1. A., who had a contract with the United States, agreed with
B., in 1847, that the latter should perform it and that the profits
should be equally divided between them. Thereupon they and C.
executed an instrument in which the agreement was recited, and A.,
for the due fulfillment thereof, assigned the contract to C. as
trustee. A controversy having arisen as to the amount due upon the
contract, Congress, in 1870, authorized C. as such trustee to sue
the United States therefor, and subsequently made an appropriation
to pay the judgment which he recovered.
Held that as the
assignment was thus recognized by the government, the parties to
the agreement and those claiming under them are precluded from
setting up that the contract was not assignable.
2. A. made in 1860 an assignment for the benefit of his
creditors, which included all his rights, credits, effects, and
property of every description.
Held that the assignment,
although it covered whatever might be due to him under his contract
with the government, was not within the prohibition of the Act of
Feb. 26, 1853, 10 Stat. 170, reenacted in sec. 3477, Rev.Stat., nor
in violation of public policy.
3.
Spofford v. Kirk, 97 U. S. 484, and
Erwin v. United States, 97 U. S. 392, cited
and examined.
4. Where a bill is filed to enforce a claim or lien upon a
specific fund within reach of the court, and such of the defendants
as are neither inhabitants of nor found within the district do not
voluntarily appear, the circuit court has jurisdiction to
adjudicate upon their right to, or interest in, the fund, if they
be notified of the pendency of the suit by service or publication,
in the mode prescribed by sec. 738 of the Revised Statutes.
5. In such a case, where it appears by the bill that certain
nonresidents are indispensable parties, and they are not made
parties, the bill is bad on demurrer, and should be dismissed
without prejudice.
Page 102 U. S. 557
This was a bill in chancery filed by Charles Goodman against
William E. Niblack, administrator
de bonis non of Albert
G. Sloo, deceased. A demurrer to it was sustained, and Goodman
appealed.
The case is fully stated in the opinion of the Court.
MR. JUSTICE MILLER delivered the opinion of the Court.
There came into the hands of Niblack, as administrator
de
bonis non of the estate of Albert G. Sloo, the sum of
$150,000, and the complainant is the owner of a judgment against
said Sloo for $31,344.44, recovered in the supreme court of the
State of New York on the twentieth day of January, 1855. The
purpose of the present bill is to follow this money in Niblack's
hands as a trust fund devoted by Sloo in his lifetime to the
payment of that judgment. This trust arises, if it exist at all,
out of a deed of assignment made by Sloo of all his property,
rights, and credits to Benjamin H. Cheever and James Wiles, of the
date of Feb. 3, 1860, for the benefit of all his creditors, but
with some preferences, among which is the judgment. The sum above
mentioned was received by Niblack as the share of Sloo's estate in
a claim of over a million dollars recovered in the Court of Claims
against the United States and paid by the government to Marshall O.
Roberts and Edward N. Dickerson, in whose names the judgment was
recovered. The history of this claim, which is necessary to an
understanding of the case in hand, is this:
The fourth section of the Act of Congress of March 3, 1847,
chap. 62, 9 Stat. 187, directed the Secretary of the Navy to
contract with Sloo for the transportation of the mails of the
United States from New York to New Orleans, Charleston, Savannah,
Havana, and Chagres and back twice a month, at a compensation not
to exceed the sum of $290,000. The mail was to be carried in steam
vessels of a character described in the act, not less than five in
number, to be constructed under
Page 102 U. S. 558
the supervision of officers of the navy, in such manner as to be
easily converted into war steamers of the first class. Under this
authority, the Secretary and Sloo executed a written contract on
the 20th of April of that year for the construction of the ships
and transportation of the mails at the sum of $290,000 per annum.
On the 17th of August thereafter, Sloo entered into an agreement
with Marshall O. Roberts, George Law, Prosper M. Wetmore, and Edwin
Croswell, by which they were taken into this contract with him, and
agreed to build the vessels, and run them, and perform the
obligations of Sloo to the government. He was to receive one-half
of the net profits of the venture and the four persons named the
other half. In order to the perfect working of this agreement, a
tripartite instrument in writing was made in which Sloo is called
the party of the first part, and Roberts, Law, Wetmore, and
Croswell the party of the second part, and George Law, Marshall O.
Roberts, and Berres R. McIlvaine party of the third part, whereby,
after reciting the agreement between the party of the first part
and the party of the second part, the contract of Sloo is assigned
to the party of the third part as trustees for the due execution of
the agreement. This was signed by all the persons named.
The ships were built, and the mails carried for many years. By
death and substitution, Marshall O. Roberts and Edward N. Dickerson
became the surviving trustees under the agreement, and, as such,
recovered in a controversy with the United States in the Court of
Claims judgment for the sum of $1,031,000 as money due under the
original contract with Sloo, which judgment was affirmed in this
court and the money paid to them.
In the meantime, Sloo, who had become insolvent, executed in
1860 the general assignment to Cheever and Wiles, already
mentioned. He died before the final payment of the money by the
government to Roberts and Dickerson. Niblack was appointed his
administrator.
These facts are all set out in the bill, and copies of the
several contracts and assignments are filed as exhibits. Another
averment of the bill is that the sum really due to Cheever and
Wiles, as assignees of Sloo, out of the sum paid
Page 102 U. S. 559
by the government, was $182,000; that Cheever and Wiles received
$37,000 of this money, and consented to the payment of the
remaining $145,000 to Niblack under some arrangement not understood
by the complainant. It is also alleged that all the other
indebtedness of Sloo which might have been a claim on this fund
under his assignment to Cheever and Wiles has been paid, and there
remains no other claim on it than complainant's. It is also averred
that Wiles and Cheever are not citizens of Indiana, and cannot be
served with process, and are not made parties to the bill, and for
the reasons above stated are not necessary parties.
The demurrer is first general and secondly special as regards
the failure to make Cheever and Wiles parties.
The general demurrer is maintained on the ground that the
assignments made by Sloo are void by reason of the provisions of
sec. 3477 of the Revised Statutes. These provisions were enacted by
Congress in 1853, 10 Stat. 170, and were therefore not in force
when Sloo made his contract with the government or his agreement
with Roberts, Law, and others. That agreement remains unaffected by
them. They were in force, however, when he made the general
assignment of all his effects to Cheever and Wiles, and as the
complainant claims through it, and can probably succeed only in
that way (because, as we are informed, the state court of Indiana
has decided that the statute of limitations bars his claim as an
ordinary debt), we must inquire whether that assignment is void
under the act of Congress.
The statute has several times within the last few years received
the consideration of this court.
United States v. Gillis,
95 U. S. 407;
Spofford v. Kirk, 97 U. S. 484;
Erwin v. United States, 97 U. S. 392.
It is understood that the circuit court sustained the demurrer
under pressure of the strong language of the opinion in
Spofford v. Kirk. We do not think, however, that the
circumstances of the present case bring it within the one then
under consideration or the principles there laid down. That was a
case of the transfer or assignment of a part of a disputed claim,
then in controversy, and it was clearly within all the mischiefs
designed to be remedied by the statute. Those mischiefs,
Page 102 U. S. 560
as laid down in that opinion, and in the others referred to, are
mainly two:
First, the danger that the rights of the government
might be embarrassed by having to deal with several persons instead
of one, and by the introduction of who was a stranger to the
original transaction.
Second, that by a transfer of such a claim against the
government to one or more persons not originally interested in it,
the way might be conveniently opened to such improper influences in
prosecuting the claim before the departments, the courts, or the
Congress, as desperate cases, when the reward is contingent on
success, so often suggest.
Both these considerations, as well as a careful examination of
the statute, leave no doubt that its sole purpose was to protect
the government, and not the parties to the assignment.
Erwin v.
United States, supra, decided at the same term as
Spofford
v. Kirk, is suggestive on this point. It was there held that
the claim of a bankrupt against the United States passed by the
assignment in the bankruptcy proceeding to his assignee, and that
the latter, and not the original claimant, was the proper person to
sue in the Court of Claims. "The passing of claims to heirs,
devisees, or assignees in bankruptcy is not within the evil at
which the statute aimed," said the Court. The language of the
statute, "all transfers and assignments of any claim upon the
United States, or of any part thereof, or any interest therein," is
broad enough (if such were the purpose of Congress) to include
transfers by operation of law or by will. Yet we held it did not
include a transfer by operation of law, or in bankruptcy, and we
said it did not include one by will. The obvious reason of this is
that there can be no purpose in such cases to harass the government
by multiplying the number of persons with whom it has to deal, nor
any danger of enlisting improper influences in advocacy of the
claim, and that the exigencies of the party who held it justified
and required the transfer that was made. In what respect does the
voluntary assignment for the benefit of his creditors, which is
made by an insolvent debtor of all his effects, which must, if it
be honest, include a claim against the government, differ from the
assignment which is made in
Page 102 U. S. 561
bankruptcy? There can here be no intent to bring improper means
to bear in establishing the claim, and it is not perceived how the
government can be embarrassed by such an assignment. The claim is
not specifically mentioned, and is obviously included only for the
just and proper purpose of appropriating the whole of his effects
to the payment of all his debts. We cannot believe that such a
meritorious act as this comes within the evil which Congress sought
to suppress by the act of 1853.
It is also to be remarked that the government had recognized
Sloo's original assignment of his contract to Roberts, Law, and
McIlvaine, as trustees, by permitting them to perform the contract
and receive the pay under it for years, and when a dispute arose as
to the sum due under that contract, Congress, by the Act of July
14, 1870, very fully recognized the validity of that transfer.
That act is in these words:
"Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, that the claim of
the trustees of Albert G. Sloo, for compensation for services in
conveying the United States mails by steamers, direct between New
York and Chagres, in addition to the regular service required under
the contract made between the said Albert G. Sloo and the United
States be, and the same is hereby, referred to the Court of Claims,
and the said court is hereby directed to examine the same, and
determine and adjudge whether any, and if any, what, amount is due
said trustees for said extra service, provided that the amount to
be awarded by said court shall be upon the basis of the value of
conveying other first-class freight of like quantity with the mails
actually carried between the same points at the same time."
This is still further recognized by the appropriation to pay
this judgment "to Marshall O. Roberts and E. N. Dickerson,
surviving trustees of A. G. Sloo," found in chapter 3 of the Second
Session of the Forty-fifth Congress. 20 Stat. 7.
The first agreement of Sloo, therefore, is unassailable.
His assignment to Cheever and Wiles, in 1860, conveyed only his
interest in the profits of the contract which the parties in the
first assignment were performing or had performed for the
government.
Page 102 U. S. 562
The general assignment of Sloo in 1860 gave Cheever and Wiles no
right to assert a claim against the government. They could only
deal with the trustees under the first assignment, and on them they
had only the claim for net profits which came into their hands.
Cheever and Wiles and the present complainant were neither of them
capable of suing the United States in the Court of Claims, or of
presenting the matter before the accounting officers of the
government, and could give no valid or just acquittance to the
government for any part of the claim.
We do not think the transfer to Cheever and Wiles, as trustees
for Sloo's creditors, is forbidden by the act of 1853, or by any
other principle of law or of public policy.
But we are of opinion that Cheever and Wiles are not only proper
but necessary parties to this suit. The entire sum to which the
estate of Sloo could possibly be entitled was assigned to them. The
trust on which it was assigned remains unexecuted. They are charged
with having received $37,000 of that fund. What have they done with
it?
If, as alleged in the bill, there are no other debts of Sloo
secured by the assignment, this sum in their hands should be
accounted for before a decree is rendered against his
administrator. They are charged with consenting to the payment to
the administrator of the fund now sought in this suit. There may
have been good reasons for it, and if not, they may be personally
liable for it. The fund can only be subjected to the complainant's
debt through these trustees. It is only in right of the assignment
to them that he proceeds. They are living, and cannot be divested
of this trust by any decree to which they are not parties. The
administrator has a right, if a decree is rendered against him, to
have it made effectual against them.
Notwithstanding the allegation of the bill that all the
liabilities of the trust fund except the complainant's debt have
been discharged, this may not be so, and it may be in the power of
these trustees, and it may be their duty, if made parties to this
suit, to show that there are others entitled to share in it. No
decree against that fund can rightfully be made while they are not
before the court.
Page 102 U. S. 563
This, however, need not defeat the jurisdiction of the court if
the bill is amended by making them defendants.
This is a proceeding in equity to enforce a lien on the fund
which is within reach of the court, and as the trustees and
complainant have the requisite citizenship, sec. 738 of the Revised
Statutes provides a remedy for inability to serve process by an
order of publication. If they appear, the suit will proceed as
usual. If they do not appear, the decree, so far as it affects the
fund in the hands of Niblack, will bind them, and that is all that
is necessary to give the court jurisdiction to grant the relief
prayed for by the complainant.
If the decree of the circuit court had dismissed the case
without prejudice for want of proper parties, we should have been
bound to affirm it. But standing as it does now, it is a decision
on the merits of the case and a bar to any other suit. It must
therefore be reversed and remanded to that court. If the
complainant shall ask leave to amend his bill by making Cheever and
Wiles defendants, he should be permitted to do so and proceed with
his case. If he does not do this, a decree should be entered
dismissing the bill for want of these parties and without prejudice
to any other suit on the merits.
Shields v.
Barrow, 17 How. 130;
Barney v.
Baltimore City, 6 Wall. 280;
House v.
Mullen, 22 Wall. 42;
Kendig v. Dean,
97 U. S. 423.
The decree will be reversed, and the cause remanded for further
proceedings in conformity with this opinion, and it is
So ordered.