Bouchaud v. Dias & Furman

Headnote

Questions discussed.

1. Whether a bill filed by two creditors, sureties on custom-house bonds, claiming, for that reason, priority above all other creditors, against a defendant, assignee in trust of an insolvent firm—the assignment being made to indemnify the assignee, as surety for the firm also on custom-house bonds, was defective for want of parties ?

2. Whether, under the act of congress, (1799, ch. 12S, § 65,) the United States are preferred creditors, where the insolvent debtor has only assigned his

property for the purpose of paying or indemnifying a single creditor or surety, and not for the benefit of creditors generally ?

That is, was it necessary that the bill should have been filed in behalf of all the creditors of the insolvent firm, where its object was to establish the right of priority in the United States, with regard to custom-house bonds, paid by the complainants, and their subrogation in the place of the United States, by reason of such payment; and that the assignee, by reason of misapplication of the trust funds, be charged personally ?

3. Whether, if the complainants were entitled to subrogation in the place of the United States, they were equally, with the. latter, protected against the operation of the statute of limitations ?

It appeared by the bill filed in this case, by Joseph L. Dias and Job Furman, complainants, that Henry Castro and Louis B. Henriques were formerly merchants in the city of New-York. They became insolvent, and in May, 1823, Castro, in his own name and that of Henriques, by power of attorney from him, (who was then in France,) executed to Louis A. Brunei, of the city of New-York, an assignment of a large amount of property, then in the possession and under the control of Castro and Henriques, consisting of goods, wares and merchandize, and certain leasehold estates in the city of New-York. Also certain household furniture of Castro, upon trust, after paying expenses, to pay and satisfy certain moneys paid and liabilities incurred by said Louis A. Brunei, or by the house of F. & A. Brunei, of which the said Louis A. was a member, by indorsement or otherwise, and on account of the said Castro and Henriques, and also to pay certain bonds, given by said Castro to the United States for duties and merchandize imported by Castro and Henriques, and which bonds the said Louis A. Brunei had executed as surety for said Castro.

The bill charged, on information and belief, that the assignment, although it did not purport on its face to be an assignment of all the estate of the said Castro and Henriques, yet that it was so in fact; and that it embraced and covered all their estate, real and personal, amounting to about $80,000, which amount came into the hands of said Louis A. Brunei.

That the whole indebtedness intended to be secured by the assignment was the amount of custom-house bonds, on which said Louis A. Brunei was surety, amounting to $30,636.26, and

the debts paid or liabilities incurred by the said Louis A. Brunei, or F. & A. Brunei, amounting to.$6,873.83.

That Castro and Henriques were, at the time of executing the assignment, largely indebted to the United States upon other bonds given for duties, besides those above mentioned; some of which, one of the complainants, Job Furman, had executed as surety with said Castro, and others were executed by said Castro and one Garniere Thiolliere. That judgments were recovered upon all the said bonds in favor of the United States, against said Castro, and the several parties who had executed the same with him as,.sureties; and charged, that by reason thereof,- and in pursuance of the statute, the United States were entitled to a priority of payment over all the other creditors of said Henry Castro.

That Brunei pretended that the assigned property was insufficient to pay the debts secured by the assignment. Whereas, it was charged, on information, that without wilful default and neglect of the assignee, the property so assigned was abundant, not only to pay all the debts provided in the assignment, but also to pay all the custom-house bonds of said Castro, and also a large dividend on other debts.

Also charged that Brunei, the assignee, in disregard of the duties he owed to the sureties of said Castro, upon the United States bonds aforesaid, had paid the simple contract debts mentioned in the assignment, amounting to the sum of $6,873.83 as aforesaid, and thereby made himself personally answerable, and his estate in the hands of his executors liable, for so much money as was thus misapplied.

That Louis A. Brunei died on or about the 29th July, 1833, having a large amount of the property of Castro and Henriques assigned to him as aforesaid, in his hands, and leaving a large amount of the said bonds, as well as those in which he was surety to the United States for said Castro, as others, in which he had not joined as surety, entirely unpaid and unsatisfied. That said Brunei, previous to his death, duly made and published his last will and testament, and thereby appointed Joseph Bouchaud executor, who qualified as such, and letters testa

mentary were granted to him by the surrogate of the city of New-York, on the 14th March, 1834. That Bouchaud took possession of the said assigned property, which was in the hands of Brunei at the time of his death.

That Bouchaud thereafter pretended that Brunei had died insolvent, yet he nevertheless paid to sundry simple contract creditors of Brunei their respective demands, without regard to the priority of the United States, under and by virtue of the bonds executed by Brunei, in their favor, and with full knowledge of the same, and also without making any distinction between the said assigned funds and property and those held by Brunei in his own right, but charged that the whole funds and property" received by Bouchaud as executor had been mingled together.

And also charged that Bouchaud was personally liable to the extent of 'the assets received by him from the estate of Brunei.

Also charged, that the following bonds, executed by the said Henry Castro, were still due and unpaid; fourteen bonds executed by Castro as principal and Garniere Thiolliere as surety for various sums, amounting in the whole to $6,886.92. One bond executed by Castro as principal, and Louis A. Brunei as surety, for $1,027. Three bonds executed by Garniere Thiolliere as principal, and the said Henry Castro as surety, in various sums amounting in the whole to $1,910.05, the aggregate amount of said bonds being $9,823.97.

That judgments were recovered on all said bonds in the dis-‘ trict court of the United States for the southern district of New-York, in favor of the United States against the obligors in said bonds respectively.

That the complainant, Job Furman, signed as surety for said Henry Castro three bonds for duties to the United States, March 19, 1823, for $1,153.84 each, upon which judgments had been obtained by the United States against said Furman and Castro, and which had been paid by Furman on the 15th December, 1824, the principal interest and costs amounting to $3,787.52, and charged this sum to be a lien on the estate of

Louis A. Brunei, and entitled to priority of payment, the same-as if said judgments and bonds were held by the United-States.

That the other complainant, Joseph L. Dias, was surety with-said Louis A. Brunei on two bonds executed by said Henry Cas- - tro as principal, in favor of the United States, for $2,968 each, upon which judgment had been obtained against said Dias, Brunei and Castro, in favor of the United States, March 1,1824.-On the 7th November, 1834, the complainant Dias paid upon said last mentioned judgment $1,000, which he charged to be-entitled to priority of payment out of the estate of Castro and Henriques or Louis A. Brunei, in the same manner and to the same extent as if held by the United States.

The bill stated that Castro, in March, 1824, obtained a discharge under “ an act to abolish imprisonment for debt in certain cases,” passed April 7,1819, by which he was directed and did assign to the complainant Dias all his estate, real and personal, for the benefit of his- creditors. That in June, 1824, Henriques obtained a like discharge, and assigned all his estate, real and personal, to one Fulgence Chegaray, for the benefit1 of his creditors. And the bill claimed, that by virtue of these assignments all the estate of Castro and Henriques, respectively, became and was vested in the respective assignees, Dias and Chegaray.

The complainants admitted that the United States were entitled in common, with their claim as sureties of the said Henry Castro, as before stated, to a priority of payment out of the estate of said Louis A. Brunei of the bond executed by him as surety with said Castro for $1,027, as before stated, with interest and costs, and also a priority of payment over the other creditors out of the estate of Castro in the hands of Brunei, at' the time of his decease, of the other bonds executed by Castro, either as principal or surety, as before stated; and that if there were not sufficient assets in the hands of Brunei at the time of his decease, of the estate of said Castro and Henriques, then that the estate of Brunei, which came to the possession and control of said Bouchaud, his executor, was answerable for the

same, by reason of the misapplication by Brunei of the funds received from said assignment; and that any sums of money due from said Brunei on account of the estate of Castro, being received and held by him in trust for the United States and other creditors, who were or might be subrogated in the place of the United States, and have the same rights with them, were entitled to a priority of payment over other debts of Brunei, in case of deficiency to pay the whole.

The complainants charged that they were respectively entitled, in common with the United States, and on the same principle with them, to a priority of payment upon the bonds paid by them, or for so much thereof as was paid by them ; and that in case of a deficiency of assets of the estate of Brunei to pay the full amount of said debts, before stated, as entitled to priority, that they were entitled to a rateable share dr distribution with the United States of the funds, or estate of Brunei, or of such part as did come, or might have.come, to the hands of Bouchaud, his executor.

The bill charged a knowledge of Castro’s indebtedness to the United States to Brunei when he took possession of the assigned property; also a like knowledge of Brunei’s indebtedness to the United States and to Job Furman, to Bouchaud his executor, before letters testamentary were issued; also a knowledge that Brunei then had a large amount of property of Castro and Henriques in his hands; and that a large amount of custom-house bonds of said Castro remained unpaid.

That the complainants might be decreed to be paid the full amount due to them as above mentioned, with interest, on the principles before stated, from the estate of Brunei, if sufficient; if not, then out of the proper goods and effects of Bouchaud, the executor.

The United States, Joseph Bouchaud, Fulgence Chegaray, Henry Castro'and Louis B. Henriques, were made defendants.

Joseph Bouchaud, one of the defendants, demurred, generally, for want of equity.

The vice-chancellor of the first circuit overruled the demurrer. His decision was appealed to the chancellor, who,

on the 28th October, 1845, affirmed the decision of the vice-chancellor, with costs. No opinion was given by the chancellor.

The defendant, Bouchaud, brought an appeal from the decree of the chancellor to this court.