Morgan County IL Archives Court.....United, States V E C Duncan 1850
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Source: Reports Of Cases Illinois
Written: 1850

OPINION OF JUDGE DRUMMOND.

The following opinion of Judge Drummond, of the United States Circuit and 
District Courts for the District of Illinois, was delivered at the December 
term, 1850, of those courts.

The merit of the opinion was such, that at the request of a large number of 
the members of the bar, he prepared it for publication, and at the request of 
the same parties, it is published.

Circuit Court of United States for Illinois.

The United States v. E. C. Duncan et al.
December Term, 1850

The judgments at law and decrees in chancery of the Circuit Court of the 
United States for the district of Illinois constitutes a lien throughout the 
state, on the real estate of the party against whom they are rendered. This 
doctrine, treated an the law of the court, until the Supreme Court shall 
establish a different rule.

A person, who, at a judicial sale, purchases a tract of land, as the property 
of the party against whom the judgment is obtained, and pays the purchase 
money to the plaintiff, cannot, as a general thing, call on him for repayment.

A sale of real estate of D. had taken place under a decree of this court, O 
became the purchaser of a piece of land, and paid the purchase money to the 
plaintiffs, but discovering that D had no title to the land, made application 
to the court to have the purchase money reimbursed out of moneys of the 
plaintiff's in court: Held, in the absence of fraud and unfair dealing, that 
this could not be done, but that, being a judicial sale, O must take the 
consequences of a defect or failure of title; and that the remedy was in 
equity against D. or his legal representatives.

If one partner withdraws funds from the partnership, and pays the taxes on his 
private estate, the creditors of the partnership do not, in general, thereby 
acquire a lien on the land. The estate of the partner is still his own private 
property, and, in case of his death, passes to his heirs or devisees, subject 
to that debt as to others; and if his executors make a similar appropriation 
of the partnership funds, the rule is the same.

Where it was alleged that A and B were partners, and after A's death, his 
executors appropriated partnership property to the payment of taxes on his 
estate, and in expenses of administration, he being, at the time of his death, 
insolvent and indebted to the United States in judgments and otherwise, which 
judgments were a lien on the real estate of A, the lien of the United States 
and their priority of payment were not thereby affected, but they could 
enforce their judgments, notwithstanding the acts of the executors.

When the partnership property is not sufficient to pay the debts of the firm, 
the priority of the United States does not reach the undivided interest of one 
of the partners in the
partnership effects, if he is indebted to the United States, but when it has 
become his separate, individual property, the rule would be different. The 
true test is, whether the property belongs to the partnership or the 
individual.

The creditors of a partnership applied to the state court, by bill, to declare 
the partnership, and decree the payment of the partnership debt, out of assets 
in the hands of the administrator of one of the partners who had died 
insolvent, indebted to the United States. The administrator denied the 
partnership, and took an objection, based on the debts of the United States 
and their priority. The state court decreed in accordance with the prayer of 
the bill. The United States were not parties, and did not appear in the state 
court: Held, That the proceedings in the state court did not impair the rights 
of the United States, and that they were not bound by them, but that, 
notwithstanding the decree in the state court, the priority of the government 
attached, and that whenever the proceeds of any real estate, or any personal 
estate, came into the hands of the administrator, he became a trustee for the 
United States, and they must first be paid.

The acts of congress, giving the United States a priority of payment, 
supersede all state laws upon the subject of the distribution of those estates 
that come within their provisions. The law makes no exceptions in favor of a 
particular class of creditors, and the priority of the United States does not 
yield to the claims of any creditors, however high may be the dignity of their 
debts.

In June, 1841, the United States recovered judgments in the Circuit Court of 
the United States against D. Subsequently, in 1841 and 1842, other creditors 
obtained judgments in a state court against him. These last judgments were 
liens only on the real estate of D, situate in the county where the judgments 
were recovered. In 1846, the United States obtained a decree in the Circuit 
Court of the United States, directing all of D's real property in the state to 
be sold to pay an indebtedness to the United States, independent of the 
judgments of 1841. D died in 1844, his whole property not being sufficient to 
pay the debts due the government. Under the decree of 1816, various sales took 
place of real estate, out of the county in which the other creditors had their 
judgment, and there was a fund in court arising from these sales, sufficient 
to pay the judgments of the other creditors. The United States having sued out 
executions on the judgments of 1841, and levied them on lands situate in the 
county where the other creditors held their judgments, these creditors made 
application to this court to compel the United States to go upon lands outside 
of that county, to satisfy their judgments, or for the proceeds of the land 
sold out of that county: Held, That however it might be in the case of private 
individuals, the United States, having an older lien made perfect by a levy, 
were entitled to retain it and sell the property to satisfy the judgments of 
1841, and that the other creditors had no claim upon the proceeds in court.

It is a rule, well recognized and understood, that when a party has a lien for 
a debt in two funds, and another party has a lien on one of the funds only, a 
court of equity will oblige the party who has the double funds, to resort, in 
the first instance, for payment, to that fund upon which the other party has 
no lien. Hut this is never done when it trenches on the rights or operates to 
the prejudice of the party entitled to the double fund.

The case of Schuyler v. Teller, 9 Paige, 173, examined and distinguished from 
this.

But this rule does not affect, under the circumstances of this case, the 
priority of the United States, neither is that priority affected by the rule 
settled in New York, that lands consisting of different parcels, subject to a 
general incumbrance, are, in equity, to be charged in the inverse order of the 
alienation of the several parcels.

It has been uniformly held in all the cases, that the priority of the United 
States does not disturb any specific lien, nor the perfected lien for a 
judgment, that is, it does not supersede a mortgage on land, nor a judgment 
made perfect by the issue of an execution and a levy on real estate. But in 
the case of a general lien, it is not so clear.

The laws of the United States, giving a priority to the government, are of 
general application in the cases therein stated, and if a debtor is to be 
excepted out of the general rule, it devolves upon the party alleging the 
exception, to show it.

Opinion, delivered December 27, 1850.

In the year 1835, Joseph Duncan, whose representatives are the defendants in 
this case, became one of the sureties of William Linn, receiver of public 
moneys at Vandalia, in this state. The principal having failed to comply with 
the duties imposed on him by law, the sureties became liable on the bond given 
to the United States.

At the June term, 1841, of this court, the United States recovered three 
several judgments at law, against the sureties, Duncan, among others, for the 
aggregate sum of $29,191.05. At the time these judgments were obtained, none 
of the sureties, except Duncan, had any available property, and Linn, the 
principal, was insolvent. On the twenty-second of December, 1843, the United 
States realized on these judgments the sum of $23,532.65.

In January, 1844, Joseph Duncan died, disposing, by will, of his real and 
personal estate, but making no provision, other than the usual one for the 
payment of his debts, for the amount due the United States. At the time of his 
death, he was seized of a great many tracts of land, lying in different 
counties of this state and in Morgan county, his place of residence.

The judgments of 1841, in this court, not covering the defalcation of Linn, 
the plaintiffs instituted suit at law, to the December term of this court, 
1844, against William Thomas, as administrator, etc., of Joseph Duncan, the 
executors having resigned or ceased to act; and, at that term, recovered 
judgment against the administrator, de bonis testatoris, for the sum of 
$48,151.61.

In February, 1846, the United States filed a bill in this court, seting forth 
most of the facts detailed above, and asking for a discovery of the title 
papers and estate of Duncan; insisting upon the priority of the plaintiffs, 
and praying for an account of the money due the United States, of the personal 
estate of Duncan, and of the value, rents and profits of the real estate; and 
that, if the personal estate was not sufficient, the real estate might be sold 
to pay the debt due the plaintiffs. To this bill, the widow, heirs, executors, 
devisees, etc., of Duncan, were made parties. During the progress of the 
cause, the value of the widow's dower was agreed upon and amicably settled, 
and she relinquished. Answers were put in by the defendants, and at the June 
term, 1846, a decree was rendered in favor of the United States for the sum of 
$49,156.15 (that being all that was due, except what had not been collected 
under the judgments of 1841), and ordering the real estate of Duncan to be 
sold, and the proceeds to be paid to the United States, "first paying prior 
liens, if any." 
Under this decree, various sales of real estate out of Morgan county have 
taken place, under the direction of a commissioner, from which very 
considerable sums have been realized, part of which have been paid over to the 
United States, but there remains the sum of $4,052.00, subject to the order of 
the court.

Personal property to the amount of $300 was sold under the judgment of 1844.

There were two judgments recovered against Duncan in his life time, in the 
Circuit Court of Morgan county, of this state, one by McConnel et al., for 
$333.76, in November, 1841, and the other by Matthews for $497.35, in March, 
1842. On the tenth of November, 1845, Doremus, Suydam & Nixon, filed a bill in 
the same court against William Thomas, administrator, etc., of Duncan's 
estate, alleging that certain personal property which the executors of Duncan 
had sold, and the proceeds of which, amounting to $960.60, it seems they had 
applied to the payment of taxes on real estate and expenses of administration, 
belonged to a firm of which one James M. Duncan and Joseph Duncan, in his life 
time, were partners, and that, the plaintiffs were creditors of that firm, and 
claiming that they (Doremus, Suydam & Nixon) should be repaid the sum so used 
by the executors, and that they should be substituted in their place; 
insisting it was a favored claim. James M. Duncan, also one of the sureties of 
Linn, was party to this bill, but he was insolvent. The administrator, in his 
answer, denied the partnership, and referred to the claim of the United 
States, and their priority, and to the proceedings in this court, which he set 
forth of length, but the Circuit Court of Morgan county, by a decree rendered 
on the seventeenth of November, 1847, found that the partnership did exist, as 
stated in the bill; that at the death of Duncan, the goods and chattels 
referred to, and the proceeds of which had gone into the hands of the 
executors, were liable for the partnership debts, wherever traced, and ordered 
that the plaintiffs should be paid out of the estate of Duncan. To Doremus & 
Nixon $766.48; to William A. Ransom & Co., $194.12. The latter had been made 
parties, and Suydam had died pending the suit. The court further adjudged, 
that inasmuch as it did not appear the administrator had any assets in his 
hands, he should pay the above sums out of assets thereafter to come into his 
hands, or which might remain in his hands after the settlement of his accounts 
as administrator. It is proper to add, that an objection was made in the 
answer of Thomas, because, the United States were not parties, but the court 
decided it was not necessary to make them parties.

It was conceded that the judgments of 1841, rendered in this court, were a 
lien on all the real estate of Duncan within the state, that the decree of 
June term, 1846, operated to the same extent, upon the real estate in the 
hands of the heirs, devisees, executors, etc., of Duncan,* and that the 
judgments of the Morgan Circuit Court operated only upon real estate within 
the county of Morgan. The judgments and decree entered in the Circuit Court of 
Morgan county are yet in force, not being paid or satisfied, except some 
partial payments hereafter mentioned.

The judgments at law of this court, recovered in 1841, being paid only in 
part, the United States, in 1847, issued alias executions on those judgments, 
and the marshal levied them on lands lying in Morgan county of which Duncan 
died seized, and they were sold by the plaintiffs.

Joseph Duncan, at the time of his death, did not possess sufficient property, 
including real and personal, to discharge the debt he owed the United States, 
the lands out of Morgan county not being of value enough to satisfy the decree 
of June term, 1846. And it does not appear that there was more than sufficient 
property in Morgan county to meet the balance due on the judgments of 1841, of 
this court.

In this condition stood the cause when, on the fifteenth of June, 1847, 
McConnel et al., and Matthews, filed their petitions in this court.

The petition of McConnel et al. alleges that under the decree of 1846, sales 
of lands without the county of Morgan had taken place, upon which had been 
made $3,555.20, which, it insists, ought to be, as to the lien of their 
judgment, a credit on the judgments at law, of the United States of June, 
1841; that there are lands out of the county of Morgan more than sufficient to 
satisfy those judgments, and that the United States are proceeding to sell 
real estate in Morgan county. The petition calls for the interposition of the 
court to arrest the sale; to marshal the securities so as to give them the 
benefit of this lien, by throwing the judgments of the United States of 1841 
upon lands out of Morgan county, and that the sum made, $3,555.20, be applied 
upon these judgments.

The petition of Matthews is, in all respects, similar to that of McConnel et 
al.

A fi. fa. had issued on the judgment of McConnel, and $60 had been obtained on 
it. A fi fa. had also issued on the judgment of Matthews, and real estate had 
been levied on and $393 made by the sale of it. The executions were issued in 
each case within a year after the judgments were obtained respectively.

On the twenty-third of December, 1847, Doremus & Nixon, and A. Ransom & Co. 
likewise filed a petition setting forth most of the facts heretofore 
mentioned, and alleging that this court had taken full administration of the 
estate of Duncan; that their decree of the Morgan court of November, 1847, had 
been rendered useless; that there was no priority of payment to the United 
States till the estate was ready to be disbursed; that taxes and costs of 
administration were to be first paid; that, under the circumstances, they 
stood as the state and individuals, and were elected with their rights; that 
there was more real estate to be sold, and their partnership fund had 
increased the amount to be disbursed in this cause, and asking that their 
decree be paid out of moneys received from the sale of real and personal 
estate, or, if that be not proper, that the commissioner of this court be 
ordered to sell land enough to satisfy the sum named in their decree, and pay 
it over to them.

Various supplemental petitions were filed by all the parties, from time to 
time, bringing before the court the proceedings that have since taken place in 
this cause, and particularly stating that other lands out of Morgan county had 
been sold under the decree of June, 1846, and the money received, and that the 
sum of $3,789.56 was made by sale of land in Morgan county under the judgments 
of 1841.

The petition of O'Donoghue, which was filed on the tenth of January, 1849, 
states that he had purchased a lot of land at a sale made by the commissioner 
in this cause, which lot was sold as a part of the estate of Duncan; that he 
paid the commissioner for it, and that Duncan had no title to it, having 
before his death, by deed duly recorded, conveyed it to the Illinois college. 
And he seeks to have the sale by the commissioner to him annulled, and to have 
the money paid by him reimbursed out of the fund in court.

When these petitions were presented, this court without determining the 
questions sought to be raised by them, ordered that a sufficient fund should 
be reserved to satisfy their claims, which was to be paid to the petitioners, 
provided the court should be of opinion upon the final disposition of the 
cause, that the parties were entitled to receive the amounts they sought. And 
there is now a fund of more than four thousand dollars awaiting the decision 
of the questions presented by these petitioners.

These are the material facts.

The applications were once heard before the former judge of this court, but no 
decision was given or order entered. They have, therefore, been fully argued 
before me, and it now becomes my duty to announce my opinions upon the 
different questions presented.

The counsel of the United States not denying the allegations contained in the 
petitions, insists that the petitioners are not entitled to the relief they 
seek, nor to any relief. 

As the petition of O'Donaghue stands upon a footing entirely different from 
the others, it may be convenient to consider that first.

The sale, under which he purchased the lot, was made by the order of this 
court, and it is well settled that in all judicial sales there is no warranty, 
but that the rule of caveat emptor applies; Owings v. Thompson, 3 Scam., 502. 
If there be fraud or concealment, or any unfair dealing, that may be a ground 
for an application to a court of equity; otherwise the purchaser must look to 
the soundness of his title. This is the established rule in England, and 
throughout the United States, and it should be peculiarly applicable here, 
where it is so easy to trace the title to real estate, the sources, in nearly 
all cases, being the public records of the county. It is true, where a 
plaintiff, in an execution, purchases a tract of land belonging, apparently, 
or which he supposes to belong to the defendant, and there is in fact, no 
title, a court will interpose and place the parties in their former condition. 
But that is because it is a matter between themselves, the purchaser having 
neither benefited nor injured any third person; and it has been decided, that 
where there was no fraud, and a stranger to the execution purchased a piece of 
land as the property of the defendant, when he had no title, a court of equity 
would compel the judgment debtor to refund the amount to the purchaser, on the 
ground that his purchase had paid the debt. But no case has been shown, in 
which, under such circumstances, the purchaser could call upon the plaintiff 
in the execution to refund the amount. Indeed, the case just mentioned, is 
conclusive that he could not, for it is because the sale must so far stand as 
to enable the plaintiff to retain the money paid, that the defendant is 
liable. It could make no difference, that the money, instead of being in the 
hands of the party, was held by the officer, or paid into court. In either 
case, it would seem, the right of the party to the fruits of his judgment, 
could not be contested. But conceding that, this last position may be 
questionable, still, after the money has actually been paid to the party, it 
is beyond the reach of the purchaser. Here the money paid by the petitioner 
has been received by the plaintiffs, and he seeks to make another fund, now in 
court, arising from the sale of other property belonging to the estate of 
Duncan, liable to his claim.

On the part of the petitioner, the court was referred to Lansing v. 
Quackenbush, 5 Cowen, 38; a case where the defendant had represented he was 
the owner of lots, which the party purchased, and it turned out he was not. On 
application to the court, they said there was a remedy, but that it was in 
equity. Here was a false statement, and if the plaintiff were not a party to 
it, the remedy would be against the defendant. Adams v. Smith, 5 Cowen, 280, 
was also referred to. In this case, the sheriff had sold personal property 
which did not belong to the defendant, and the real owner sued the sheriff and 
plaintiff jointly and recovered. The court allowed the amount made on the 
sale, and endorsed on the execution, to be stricken out, and an execution to 
issue for the amount of the original judgment. In this case, it was personal 
property, and the owner resorted to the remedy which the law gave him, the 
property remaining with the purchaser. Both cases are very shortly reported 
and clearly distinguishable from the present. But the Supreme Court of 
Illinois have held under somewhat similar circumstances, there was no remedy 
against the plaintiff in the execution. A party purchased some property under 
an execution. A stranger sued for and recovered the property from the 
purchaser. The latter then brought suit against the plaintiff in the 
execution, to recover back the purchase money. The court decided that the 
plaintiff was not liable: England v. Clark, 4 Scam., 486. These were all cases 
of personal property, but in a sale of real estate under execution no action 
is brought, because if the property of A is sold on an execution against B the 
title to the property is unchanged, and A ordinarily suffers no wrong.

In a very recent case, however, Dunn v. Frazier, 8 Blackford, 432, this 
question was directly decided. That was a much stronger case than this. A 
judgment had been obtained, and an execution was issued and returned nulla 
bona, and afterwards the judgment creditor filed a petition, alleging that the 
judgment debtor was the owner of certain real estate in fee simple. On the 
application of the petitioner, the court ordered the real estate to be sold on 
execution. It was sold accordingly, and Frazier became the purchaser. One of 
the administrators of the judgment debtor was present at the sale, and 
solicited Frazier to buy, assuring him that the title was good. Various 
proceedings took place, during which Dunn, the judgment creditor, transferred 
the judgment to one Adams, and Frazier refused to pay the purchase money. 
Another execution was issued which was enjoined. Finally, Frazier paid part of 
the money to Adams, and the remainder into court (to the clerk). The judgment 
debtor had no title to the property. These facts being made to appear to the 
court below, by bill in chancery, it ordered the money to be paid back to 
Frazier, but the Superior Court of Indiana reversed the decree, on the 
distinct ground, that a purchaser who buys lands and pays the money, the 
judgment creditor receiving it, cannot recover it back from the creditor, 
either at law or in equity, merely because the judgment debtor had no title to 
the land. The proper course in such a case, was to proceed against the 
judgment debtor, or his estate, by bill in equity. And even in relation to the 
money in court, it depended altogether upon the fact, whether there was 
anything due on the judgment, or it was an overplus, in which last event it 
might be paid over to the purchaser. And see Warner v. Helm, 1 Gilman, 220.

It will be seen, therefore, from these principles and authorities, the 
petitioner, while he has no claim upon the fund now in court, has a remedy 
against the estate of Duncan. That it may be unavailing is his misfortune. If 
the petitioner
obtain the money he has paid, it must be by the voluntary act of the 
plaintiffs, and not by the order of this court.

Let us now proceed to consider the petition of Doremus & Nixon, and A. Ransom 
& Co. They insist that, inasmuch as there was a partnership between James M. 
and Joseph Duncan, and the executor of Joseph Duncan had used the partnership 
goods to pay the taxes on his real estate, and the expenses of administration, 
they, as creditors of the partnership, have a right to be repaid out of the 
fund in court.

There can be no doubt that the partnership effects are primarily liable for 
the partnership debts, and that those effects ought not to be appropriated to 
the payment of the separate liabilities of one of the partners. And if the 
executors knowingly diverted them, in the manner charged in the bill filed in 
the Circuit Court of the state, they acted illegally. But conceding this, it 
does not follow that the partnership creditors thereby obtained a lien upon 
the separate property of Duncan. No authority has been referred to which shows 
that if one partner withdraws funds from the partnership, and pays the taxes 
on his private estate, the creditors of the firm thereby acquire a lien on the 
land, unless, indeed, the decree on which the application now under 
consideration is founded, may be so regarded. All that can be said is, that 
the estate of the partner becomes liable to the creditor of the firm. The 
estate of the partner is still his own private property, and in case of his 
death, passes to his heirs or devisees, subject, if he had used the 
partnership funds for the purpose mentioned, to that debt as to others: Story 
on Part., secs. 97, 326, 358, 359, 360 and 361. Neither could the use of the 
partnership funds, by the executors, in the expenses of administration, create 
any lien upon the estate. It would still be a debt due from the estate. And, 
if the creditor of the firm was placed in the condition of those individuals 
to whom those expenses had been paid, it is doubtful, whether that 
circumstance, for reasons presently to be given, would affect the question. 

It has been decided that the priority of the United States does not reach the 
property of a partner in partnership effects, so as to pay the separate debt 
of one of the partners (he being the debtor of the United States), where the 
partnership property is not sufficient to pay the debts of the firm: U. S. v. 
Hack, 8 Peters, 271. But that proceeds upon the presumption that they are 
partnership effects. It is plain, if they had ceased to be such, and had 
become the separate property of the one indebted to the United States, the 
doctrine would be different. The true test would seem to be, whether the 
property belonged to the firm or the individual.

Now it is to be remarked, that those petitioners did not ask the court of 
Morgan county to do more than to declare the partnership, and to decree the 
payment of the partnership debt, out of assets which were at that time, or 
thereafter to be, in the hands of the administrator. They claimed at most, not 
a lien on the estate, but a priority of payment out of the estate. And the 
court, though it expresses the opinion, that the proceeds of the partnership 
effects were liable to the debts of the petitioners, wherever they could be 
traced, decides they were to be paid out of the estate of the testator. 
Accordingly, in whatever light we may regard this decree of the Circuit Court 
of Morgan county, it is clear it intended that payment of the debts was to be 
made out of Duncan's estate, when there should be sufficient assets for that 
purpose in the hands of the administrator. The court does not even decree that 
the petitioners shall be first paid; but there is an alternative, that they 
may be paid when the administrator, upon the settlement of his accounts as 
such, shall have money then remaining in his hands. The decree did not create 
any lien, specific or general, upon any fund, nor upon the real estate of the 
testator, as it probably could not; and it does not vary essentially from the 
usual judgment against an administrator, for the debt of a deceased party.

Though an objection was taken to the proceedings in Morgan county, because the 
United States were not made parties, it is said that the decree is binding on 
them in this court, in this application on the part of the petitioners. Let us 
now examine this position, and endeavor to ascertain whether this is so.

At the time of Joseph Duncan's death, his indebtedness to the United States, 
except the balance due on the judgments at law of this court of 1841, did not 
constitute a lien upon his real or personal estate. The plaintiffs had only a 
right to a priority of payment. And it may be admitted, for the purpose of 
this argument, that their priority did not extend, in point of law, so as to 
operate upon the real estate of which Duncan died seized, in the hands of 
heirs or devisees. But at the time the petitioners filed their bill in the 
Circuit Court of Morgan county, there was a judgment of this court against 
William Thomas as the administrator, with the will annexed, etc., of Duncan; 
and at the time the final decree was rendered in the Circuit Court of Morgan 
county, there was, and had been, for more than a year, a decree standing in 
this court, which took effect upon all the real estate of Duncan within the 
state, and directed it all to be sold for the payment of the debts of the 
United States, first paying prior liens. When this decree was rendered, in 
June, 1846, the claims of the petitioners were certainly not a prior lien, 
binding the estate. If, then, we give effect to the decree in the state court, 
we are not the less bound to give full effect to the judgments and decree in 
this court; and we will now proceed to show, that it must be considered 
subject to those of this court; that under the law and by virtue of the 
proceedings here, the decree of the Circuit Court of Morgan county could not 
become operative until the claims in this court were satisfied.

The petitioners have not sought to enforce their decree in the state court; 
indeed, so long as there is nothing in the hands of the administrator, it 
could not, by its terms, be enforced. They come into this court, and request 
its action upon their claims.

By the fifth section of the act of third of March, 1797, it is provided that 
when any revenue officer, or other person, hereafter becoming indebted to the 
United States by bond or otherwise, or shall become insolvent, or where the 
estate of any deceased debtor, in the hands of executors or administrators, 
shall be insufficient to pay all the debts due from the deceased, the debt due 
to the United States shall be first satisfied: 1 Statutes at Large, 515. This 
applies to two classes of debtors—those who are insolvent, and those whose 
estates, in the hands of executors or administrators, are not sufficient to 
discharge all the debts due from the estate. It was intended to reach the 
property of the debtor, whether living or dead. It has been decided that this 
section is applicable to all debtors of the United States. Joseph Duncan's 
estate was the estate of a deceased debtor of the United States; and when it 
came within the other requisition of the act—that is, whenever it came into 
the hands of executors or administrators—then the operation of the law was 
complete. The doctrine of the Supreme Court of the United States, as founded 
on this law, and on a similar one (act of March 2, 1799, sec. 65), as it 
respects this point is, that the party, whether assignee, executor or 
administrator, into whose hands the estate of the two classes of debtors 
mentioned passes, becomes a trustee for the United States; and from the fund 
in his hands, they must first be paid: Blaston v. The Farmers' Bank of 
Delaware, 12 Peters, 102; Brent v. Bank of Washington, 10 Peters, 596. If it 
be admitted that the priority of the United States did not extend to the real 
estate of Duncan, in the hands of heirs or devisees, as already stated, 
because it does not attach as against them, still when the real estate or the 
proceeds thereof passed to or vested by law in the hands of the executors or 
administrators, the priority did attach: United States v. Crookshank, 1 
Edwards' Chancery R., 233. Consequently, whenever the proceeds of any real 
estate, or any personal estate, came into the hands of Thomas as the 
administrator, he, having notice of the debt due the government, became a 
trustee for the United States, and was obliged to pay them first, independent 
of the judgment of December term, 1844, and the decree of June term, 1846, of 
this court. These merely determined the amount of the debt, but in no degree 
changed his duty in the premises.

It is to be observed that this law of congress supersedes all state laws upon 
the subject of the distribution of those estates that come within its 
provisions. The language of the Supreme Court of the United States, in 
Thelluson v. Smith, 2 Wheaton, 396, is, that there is no exception made by the 
law in favor of a particular class of creditors. And the same court, in Conard 
v. Atlantic Insurance Company, 1 Peters, 444, say, that the priority of the 
United States does not yield to any class of creditors, however high may be 
the dignity of their debts. It follows, then, if these principles are correct, 
that the claims of the petitioners cannot bind any funds in the hands of the 
administrator, nor any lands sold under the judgments at law or the decree in 
chancery of this court, nor the proceeds of the same, notwithstanding the 
decree of the Circuit Court of Morgan county; for whatever may be the effect 
of this last decree, it cannot operate, under the circumstances, so as to 
impair the rights of the United States: Field v. United States, 9 Peters, 182.

The remaining question is as to the effect, of the judgments at law of the 
Circuit Court of Morgan county. As the rights of the petitioners, whose claims 
we are now to consider, depend upon the same principle, we will examine them 
together. This, then, was the position of the parties. The United States had 
judgments, binding all the lands of Duncan throughout the state, prior, in 
point of time, to the judgment of McConnel et al., and that of Matthews, which 
last two judgments were binding only on lands in Morgan county; and the United 
States had a decree subsequent and subordinate to both, but which, in extent, 
had the advantage of operating, like the judgments of June, 1841, throughout 
the state. The petitioners insist they have a right to throw the judgments of 
1841, upon land without the county of Morgan. They assert that at the time 
their judgments became liens upon the real estate in Morgan county, the United 
Stales, having also judgments which were liens upon that land, and which were, 
besides, liens upon lands out of Morgan county, are compelled to go upon these 
last mentioned lands, upon the principle well recognized and understood, that 
where a party has a lien for a debt on two funds, and another party has a lien 
on one of the funds only, a court of equity will oblige the party who has the 
double fund to resort in the first instance, for payment, to that fund upon 
which the other party has no lien. And it is contended that the circumstance 
of the United States procuring a decree, binding the lands out of Morgan 
county, before the application is made here, can make no difference. Another 
principle is also invoked, which may be considered settled law in New York at 
least; that where there is a general incumbrance upon distinct parcels of 
land, and the owner aliens them at different times to different persons, the 
parcel last sold is to be first charged to its full value to pay the general 
incumbrance, and so on backwards. The argument is this: if Duncan had 
mortgaged all his lands in the state, to the United Slates, for the payment of 
thirty thousand dollars, and then had mortgaged his lands in Morgan county to 
these petitioners for the amount of their judgments, and afterwards all his 
lands out of Morgan county to the United States for forty-nine thousand 
dollars, these lands out of Morgan, being the last aliened, are, according to 
the doctrine above mentioned, to be first charged with the payment of the sum 
first named. And it can make no difference, it is said, if, instead of 
mortgaging the lands out of Morgan, he had mortgaged all of his lands in the 
state over again; because, it will be seen, in order to adapt it to this case, 
we must include all of the land, the decree of 1846 of this court binding the 
lands in Morgan county as well as elsewhere. It is urged that these being 
judgments, the principle is the same.

This is stating the proposition fully, and carrying the analogy to as great an 
extent in favor of the petitioners, as was contended for by their counsel on 
the argument.

The doctrine that where a man owns different parcels of land, and transfers 
some of them, himself also retaining some, all the parcels being subject, 
before the transfer, to a general incumbrance made by him, the part which he 
still retains shall be applied to the payment or discharge of that general 
incumbrance, rather than that which he has transferred, is founded on the 
plainest principles of equity. It would be manifestly unjust that those 
persons to whom he had made transfers, should be compelled to pay off the 
incumbrance, when he held land which would satisfy it. Accordingly, it has 
been held, under such circumstances, that the property transferred is only 
liable, in the event of the part remaining in the owner not being sufficient 
to discharge the incumbrance. On the other hand, the doctrine already 
mentioned, as settled in New York, that land consisting of different parcels, 
subject to a general incumbrance, is in equity to be charged in the inverse 
order of the alienation of the several parcels, has been sometimes questioned, 
and Judge Story thinks it is not maintainable upon principle; and inclines to 
the opinion that there should be contribution, in such cases, according to the 
relative value of the estates: Story's Equity Jurisp., secs. 634 a, 1233 a.

The New York doctrine was pressed very far in the case of Schryver v. Teller, 
9 Paige, 173, and as that was cited in the argument by the counsel of the 
petitioners, and considered conclusively settling the principles which should 
govern this case, it may not be improper to give it a particular examination.

In that case, the owner of the parcels of lands—one at Coxsackie, the other at 
Redhook—having encumbered both by judgments and each by mortgages, on the 
twenty-eighth of May, 1840, mortgaged the Coxsackie property, and on the 
seventh of July following mortgaged it again to another person. On the ninth 
of June, of the same year, he mortgaged the Redhook property, and again on the 
twelfth of the same month, this last being given to the same person that held 
the mortgage of the seventh of July on the Coxsackie property. On the third of 
June, 1840, a judgment was docketed, which was a lien on both. The parties who 
held the mortgage of the seventh of July on the Coxsackie property, and those 
who held the mortgage of the ninth of June on the Redhook property, at 
different times and in different courts, filed bills for foreclosure, and at 
different dates obtained the usual decrees for sale of the property, the 
master having reported as to the priority of the several liens. On the second 
of March, 1841, the Redhook property was sold for an amount sufficient to 
satisfy all the liens on it prior in point of time to the mortgage of the 
twenty-eighth of May, 1840, on the Coxsackie property. On the twenty-third of 
March, 1841, this last property was sold for an amount not sufficient to pay 
the costs of foreclosure and the mortgage of twenty-eighth of May, if the 
previous judgments, as well as the prior specific liens on that property, were 
paid out of such sale. Under these circumstances, the holder of the mortgage 
of the twenty-eighth of May made application to the court for a modification 
of the original decree so as to throw the judgments on the surplus proceeds of 
the Redhook property, after satisfying all liens thereon prior to his 
mortgage. The court allowed the application, on the ground that as the Redhook 
property was more than sufficient to pay all liens on it prior to the date of 
the applicant's mortgage, in case the judgment creditors, who held liens at 
that time, sought to enforce them on the Redhook property, if the applicant 
paid them, he would have a right in equity to insist on an assignment of them, 
so that he might have a repayment out of the surplus proceeds, in preference 
who those who had liens on that property accruing after the date of his 
mortgage. For instance, the judgment creditors had liens on both properties, 
when his mortgage was taken on one (Coxsackie). If, in enforcing these liens, 
it would prejudice his mortgage, he would have a right in equity to compel 
them to go upon the Redhook property, because, certainly, he could be in no 
better position by taking an assignment of the judgments, than those who held 
them. Let us suppose the case put, had actually happened; that the applicant 
had purchased the judgments; then he would be the holder of judgments binding 
on both properties, and of a mortgage on one. 

The doctrine of the court, is, that in this condition, he could go upon the 
Redhook property to satisfy his judgments, in preference to one who had a lien 
on that property accruing after his mortgage. The court illustrated it by 
saying, if there had been a mortgage on both properties, and it had been 
foreclosed, the decree would require the property to be sold separately, and 
the proceeds so to be marshalled as to pay general liens on the whole out of 
that part of the fund arising from the sale of the Redhook property, thus far 
giving the applicant the benefit of his priority on the Coxsackie property, 
over a subsequent incumbrancer of the Redhook property.

In the case just cited there was a general incumbrance, binding both parcels, 
also specific incumbrances binding each, and a transfer made of one, and then 
the other; and it seems to proceed upon the principle that, inasmuch as at the 
time when the transfer was made of one of the parcels, the party would have 
the right to compel the general incumbrancer to go upon that parcel not 
affected by the transfer, no subsequent act of the owner in relation to that 
other parcel, could change his rights. Whether it would make any difference, 
if the general incumbrance and the transfer of the second parcel were held by 
the same person, does not appear; but it is certain he would, in one sense, 
come within the qualification or limitation of the rule laid down by Judge 
Story. He says that though the rule, that is, if a creditor has two funds, he 
shall take his satisfaction out of that fund upon which another creditor has 
no lien, is so general, it is never applied, except when it can be done 
without injustice to the person who has the double fund, as well as the 
debtor. It is never done when it trenches upon the rights, or operates to the 
prejudice of the party entitled to the double fund: Equity Jurisprudence, 
secs. 558, 559, 560, 633. The object is to satisfy both creditors. It is 
apparent, however, whenever the double fund is insufficient to pay all the 
claims against it, and the same person has a right to proceed against both, 
and against one alone, it does affect the right of the party entitled to the 
double fund. For example, in this case, the United States have a general lien 
on different parcels of land; creditors, the petitioners, have also a general 
lien on some of the parcels; and the United States have a lien which may well 
be considered specific upon all the parcels. Now it is plain, if the creditors 
turn the general lien of the United States over to the lands not bound by the 
lien of the creditors, under the facts of this case, it diminishes, by so 
much, the fund which is to satisfy the decree of 1846. In other words, 
whatever is paid to the petitioners is an absolute loss to the plaintiffs. 
Notwithstanding such would be the effect, in this case, upon the party 
entitled to the double fund, it may be questionable whether the circumstance 
of taking a subsequent lien, would or ought to place them in a better 
position; certainly not, if the true reason be given for the rule, in the case 
in Paige. To apply the argument of that case to this: if these petitioners had 
paid off the balance due on the judgments of the plaintiffs of 1841, they 
would have the right, in equity, to insist upon an assignment thereof.

The case of Schryver v. Teller, if we admit that it was rightly ruled, must be 
regarded as deciding that a general lien will be thrown upon a particular 
parcel of land, so as to give a party having a mortgage the benefit of his 
priority over subsequent incumbrances, either of the whole or a part; that is, 
where the question is dependent upon priority of time alone. But it does not 
follow that this would be the rule where there is a priority of right, that 
is, in a case where the parties, as such, do not stand upon an equality of 
right.

Let us, therefore, examine how far the character of the parties in this case, 
affects the question. The plaintiffs constitute the sovereign power of the 
country, and, according to the jurisprudence of most states, under certain 
circumstances, are entitled, as a creditor, to peculiar privileges. It was so 
under the Roman law; it is so under the law of England, and under our own.

We must bear in mind that the statutes giving the government a priority are 
presumed to have for their object the public good, and are, therefore, to be 
liberally construed: United States v. State Bank of North Carolina, 6 Peters, 
29; Beaston v. Farmers' Bank of Delaware, 12 Peters, 134.

The application was presented, in this case, after a levy had been made by the 
United States upon lands in Morgan county, under executions issued on the 
judgments of 1841. The lands were sold, and the moneys appropriated, upon 
those judgments, subsequent to the filing of the original petitions, as 
appears by the supplemental petitions. This court did not interfere with the 
proceedings under the executions, but suffered them to continue, and directed 
that there should be reserved a sufficient fund to meet the claim of the 
petitioners, from what might be made by the sale of lands in this case. The 
rights of the petitioners ought, perhaps, for that reason, to be considered 
the same as if the money arising from the sale of the Morgan lands had been 
paid into court, subject to its order herein. And, apparently, it should be 
governed by the same principles as if the petitioners, instead of pursuing the 
course they have, had applied to a court of equity to restrain the proceedings 
on the executions, waiving, for the purpose of the supposed case all 
objections on account of sovereignty, and the United States had come and 
given, in answer, the decree of 1846; the indebtedness of Duncan's estate; in 
fine, stating all the facts and claiming a priority of payment under the law.

It would seem upon principle, as well as by the authority of adjudged cases, 
if we throw out of view the decree of 1846, and the question of sovereignty, 
there could be no doubt of the right of the judgment creditors to compel the 
plaintiff to look to lands out of Morgan county, not bound by their lien, for 
the satisfaction of the balance due the United States, upon the judgments of 
1841, for in that case, there would be property sufficient to pay both. It is 
true, technically speaking, the petitioners, if they paid the judgments of 
1841, could not compel the plaintiffs to assign those judgments to them, 
because they could not strictly reach the United States: Hill v. United 
States, 9 Howard, 386. But if this difficulty were avoided, the question is 
whether the decree of 1846, which operated specifically upon lands not 
affected by the judgments of the petitioners, changes the principle.

It must be conceded the question is not free from embarrassment, in 
consequence of the difficulty of extracting from the various cases which have 
been decided, the true rule of interpretation of the acts of congress, laid 
down by the Supreme Court.

The petitioners had taken out executions on their judgments, within a year 
after they were rendered; on one some real estate, not in question here, had 
been sold; on the other, a small payment had been made; as to the balances due 
on them respectively, the judgments became general liens.

It has been uniformly held, in all the cases, that the priority of the United 
States, does not disturb any specific lien, nor the perfected lien of a 
judgment; that is, it does not supersede a mortgage on land, nor a judgment 
made perfect by the issue of an execution and a levy on land: Thelluson v. 
Smith, 2 Wheat., 396; Conard v. The Atlantic Insurance Company, 1 Peters, 386.

But in the case of a general lien it is not so clear. The case of Thelluson v. 
Smith, if it is not considered, as in some respects, overruled by the case of 
Conard v. The Atlantic Insurance Company, certainly establishes the doctrine 
that the priority of the United States does not yield to a judgment which is a 
general lien upon real estate. The facts were, that Thelluson and others 
recovered a judgment against Crammond, which, it was admitted by the court, 
was a lien upon his lands on the twentieth of May, 1805. Afterwards he made an 
assignment of all his estate, being insolvent, and in debt to the United 
States, so as to bring him within the operation of the acts of congress. The 
United States subsequently brought suit, against him, had judgment, sited out 
execution, levied on and sold an estate, called Sedgeley, admitted to be bound 
by the judgment of May 20, 1805. The marshal having received the proceeds, 
Thelluson et al. brought suit against him. They had not issued execution, nor 
levied on the estate by virtue of their judgment. One of the questions made in 
the case was, whether the United States were entitled to be paid in preference 
to the judgment creditor? This the Supreme Court decided in the affirmative, 
concluding by saying: "a judgment gives the judgment creditor a lien on the 
debtor's lands, and a preference over all subsequent judgment creditors. But 
the act of congress defeats this preference." This was under the act of 1799, 
but we have already seen, that in this respect, it is like the act of 1797.

This case was particularly examined and reviewed in Canard v. The Atlantic 
Insurance Company. It is there said, that Thelluson v. Smith was a case where 
a judgment creditor sought to recover the proceeds of a sale of land made 
under an adverse execution, on the ground that he had a general lien by 
judgment on the land; and in such circumstances the action was not 
maintainable. The real ground of the decision, the court says, was, that the 
judgment creditor had never made his lien specific; that he had no title to 
the proceeds as his property; and if they were to be deemed general funds of 
the debtor, the priority of the United States attached; that a mere lien on 
land did not convey the legal title to the proceeds of a sale, made under an 
adverse execution; the case did not establish the principle, that a specific 
lien could be displaced by the priority of the United States; because that 
priority was not, of itself, equivalent to a lien. Judge Johnson, in his 
separate opinion, says, that he never acknowledged the authority of the case 
of Thelluson v. Smith, on the point supposed to be decided by it—the 
precedence of the debt of the United States, as to a previous judgment, in the 
case of a general assignment; and that he concurred in it, only because of the 
want of priority between the parties. He thought the sale of the Sedgeley 
estate under tho execution was a nullity, because the assignment of Crammond 
divested all his interest, so as to place it beyond the reach of the execution 
issued on the judgment of the United States. Suppose, however, the assignees 
in whom the estate had vested—admitting it had vested—had sold it 
notwithstanding the lien; then, according to my understanding of the case of 
Thelluson v. Smith, even as corrected and explained in Conard v. The Atlantic 
Insurance Company, the proceeds of the sale in the hands of the assignees, 
would have been subject to the priority of the United States. As, in this 
case, if the lands in Morgan county had been sold by the executors or 
administrator, under the authority of the will or of the law, the proceeds 
would have been liable, not to the judgment creditors, (the petitioners) but 
to the United States; it being understood in all such cases, that the executor 
or administrator in whoso hands the proceeds were, had notice of the debt due 
the government.

In Conard v. The Atlantic Insurance Company, the court are careful to say, the 
priority of the United States does not affect any specific lien; but in the 
case of Brent v. The Bank of Washington, 10 Peters, 596, the court state, that 
is has never been decided that the priority of the United States affects any 
lien, general or specific, existing when the event happened, which gave them 
priority. 

Suppose, then, the case of Thelluson v. Smith may be considered as shaken, 
and, indeed, overruled—about which some doubt may be entertained—so far as it 
gives a preference to the United States over the general lien of a judgment 
creditor, it would follow that the judgments of these petitioners would not be 
affected by the mere force of the statute of 1797; and, possibly, we might go 
farther, and say they would not be affected by any mere judgment or decree in 
favor of the United States, on the indebtedness of Duncan's estate, rendered 
after the date of the judgments of the petitioners. But this court is asked to 
go even farther; to say that the United States shall forego their lien of 
1841, superior to that of the petitioners, as to the lands in Morgan county, 
and release a part of the lands bound by their decree of 1846, out of that 
county; so that the petitioners may be paid in preference to the plaintiffs. 
This, it seems to me, cannot be done. The United States are entitled to all 
their legal rights; and, in the case supposed of an application to a court of 
equity, to say to the judgment creditors: We will enforce our lien of older 
date than yours, made specific by a levy before you applied to the court; we 
will retain our lien under the decree of 1846 upon the lands out of Morgan 
county, we are not to be regarded as ordinary individual creditors of the 
estate; your rights must yield to ours. The same answer to the application of 
the petitioners must be given in this court. If they have a lien, so have the 
United States; and to decide that, under the circumstances of this case, the 
latter could not enforce their judgments of 1841, would be to say, in effect, 
they had no priority of payment at all; but that they must stand upon an equal 
footing with all other creditors; to prevent which was the very object of that 
portion of the statutes of 1797 and 1799, already referred to.

We have been told their lien cannot be displaced by that which
is not a lien—the priority of the plaintiffs. It is not. There is not only a 
priority, but that priority has been perfected into specific liens. If it be 
said that, discarding the decree of 1846, the United States might be regarded 
as individuals, and thrown on the lands out of Morgan county for the 
satisfaction of their judgments of 1841, and they ought consequently to be 
treated in the same manner, notwithstanding that decree; if the first could be 
done, the other would not necessarily follow; and the reason is—in the former 
case the United States would be paid; in the latter, not; and the law is 
imperative they shall be first paid, when the estate of any deceased debtor, 
in the hands of administrators or executors, is insufficient to pay all the 
debts due from the deceased. And, certainly, the lands of the deceased debtor, 
when those petitioners made their application to this court, were as strongly 
bound by the priority of the claim of the United States, as the proceeds of 
them would have been, in the hands of executors or administrators.

The laws of the United States giving a priority to the government, are of 
general application in the cases therein stated; and if a debtor is to be 
excepted out of the general rule, it devolves upon the party alleging the 
exception to show it. I think these petitioners have not satisfactorily 
established their right to be withdrawn from the ordinary predicament of 
creditors, when they come in competition with the claims of the government. In 
all such cases, it is manifest congress intended to give priority of payment 
to the United States, over all other creditors: Beaston v. The Farmers' Bank 
of Delaware, 12 Peters, 134.

Admitting that the question is not free from difficulty, yet I have not been 
able to arrive at any other conclusion than that which is here announced. It 
is sometimes a hard rule, undoubtedly, upon individual creditors and upon 
families, that a man's whole estate should be swept away, to pay a debt due to 
the government; but courts of justice can only expound and apply the law; and 
if, upon a fair and impartial examination of the subject, they can ascertain 
its intent and meaning, their duty is simply to administer it, as it becomes 
applicable, in the various relations of life, to the rights and interests of 
the parties before them.

Archibald Williams, District Attorney, for the plaintiffs.

D. A. Smith and Wm. Brown, for the petitioners.

------------------
*The opinion of the profession in Illinois is so general in favor of the 
doctrine that the lien of judgments of the United States Court is co-extensive 
with its jurisdiction, as stated in the text, it was not controverted on the 
argument. See the question discussed in a report which was confirmed by the 
Circuit Court of the United States for the Eastern District of Pennsylvania, 
contained in the case of Bayard v. Lombard et al., 9 Howard's Reports, 530. 
The Supreme Court of the United States held that the decision of the Circuit 
Court was final and conclusive under the circumstances, and could not be 
reviewed, consequently, no opinion was given as to the lien of judgments 
obtained in the Circuit Court of the United States. Wallace, Jr., R., 196, S. 
C.

Additional Comments:
Reports of Cases Determined in the Supreme Court of the State of Illinois from 
November Term, 1850, to June Term, 1851, both inclusive by E. Peck, Counsellor 
at Law. Volume XII. Reprinted from the Original Edition, with Annotations by 
William Gordon McMillan of the Chicago Bar. Callaghan & Company, Chicago, Ill. 
1881.

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