Benjamin N. Cardozo,
American Surety Company of New York v…
“ I think it clear that, in the circumstances, the amount paid by the United States into the fund in the hands of the trustee in bankruptcy is general assets of the estate, and that the surety company, as respects its claim for the amount paid under its bond, and the furnishers of material and labor, are general creditors entitled to no preference or priority over each other. ”
Benjamin N. Cardozo,
American Surety Company of New York v…
“ We are told in effect that the displacement of a lien is an exercise of power more drastic and far-reaching than the marshaling of assets where there has been no agreement for a lien. The distinction might be important if the contest were between the surety and creditors not covered by the bond or between the surety and later assignees of the security so promised. ”
Benjamin N. Cardozo,
American Surety Company of New York v…
“ On the other hand, the reserved percentage was claimed by the respondents on the ground that the effect of the statute, the contract, and the bond, when read together, was to make the equity of the surety subordinate to theirs. Out of this equity there grew, as they contended, a right or an interest which, even if not a lien in the strict and proper sense, brought kindred consequences along with it. At least a court of equity would not come to the aid of one whose equity was subordinate until claims superior in equity had been satisfied in full. ”
