Burck v. Taylor - 152 U.S. 634 (1894)
U.S. Supreme Court
Burck v. Taylor, 152 U.S. 634 (1894)
Burck v. Taylor
Argued December 15, 1893
Decided April 9, 1894
152 U.S. 634
S. contracted with the State of Texas, in writing, January 18, 1882, to build a new capitol building for it for an agreed compensation, and not to assign the contract without the consent of the state. On the 31st of January, 1882, S., with the consent of the State, assigned an undivided three-fourths interest in the contract to F., G., and T., who were partners. On the same day, without the consent or knowledge of the State, S. assigned to B., C., and D., each one-fourth of the one-fourth interest remaining in him. On the 9th of May, 1882, S. conveyed to F., G., and T. all the right and interest which he had in and under the contract, and the state gave its assent to this transfer on the 10th of May. It did not appear that the assignees in the last conveyance knew of the transfer to B., C., and D. On the 20th of June, 1882, F. and G. transferred, with the consent of the state, all their interest in the contract to T., who then performed the work to the satisfaction of the state and received the agreed compensation therefor. On the 1st of April, 1883, D. transferred to E. the interest in the contract which had been transferred to him, January 31, 1882, and on the 27th of May, 1884, he transferred the same interest to T. Most of these conveyances were filed and recorded in the office of the County Clerk for Travis County, Texas, and some were filed in the office of the Comptroller of Public Accounts of the State. In a suit brought by E. against T. to recover what he claimed to be his share of the profits under the contract,
(1) That it was not competent for S., by his own act, and without the consent of the State, to transfer any interest in the contract.
(2) That all that could have been acquired by an assignment by S. without the consent of the state was a right to maintain an action against S. for the share of the profits which he had attempted to transfer.
(3) That when the contract was transferred to T., who was accepted by the State in lieu of the original contractor, T. entered upon its performance free from any disposition of the profits made by the original contract.
(4) That the filing of an instrument for record in a public office of the state, for the record of which the statutes of the state made no provision, carried with it no notice to other parties.
This was a suit brought by S. B. Burck against Abner Taylor for an accounting for a share of defendant's profits from a certain contract, brought in a court of the State of Texas and removed by defendant to the United States circuit court. A motion by plaintiff to remand was denied. 39 F. 581. A demurrer to the bill was sustained, and the bill dismissed. Plaintiff appeals.
On December 8, 1888, appellant filed his petition in the District Court of Travis County, Texas, to recover of defendant the sum of $231,417, alleged to be his share of the profits of the contract made with the State of Texas for the building of its capitol. The suit thus commenced was thereafter removed to the United States Circuit Court for the Western District of Texas, and on October 7, 1889, upon leave obtained, the plaintiff filed an amended bill. To this bill, on November 4, defendant demurred. On March 4, 1890, the demurrer was sustained, and, the plaintiff electing to stand upon his bill, and declining to amend it, a decree was entered dismissing the same with costs. From such decree of dismissal the plaintiff appealed to this Court.
The matters set forth in the bill are as follows: on January 18, 1882, the State of Texas, by Joseph Lee and N. L. Norton, capitol commissioners, with the approval of O. M. Roberts, Governor, made and executed a contract with Matthias Schnell for the erection of the capitol building, according to certain plans and specifications, Schnell to furnish all the material and do all the work, and the state, as the consideration therefor, to convey 3,000,000 acres of land. The twenty-sixth clause of the contract is as follows:
"It is further agreed, covenanted, and stipulated by the party of the second part that this contract shall not be assigned, in whole or in part, by the party of the second part without the consent in writing of the party of the first part, signed by the Governor of Texas and the Capitol Building Commissioners, with the advice and consent of the heads of departments."
On January 31, 1882, Matthias Schnell, Charles B. Farwell, John v. Farwell, Amos C. Babcock, and the defendant, Abner Taylor, entered into a contract by which Schnell assigned and set over to the other parties an undivided three-fourths interest in said
contract. The material portions of this contract are as follows:
"It is hereby agreed by and between the parties hereto that the said Matthias Schnell shall assign and set over, and by these presents does assign and set over, to the parties of the second part, an undivided three-fourths (3/4) interest in said contract, for the purpose that the said parties of the second part may share in any and all the profits that may arise from same, the same as the party of the first part, as their interests may appear, which is hereby agreed to be equal."
"And it is understood and agreed by and between the parties hereto that the parties of the second part are to furnish whatever money may be needed or necessary for the proper construction of said statehouse, or for the execution of the said contract, as the same may be required from time to time."
"It is further agreed and understood by and between the parties hereto that the said Matthias Schnell shall have the management and superintendence of the building and construction of said statehouse from the commencement to its completion, subject to the direction and control of the majority in interest herein at a salary of five thousand ($5,000) dollars per annum, payable monthly."
"* * * *"
"And it is further agreed that the said superintendent shall be personally responsible to the parties of the second part for any loss or damages caused or sustained by reason of his neglect or mistakes in prosecution of his duties as such superintendent, willfully done."
"And it is hereby understood and agreed that this agreement shall be binding and operative from the date of its approval by the Governor of Texas and the heads of departments."
In accordance with clause 26 of the original contract, the following consent to the assignment was endorsed on the back:
"State of Texas"
"County of Travis"
"We hereby consent to the within assignment of an interest in the contract referred to this the eleventh day of February, 1882."
"[Signed] Joseph Lee"
"N. L. Norton"
"Capitol Building Commissioners"
"O. M. Roberts, Governor"
"We advise and consent to the above consent given by the Capitol Building Commissioners and Governor this eleventh February, 1882."
"[Signed] F. R. Lubbock, Treasurer ~ J. H. McLeary"
"Attorney General ~ W. C. Walsh"
"Commissioner General Land Office "
"W. M. Brown, Comptroller"
On January 31, 1882, Schnell made an agreement with James M. Beardsley, James S. Drake, and A. A. Burck, which, after referring to the prior contracts, purported to be an assignment and transfer to each of the three of an undivided one-fourth of the one-fourth interest in the contract remaining in Schnell. This contract, although signed and acknowledged by all four of the parties, was without the consent in writing of the State of Texas. Afterwards, and on May 9, 1882, Schnell executed in writing a further assignment in the following language:
"The State of Texas"
"County of Travis"
"Know all men by these presents that I, Matthias Schnell, a citizen of Rock Island, in the State of Illinois, for and in consideration of the sum of fifteen thousand five hundred dollars to me now paid, the receipt whereof I do now acknowledge, have transferred, released, and conveyed to Charles B. Farwell, John v. Farwell, Abner Taylor, and Amos C. Babcock, who compose the firm of Taylor, Babcock & Co., all the rights and interest which I have in and under a certain contract made by me with Joseph Lee and N. L. Norton, capitol commissioners, for the construction of a new statehouse for the State of Texas. And I do also, for the consideration hereinbefore expressed, transfer, assign, and release to said parties above named all interests, rights, or claims which I may now or might hereafter assert by virtue of any contract made by me with said
parties regarding the construction of said statehouse or the superintendency thereof, and all interest accruing to me from any contract regarding the building of said statehouse for the State of Texas."
"In testimony whereof I have hereunto set my hand this the 9th day of May, A.D. 1882."
"[Signed] Matthias Schnell"
which assignment was duly acknowledged, the assignment accepted in writing, and a written consent endorsed upon it as follows:
"This certifies that we, the Governor of Texas and the Capitol Building Commissioners, with the advice and consent of the heads of departments, consent to the assignment in the foregoing instrument, made to take effect on the filing of the formal adoption of the contract referred to, and the execution and approval of the bond to carry out the same this tenth day of May, A.D. 1882."
"O. M. Roberts, Governor ~ Joseph Lee"
"N. L. Norton"
"Capital Building Commissioners ~ F. R. Lubbock, Treasurer."
"W. M. Brown, Comptroller ~ W. C. Walsh"
"Comm'r Gem's Land Office"
"J. H. McLeary"
On June 20, 1882, the firm of Taylor, Babcock & Co. assigned and transferred the entire contract to Abner Taylor, the language of the transfer being as follows:
". . . do hereby transfer and assign, and have transferred and assigned, to Abner Taylor, the said contract to construct, build, erect, complete, and deliver to the State of Texas a capitol building and appurtenances thereto, according to the plans and specifications therein referred to and made a part thereof, and each and every, all and singular, the rights, profits, and benefits thereunder, the same to be by him carried
out in the same manner as provided for in the original contract between the State of Texas and Matthias Schnell as aforesaid,"
which assignment was accepted in writing by Abner Taylor, whose acceptance contained this covenant on his part:
"Now therefore, in consideration of the fact that, by virtue of the transfers and assignments herein set out, I, the said Abner Taylor, have become the contractor with the State of Texas for the building of the capitol aforesaid, and in consideration of the fact that the Capitol Building Commissioners, together with the Governor of Texas and the several heads of departments, have consented to the several transfers and assignments aforesaid, and in further consideration of the stipulations, covenants, and agreements set forth in the original contract between the State of Texas and Matthias Schnell, to the profits, rights, and benefits of which I have succeeded by virtue of the said contract and the several transfers and assignments aforesaid, I, the said Abner Taylor, have agreed, covenanted, and bound myself, and do by these presents agree, covenant, and bind myself unto the State of Texas through its Capitol Building Commissioners, that I will in every particular carry out, finish, and perform the contract made and entered into by and between the State of Texas and Matthias Schnell, a printed copy of which is hereto attached as aforesaid, in the same manner, style, and method, and according to he said terms, tenor, and effect, that the said Matthias Schnell was originally bound to do, and I hereby adopt the said contract as my own and assume each and every, all and singular, the obligations therein imposed on the party of the second part as my own as fully and completely as if they had originally been assumed, incurred, and undertaken by me in person, the said contract, of which the printed copy is hereto attached, being hereby incorporated into this contract and made a part thereof. And I, the said Abner Taylor, do hereby bind myself, my heirs, executors, and administrators, to keep and perform this covenant, agreement, and contract according to its full intent
and meaning in each and every, all and singular, of its parts and stipulations in every particular whatsoever. In testimony whereof I hereto set my signature this the twentieth day of June, A.D. 1882 (one thousand eight hundred and eighty-two)."
"[Seal] [Signed] Abner Taylor"
and this assignment and acceptance, both being duly acknowledged, were also assented to in writing, endorsed on the back, the consent being in these words:
"State of Texas"
"County of Travis"
"In accordance with the provisions of section 26 of the original contract between the State of Texas and Matthias Schnell for building a new capitol, dated eighteenth of January, 1882, we, O. M. Roberts, Governor of Texas, and Joseph Lee and N. L. Norton, Capitol Building Commissioners, acting by and with the advice and consent of the heads of departments, do hereby consent in writing to the assignment made by Matthias Schnell of his contract to Taylor, Babcock & Co., and to the further assignment made by Taylor, Babcock & Co. of the said contract to Abner Taylor, and we, the said Governor, Capitol Building Commissioners, and heads of departments, do hereby recognize Abner Taylor as the contractor, bound in all respects to carry out the contract with the State of Texas in like manner as the original contractor, Matthias Schnell, was bound, and in testimony of our advice and consent having been so given, we hereunto subscribe our names officially this the twelfth day of July, 1882."
"[Signed] Joseph Lee"
"N. L. Norton"
"Approved by and with the advice and consent of the heads of the departments."
"[Signed] O. M. Roberts, Governor"
On April 14, 1883, A. A. Burck executed to plaintiff the following conveyance:
The State of Texas
County of Travis
"Know all men by these presents that I, A. A. Burck, of the County of Milam and State of Texas, in consideration of the sum of ten thousand dollars to me in hand paid, by S. B. Burck, of the County of Galveston and State of Texas, the receipt of which is hereby acknowledged, have granted, bargained, sold, conveyed, and released, and by these presents do grant, bargain, sell, convey, and release, unto the said S. B. Burck, heirs and assigns, the following described property, to-wit: one undivided one-half interest in one-sixteenth interest in the capitol contract which was awarded to M. Schnell by the Texas State Capitol Commissioners, Joseph Lee and N. L. Norton, and transferred to me by said Schnell, together with all and singular the rights, members, improvements, hereditaments, and appurtenances to the same belonging or in any wise incident or appertaining,"
"To have and to hold all and singular the premises above mentioned unto the said S. B. Burck, heirs and assigns forever, and I do hereby bind myself, heirs, executors, and administrators to warrant and forever defend all and singular the said premises unto the said S. B. Burck, heirs and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof."
Witness my hand at Austin, this 14th day of April, A.D. 1883.
"A. A. Burck. [Seal.]"
which conveyance was duly acknowledged. On May 27, 1884, A. A. Burck made an assignment to Taylor and Babcock in these words:
"Austin, Texas, May 27, 1884"
"For and in consideration of one dollar in hand paid and other valuable considerations, I hereby sell, assign, and transfer to Abner Taylor, of the County of Cook, State of Illinois, and A. C. Babcock, of the County of Fulton, said state, all my rights, interest, and claim in and to the contract or contracts from the State of Texas to build or erect a statehouse or
capitol building in the City of Austin and last-mentioned state, derived from a contract or agreement made with Matthias Schnell in Chicago, Cook county, Illinois, bearing date January 31st, 1882, or any interest I may have for building or erecting a statehouse or capitol building in the City of Austin, Texas, derived from said Schnell at any time or from any other source, hereby relinquishing to said Taylor and Babcock all right or claim of any character to any and all contracts or agreements that I may have heretofore had or now possess pertaining to building, erecting, or constructing a statehouse or capitol building in the City of Austin, State of Texas."
"Witness my hand and seal this 27th day of May, A.D. 1884."
"A. A. Burck. [Seal]"
(which was also duly acknowledged).
It further appears that the instrument dated January 31 by which Schnell transferred a three-fourths interest in the contract to the two Farwells, Babcock, and Taylor, was filed for registration on February 13 in the office of the Clerk of the County Court of the County of Travis, that being the county in which the capitol building was situated, and thereafter recorded in the records of said county; that the instrument executed between Schnell, Drake, Beardsley, and Burck was also filed and recorded in the same office on February 14, 1882; likewise the assignment of May 9, 1882, from Schnell to Taylor, Babcock & Co., on May 10, 1882, and the deed from A. A. Burck to S. B. Burck, of date April 14, 1883, on April 20, 1883; also the conveyance from Burck to Taylor and Babcock, of date May 27, 1884, on May 27, 1884. It also appears from the certificate of the Comptroller of Public Accounts of the State of Texas that the original contract of the state with Schnell, together with the assignment from Schnell to the two Farwells, Babcock, and Taylor, of date January 31, the assignment, of date May 9, from Schnell to Taylor, Babcock & Co., and the assignment from Taylor, Babcock & Co. to Abner Taylor, were all on file in his office, though when so filed is not stated. With reference to the
effect of the filing in the office of the clerk of Travis County, the bill avers as follows:
"And your orator further says that the account between your orator and defendant as to this matter is still open and unsettled, and that for reason why your orator should not have an account or relief against him, the defendant pretends that he had no notice that the said A. A. Burck assigned or transferred to your orator a one-half interest in his, the said A. A. Burck's, one-sixteenth interest in the profits that might arise from the building of said capitol contract, and that the defendant, in good faith and without notice, purchased from said A. A. Burck for a valuable consideration the said Burck's one-sixteenth interest in said profits after the said A. A. Burck had sold one-half of his said interest to your orator, and therefore refuses to account with plaintiff, whereas the truth is that the said transfer by A. A. Burck to your orator, which has been hereinbefore stated, and made a part of this bill as an exhibit, was duly authenticated for registration in the office of the county clerk, and was duly recorded in the records of deeds of Travis County, Texas, on the 14th day of April, A.D. 1883, and said Abner Taylor then had notice of the same; whereas the said A. A. Burck did not sell or transfer any of his said interest in said profits to said Abner Taylor until the 27th day of May, 1884."
"That the said Abner Taylor ought not to be heard to aver that said registration was not notice to him of the said assignment by A. A. Burck to your orator, for that the formation of the co-partnership between Matthias Schnell, Abner Taylor, Amos C. Babcock, Charles B. Farwell, and John v. Farwell, as hereinbefore alleged, wherein it was stipulated that the profits arising from building the capitol should be divided between said parties, or with the assignees of either party, the said co-partnership caused said contract of co-partnership, which contained an assignment by said Schnell of three-fourths of his interest in said capitol contract, to be recorded in the register of deeds of Travis County, whereupon the said A. A. Burck, J. M. Beardsley, and James S. Drake, acting on this means of giving notice of assignments adopted by said partnership,
caused their said assignment to be recorded in the office of the Clerk of the County Court of Travis County in the records of deeds, and afterwards, when the said Schnell assigned his remaining interest in said contract and in the profits that might arise from the fulfillment of the same to the other members of said firm styled Taylor, Babcock & Co., the said firm caused said last-mentioned assignment to be also recorded in the said register of deeds, as a means of giving notice thereof; that when the said firm of Taylor, Babcock & Co. and the individual members thereof assigned their interests in said contract to Abner Taylor, the defendant herein, they and said Taylor in their contract of assignment referred to the several mesne assignments of interests in said contract as being of record in the office of the Clerk of the County Court of Travis County, and referred to said records for full particulars as to said mesne assignments, whereby the said parties concerned in said contract for building said capitol building agreed and established a custom among themselves to give notice of assignments of interests in said capitol contract or in the profits that might arise from the fulfillment of the same by recording such assignments in the records of deeds of Travis County, Texas, and by their conduct in so recording such assignments, and referring to said records, and not otherwise giving notice of such assignments, led your orator to believe, and justified him in believing, that said partnership and its assigns would take notice of the assignment by said A. A. Burck to your orator when your orator placed the same on record in the records of deeds of Travis County, duly authenticated for record; that your orator, fully believing that such record would be accepted as notice of the said assignment to your orator, caused his said assignment to be promptly recorded in the records of deeds of Travis County on the 14th day of April, 1883, which was more than a year before the said Abner Taylor purchased any interest from the said A. A. Burck."
And with regard to the rights acquired by defendant, through the conveyance of May 27, 1884, from A. A. Burck to him, it avers as follows:
"And your orator further says that said assignment by A. A. Burck to Abner Taylor did not purport on its face to sell or assign to said Taylor the interests in the profits of said capitol contract which the said A. A. Burck had assigned to your orator, but only purported to assign to said Taylor whatever interest the said A. A. Burck had at the time of the said assignment to Abner Taylor or might thereafter have; the said Abner Taylor, defendant, was placed upon notice and inquiry as to whether A. A. Burck had parted with any of his interest before the assignment of his remaining interest to the said Abner Taylor, but the said Abner Taylor made no inquiry of said A. A. Burck as to whether he had parted with any of his, the said Burck's, interest, nor did the said Taylor examine or cause to be examined the records of deeds of Travis County for any record of an assignment by said A. A. Burck, notwithstanding the said custom and practice of all the parties concerned in assignments affecting said capitol contract or interest in the profits thereof to record all such assignments and the agreement thereby affected to that [as their?] method of giving notice of assignments."
The bill further alleges the performance of the contract by Taylor, large profits as the result thereof, and prays an accounting.