Joseph Story

“ There is no hardship in the case, which does not apply with equal force to any other private creditor. Every man like the mortgagee trusts another on the credit of his property, and means and consequent ability, to meet his engagements. It is hard upon them all to be postponed to the government;-and as hard upon the vigilant judgment creditor as upon the mortgagee. Nor is it perceived how postponing the mortgage creditor, would tend any more to shake the confidence of man in man, and to embarrass the commercial operations of the country, than the postponement of all the other creditors. ”

“ But, if before a Court of Law, a mortgage, from its peculiar form and structure, would be considered as conveying the amount of the property, because such a Court could not look from the terms of the conveyance to the private understanding of the parties, and that it should be a mere security for a debt, the difficulty does not exist here.-Because here, upon the face of the agreement, and in its express terms, the Court see that nothing more was in the contemplation of the parties, than to create a security for a debt. ”

“ Smith, the Court, though they mention mortgage as an exception to the general rule, yet do so only, obiter, nor has it ever been adjudged that even a mortgage will dislodge the public priority. No lien is pretended for it. But an equitable title to these funds, much better founded in justice than that of the Insurance Company, whose asserted lien, without possession or property, is a mischievous taint secretly affecting the right to the fund, and most disastrous in its influence on free and fair circulation. ”

“ The United States have no rights but as a creditor. They derived nothing from their execution and levy on these teas. If they were not ours by the assignment on the bill of lading, they passed to Thomson's general assignees by his assignment of the 19th November 1825. The United States can claim only as a creditor, against the assignees who are trustees for all the creditors, and for the government first before all; but what the assignees connot overthrow, be it specific, or be it general lien, is secure against the government. ”

“ Know all men by these presents, that we, the Atlantic Insurance Company of New-York, are held, and firmly bound, unto the United States of America, in the sum of forty-two thousand dollars, lawful money of the United States of America, to be paid to the said United States of America, their certain Attorneys, Successors, or Assigns, to which payment, well, and truly to be made, and done, we bind ourselves, and our successors, firmly by these presents, sealed with out seal of incorporation, and dated this ninth day of October, in the year of our Lord, one thousand eight hundred and twenty-six. ”

“ It is neither politic nor permitted for the judiciary to enfeeble by construction, what the legislature has done to establish them. Neither property nor lien is asserted for the United States, but privilege to be first paid out of the insolvent debtor's effects, before any other debtor. ”

“ First, it is said that this debt upon a respondentia bond is of too contingent a nature to uphold a mortgage, as collateral security for the payment of it. We know of no principle or decision, that justifies such a conclusion. Mortgages may as well be given to secure future advances and contingent debts, as those which already exist, and are certain and due. The only question that properly arises in such cases is, the bona fides of the transaction. ”

“ The application of a loan does not affect either the debt or the security given for it. The maritime law, as to this species of loan, is the same. The doctrine of application arises only where the master hypothecates, not where the owner bottomries, or borrows on respondentia. Even in the former case, though a necessity for the advance must be shown, the application does not concern the lender, unless there be a misapplication by collusion with him, or with his privity. ”

“ The contracts involve an advance of money at a premium beyond the rate of the statute, dependent for its return on the result of a real risk,-a risk in which the borrower had an interest to the whole extent of the loan,-an assignment of the goods at risk, to secure the payment of principal and interest on the happening of a contingency,-and a continuance of the actual possession of the goods assigned with the agents of the borrowers, until the purposes of their employment were answered, and they returned within the reach of the lender. ”

“ It is a collateral security, and is just what it should be; for if it had appeared to be an absolute sale, when only security was intended, it would have worn a badge of fraud. The conveyance is made to carry a lawful agreement into effect, and the words of the assignment are full and clear, and are restrained only by the designation of the purpose.
It is hinted, that it is not to be taken as conceded, that a mortgage of personal chattels can stand against the United States' priority. The general principle is, that a mortgage of goods is like a mortgage of lands. ”

“ Chan. 289, in which the title of a lender on a similar assignment for security, was traced through successive voyages, sales, and shipments, during several years, and enforced against the personal representative of the borrower.
It was not for the Court to let the jury decide the question of property, as inferable from the fact of possession. The fact of possession did not stand alone, but was governed by written instruments which legally made that fact of no importance. ”

“ Smith, are all possessory, viz: sale with delivery, executions executed, and mortgage. All liens are possessory-enforceable without suit. Liens for freight, general balance of factors, auctioneers, attorneys, carriers, tradesmen, materialmen, for purchase money; all depend in having hold of the thing liable to the lien; but none of them give a property in it. Indeed the legal understanding of lien and of property, are inconsistent with each other. Loss or gain do not affect the lien holder, but the owner of the property; to whom also, any surplus belongs after satisfying the lien debt. ”

“ But the origin and reason of the contract, argue conclusively the necessity of confining it to loans before the voyage begins, and to make it begin. Otherwise, as in this instance, the loan never was at risque, nor at sea at all, nor were any purchases made abroad with the proceeds of it. Though the terms of the bond are at and from Philadelphia, yet the money was not loaned till the vessels were half way to China: and it will be as lawful to borrow money on respondentia after the vessel's return as before her departure if such devices are sanctioned. They are mere wagers without interest. ”