Opinion of the Court.

ment of debts generally, or which, being non-existent at law, have been created in equity, under circumstances which fasten upon them such a trust. Adams on Equity, 254. But, as was said by Chancellor Kent in Williams v. Brown, 4 Johns. Ch. 682, the doctrine "does not apply to the case of a debtor in full life, for there is no equitable trust created and attached to the distribution of the effects in the latter case." Property held by a trustee for the testator is legal assets, for, although the benefit of the trust, if resisted, cannot be enforced without equitable aid, yet the analogy of the law will regulate the application of the fund. To constitute equitable assets, the trust imposed by the party, or by the court, must be for the benefit of creditors generally.

It is true that in Moses v. Murgatroyd, 1 Johns. Ch. 119 (7 Am. Dec. 478), Chancellor Kent held surplus money arising from the sale of mortgaged premises to be equitable assets, but that was in a case where the mortgagor was deceased and the fund was in a court of equity for distribution, and when the judgment to which priority was refused was confessed by the administrator. In Purdy v. Doyle, 1 Paige, 558, the rule was stated by Chancellor Walworth, in these words:

"If it is such property as the judgment creditors could obtain. a specific or general lien on at law, they are entitled to the fruits. of their superior vigilance, so far as they have succeeded in getting such lien. But if the property was in such a situation that it could not be reached by a judgment at law, and the fund is raised by a decree of this court, and the creditors are obliged to come here to avail themselves of it, they will be paid on the footing of equity only."

But a specific lien, whether legal or equitable, on property liable as equitable assets, was always respected by courts of equity. Freemoult v. Dedire, 1 Peere Wms. 429; Finch v. Earl of Winchelsea, Ib. 277; Ram on Assets, 318. And Lord Chancellor Parker, in Wilson v. Fielding, 2 Vern. 763, 10 Mod. 426, drew the distinction between property which is assets in a court of equity only and certain property which a creditor cannot come at without the aid of a court of equity. In that case

Opinion of the Court.

the mortgage debt had been paid out of the personal estate by the executor, thus exonerating the mortgaged premises which had descended to the heir. The unsatisfied creditors filed a bill to require the heir at law to refund, which was "a matter purely in equity and a raising of assets where there were none at law."

And see Atlas Bank v. Nahant Bank, 3 Met. (Mass.) 581; Codwise v. Gelston, 10 Johns. 507, 522; Tenant v. Strong, 1 Richardson Eq. 221; 1 Story Eq. Jur. § 553; 2 White & Tudor's Lead. Cas. in Eq. pt. 1, 390.

We have already seen that the filing of a bill by an execution creditor to subject the equity of the debtor in his lifetime, created a lien and gave him a legal preference. And in the English chancery, although equities of redemption after the death of the mortgagor are classed as equitable assets, the rule of distribution pari passu is modified in its application to them in respect to judgment creditors by permitting them to retain their priority over other claims, because, if such priority were not allowed, the judgment creditor might acquire it by redeeming the mortgage. Adams Eq. 256. Legal assets, according to the definition of Mr. Justice Story, Eq. Jur. § 551, “are such as come into the hands and power of an executor or administrator, or such as he is intrusted with by law virtute officii to dispose of in the course of his administration. In other words, whatever an executor or administrator takes qua executor or administrator, or in respect to his office, is to be considered legal assets." And this is the modern doctrine in England. In Lovegrove v. Cooper, 2 Sm. & Giff. 271, it was held, for that reason, that the proceeds of real estate directed to be sold for the payment of debts, and paid by the purchaser into court, were legal and not equitable assets.

It follows from this, that in this country generally, where the real estate of a decedent is chargeable with the payment of debts, and, in case of a deficiency of personal property for that purpose, may be subjected to sale and distribution as assets, by the personal representative, in the ordinary course of administration, the distinction between legal and equitable assets has ceased to be important. In every such case the equity of re

Syllabus.

demption could only be applied after sale by the executor or administrator in the ordinary course of administration, subject to whatever liens may have been imposed upon it in the lifetime of the mortgagor, and among them, as we have seen, is that of an execution creditor who has filed his bill to subject it to the payment of his judgment. So, in other cases where the rule of equality in distribution, as to equitable assets, applies, as in cases of assignments by the debtor himself for the payment of debts generally, and in cases of bankruptcy and insolvency, except as otherwise expressly provided by statute, the estate passes, subject to existing liens, including that of an execution creditor who had previously filed a bill to subject the equitable interest of the debtor, and his priority is respected and preserved. The lien is given by the court in the exercise of its jurisdiction to entertain the bill and to grant the relief prayed for; and to distribute the proceeds of the sale for the benefit of others, equally with the execution creditor first filing the bill, would be to contradict the very principle of the jurisdiction itself, and defeat the very remedy it promised; for the fruits of litigation, according to the rule of equality, would have to be divided, not only with other judgment and execution creditors, but, as well, with all creditors, whether their claims had been reduced to judgment or not.

For these reasons, the decree appealed from is affirmed.

CUTLER v. KOUNS & Another.

IN ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK.

Argued January 9th, 1884.--Decided March 10th, 1884.

Rebellion-Restrictions upon Trade.

Under authority derived from § 8 of the act of July 2d, 1864, 13 Stat. 375, and the Treasury Regulation of May 9th, 1865, a treasury agent at New Orleans took on the 6th of June, 1865, possession of cotton brought to New Orleans, from Shreveport and from the State of Texas, and before releas

Statement of Facts.

ing it to the owners exacted the payment of one-fourth of its market value in New York. Payment was made under protest by instalments, viz.: June 12th, June 15th, and June 20th, 1865, and the money paid into the treasury. June 13th, 1865, the President issued his proclamation removing the restrictions upon trade east of the Mississippi, and on the 24th his proclamation removing them from the country west of the Mississippi. On the 1st of July, 1871, the owners of the cotton commenced suit against the agent to recover the sums so paid. Held, (1) That all cotton arriving at New Orleans before the proclamation of June 13th, became thereby subject to the treasury regulation. (2) That the President could not exempt it therefrom by proclamation subsequent to its arrival, and that the time granted by the agent to make the payments had no effect upon the liability to make them. (3) That the proclamation relating to trade east of the Mississippi did not affect cotton arriving at New Orleans from the country west of the river. (4) That the action was subject to the limitations prescribed by § 7 of the act of March 3d, 1863, 12 Stat. 757.

By section 3 of the act of July 13th, 1861, 12 Stat. 255, it was enacted that it should be lawful for the President by proclamation to declare that the inhabitants of any State or part of a State in rebellion against the United States were in a state of insurrection, and that "thereupon all commercial intercourse by and between the same and citizens thereof and the citizens of the rest of the United States should cease and be unlawful so long as such condition of hostilities should continue."

By his proclamation, dated August 16th, 1861, 12 Stat. 1262, the President declared, among others, the States of Louisiana and Texas to be in a state of insurrection against the United States (excepting such parts thereof as might, from time to time, be occupied by the forces of the United States), and forbade all commercial intercourse between the same and the inhabitants thereof, with the exceptions aforesaid, and the citizens of other States and other parts of the United States.

On April 26th, 1862, the city of New Orleans was occupied by the forces of the United States, and remained in their possession until the close of the civil war. From the date named New Orleans was, therefore, excepted from the operation of the non-intercourse act.

In this state of affairs, on July 2d, 1864, an act of Congress was passed, entitled "An Act in addition to the several acts concerning commercial intercourse between loyal and insur

VOL. CX-46

Statement of Facts.

rectionary States, and to provide for the collection of captured and abandoned property, and the prevention of fraud in States declared in insurrection." 13 Stat. 375. Section 8 of the act provided as follows:

"That it shall be lawful for the Secretary of the Treasury, with the approval of the President, to authorize agents to purchase for the United States any products of States declared in insurrection, at such places therein as shall be designated by him, at such prices as shall be agreed on with the seller, not exceeding the market value thereof at the place of delivery, nor exceeding three-fourths of the market value thereof in the city of New York, at the latest quotations known to the agent purchasing."

In pursuance of the authority thus conferred, the Secretary of the Treasury designated certain cities, among them the city of New Orleans, as places of purchase, and appointed purchasing agents. By regulations dated May 9th, 1865, he directed that to meet the requirements of the 8th section of the act of July 2d, 1864, the agents should receive all cotton brought to the places designated as places of purchase, and forthwith return to the seller three-fourths thereof, or retain out of the price thereof the difference between three-fourths the market price and the full price thereof in the city of New York.

While the statute and these regulations were in force, to wit, on June 6th, 1865, the defendants in error, George L. Kouns and John Kouns, brought to the city of New Orleans about nine hundred bales of cotton, which they had caused to be transported, a part from near Shreveport, in the State of Louisiana, and the residue from Jefferson, in the State of Texas. At the time last mentioned, Cutler, the plaintiff in error, was the purchasing agent in New Orleans appointed by the Secretary of the Treasury. As such agent he took possession of the cotton, and before releasing it to the plaintiffs in error exacted from them the one-fourth of its market value in New York, which they paid under protest. They paid the money in three instalments-$13,695.92 on June 12th; $7,200 on June 15th; and $8,588.41 on June 20th. The money so paid was paid into the treasury by Cutler.