224 U. S. 158
There exist now the same reasons for a liberal construction of the
priority act as when the rule was laid down.
The act applies to all debts due from deceased debtors whenever
their estates are insufficient to pay all creditors,
Page 269 U. S. 488
and extends to all debts due from insolvent living debtors when
their insolvency is shown in any of the ways stated in § 3466. The
decisions of this Court show that no lien is created by the
statute, that priority does not attach while the debtor continues
the owner and in possession of the property, that no evidence can
be received of the insolvency of the debtor until he has been
divested of his property in one of the modes stated, and that
"whenever he is thus divested of his property, the person who
becomes invested with the title is thereby made a trustee for the
United States, and is bound to pay their debt first out of the
proceeds of the debtor's property."
Beaston v. Farmers' Bank, supra, 37 U. S. 133
and cases cited; United States v. Oklahoma, 261 U.
, 261 U. S.
Appellant, emphasizing the view that the priority act does not
apply unless insolvency is manifested in one of the modes there
indicated, contends that the resolution of the board of directors
was not a voluntary assignment, and did not divest the bank of the
title; that, as the Bankruptcy Act does not apply to banks, there
was no act of bankruptcy committed; that, under the state law,
title remains in the bank after the superintendent takes possession
and until he disposes of the property in the course of liquidation.
And, to support the last contention, he cites United States F.
& G. Co. v. Bramwell,
108 Or. 261, 287. The question in
that case was whether the state, as depositor in an insolvent bank
taken over by the superintendent of banks, was entitled to priority
as a sovereign right. The court held that it was, that its right
was not defeated by the taking of the property by an administrative
officer of the state before the state asserted its claim for
priority, and that the bank's title was not divested until the
assets were sold in the course of liquidation.
The specified ways in which insolvency may be manifested include
all cases in which an insolvent debtor makes
Page 269 U. S. 489
an assignment of his property; there is no exception, and no
regard is had to the purpose or manner of the assignment, and they
include all cases in which an act of bankruptcy is committed under
the laws of a state or under a national bankruptcy law.
4 Pet. 291, 29 U. S.
-308; United States v. Oklahoma, supra,
261 U. S. 262
The priority act does not expressly require that the insolvent
debtor should be "divested," or that the person on whom is imposed
the duty to pay the United States first shall become "invested"
with the title. Appellant, arguing that such transfer of title is
necessary, stresses general statements to that effect from opinions
of this Court. See United States v.
3 Cranch 73, 7 U. S. 91
Conard v. Atlantic Insurance
1 Pet. 386, 26 U. S. 439
Beaston v. Farmers' Bank, supra, 37 U. S. 133
37 U. S. 136
United States v. Oklahoma, supra, 261 U. S. 259
None involved the legal effect of acts similar to those presented
here. It is a rule of universal application that general
expressions used in a court's opinion are to be taken in connection
with the case under consideration. Cohens v.
6 Wheat. 264, 19 U. S. 399
The language on which appellant relies was properly used in respect
of the matters presented for decision in the cases cited by him.
But, when the passages are read in the light of the facts
considered and questions decided, they do not establish that the
things done in this case did not in substance and effect amount to
a voluntary assignment or to an act of bankruptcy.
Section 3a(4) of the Bankruptcy Act, as amended February 5,
1903, c. 487, 32 Stat. 797 provides:
"Acts of bankruptcy by a person shall consist of his having . .
. (4) made a general assignment for the benefit of his creditors,
or, being insolvent, applied for a receiver or trustee for his
property or because of insolvency a receiver or trustee has been
put in charge of his property under the laws of a state, of a
territory, or of the United States."
The fact that banks are not subject to that Act
Page 269 U. S. 490
is of no moment. The reference to an act of bankruptcy in § 3466
is general, and is for the purpose of defining one of the ways in
which the debtor's insolvency may be manifested. The priority given
does not depend on any proceeding under the bankruptcy laws of
state or nation. There is nothing in the language of the section,
and no reason has been suggested, to indicate a purpose to give
priority in the case of a debt due the United States from a debtor
subject to the Bankruptcy Act and to deny priority, under like
circumstances, when the debt is due from an insolvent bank or other
debtor to whom the Act does not apply. The specification in § 3466
of the ways insolvency may be manifested is aided by the
designation in § 3467 of the persons made answerable for failure to
pay the United States first from the inadequate estates of deceased
debtors or from the insolvent estates of living debtors. The
persons held are "every executor, administrator, or assignee, or
other person." The generality of the language is significant. Taken
together, these sections mean that a debt due the United States is
required first to be satisfied when the possession and control of
the estate of the insolvent is given to any person charged with the
duty of applying it to the payment of the debts of the insolvent,
as the rights and priorities of creditors may be made to appear.
The statutes of the state (§§ 6221-6223) provide for the handing
over of the property of insolvent banks to the state superintendent
of banks to be by him administered and disposed of for the benefit
of creditors. By the resolution of the directors in this case, the
bank was wholly divested of and business, and the exclusive
Page 269 U. S. 491
business, and the exclusive possession and control of them
passed to appellant for the purpose of liquidating the debts of the
bank. And, under the state law, when he took possession of its
assets, liens thereon, amounting in all to more than the value of
the property, attached in favor of the depositors. Section 6220(h);
Upham v. Bramwell,
105 Or. 597, 606-609, 613. He was
empowered, and it became his duty, to collect all debts and claims
belonging to the bank, to sell its property under the direction of
the court, and to execute and deliver to purchasers deeds and other
instruments to evidence the passing of title to them, and, if
necessary to pay the bank's debts, he was authorized to enforce the
individual liability, if any, of the stockholders. And it was his
duty, out of the estate, to pay expenses, and from time to time, as
directed by the court, to apply the funds remaining in his hands to
the payment of the bank's creditors according to their rights and
priorities. United States F. & G. Co. v. Bramwell,
288. After 60 days had elapsed, the bank could not
regain the property. Section 6223(c). The state law excludes all
other methods for the liquidation of the debts of insolvent banks.
Appellant's duties were in substance the same as those of a trustee
having the legal title of property for the purpose of converting it
into money to be paid over to specified persons. The state law
required him to perform the functions of an assignee, receiver, or
trustee for the liquidation of the debts of an insolvent. See
Sargent v. American Bank & Trust Co.,
80 Or. 16, 26.
Appellant had a power that for present purposes had the same effect
as a title, and that is enough.
The effect of the resolution of the bank directors is the same
as if it expressly granted and imposed upon appellant all the
powers and duties in respect of the bank's property and the
liquidation of its debts that are specified in the state law. The
resolution authorized and was followed by the handing over of the
possession and control
Page 269 U. S. 492
of all the bank's property to be converted into money to pay the
bank's debts. The act of the directors made the bank's insolvency
notorious. The established rule of liberal construction requires
that the priority act be applied having regard to the public good
it was intended to advance. Its application is not to be narrowly
restricted to the cases within the literal and technical meaning of
the words used. The things done in this case are not different in
their substance from the things specified as the ways in which
insolvency is required to be made manifest. It must be held that,
within the meaning of the priority act, the bank made a voluntary
assignment of its property, and that, because of the bank's
insolvency, a trustee was put in charge of its property under a
state law within the meaning of the Bankruptcy Act.
* Cf. Davis v. Pullen,
277 F. 650; Equitable Trust
Co. v. Connecticut Brass & Mfg. Corp.,
290 F. 712, 723;
Davis v. Miller-Link Lumber Co.,
296 F. 649; Bramwell
v. United States F. & G. Co.
(this case below), 299 F.
705; Davis v. Michigan Trust Co.,
2 F.2d 194; Liberty
Mutual Insurance Co. v. Johnson Shipyards Corp.,