Spain v. Hamilton's Administrator
68 U.S. 604 (1863)

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U.S. Supreme Court

Spain v. Hamilton's Administrator, 68 U.S. 1 Wall. 604 604 (1863)

Spain v. Hamilton's Administrator

68 U.S. (1 Wall.) 604

ERROR TO THE CIRCUIT COURT

FOR THE DISTRICT OF COLUMBIA

Syllabus

1. A transfer by a party of his "right and, claim for and commission or compensation for services rendered, or to be rendered to any body corporate," in a class of claims mentioned generally in the transfer, is not such an assignment, even in equity, of a compensation subsequently earned as will give the transfer priority against junior assignees (without notice) of portions of a fund designated and appropriated to answer this claim the case being one where, on the one hand, the older transferee did not make inquiries as to what body corporate the claim for commissions was against, and did not give notice of the paper executed in his favor, to such body corporate, nor to a third party to whom this body, subsequently to the older transfer, but prior to the junior ones, devoted a fund to answer these commissions, and where, on the other hand, the junior transferees did make exact inquiries and obtain precise evidences and accurate information as to the fund from which the commissions were to be derived, and did immediately notify to the party then holding the fund, the nature and extent of their claims, and did generally take measures to prevent all other persons being misled by the supposition that the fund still remained in the power of the party who had transferred this claim for commissions upon it. Such an assignment

Page 68 U. S. 605

as the one first above mentioned is a blind assignment, and the party claiming under it cannot come into equity for priority against even junior assignees in a case where the claims of these last are on a fund specifically, and are moreover precise, well understood, and have been vigilantly protected.

2. The general doctrine of equity that a party complaining of usury can have relief only for the excess above lawful interest applies to the case of a person standing in the position of a claimant through bill in equity of priority on a fund another claimant upon which, as defendant, is the alleged usurer. The fact that the suit is a mere contest between different parties for a fund and a contest, therefore, in which each claimant may in some senses be considered an actor does not force the alleged usurer into the position of a complainant or plaintiff, and so expose him to the penalty incurred by a person seeking as plaintiff to recover a usurious debt -- that is to say, to the loss of the entire claim.

3. Where the promise to pay a sum above legal interest depends upon a contingency, and not upon any happening of a certain event, the loan is not usurious. Nor will usurious interest be inferred from a paper which,

while referring to payment of a sum above the legal interest, is "uncertain and so curious" that intentional bad device cannot be affirmed.

MILLER and SWAYNE, JJ., dissented in this case.

This was a bill in equity filed in the Circuit Court for the District of Columbia by S. Spain, guardian of Mrs. McRae, a lunatic, against the administrator of the late James Hamilton, of South Carolina and Texas, extensively known as "General James Hamilton," and against Corcoran and Riggs, Hill and others, the said bill claiming priority in the distribution of a fund in the Treasury of the United States originally belonging to Hamilton and arising by the assumption of the United States, in September, 1850, of certain debts of the Republic of Texas, which fund, or the source of it, rather, Hamilton, having become embarrassed and insolvent, had assigned in divers ways and to various extents to different persons, parties plaintiff and defendant in this suit.

The case in its outlines as proved, or by agreements made in the case admitted, was essentially this, the leading facts being derived from the stating part of the opinion of the learned Justice (WAYNE, J) who delivered the judgment of the Court.

The Republic of Texas, prior to its annexation to the United States, had issued a large number of bonds which

Page 68 U. S. 606

were due, unpaid, and the subject of speculation and purchase in different parts of the Union. Hamilton, who held a considerable amount of the bonds, had become familiar with the affairs of Texas, and especially with all that related to its debts, and was anticipating that if that republic was annexed to the United States, those debts would all be paid. He became, accordingly, an active and energetic advocate of annexation. The trustees of the Bank of the United States also owned a large amount of the bonds. But these had been pledged, in a greatly depreciated state, to a certain Wetmore, one of the defendants, as security for a loan which he had made to the bank. If, however, the bonds should be paid, enough would be obtained to pay the debt due by the bank to Wetmore and leave a large surplus remaining. And Hamilton, being already the agent of some of the bondholders and desirous to have the agency for others, applied to the trustees of the bank to represent them. On the 16th of October, 1845, the trustees accordingly wrote Hamilton a letter in which, adverting to his knowledge of the fact that they had

"now only a contingent resulting interest in the bonds dependent upon the payment by us of the amount for which they are now held by Mr. Wetmore in pledge,"

they say as follows:

"If you will devote your best efforts to securing the recognition and payment of said claims, and your effort shall be successful, then we agree to allow you a commission of 10 percent on whatever sum or amount of our claim, through your instrumentality, shall be recognized and paid over to us over and above the amount for which the said bonds are pledged. The limitation of time during which this agreement on our part can with certainty be continued is only to the 20th of March next ensuing, but we are willing, with the concurrence of Mr. Wetmore or in case we should then or sooner obtain the entire control of those bonds and securities now in his hands, to extend the said time to two years from this date."

The 20th of March, the first limitation, passed without the recognition by Texas of its bonds and without the payment

Page 68 U. S. 607

of the debt due by the bank to Wetmore. Of course Wetmore's legal right to retain the Texas bonds was continued, and Hamilton was left without any claim upon the bank for commission or compensation under the agreement.

On the 16th September, 1850, however, the trustees wrote to Wetmore a letter reciting that Hamilton had rendered his services, as he had agreed, "so far as in his power, without however realizing the money," and then, referring to an act of Congress recently passed for the payment, in part, of the Texas bonds, among which the trustees had been "informed by General Hamilton, are the bonds held by them," the letter goes on as follows:

"The trustees, at the particular request of General Hamilton, have instructed me to say to you if they should not have previously redeemed the bonds, that upon the final adjustment and payment of the said bonds first above mentioned, either by the Treasury of the United States, in the manner provided for in said act of Congress or otherwise, to the satisfaction of the said trustees, pursuant to their said agreement with General Hamilton, you will be pleased to hold, subject to the order of General James Hamilton, one-tenth of any sum over and above the amount of your claim against the said bonds."

This claim of Wetmore, originally

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