A. employed B. to collect a claim against the United States.
Before its allowance, or the issue of a warrant for its payment, he
drew, in favor of C. an order on B. payable out of any moneys
coming into his hands on account of said claim. B. accepted it, and
D. became the holder of it in good faith and
for value. A. refused to recognize its validity after the
warrant in his favor
had been issued, or to endorse the latter. D. thereupon filed
his bill against A. and B. to enforce payment of the order.
Held:
1. That the order became, upon its acceptance and in the absence
of any statutory prohibition, an equitable assignment
pro
tanto of the claim.
2. That under the Act of Feb. 26, 1863, 10 Stat. 170, reenacted
in sec. 3477, Rev.Stat., the accepted order was void, and that D.
took no interest in the claim, and acquired no lien upon the fund
arising therefrom.
James B. Kirk employed Hosmer & Co. to prosecute his claim
for $12,000 against the United States for supplies furnished to the
army during the war of the rebellion and for damages sustained by
reason of the military occupation of his property. Before the
allowance of the claim, he drew upon that firm the following
orders:
"CULPEPER COURT-HOUSE, VA."
"Jan. 14, 1873"
"Messrs. Hosmer & Co., of Washington City, D.C., will please
pay to J. S. Wharton or order six hundred ($600) dollars out of
whatever moneys may be coming into your hands for me for supplies
furnished and damages sustained by the United States army during
the war."
"JAMES B. KIRK."
"CULPEPER COURT-HOUSE, VA."
"Jan. 14, 1873"
"Messrs. Hosmer & Co., of Washington City, D. C., will
please pay to E. R. Taylor, or order, six hundred ($600) dollars
out of whatever moneys may be coming into your hands for me, for
supplies furnished and damages sustained by the United States army
during the war."
"JAMES B. KIRK."
Which were thereupon severally accepted by the drawees by
writing across the face of the first as follows:
Page 97 U. S. 485
"WASHINGTON, Jan. 24, 1873"
"Accepted; payment to be made out of any moneys received by us
from the United States on the claim of said James B. Kirk, and
remaining in our hands, after deduction and payment of attorney's
fees in the case."
"HOSMER & CO."
And of the second, as follows:
"Accepted; payment to be made out of any moneys received by us
from the United States on the claim of said James B. Kirk and
remaining after deduction and payment of our attorney's fees in the
case, and also our acceptance of a similar order for the same
amount in favor of Dr. J. S. Wharton."
"HOSMER & CO."
"Jan. 25, 1873"
The orders bearing said acceptances and endorsed by the
respective payees, were in February, 1873, offered for sale to
Ainsworth R. Spofford, who, on the written assurance of the drawees
that Kirk had been allowed by the government something over $9,000,
became the assignee or holder of both for value and in entire good
faith.
Upon the issue of the treasury warrant for the sum awarded to
Kirk, Spofford made demand upon Hosmer & Co. for the payment of
the orders. Kirk having refused to endorse the warrant or to admit
the validity of the orders, Spofford filed this bill to enforce
compliance with said orders and acceptances and to enjoin Hosmer
& Co. from surrendering and Kirk from receiving said
warrant.
The court below dismissed the bill, whereupon Spofford appealed
here.
Page 97 U. S. 487
MR. JUSTICE STRONG delivered the opinion of the Court.
Whether the orders, drawn as they were upon a designated fund,
made payable to order, and accepted by the drawees, are held by the
endorsee free from any equities existing between the payees and the
drawer, though the endorsee purchased them without any notice of
such equities, is a question which the case does not require us to
consider. It has been ably and elaborately argued by the counsel
for the appellant, and if the orders could have any legal effect,
we might be compelled to answer it. But there is a primary question
which must be met and determined before we reach the one
principally argued. It is whether the orders are operative for any
purpose. The complainants' case rests upon the assumption that,
coupled with the acceptance of the drawees, they created an
equitable lien upon the debt due from the United States to the
drawer. If they did not, it is plain that the court below had no
jurisdiction in equity to grant the relief asked for by the bill.
The complainant's only remedy was at law. If they did, it must be
because the orders and acceptances amounted to an equitable
assignment
pro tanto of the claim of the drawer against
the government. The ingenious argument for the appellant is that
the orders clothed the respective payees with absolute ownership of
the several sums mentioned therein out of whatever moneys might be
coming into the hands of the drawees from the United States for the
drawer, and it is said that the fund thus specified was unaffected
by the orders, and had only a potential existence in the drawees'
hands until it was received by them, but that from the moment of
possession, they assumed a trust to administer the fund in
accordance with the directions given by the orders, having
previously accepted them.
Another formal statement of the argument is that the orders
drawn by Kirk upon Hosmer & Co. and accepted by them created in
equity an absolute and irrevocable appropriation of their contents,
when collected by the drawees from the drawer's claim against the
government, and that when collected the sums named in the orders
were held by the drawees in trust for the payees or their
assignees. There is no substantial variance in the argument stated
in these several forms. However stated, the equitable effect of the
orders and acceptances,
Page 97 U. S. 488
independent of any statutory prohibition, if they had any effect
when they were drawn, was to transfer a portion of the drawer's
claim against the United States to the payees. After the orders
were given and accepted, the drawer could not in a court of equity
insist that he was entitled to the entire amount which might
subsequently be allowed for his claim. If, instead of two orders,
he had given one for the entire sum which might be awarded to him
by the government, there can be no doubt that it would have
divested his whole interest and vested it in equity in the person
in whose favor the order was drawn. In other words, it would have
been an equitable assignment of the claim. How, then, can it be
that an order drawn upon the fund, or payable out of it if
accepted, is not a partial assignment? There is nothing in Story's
Equity Jurisprudence, secs. 1040 to 1047 inclusive, nor in any of
the cases cited by the appellant, inconsistent with our holding
that such an order is in equity a partial assignment.
We are brought, then, to the inquiry whether such an assignment
of a claim against the United States, made before the claim has
been allowed and before a warrant has been issued for its payment,
has any validity either in law or in equity. The Act of Congress
approved Feb. 26, 1853, 10 Stat. 170, entitled "An Act to prevent
frauds upon the treasury of the United States," reenacted in sec.
3477 of the Revised Statutes, declares that all transfers and
assignments thereafter made of any claim upon the United States, or
any part or share thereof or interest therein, whether absolute or
conditional, and all powers of attorney, orders, or other
authorities for receiving payment of any such claim or any part or
share thereof, shall be absolutely null and void unless the same
shall be freely made and executed in the presence of at least two
attesting witnesses after the allowance of such claim, the
ascertainment of the amount due, and the issuing of a warrant for
the payment thereof. It would seem to be impossible to use language
more comprehensive than this. It embraces alike legal and equitable
assignments. It includes powers of attorney, orders, or other
authorities for receiving payment of any such claim, or any part or
share thereof. It strikes at every derivative interest, in whatever
form acquired, and incapacitates every
Page 97 U. S. 489
claimant upon the government from creating an interest in the
claim in any other than himself.
In
United States v. Gillis, 95 U. S.
407, we had occasion to examine this act. We then
concluded that it embraced every claim against the United States,
however arising, of whatever nature, and wherever and whenever
presented. We had not, however, before us the precise question
which is here presented. That was the case of a suit by the
assignee of a claim in the Court of Claims. We held he could have
no standing there. We held also that such an assignee could not
prosecute the claim in any court, or before the Treasury
Department, against the government. We were not called upon to
decide whether such assignments were invalid as between the
assignor and the assignee. But if after the claim in this case was
allowed and a warrant for its payment was issued in the claimant's
name, as it must have been, he had gone to the Treasury for his
money, it is clear that no assignment he might have made, or order
he might have given, before the allowance would have stood in the
way of his receiving the whole sum allowed. The United States must
have treated as a nullity any rights to the claim asserted by
others. It is hard to see how a transfer of a debt can be of no
force as between the transferee and the debtor, and yet effective
as between the creditor and his assignee to transmit an ownership
of the debt or create a lien upon it. Yet if that might be -- and
we do not propose now to affirm or deny it -- the question remains
whether the act of Congress was not intended to render all claims
against the government inalienable alike in law and in equity for
every purpose and between all parties. The intention of Congress
must be discovered in the act itself. It was entitled "An act, to
prevent frauds upon the Treasury of the United States." It may be
assumed, therefore, that such was its purpose. What the frauds were
against which it was intended to set up a guard, and how they might
be perpetrated, nothing in the statute informs us. We can only
infer from its provisions what the frauds and mischiefs had been or
were apprehended which led to its enactment. One probably was the
possible presentation of a single claim by more than a single
claimant, the original and his assignee, thus raising the danger of
paying the claim
Page 97 U. S. 490
twice or rendering necessary the investigation of the validity
of an alleged assignment. Another and greater danger was the
possible combination of interests and influences in the prosecution
of claims which might have no real foundation, of which the facts
of the present case afford an illustration. Within our knowledge
there have been claims against the government interests in which
have been assigned to numerous persons, and thus an influence in
support of the claims has been brought into being which would not
have existed had assignments been impossible. We do not say that
the passage of the act was induced by these considerations. It is
enough that frauds or wrongs upon the Treasury were possible in
either of these ways, and it may be that Congress intended to close
the door against both. However that may be, the language of the act
is too sweeping and positive to justify us in giving it a limited
construction. We cannot say, when the statute declares all
transfers and assignments of the whole of a claim, or any part or
interest therein, and all orders, powers of attorney, or other
authority for receiving payment of the claim or any part thereof,
shall be absolutely null and void, that they are only partially
null and void, that they are valid and effective as between the
parties thereto, and only invalid when set up against the
government.
It follows that, in our opinion, the accepted orders under which
the appellant claims gave him no interest in the claim of the
drawer against the United States and no lien upon the fund arising
out of the claim. His bill was therefore rightly dismissed.
Decree affirmed.
MR. JUSTICE FIELD did not sit in this case.
