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651 Chests of Tea - Cnited States.
The different modes of securing duties, when not paid at the time of the entry, are all prescribed in this same 62d section. It máy, in all cases above fifty dollars in amount, be done by the bond of the importer with sureties. And upon all goods, except teas, by a like bond for the amount of duties, with a deposite of goods sufficient to pay such duties and expenses. And with respect to teas, a bond in double the amount of duties, with a deposite of the teas, according to the special regulations pointed out in the act. This appears to me to be the plain and obvious interpretation of this section of the law. And whenever the terms “ duties secured” occur, as they do in various parts of the collection act, they embrace these different modes, unless restricted to one or the other, as they sometimes are.
To consider the deposite of teas in stores as done merely for safe keeping, and because the importer is not able to find personal securities for the duties, does not strike me as being a just construction of this provision. If such had been the sole object, and possession retained by the government with no other view, that possession would, as in other cases where duties are not paid or secured at the time of entry, have been held exclusively by the revenue officers. Instead of which, the possession is held jointly by the importer and the inspector, at a store agreed upon between them, and under two locks, the key of one to be kept by the importer or his agent, and the key of the other by the inspector : so that all lawful interference with such deposite, until the expiration of two years, by one party, without the assent of the other, is rendered impracticable. All this shows an arrangement, with the concurrence of two parties, having the right and the power to act on the subject; and not the act of one, by reason of the inability of the other to avoid it. It is a course submitted by law to the option of the importer; and to say he was driven to it on account of his inability to elect the other alternative, would
651 Chests of Tea v. United States.
seem rather more like aggravating his necessities, than fairly presenting to him an option, which necessarily implies the ability to choose.
The construction I have given to the provision is in every respect calculated for the security of the revenue and the accommodation of the merchant. The inspector is required to attend at all reasonable times, to deliver out such parcels of teas as may be required, under the permit of the Collector, on the duties being paid, or secured by bond with sureties, which is to be accepted as a substitute for such parcels ; by which the government is amply secured, and the interest and convenience of the importer greatly promoted. other construction would be interposing greater restrictions and embarrassments with respect to the importation of teas than any other articles, which was clearly not the intention of the law.
The duties were, therefore, in my judgment, secured by the general bond of the importer, and the deposite of the teas in store, according to the provisions of the act, as found by the special verdict. And if so, where is the ground of forfeiture ? No fault has been imputed to the owner. Forfeiture, throughout the act, is visited only upon fraud, misconduct, and gross negligence, in the party or his agents. Admitting the lien for the duties still continues, and that the government has a right to reclaim the possession, and enforce the payment of the duties, (which by the by are not yet due ;) that would seem to be all that justice would demand, or policy require against an innocent party. But to follow this up with the penalty of forfeiture under such circumstances, is what I should be very unwilling to sanction. I find no special provision in any act of Congress calling for the application of such a severe rule, and it is certainly utterly at variance with
651 Chests of Tea v. United States.
the general principles of law. All that can be claimed out of property pledged or mortgaged, is satisfaction of the debt, for which it is held as security, and the expenses incurred by rea- . son of a non-compliance with the condition upon which it is so held.
It was said at the bar, that the same principle which is expressly adopted in the 5th section of the act of the 20th of April, 1818, with respect to wines and distilled spirits, is by implication applicable to the teas in question. Should this be conceded, (which however is not) it would not draw after it a forfeiture in the present case.
That act adopts substantially the same provisions with respect to the deposite of wines and distilled spirits, as are contained in the 62d section of the collection law with respect to teas.
And then the 5th section declares, “ That if any wines or other spirits, deposited under the provisions of this act, shall be embezzled or fraudulently removed from any store wherein they shall have been deposited, they shall be forfeited : 'And the person or persons so embezzling, hiding, or removing the same, or aiding therein, shall be liable to the same penalties, as if such wines had been fraudulently unshipped or landed without payment of duty.” The forfeiture here can only arise upon the fraudulent removal by the owner, or some person for whom he is responsible. It would surely not be incurred by the acts of mere strangers, or the inspectors of the revenue, who are the agents of the government.
The rule I have before referred to, would apply with peculiar force to such a case, “ that the law is not understood to forfeit the property of owners on account of the misconduct of mere strangers, over whom such owners' could have no control."
f 6 Vol. L. U. S. 354.
United States r'. Sturges et al.
Upon the whole then, after the most mature and deliberate examination of this case, I am of opinion, that no forfeiture of the teas in question has been incurred, and that the sentence or decree of condemnation must be reversed.
THE UNITED STATES v. STURGES ET AL.
Where a mortgage is given by a debtor to his co-debtor to secure the latter
against the debt of their creditor, Equity considers the mortgagee as a trustee for the creditor, and where a judgment has been recovered, will apply the mortgaged property in satisfaction of the judgment, or remove the encum
brance, so that it may be subjected to execution. The principle which governs such cases is, that the collateral security is a trust
created for the protection of the debt, and that it is the duty of a Court of
Equity to see that it fulfils the purpose for which it was intended. A judgment creditor who applies to a Court of Equity for its aid to enforce a
judgment at law, if he asks its aid to reach a chattel, must show that he has taken out execution at law, and pursued it to every available extent, in order to show a lien upon the chattel : but if the aid is sought as to land, it is enough
to show a judgment creating a lien upon the land. Although a mortgage be absolute upon the face of it, a Court of Equity will in
quire into the real purpose for which it was given, and apply it to that use. It is a rule of Equity that a judgment creditor at law is entitled to redeem an
encumbrance upon land, and thereby secure his legal priority. The assignee of a mortgage or other chose in action, takes it subject to the same
equity that it was subject to in the hands of the assignor. And the rule that it is only an equity residing in the original debtor, and not the
equities of third persons, against the assignor that have this effect, does not exclude a judgment creditor, claiming to redeem: He stands in the place of
the debtor, and has his equity. An assignee who might have obtained notice, and onght to have sought it, stands
in no better situation than if he had actually obtained it. A mortgage was given in reality to indemnify the mortgagee, but purporting to
secure a sum of money payable in one year, and five years afterwards it was
United States v. Sturges et al.
assigned, the whole sum appearing from the instrument to be unpaid : Held, that the circuinstances of the case should have put the assignee upon an inquiry, from which he would have learnt the true consideration of the mort
gage. An objection to the equity of the bill, which might have been taken advantage
of on demurrer, is not favourably received at the hearing of the cause after
answer. A discharge from iinprisonment by the Secretary of the Treasury, of a debtor
to the United States, under the act of 1798, does not discharge his co-obligors and sureties in the bond from their liability.
THOMPSON, J. By the bill and answers in this cause it appears, that on the 9th of October, 1815, the defendants, Butler and Sturges, became security for Minturn and Champlin, in a bond for the payment of duties, to a large amount: That the bond not being paid at the time stipulated, separate suits were prosecuted against the principals and sureties, and separate judgments obtained, in December, 1816: That payments had been made from time to time upon the judgments, leaving, however, a large balance still due : That after the execution of the bond, and before the judgments were obtained thereon, viz. on the 12th of August, 1816, Butler and his wife executed a mortgage on certain property in the city of New-York, to Josiah Sturges, for the payment of twentyseven thousand dollars. The mortgage was duly registered on the 16th of August, 1816.
The mortgage upon its face purports to be an absolute mortgage to secure the payment of twenty-seven thousand dollars. The bill alleges, that it was in fact given to indemnify Sturges against the bond he had executed as surety for Minturn and Champlin, and for no other purpose: That Sturges had paid no monies on the bond, or towards the judgment recovered against him upon it; and that none had been realized from his property : That the mortgage remained uncancelled of record; and that by reason thereof, the house and lots so mortgaged could not be sold, under the judgment obtained by