tion of offenses against the postal laws, may be compromised by the Secretary of the Treasury under the provisions and upon the considerations imposed by this section. (1885) 18 Op. Atty. Gen. 277.

Judgments on recognizances may be subject to compromise. (1897) 21 Op. Atty. Gen. 494.

Grounds for compromise.-In passing on cases submitted to him for compromise, under R. S. 3229, and this section, the Secretary of the Treasury, while he is not at liberty to act from motives merely of compassion or charity, may consider not only the pecuniary interests of the Government, but take into view general considerations of justice and equity and of public policy. (1881) 17 Op. Atty. Gen. 213.

The Secretary of the Treasury is not authorized to remit or release any portion of a judgment indebtedness on considerations of hardship to particular individuals. The authority to "compromise" relates to claims of doubtful recovery or enforcement. (1879) 16 Op. Atty. Gen. 617; (1894) 21 Op. Atty. Gen. 50, distinguishing (1871) 13 Op. Atty. Gen. 479, and (1884) 18 Op. Atty. Gen. 72.

Authority of Attorney General to compromise pending litigation.-The Attorney General may absolutely dismiss or discontinue suits in which the Government is interested a fortiori he may terminate the same upon terms, at any stage, by way of com

The doubt as to the authority of the Attorney General, expressed in opinion of February 10, 1894 (20 Op. Atty. Gen. 714), not concurred in. Id.

Except as modified by R. S. 3229, and this section, the power to determine whether a compromise should be made of pending litigation would seem to rest with the Attorney General; such suits being necessarily under his control and subject to his direction. (1901) 23 Op. Atty. Gen. 507.

Conclusiveness of unauthorized compromise judgment.-There was no ratification of an unauthorized judgment of compromise entered in favor of the United States, nor any laches in attacking it, where there was a delay of a little more than five years after the judgment was entered before steps were taken to set it aside, but this was due to the fact that no one having authority to act had any knowledge of the facts until that time. U. S. v. Beebe (1901), 180 U. S. 343.

Compelling settlement.-State court which appointed receiver for insolvent corporation could not require Federal Government, as condition to either filing or allowance of its claim for taxes, to submit proposition of settlement. Reinecke v. General Combustion Co. (1925), 237 Ill. App. 404.

History of section.-This section is a reenactment and extension of sec. 65, act of Mar. 2, 1799 (1 Stat. 676), and the same or equivalent language, so far as the question here involved is concerned, is found in earlier statutes, cited by the court. U. S. v. Oklahoma (1923), 261 U. S. 253.

Nature of right. It depends exclusively on statute. Liberty Mut. Ins. Co. v. Johnson Shipyards Corporation (C. C. A. 1925), 6 Fed. (2d) 752, affirming (D. C. 1924), 300 Fed. 952. Affirmed Stripe v. U. S. (1926), 269 U. S. 503.

Claim of United States f payment of tax debt de

statute, and does not r

prerogative. U. S. ↑ poration (C. C. A. 19

And though United States, in taking over and operating railroads, acted in sovereign capacity, rights of Director General as to priority of claims arising out of operation rests on statutory provisions, and not on sovereign prerogative. Mellon v. Michigan Trust Co. (1926), 271 U. S. 236, affirming (C. C. A. 1924), 2 F. (2d) 194.

General rules of construction.-But this act has reference to the public good, and must be liberally construed. Beaston v. Farmers' Bank (1838), 12 Pet. 102, 134. To the same effect, see Bramwell v. U. S. lity & Guaranty Co. (1926), 269 U. S. S. v. People's Trust Co. (D. C. F. (2d) 437; In re Stiles' Estate Sur. 1926), 215 N. Y. S. 134, 126 D. 715.

than the amount of its indebtedness, and that voluntarily, by resolution of its board of directors, surrendered all its assets to the State superintendent of banks for the purpose of liquidation, has been held to have committed an act of bankruptcy and to be "insolvent," within the meaning of this section, giving preference to debts due the United States. Bramwell v. U. S. Fidelity, etc., Co. (C. C. A. 1924), 299 Fed. 705, affirming (D. C. 1923) 295 Fed. 331. Affirmed (1926), 269 U. S. 483.

The appointment of a receiver in equity for the property of a debtor is not such a divestiture of his property as to give debts due to the United States priority, under this section. Kennebec Box Co., Inc., v. O. S. Richards Corp. (D. C. 1924), 299 Fed. 871.

This section gives the United States priority only (1) where the person in debt to the United States is insolvent; (2) where the estate of a deceased debtor is insufficient to pay all the debts due from the deceased; (3) where a debtor not having sufficient property to pay all his debts makes a voluntary assignment thereof, or where there is an attachment against the estate and effects of an absconding, concealed, or absent debtor. Id.

The United States is entitled to priority of claims against property of "insolvent banks taken over by State bank commissioner. U. S. v. Parker (D. C. 1925), 9 F. (2d) 473.

Where the superintendent of banks of South Dakota takes possession of a bank under the laws of the State because of insolvency, for the purpose of liquidating its affairs, he becomes trustee for the United States under this section, and is bound to first pay debts due it. U. S. v. First State Bank of Philip, S. Dak. (D. C. 1926), 14 F. (2d) 543.

Where State banks, having on deposit United States funds, suspended payment and were found to be insolvent by State commissioner of finance, the United States was then, under this section, entitled to have property dealt with as a trust fund, and its rights or priorities recognized under the statute. U. S. v. Porter (D. C. 1927), 19 F. (2d) 541.

Under this section and R. S. 3467, 725, post, claim of the United States for postal funds deposited in trust company in hands of bank commissioner for liquidation under Pub. Laws N. H. 1926, ch. 268, was en. titled to preference, notwithstanding bank was closed, for express reason that public good required it rather than on ground of insolvency; it being in fact insolvent and assumption of control by commissioner equivalent to placing of receiver or trustee in charge, under sec. 3, act of July 1, 1898, as amended by sec. 2, act of Feb. 5, 1903

(32 Stat. 797), prior to amendment of May 27, 1926 (44 Stat. 662). U. S. v. People's Trust Co. (D. C. 1927), 17 F. (2d) 437.

Since insolvency within meaning of this section was not necessary to justify commissioner of banks taking possession of trust company under G. L. ch. 167, of Massachusetts, and no inference of insolvency can be inferred therefrom, claim of United States against bank in liquidation by com missioner was held not entitled to priority under this section. U. S. v. Commissioner of Banks (Mass. 1925), 149 N. E. 883.

Taking over of bank by commissioner held not insolvency or act of bankruptcy, so as to give United States deposits priority. Strain v. U. S. Fidelity & Guaranty Co. (C. C. A. 1923), 292 Fed. 694, affirmed U. S. Fidelity & Guaranty Co. v. Strain (1924), 264 U. S. 570.

Insolvency of debtor, in general.-Where a receiver was appointed for a corporation on a creditor's bill, alleging solvency, but temporary embarrassment, and the corporation was subsequently found to be insolvent and was in process of liquidation, debts due the United States were entitled to priority under this section. Davis v. Pullen (C. C. A. 1922), 277 Fed. 650.

Sovereign is not bound by any of the provisions of an insolvency law unless especially mentioned therein. Villere . U. S. (C. C. A. 1927), 18 F. (2d) 409.

In determining question of insolvency, capital stock and surplus in no sense constitute indebtedness of bank, its obligation to a stockholder not being a debt, but latter's right being to receive ratable share of assets after all debts are paid. U. S. Fidelity & Guaranty Co. v. Porter (D. C. 1924), 3 F. (2d) 57.

Where corporation in hands of receiver was not insolvent within meaning of sec. 1 (subd. 15), of act of July 1, 1898 (30 Stat. 544), as amended, at time of appointment of receiver, or any time subsequent thereto, the United States was not entitled, under this section, to priority in its claim for taxes. U. S. v. Middle States Oil Corporation (C. C. A. 1927), 18 F. (2d) 231.

What constitutes insolvency.-A person, to be insolvent," within this section, must have made a voluntary assignment or have had his effects attached after absconding. concealing, or absenting himself, or must have committed an act of bankruptcy. Nolte v. Hudson Nav. Co. (C. C. A. 1925), 8 F. (2d) 859.

Insolvency of bank held not shown by proof that balance disclosed by daily statement was incorrect or that certain bills receivable were without value, where the statement showed excess of resources over indebtedness. U. S. Fidelity & Guaranty Co. v. Porter (D. C. 1924), 3 F. (2d) 57. The word insolvent " as used in this the bankruptcy law, applies

section and

only where a debtor's property is insufficlent to pay all his debts. U. S. v. Oklahoma (1923), 261 U. S. 253, wherein it was held that insolvent," in the sense of par. 303 of ch. 6, Rev. Laws Okla..1910, which authorizes the bank commissioner, upon becoming satisfied of a bank's insolvency, to take possession and wind up its affairs, is a broader term, applicable where a bank is unable to pay depositors in the ordinary course of business, though its assets may exceed its debts, and that such a taking over of a bank by the act of the commissioner upon a finding by him of its insolvency does not establish the right of the United States to priority of payment under this section, because it does not imply insolvency within the meaning of this section and does not otherwise satisfy its Conditions, either as a voluntary assignment, as an attachment of assets of an absconding, concealed, or absent debtor, or as an act of bankruptcy, as defined by sec. 3a of the bankruptcy act or by any law of the State.

Acts which constitute an assignment.Subsidiary corporation's consent to appointment of ancillary receiver to carry on business was held not "assignment for benefit of ereditors," authorizing priority to claim of United States. U. S. v. Middle States Oil Corporation (C. C. A. 1927), 18 F. (2d) 231.

Where a receiver was appointed for a corporation in a creditor's bill, alleging solvency but temporary embarrassment, and the corporation joined in the application for the appointment of the receiver and was subsequently found to be insolvent, debts due the United States were entitled to priority, as the transaction was in effect a general assignment for the benefit of creditors. Davis v. Miller-Link Lumber Co. (C. C. A. 1924), 296 Fed. 649.

An insolvent State bank, by putting State superintendent of banks in charge, has been held to have made voluntary assignment" within the statute. U. S. v. First State Bank of Philip, S. Dak. (D. C. 1926), 14 F. (2d) 543.

In suit by surety to have declared a preference its claim against insolvent State bank within this section and R. S. 3468, ,ante, 531, evidence held insufficient to show that Idaho State finance commissioner took charge of affairs of bank under an assign. ment by resolution of board of directors, where such resolution did not purport to be an assignment but simply a determination to discontinue business. U. S. Fidelity & Guaranty Co. v. Porter (D. C. 1924), 3 F. (2d) 57.

Insolvent corporation by consenting to appointment of receiver in suit wherein mere inability to meet maturing obligations, was alleged, was held to have made voluntary assignment for benefit of credi

tors within this section. U. S. v. Butter worth-Judson Corporation (1926), 269 U. S. 504, reversing (C. C. A. 1924), 297 Fed. 971; Price v. U. S. (1926), 269 U. S. 492, affirming Mears v. Gidding & Co. (C. C. A. 1925), 6 F. (2d) 758.

A bank whose assets were less than its liabilities, and which voluntarily by resolution of its board of directors surrendered its assets to State superintendent of banks for liquidation under Laws of Oregon, secs. 6221-6223, was held to have made a voluntary assignment for benefit of creditors within this section. Bramwell v. U. S. Fldelity & Guaranty Co. (1926), 269 U. S. 483, affirming (C. C. A. 1924), 299 Fed. 705, which affirmed (D. C. 1924), 295 Fed. 331.

Acts which constitute an assignment.Insolvent banks, surrendering assets to bank commissioner, made assignment and committed bankruptcy, within statute, giving priority to claims of United States. Mothersead v. U. S. Fidelity & Guaranty Co. (C. C. A. 1927), 22 F. (2d) 644; Mothersead v. New Amsterdam Casualty Co. (C. C. A. 1927), 22 F. (2d) 654; Mothersend v. Fidelity & Deposit Co. of Maryland (C. C. A. 1927), 22 F. (2d) 654; Mothersead v. Fidelity & Casualty Co. of New York (C. C. A. 1927), 22 F. (2d) 654; Mothersead v. American Surety Co. of New York (C. C. A. 1927), 22 F. (2d) 655.

Necessity of appearing or presenting or proving claim.-Under this section and section 725, post, it is not necessary for the Federal Government to obtain an extension of time for filing with assignee of insolvent corporation, of Government's claim for freight accruing to it while operating railroads, nor was it necessary to file claim within three months, it being sufficient that notice was given to assignee of such claim. In re Farmers' Co-op. Co. (Iowa, 1925), 206 N. W. 251.

If Federal Government has valid claim against insolvent corporation for unpaid taxes, its claim must be proved like any other claim, and, if allowed, such claim will have priority over claims of other creditors. Reinecke v. General Combustion Co. (1925), 237 11. App. 404.

Federal Government is not barred from asserting claim against assets in hands of receiver appointed by State court at any time during pendency of receivership be fore distribution, though after time fixed by such court for filing of claims, since United States is not bound by any statute of limitations, nor barred by laches of officers, however gross, in suit brought by it as sovereign Government to enforce public right or to assert public interest. Id.

Bankruptcy of debtor-In general. As to estates in bankruptcy, the bankruptcy act supersedes this section as to priority of United States for debts due to it. In re

Caswell Const. Co. (D. C. 1926), 13 F. (2d) 667.

But it has also been held that the priority of the United States under this section applies to claims against a bankrupt except as to claims for other things than taxes which are postponed by sec. 65, bankruptcy act, to State taxes and the cost and expense of preserving and administering the estate and to salaries and wages. In re Atlantic, etc., Steamship Co. (D. C. 1923), 289 Fed. 145, affirmed and petition to revise dismissed (C. C. A. 1925), 3 F. (2d) 438.

Acts of bankruptcy.-The taking over of a bank by the bank commissioner, under sec. 302, Rev. Laws Okla. 1910, is not an act of bankruptcy," within sec. 3, bankruptcy act, hence gives claims of the United States no priority under this section, since the bank commissioner does not take possession because of the existence of insolvency within the meaning of the Federal laws. U. S. v. State of Oklahoma (1923), 261 U. S. 253.

What constitutes an "act of bankruptcy by a bank is determined by bankruptcy act though inapplicable to banks. Bramwell v. U. S. Fidelity & Guaranty Co. (1926), 269 U. S. 483, affirming (C. C. A. 1924), 299 Fed. 705, which affirmed (D. C. 1923), 295 Fed. 331.

Receivership in State proceeding has been held not an act of bankruptcy as entitles United States to priority. Anderson v. Myers (C. C. A. 1924), 296 Fed. 101, certiorari granted (1924), 263 U. S. 578, and dismissed (1925), 267 U. S. 609.

Navigation company, consenting to receivership, was held not to have committed an "act of bankruptcy." Nolte v. Hudson Nav. Co. (C. C. A. 1925), 8 F. (2d) 859.

Action of State superintendent of banking in taking possession of bank's assets for liquidation was held an "act of bankruptcy." U. S. v. Adams (D. C. 1925), 9 F. (2d) 624.

A bank, whose assets were less than its liabilities, and which voluntarily, by resolution of its board of directors, surrendered its assets to State superintendent of banks for liquidation, under secs. 6221-6223, Laws of Oregon, was held to have committed an act of bankruptcy defined by sec. 3, bankruptcy act, as respected priority under this section, 725, post, and 531, ante. Bramwell v. U. S. Fidelity & Guaranty Co. (1926), 269 U. S. 483, affirming (C. C. A. 1924), 299 Fed. 705, which affirmed (D. C. 1923), 295 Fed. 331.

Debts to which priority applicable.Claim of United States for postal funds deposited with trust company in course of liquidation has been held entitled to preference. U. S. v. People's Trust Co. (D. C. 1927), 17 F. (2d) 437.

Under this section, the claim of the United States on a recognizance entered into by a company for the appearance of a defendant in criminal proceedings is entitled to priority over all other claims, where the surety company became insolvent after entering into the recognizance, but before the defendant had failed to appear, regardless of whether the claim on the recognizance had matured at the time of the entry of the insolvency order, within the meaning of the New York law. In re Casualty Co. of America (1921), 187 N. Y. S. 849, affirmed (N. Y. 1921), 134 N. E. 571.

66

Priority given by this section against decedent's estate exists only in favor of debts due the United States." In re Stiles' Estate (Sur. 1926), 215 N. Y. S. 134, 126 Misc. Rep. 715.

Claims due the United States other than taxes are not entitled to priority under sec. 64, bankruptcy act, and this section, though the latter prefers debts due a "person entitled to priority under law of United States, and section 1 of said act defines person as including corporations. Davis v. Pringle (1925), 268 U. S. 315, affirming (C. C. A. 1924), 1 F. (2d) 860, 864, and reversing (C. C. A. 1925), 6 F. (2d) 1020.

Debt due Oregon State industrial acetdent fund is not entitled to priority in bankruptcy proceeding notwithstanding this section. In re Pick (D. C. 1925), 9 F. (2d) 207.

A deposit by the United States, through its proper agents, of individual Indian money in a State bank is entitled, upon failure of said bank, both to priority against the assets of the bank and to the protection of the State bank guaranty fund; and this is so notwithstanding a bond in accordance with Federal law be first given by the bank to secure the deposit. State v. Kilgore State Bank (Nebr. 1924), 112 Nebr. 856.

Taxes." Debts," as used in this section includes taxes. Price v. U. S. (1926), 269 U. S. 492; contra, Liberty Mut. Ins. Co. v. Johnson Shipyards Corp. (D. C. 1924), 300 Fed. 952; In re Wyley Co. (D. C. 1923), 292 Fed. 900.

In Liberty Mut. Ins. Co. v. Johnson Ship-. yards Corp., supra, it was held, however, that the United States Government is entitled to priority of payment of income and other taxes due the Government from an insolvent taxpayer; such right being an attribute of sovereignty, and not dependent on statute.

Additional excess profits tax assessed against partnership after assets were taken over by bankrupt corporation held entitled to priority under this section. In re W. J. Marshall Co. (D. C. 1924), 3 F. (2d) 192.