United States v. Kirkpatrick

A bond, given on the 4th of December, 1813 for the faithful discharge of the duties of his office, by a Collector of direct taxes and internal duties, appointed (under the act of the 2d of July, 1818, ch. 16.) by the President, on the 11th of November, 1818, to hold his office until the end of the next session of the Senate, and no longer, and subsequently appointed by the President, with the advice and consent of the Senate, on the 24th of January, 1814, is to be restricted (as to the liability of the sureties) to the duties and obligations created by the Collection Acts passed antecedent to the date of the bond.

The second commission, issued under the appointment, with the advice and consent of the Senate, operates a revocation of the first commission, issued under the appointment by the President, which was to continue until the end of the next session of the Senate, and no longer; and the liability of the sureties in the bond did not extend beyond the duration of the first commission.

In general, laches is not imputable to the Government: and where the laws require quarterly or other periodical accounts and settlements, a mere omission to bring a suit, upon the neglect of the officer or agent to account, will not discharge his sureties.

The case of The People v. Jansen, (9 Johns. Rep., 332.), distinguished; and, so far as it conflicts with the present case, overruled.

In general, the debtor has a right to make the appropriation of payments; if he omits it, the creditor may make it: but neither part has a right to make an appropriation after the controversy has arisen.

In cases of long and running accounts, where balances are adjusted, merely for the purpose of making rests, the law will apply payments to extinguish the debts, according to the priority of time.

ERROR to the District Court for the Western District of Pennsylvania.

[p721] This was an action of debt, commenced by the United States, in the Court below, against the defendants in error, J. Kirkpatrick and others, as the obligees of a bond, given by them to the United States, on the 4th of December, 1813, conditioned for the true and faithful discharge of the duties of the office of Collector of direct taxes and internal duties, by Samuel M. Reed, who had been appointed to that office by the President, on the 11th of November, 1813, and, by the terms of his commission, was to hold his office during the pleasure of the President, "and until the end of the next session of the Senate of the United States, and no longer." On the 24th of January, 1814, he was re-appointed to the same office, by the President, by and with the advice and consent of the Senate, and by the new commission issued to him, was to hold his office "during the pleasure of the President of the United States, for the time being." The pleadings upon which the cause was tried in the Court below, were extremely informal and confused, but they resulted substantially in the following questions of law, upon which the Judge instructed the jury, and a bill of exceptions was taken.

1. Whether the liability of the sureties to the bond, was limited to the duties and obligations imposed upon the Collector by the act of the 22d of July, 1813, ch. 16, and other acts relating to the assessment and collection of direct taxes and internal duties, passed antecedent to the execution of the bond, thus excluding the liability for moneys [p722] collected under subsequent statutes? Upon this point, the Court below instructed the jury that the responsibility of the sureties did not extend to the obligations created by the subsequent statutes.

2. Whether the jury were at liberty to impute laches to the government, from the delay of the proper officers to call the Collector to account, at the periods prescribed by law, from the year 1814 to 1818? The Court left it to the jury to decide whether, under the circumstances of the case, the Government had not waived its resort to the sureties.

3. Whether the responsibility of the sureties extended beyond the duration of the first commission? Upon this point, the Court below charged the jury, that the responsibility of the sureties extended to the re-appointment of the Collector under the new commission, until his duties and obligations were varied by the statutes enacted subsequent to the date of the bond.

4. How the payments, which had been made by the Collector, were to be appropriated? The balance found due in each account, had been carried forward to the succeeding account, and the Court was of opinion, that the Government could not make the appropriation, at the time of the trial, so as to apply the payments to the extinguishment of debts due subsequent to the time when the sureties ceased to be liable.

Upon these instructions a verdict was found for the defendants, upon which a judgment was rendered in the Court below, and the cause was brought by writ of error to this Court.

[p723] The Attorney-General, for the plaintiffs, mentioned the extreme laxity of the pleadings in the Court below, not with a view of preventing a decision upon the merits, which was very much desired by the Government, but in the hope of producing some reform. He argued, (1.) That the appointment of the Collector was permanent, neither limited in point of time, nor to the acts of Congress then in force, but extending to all laws on the subject of direct taxes and internal revenue, which might be passed during his continuance in office. The act of the 22d of July, 1813, ch. 544. [xvi.] makes a permanent partition of the whole territory of the United States into collection districts, preparatory to other distinct and separate laws, which were afterwards to follow. It looks to all future laws. There being, then, no existing law in force, all the laws to which the bond could refer were prospective. The case of the People v. Jansen, which had been referred to in the Court below, was distinguishable, in several particulars, from the present. (2.) The instruction given to the jury, authorizing them to impute laches to the Government, was erroneous. Even in the case of private individuals, mere delay in proceeding against the principal debtor will not discharge a surety. (3.) The charge of the Judge below was also erroneous, in authorizing the jury to apply the payments made by the Collector [p724] to the balances due, under the acts in force when the bond was given. The rule is settled, that where debts are due on two different accounts, the debtor may make the application to either, at the time of payment. But, if he omit to do it, the creditor has a right to determine to which it shall be applied.

Mr. Alexander and Mr. Foster, contra, contended, (1.) that the bond entered into by the defendants in error, was no farther obligatory on them, than for the faithful performance of the official duties of Reed, during the continuance of the appointment recited in the condition. The first commission was to continue in force, by its own terms, only until the end of the next session of the Senate; and the new commission was a revocation of it. Being with the advice and consent of the Senate, it is by a different authority, and the President might have nominated a different person. By carrying forward the balance due by Reed, under the first commission, to his account, as Collector under the second commission, it was shown, that his personal responsibility was looked to, and that no resort was intended to be had against the sureties. It has been held, that a guarantee of a partnership debt is not liable, where the partnership debt is discharged, by carrying the proportions of each partner to his separate account, without notice to [p725] the guarantee. This must be upon the principle, that the plaintiff had shown, by his own act, that he did not intend to resort to the surety, and that he looked to the debtors in a different capacity from that in which the guaranty was given. In Lord Arlington v. Merrick, the action was debt on bond, dated the 1st of May, 18 Car. II., conditioned that, whereas, on the 30th of April, 1667, the plaintiff had deputed T. Jenkins to execute said office, from the 24th of June next for six months following, if said T. J. shall, &c., for and during all the time he shall continue Deputy Post Master, well, truly, and faithfully do, execute, and perform all the duties, &c. The defendant pleaded performance generally; and a breach was assigned on the last day of September, 22d of the King; and defendant demurred. The Court held, that the condition should refer to the recital only, by which the defendant was bound only for six months, and not longer. This had been considered as a leading case ever since; and other analogous cases might be cited. (2.) The subsequent [p726] acts of Congress on the same matter had so varied and enlarged the duties of the Collector, as created by the statutes in force at the time the bond was given, that the sureties were not liable for moneys received under those acts, even admitting that they were liable beyond the continuance of the first commission. The learned counsel entered into a critical examination of the acts, to show that the duties of the officer were thus varied and enlarged, and cited the authorities in the margin to support the legal principle, that such alteration in his official duties would discharge the sureties from further liability. (3). That laches might be imputed to the government, through the negligence of their officers. In the case of mere private individuals, the surety, or guarantee, may pay the debt, and proceed in Chancery to compel the creditor to enforce his demand against the principal, which he could not do in the case of the Government; and that was a sufficient reason to justify the Court below in leaving it to the jury to say, whether the neglect of the officers of the treasury was not a waiver of the guaranty. And even [p727] in the case of a private individual, gross laches, or fraud, on the part of the creditor, will discharge the surety. (4.) The Court below were not bound to direct the jury, that the subsequent payments should be applied to discharge subsequent balances; nor did it appear by the record, that the United States Attorney made such an election. The rule as between a private debtor and creditor, as to the appropriation of payments, is not applicable where the receiver is a public officer. Where the whole case is complicated of law and fact, the whole may be left to the jury, unless some particular point is selected by the counsel for the consideration of the Judge, and his opinion is asked upon that point.

The Attorney-General, in reply, insisted, that there was no limitation to the obligation of a surety, unless expressed on the face of the bond, or implied in law. In Lord Arlington v. Merrick, the condition of the bond was expressly limited to six months. So all the other cases cited would be found to have some distinguishing feature; such as that the condition was to be faithful to the plaintiff, and the breach assigned was, that the defendant had failed to pay the plaintiff and his partner, [p728] whom he had subsequently taken into the firm. There it was held, that the surety was not liable for subsequent defaults. In the case of the People v. Jansen, the statute of New-York made it the express duty of the public officers to prosecute diligently, and with effect, the suits which had been commenced against the principal; and their neglect to perform this duty, actually occasioned the loss for which the sureties were sought to be made responsible. So, also, in the exchequer case of Bartlett v. the Attorney-General, a new duty was laid upon coals, by a statute passed subsequent to the giving of the bond by the Collector, under which statute a new deputation was given, and new security taken; it was, therefore, very properly held, that the sureties on the first bond were not liable for the moneys received on account of this duty. But, in the present case, the bond is to continue during his continuance in office, and is to secure all duties collected during that term. If it were an annual office, it might have been different. As to the two commissions, the practice of the Government has been, to consider them as one continuing commission. A different construction would render the bond practically ineffectual. The objection which seeks to impute laches to the Government, on account of the mere omission of its officers to proceed against the [p729] principal, on every periodical omission to account, is entirely novel, and, if it were to prevail, would be equally fatal to the most important interests of the public, and injurious to the sureties themselves, as it may often happen that the balance consists of outstanding duty bonds, which may soon afterwards be collected, and liquidate the balance. The law does not create any obligation to sue, which does not exist in the case of a private guaranty.