An action was instituted by the United States to recover from
the assignees of S. Smith & Buchanan, insolvent merchants, the
duties on merchandise imported by them and for which bonds had been
given, but which remained unpaid. The United States had retained,
from money awarded under the treaty with France to Lemuel Taylor,
who was the surety in the bonds, a sufficient sum to pay the bonds,
but had not appropriated the
same towards their satisfaction. The assignees claimed to set
off against the demand of the United States the amount due by
Lemuel Taylor to the estate they represented, he having been
discharged by the insolvent laws of Maryland. The Court said
"Whatever might be the merits of such an equitable claim in any
suit brought by Lemuel Taylor, the insolvent, or by his assignee
against S. Smith & Buchanan or against their assignees, it
could have no proper place in a suit brought by the United States
to recover demands justly due to them for duties. It was to them
res inter alios acta, and the United States was not called
upon to engage in or to unravel any of the accounts and setoffs
existing between those parties in a suit at law like the
present."
The importers of goods do, in virtue of the importation thereof,
become personally indebted to the United States for the duties
thereon, and the remedy of the United States for the duties is not
exclusively confined to the lien on the goods and the security of
the bond given for the duties. The duties due upon all goods
imported constitute a personal debt due to the United States from
the importer, independently of any lien on the goods and of any
bond given for the duties. The consignee of goods imported is for
this purpose treated as the owner and importer.
The right of the government to the duties accrues, in the fiscal
sense of the term, when the goods have arrived at the port of
entry. The debt for the duties is then due, although it may be
payable afterwards according to the regulations of acts of
Congress.
The debt due to the United States for duties on imported
merchandise is not extinguished by the giving of bonds, with
surety, for the same. The revenue collection act of 1799, ch. 128,
requires that the collector should take the bonds for the duties
from all the persons who are the importers, whether they be
partners or part owners.
The government of the United States has a right to retain money
in its hands belonging to a surety in a bond given for duties which
is unpaid until a suit shall be terminated for the recovery of the
amount of the duties on the goods due by the importers. The
government is not obliged to appropriate the money of the surety to
the satisfaction of the bond, but may hold it as a security until
the suit is determined.
The United States instituted an action of assumpsit against
Jonathan Meredith and Thomas Ellicott to recover from them, as the
assignees of Samuel Smith, James A. Buchanan, and Thomas A.
Buchanan, formerly trading as merchants under the firm of S. Smith
& Buchanan, a certain amount due to the United States for
duties; the United States claiming a right of priority of payment
against the estate in the hands of the trustees. The deed of trust
to the plaintiffs in error was executed by S. Smith & Buchanan,
on the 9th of November, 1820.
In July, 1818, there was imported into Baltimore by S. Smith
& Buchanan and by Hollins & McBlair a quantity of
merchandise from Canton on board the brig
Unicorn, and in
February, 1819, the same persons imported from Calcutta a quantity
of merchandise on board of the ship
Brazilian. In the
importation by the
Page 38 U. S. 487
Unicorn, S. Smith & Buchanan had an interest of
two-thirds, and of five-ninths in the cargo of the Brazilian, the
remaining interest in both importations belonging to Hollins &
McBlair.
Entries of the merchandise of both cargoes were made by John
Smith Hollins, one of the joint importers, and a partner in the
firm of Hollins & McBlair, who, with James A. Buchanan, also
one of the joint importers, and a partner in the firm of S. Smith
& Buchanan, and a certain Lemuel Taylor, executed to the United
States their joint and several bonds for the payment of the
duties.
Upon these bonds the United States afterwards instituted actions
against each of the obligors and recovered judgments in the Circuit
Court for the District of Maryland. These judgments have been twice
revived by
scire facias, and are now in full force and
unreversed.
S. Smith & Buchanan afterwards became insolvent, as also did
Lemuel Taylor. A large sum of money was awarded under the treaty
with France to Lemuel Taylor, which was claimed by Mr. Colt, his
assignee, but the United States withheld a part thereof, being the
amount of the bonds given for the duties on the importations by the
brig
Unicorn and ship
Brazilian, for which Lemuel
Taylor was surety. A large sum of money was also awarded to Smith
& Buchanan, under the treaty with France, which was paid to
Messrs. Meredith and Ellicott, their assignees. The sum so received
by the assignees was sufficient to pay the amount claimed by the
United States for the duties on the portions of cargoes of the
Unicorn and
Brazilian, which had been imported by
S. Smith & Buchanan, but not enough to pay their partnership
debts. The United States had not adverted to the alleged liability
of S. Smith & Buchanan for the duties unpaid on their
importations when the awards under the French treaty were paid to
their assignees.
The case was tried before the Circuit Court of Maryland, and a
verdict rendered in favor of the United States. The defendants
prosecuted this writ of error.
In the progress of the trial, the defendants, now plaintiffs in
error, offered evidence to prove that at the time of Lemuel
Taylor's application for the benefit of the insolvent laws of
Maryland, he was indebted and still remains indebted to the estate
of S. Smith & Buchanan in a sum more than sufficient to pay the
whole amount due upon the several bonds for duties before
mentioned, but the admissibility of this evidence was objected to
by the counsel for the United States, and the court sustained the
objection.
Page 38 U. S. 491
MR. JUSTICE STORY delivered the opinion of the Court.
This is a writ of error to the Circuit Court for the District of
Maryland. The original action was assumpsit brought by the United
States against the plaintiffs in error, who were the original
defendants, to recover from them, as assignees under a general
assignment of the property of the firm of Smith & Buchanan, the
amount of certain duties alleged to be due from the said firm upon
certain importations in the brig
Unicorn and the ship
Brazilian, out of the funds in the hands of the assignees,
upon the ground of an asserted right of priority of the United
States to payment out of the same funds.
At the trial upon the general issue, the material facts appeared
as follows. In the years 1818 and 1819, Smith & Buchanan and
Hollins & McBlair, two separate commercial firms in Baltimore,
imported, on their own account as owners, a quantity of goods from
Calcutta in the brig
Unicorn and ship
Brazilian
above mentioned,
Page 38 U. S. 492
on which the present duties were claimed. Smith & Buchanan
were the importers and owners of two-thirds of the cargo of the
ship and five-ninths of that of the brig, and that proportion went
to their possession and use. The remainder of both cargoes belonged
to Hollins & McBlair. The entries of both cargoes were made at
the custom house at Baltimore by John S. Hollins, one of the firm
of Hollins & McBlair, as imported in the vessels, respectively,
by Hollins & McBlair and Smith & Buchanan, and Hollins gave
bonds for the duties in the common form in his own name, and James
A. Buchanan, of the firm of Smith & Buchanan, and Lemuel
Taylor, who is admitted to be a mere surety, also executed the same
bonds. The condition of the bonds was for the payment of the duties
on the goods "entered by the above bounden John S. Hollins, for
Smith & Buchanan, and Hollins & McBlair, as imported" in
the ship and brig respectively.
Upon these bonds the United States afterwards instituted actions
against each of the obligors and recovered judgments in the Circuit
Court for the District of Maryland. These judgments have been
revived, and are now in full force and unreversed. Smith &
Buchanan became insolvent, and after the rendition of the
judgments, Taylor also became insolvent under the insolvent laws of
Maryland. One Rosewell L. Colt became the trustee of Taylor, and
afterwards, under the treaty of indemnity with France, a large sum
of money was awarded to him by the commissioners, and a large sum
of money was also awarded to Smith & Buchanan, which has been
received by the original defendants as their assignees and is more
than sufficient to pay the sums now claimed by the United States,
but not enough to pay the partnership debts of the firm of Smith
& Buchanan. Taylor applied to the Treasury Department for the
usual certificates granted to claimants by the awards under the
treaty, but they were refused by the department upon the ground of
Taylor's indebtment to the United States upon the aforesaid bonds
and judgments. Since that period an arrangement has been made
between the government and Colt, the trustee, by which a sufficient
sum of the moneys so due by Taylor is reserved in the Treasury to
secure the amount of the judgments on the bonds against Taylor, and
the residue has been paid over to the trustee. And the present
action has been brought by the United States for the benefit of
Taylor's trustee in order to give to the latter the full rights and
remedies of the United States to a priority of payment out of the
moneys of Smith & Buchanan in the hands of the defendants as
their assignees. To repel the supposed equity in Taylor as a
surety, the defendants offered to prove that at the period of the
application of Taylor for the benefit of the insolvent laws, he was
largely indebted to Smith & Buchanan, and in a sum more than
sufficient to cover the whole amount due upon the duty bonds
aforesaid, and still remained so indebted. The court rejected the
evidence, and to this rejection the defendants excepted. And this
constitutes the first bill of exceptions.
Page 38 U. S. 493
Upon this we have no more to say than that we think the ruling
of the court was clearly right. Whatever might be the merits of
such an equitable claim in any suit brought by Taylor or his
assignee against Smith & Buchanan or their assignees, it could
have no proper place in a suit brought by the United States to
recover demands justly due to them for duties. It was, as to them,
res inter alios acta, and the United States was not called
upon to engage in or to unravel any of the accounts and setoffs
existing between those parties in a suit at law like the
present.
Afterwards the United States asked an instruction to the jury,
which was given to the jury, to which the defendants excepted. The
defendants then prayed certain instructions to the jury, which the
court refused to give, to which refusal the defendants also
excepted. These exceptions are spread at large upon the record, and
constitute the second bill of exceptions. It is unnecessary to
recite them at large, as they are all resolvable into the leading
points which have been so fully argued at the bar, and we shall
therefore proceed at once to the consideration of these points.
The first question is whether Smith & Buchanan were ever
personally indebted for these duties -- or in other words, whether
the importers of goods do, in virtue of the importation thereof,
become personally indebted to the United States for the duties due
thereon, or the remedy of the United States is exclusively confined
to the lien on the goods and the security of the bond given for the
duties. It appears to us clear upon principle as well as upon the
obvious import of the provisions of the various acts of Congress on
this subject that the duties due upon all goods imported constitute
a personal debt due to the United States from the importer (and the
consignee for this purpose is treated as the owner and importer)
independently of any lien on the goods and any bond given for the
duties. The language of the Duty Act of 27 April, 1816, ch. 107,
under which the present importations were made, declares that
"there shall be levied, collected, and paid" the several duties
prescribed by the act on goods imported into the United States. And
this is a common formulary in other acts laying duties. Now in the
exposition of statutes laying duties it has been a common rule of
interpretation derived from the principles of the common law that
where the duty is charged on the goods, the meaning is that it is a
personal charge on the owner by reason of the goods. So it was held
in
Attorney General v. _____, 2 Anst. 558, where a duty
was laid on wash in a still, and it was said by the court that
where duties are charged on any articles in a revenue act, the word
"charged" means that the owner shall be debited with the sum, and
that this rule prevailed even when the article was actually lost or
destroyed before it became available to the owner. Nor is there
anything new in this doctrine, for it has long been held that in
all such cases, an action of debt lies in favor of the government
against the importer for the duties whenever by
Page 38 U. S. 494
accident, mistake, or fraud, no duties, or short duties have
been paid.
The question has also been asked at what time the right of the
government to the duties accrues in the fiscal sense of the terms.
The answer is, at the time when the goods have arrived at the
proper port of entry. This is the established rule adopted by the
government in all cases where there has been a new act passed,
increasing or diminishing the duties to be paid on goods imported
after a specified period. The same doctrine was affirmed by this
Court in the cases of
United States v.
Vowell, 5 Cranch 368, and of
Arnold v.
United States, 9 Cranch 104. But although the
duties thus accrue to the government as a personal debt of the
importer, upon the arrival of the goods in the proper port of
entry; yet it is but a
debitum in praesenti solvendum in
futuro, according to the requisitions of the Revenue
Collection Act of 2 March, 1799, ch. 128, and therefore if a
deposit of the goods is made by the importer or a bond is given by
him for the duties pursuant to the provisions of that act, the
importer is entitled to the full credit allowed by that act. But it
is a mistake to suppose that if a deposit is made or the goods,
either with or without a bond given for the duties, the rights of
the government for the duties are limited to the lien upon the
goods, and cannot, if they are lost or destroyed, be made a
personal charge against the importer. On the contrary, the Revenue
Collection Act of 1799, ch. 128, s. 62, expressly declares that the
goods deposited shall be kept by the collector with due and
reasonable care, at the expense and risk of the party on whose
account they have been deposited. Our opinion therefore on this
point is that the duties due upon goods imported, constitute a
personal debt, and charge upon the importer, as well as a lien on
the goods themselves.
In the next place, was the debt due for the duties on the goods
imported in the present case extinguished by giving the bond by
Hollins in the manner before stated? We have no doubt that these
bonds, being voluntary bonds, are valid and that Hollins and his
sureties are estopped to deny their validity. But the question is
not whether they are valid, but whether they are the proper statute
bonds contemplated by the revenue act of 1799, ch. 128. It is to be
observed that the present case is not one where the bonds were
given by the sole importer of the goods, so that the sole question
would then be whether the bond of the same party, who was
personally liable for the duties supposing the bond to cover all
the duties due and payable on the goods, was an extinguishment of
the simple contract debt for those duties. But the present is a
case where one of several partners, and one of several joint
importers, has given his separate bonds for the duties due by law
by all the importers, either as partners or as part owners, and
therefore where the true question is whether such bonds under such
circumstances amount to an extinguishment of the debt due by all
the
Page 38 U. S. 495
other importers as partners or as part owners. It is certainly
incumbent upon those who assert the affirmative, to show by some
clear and determinate language of the Revenue Collection Act of
1799, ch. 128, that the collector was thus authorized to take the
separate bonds of one of the importers for the debt of all, and
that it was the legislative intention that such separate bonds,
when taken, should operate as an extinguishment of the liability of
all the other importers. Now it is plain that where the goods are
received on deposit, the whole goods, and not merely the share of
the partner giving the bonds, are liable for the duties.
Upon a careful review of the other provisions of the act, we are
equally well satisfied that in every case within the act, the bond
for the duties is required to be given by all the persons who are
the importers, whether they be partners or part owners, and that
the collector is not by law authorized to take the separate bond of
one of the importers in extinguishment of the joint liability of
all. The language of the 62d section of the act is
"That all duties on goods, wares, or merchandise imported shall
be paid or secured to be paid before a permit shall be granted for
landing the same, and where the amount of such duty on goods
imported in any ship or vessel, on account of one person only, or
of several persons jointly interested, shall not exceed fifty
dollars, the same shall be immediately paid, and if it exceed that
sum, shall, at the option of the importer or importers, be paid, or
secured to be paid, by bond."
Now construing this language distributively, as in our judgment
it ought to be construed, to mean by the importer when there is one
only, and by all the importers when there is more than one, there
is not the slightest difficulty in giving full effect to every word
of the act. Construe it the other way, and the word "importers" has
no appropriate use which is not included in the other language. The
very form of the bond given in the same section, also, shows that
it was the intent of the act that all the importers should be
parties to the bond, for it prescribes
"Know all men by these presents that we [here insert the name of
the importer or consignee, or if by an agent the name of such
agent, and of the importers or consignees, and the sureties, their
place of abode, and occupation],"
&c. It is not unimportant also to consider what would be the
consequence of a different construction of the act, for if it would
lead to importers to substitute collection of the public revenue
and enable importers to substitute almost at their own discretion
the liability of one of the firm, or one part owner for the
liabilities of all, it would open the way not only to many
intentional evasions and frauds upon the just right of the
government, but also, in cases of the death or insolvency of the
acting partner, or part owner, leave the government without redress
against those who had almost exclusively enjoyed all the benefits
of the importation. On the other hand, the construction which we
put upon the act imposes the burden upon these who have enjoyed the
benefits and creates a common interest in a vigilant and prompt
Page 38 U. S. 496
discharge of that burden. Nor is there any inconvenience in it,
for if all the importers are not present, a letter of attorney may
readily be executed which will meet every exigency of commercial
business. And we cannot but think that the 25th section of the Act
of 1823, ch. 149, which provides that any bond to the United States
entered into for the payment of duties by a merchant belonging to a
firm in the name of such firm shall equally bind the partner or
partners in trade of the person or persons by whom such bond shall
have been executed, was intended to meet cases of this sort, and
that it demonstrates the understanding of Congress that by the
existing law then in force, all the partners were required to join
in the bond for the duties.
The remaining point is whether, under the circumstances of the
present case, the government has actually received payment of the
duties in controversy. We think it has not. By the payment of the
moneys due under the French treaty and the awards of the
commissioners, there was originally in the hands of the government
the sum of sixty thousand dollars awarded to Smith & Buchanan,
which was properly and primarily applicable to the discharge of
these very duties. But by mere mistake, arising from the
circumstance that Hollins alone appeared the principal in the
bonds, and Smith & Buchanan being unknown to have been the
original importers, that sum was paid over by the government to the
present defendants, as assignees. Had the facts been known, the
present controversy would have stopped at the threshold by
recouping or retaining the amount from the awards. The government
has now in its possession the funds, under the awards due to
Taylor, the surety on these bonds, and it certainly had the power,
if it pleased, to appropriate the same in payment of the debt. The
question is whether it has so done. Looking to the whole
transactions, we are satisfied that it has not. It retains the
funds of Taylor in its hands as security for payment, if the
present suit should not be successful; and it has allowed the suit
to be brought in the name of the United States, for the benefit of
Taylor. It has thus carried out the intent and spirit of the act of
1799, ch. 128, sec. 65, which declares that the surety paying a
bond for duties shall have and enjoy the like advantage, priority,
or preference for the receipt of the said moneys out of the effects
of the insolvent, as are reserved and secured to the United States.
We think, then, that no payment has been made, but that Taylor's
funds have been held as a mere special deposit for the indemnity of
the government, and to abide the event of the suit, and that to
give a different construction to the acts of the officers of the
government would defeat their true objects as well as the purposes
of substantial justice.
Upon the whole we are of opinion that the judgment of the
circuit court ought to be
Affirmed.
The case of
Williams v. United States, which was
submitted to the Court upon the argument in
Page 38 U. S. 497
the present case, is far less stringent in its circumstances in
favor of the defendants, and involves far less difficulty. The
judgment in that case is also
Affirmed.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Maryland and was argued by counsel. On consideration whereof it is
ordered and adjudged by this Court that the judgment of the said
circuit court in this cause be and the same is hereby affirmed.
