Bank of Washington v. Nock - 76 U.S. 373 (1869)
U.S. Supreme Court
Bank of Washington v. Nock, 76 U.S. 9 Wall. 373 373 (1869)
Bank of Washington v. Nock
76 U.S. (9 Wall.) 373
1. An agreement made by a contractor about to furnish certain manufactured articles to the government that advances to be made by a bank to enable him to fulfill his contract shall be a lien on the drafts to be drawn by him on the government for the proceeds of the articles manufactured does not give a lien on a judgment against the government for damages for violation of the contract, certain drafts having been drawn and their proceeds received by the bank.
2. A subsequent agreement that the debt due to the bank for such advances and also for any future ones to be made for the purpose of suing the government for nonfulfillment of its contract shall be paid out of any receipts from the government gives no right where a suit, though prosecuted, has resulted in an adverse judgment, even though a second suit has resulted successfully, this latter suit having been prosecuted under a new and special resolution of Congress and by the aid of advances received from other parties, the bank, on the adverse judgment in the first suit having refused to advance anything to prosecute the second.
3. A paper "renewing and reviving" the debt now, at the date of the paper, barred by the statute of limitations, for the balance of all the advances made in such a matter, whether to fulfill the contract or to prosecute the claim, does nothing more than keep alive the personal obligation. It gives no lien.
NOTE -- In this case, the contractor, soon after the original agreement to advance and when only a part of the advances were made, assigned a patent right (for the delivery of products under which to the government his contract with the government was made) to the bank with power to sell it if the advances were not paid when due. And the present case was a proceeding in equity to enforce a lien on a judgment which the contractor had obtained against the government for its breach of contract with him, the bank having kept the patent right twenty-seven years, and not offering by its bill to return it.
The trustees of the Bank of Washington filed in May, 1867, a bill against Nock complaining that in 1840, he having received a patent for a mail lock, made a contract with the Postmaster General to furnish the government from time to time with the sort of patented lock, at a price stipulated, for the use of the government; that Nock, not having means at his command to manufacture the locks, agreed with the bank, if they would advance money for him, on his drafts on the Postmaster, or otherwise on the proceeds to arise from his said contract, to enable him to fulfill the same, that he would give them a specific lien on and empower and authorize them to take out of said drafts, when paid, or proceeds, whenever realized, sufficient to repay to them the advances made or to be made. The bill averred that under this arrangement they did make advances, and that Nock was so enabled to
fulfill his contract, but that for some reason but a small amount of the said proceeds were ever realized by Nock until lately; that he still owed the bank $8,078.82.
That sometime after the principal part of the advances were made, Nock executed an agreement, on the 2d of December, 1852, with the bank to make to him further advances to prosecute his claim for payment, and that they did make such further advances, Nock agreeing that
"the debt due by him to the bank for former advances, as well as the further advances then and thereafter to be made for the purpose of prosecuting his said claim should be first paid out of any receipts realized by him from the government."
That Nock, on the 6th of January, 1865, by written obligation which was in these words and signed by him:
"I hereby renew and revive my indebtedness and obligations to the Bank of Washington arising out of certain advances made to me for drafts on the Postmaster General of the United States in 1840, and all the accruing interest thereupon, as well as for any other advances which have been made to me, or which may be made to me, on any account whatever, by the said Bank of Washington,"
did acknowledge all his said debt for the advances, and all the interest accruing thereon, and formally renewed his obligation to pay the same.
That after a long prosecution of his said claim, Nock had recently been awarded by the Court of Claims the sum of $27,000 in satisfaction of the contract to furnish locks, and the same was now about to be paid, but that Nock, refusing to pay the bank its advances or to recognize the specific lien which it had on the fund or the validity of his contracts, especially that of the 2d December, 1852, was about to and was seeking to receive the money, and to appropriate it to his own exclusive use in contravention of equity.
The answer and proofs, which, independently of the answer, were few, showed the patent right and the contract with the postmaster as alleged; that for the purpose of executing the contract, Nock had got the advances; that he had drawn several drafts on the Postmaster General in reduction
of them; that the drafts were all paid, and that the balance asserted remained unpaid. They showed also that about four months after the first sum of money advanced by the bank, Nock having now received about $3,000 of advances, by an instrument dated June 6, 1840, reciting the advances to that date and reciting also his desire to secure "by an assignment of the patent, in manner hereinafter expressed," payment not only of those advances but of all such further sums as might be thereafter advanced, transferred the patent to the bank upon trust in case of his failure to pay the bank the money advanced or to be advanced as it became due, to sell the patent after sixty days' notice by advertisement, and reimburse itself.
The answer, which was not disproved on these points, further set forth that the government having annulled its contract with the respondent, he, for the purpose of procuring the means necessary to sue it in the Court of Claims, entered into the agreement of 1852, but that that prosecution resulted, A.D. 1864, in a judgment adverse to his claim. That desiring to begin a new suit against the government and to get from the bank money to carry it on, he signed the paper of 1865; but that the bank had never advanced under that agreement but $100 (which the respondent professed himself ready to pay back), declaring that they had no confidence in his claim and would never advance another cent; that the bank thus refusing to advance money to prosecute the case anew, it then became necessary for the respondent to make other arrangements to get money, and that by aid of these new arrangements with other persons, he procured an act of Congress referring his claim again to the Court of Claims, in which court, without any assistance from the bank, he prosecuted his claim anew, and after having laid out over $11,000 in doing so, got the award of $27,000, upon which the bank sought to fix a lien.
The answer expressly denied that the drafts which Nock drew were to be "any lien on the contract," though it admitted that they were founded on it and made to enable the bank to receive pay for such locks as should be delivered,
and the testimony of the officer of the bank with whom Nock made his original arrangement said: "We made different advances at different times on drafts. The understanding was that as soon as the locks were delivered, we were to draw the money." The bank prayed an injunction against Nock's drawing the amount of the judgment from the Treasury until it was first paid its advances.
The Supreme Court of the District at special term granted the injunction and directed an account, but at general term dismissed the bill, when the bank brought the case by appeal here.