Where money is placed in the hands of one person to be delivered
to another, a trust arises in favor of the latter, which may be
enforced by bill in equity, if not by action at law.
The acceptance of money with notice of its ultimate destination
is sufficient to create a duty on the part of the bailee to devote
it to the purpose intended by the bailor.
In enforcing such a trust, a court of equity may make such
incidental orders as may be necessary for the proper distribution
of the fund.
On the facts set forth in the headnote to
Gilfillan v.
McKee, just decided, it is in this suit further
held,
(1) That when the Choctaws transferred the work from Black &
Lamon to McKee, there was no intention on the part of anybody to
ignore what had already been done.
(2) That Lamon, as representing the surviving partners of Black
Lamon & Company, was entitled to recover the reasonable value
of their services from the date of the assignment by McPherson to
the date of the McKee contract.
These cases were argued in connection with
Gifillan
McKee and
McPherson v. McKee, ante, 159 U. S. 303.
This was the original bill therein referred to filed against McKee
by Lamon and Flack, surviving partners, and was based upon the
assignment of the original Cochrane contract for a compensation of
thirty percent to Jeremiah S. Black and the substitution of Black
in the place of Cochrane, as the attorney, counsel, and agent of
the Choctaw Nation for the prosecution of their claim. This
contract was entered into between McPherson, as the executor of
Cochrane, and Jeremiah S. Black on the 8th of November, 1866, and
was assented to by the delegates of the Choctaw Nation, whereby the
right of Cochrane to receive the thirty percent became vested in
Black. This assignment seems really to have been made for the
benefit of Lamon, who raised and paid $25,000 of the $75,000, which
it
Page 159 U. S. 318
was contemplated should be paid to Cochrane, in the verbal
arrangements carried on between Lamon and Cochrane before his
death. The bill, after setting forth the facts stated in the
interpleader case, averred that on the dissolution of the firm of
Black Lamon & Co., in 1872, Lamon succeeded to the interest of
Black in the remainder of the thirty percent, after certain prior
claims thereon should be paid.
The only averment of the performance of the Cochrane and Black
contracts by the firm of Black Lamon & Co., or either member of
such firm, was that
"they undertook the prosecution of said claim, and urged the
same with great persistence before the committees of Congress, and
did all in their power to bring about such legislation as the
situation demanded, and they so continued so long as the firm of
Black Lamon & Co. existed; that after some years, said Jeremiah
S. Black, by reason of his failing strength and advanced life, was
compelled to abandon the active work of his profession, and the
said copartnership was for that reason dissolved, and the duty of
prosecuting said claim devolved solely upon said Lamon."
The bill was subsequently amended in this particular by
averring
"that said services were rendered and said advances were made
with the full knowledge and consent, and at the special instance
and request of the Choctaw Nation, with the agreement and
understanding that the said plaintiffs were to receive, as
compensation for said services, such sum as the same were
reasonably worth, to be paid out of the money claimed as aforesaid,
when paid by the United States, and that said agreement and
understanding was independent of the said Cochrane contract and of
the rights claimed by the plaintiffs under and by virtue of the
said Cochrane contract."
A subsequent paragraph set up a lien upon the judgment rendered
in favor of the Choctaws, and upon the amount due from the United
States, and upon the thirty percent fund set apart by the Choctaw
Nation for payment for services.
The amended bill further averred that, while the question of the
payment of the claim was pending before Congress, McKee procured
the passage of two acts of the Council of the Choctaw Nation, which
acts were passed, as requested by
Page 159 U. S. 319
McKee, with the express understanding and agreement between
McKee and the Choctaw Nation that he would
"pay to these complainants and others such sum or sums of money
as they were justly entitled to receive for the services rendered
and money expended by them in the prosecution of said claim, and
with the further agreement that when said McKee should receive"
the money set apart by said acts, as aforesaid,
"that he, the said McKee, would hold the same in his possession
in trust for the benefit of such persons, including these
complainants, as might be entitled to some part thereof."
The prayer was that McKee be enjoined from collecting the thirty
percent set apart for the payment of expenses; that a receiver be
appointed to collect the same from the Treasury, and pay it out to
the plaintiffs and such other persons as had a just and equitable
claim thereto.
Upon filing this bill, an order was entered enjoining the
defendant from receiving this money from the Treasury. McKee,
however, disregarded this order -- no bond having been given as
required by the rule of the court -- and drew from the Treasury
$783,768.82, which was twenty-five percent of the whole judgment,
five percent of the thirty percent having been paid to one Luce,
who had taken Blunt's place in the contract. A rule was issued
against McKee to show cause why he should not be punished for
contempt in violating the restraining order of the court, but, it
appearing that no bond had been filed, the motion was overruled and
McKee was discharged. On the discharge of the rule, plaintiffs
filed a petition based on the bill, answer, and affidavits and
prayed for the appointment of a receiver. After full argument, the
court ordered that McKee should pay into court the sum of $136,500,
to be held subject to the order of the court. McKee refused to obey
this order and absconded from the jurisdiction of the court. An
appeal, however, was taken from the order, and the same was vacated
and rescinded on December 3, 1889.
Subsequently, upon a hearing upon pleadings and proofs, a decree
was rendered in favor of Ward H. Lamon against McKee as
compensation for his services rendered and of his
Page 159 U. S. 320
disbursements and expenditures, for $35,000, with interest
thereon at the rate of six percent, and so much of the bill as
related to claim of Lamon and Black or either of them, as assignees
of the so-called Cochrane contract, and as surviving partners of
Black and Lamon, or Black Lamon & Co., was dismissed.
From this decree the plaintiffs Ward H. Lamon and Chauncy F.
Black appealed to this Court.
MR. JUSTICE BROWN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
In these cases (Nos. 33 and 34) we are concerned only with the
decree in Lamon's favor for $35,000, and with that part of the
decree dismissing the claim of Lamon and Black. The bill was
originally filed for the purpose of securing the payment to Lamon
and Black of thirty percent of the sum of $2,858,798.62, which the
appellant was about to receive from the United States, under the
authority received by him from the Choctaw Nation, and also for an
injunction restraining him from receiving such sum of money, and
for the appointment of a receiver, who should be authorized to
collect this sum from the Treasury whenever the same should become
due and payable, and also for an accounting between the appellant
and Lamon and Black in respect to the amount due them for services
rendered and money expended in the prosecution of the claim. It
appearing, however, that the contract of February 13, 1855, was
never carried out, nor the money ever collected, as required by the
contract between Cochrane and
Page 159 U. S. 321
the Choctaw Nation before Cochrane could become entitled to his
thirty percent, complainants amended their bill by averring that
McKee procured an act of the Choctaw council, of February 25, 1888,
making provision for the payment of the amount due under his
contract with them by an express understanding and agreement that
he would pay to the complainants and others such sum or sums of
money as they were justly entitled to receive for services rendered
and money expended by them in the prosecution of their claim. In
his answer, McKee denied the allegations of the bill, so far as it
related to services alleged to have been rendered in the
prosecution of the said claim by the firm of Black Lamon & Co.,
or either of them, previous or subsequent to July 16, 1870, but, on
the contrary, averred that Black retired from and abandoned the
case before such date; that by reason of such abandonment, the
Choctaws, being without counsel, solicited himself and Blunt to
take charge of the prosecution of such claim.
1. The first point made by the appellant McKee, that the Supreme
Court of the District of Columbia was without jurisdiction to
entertain the suit because, upon the averments of the bill, the
suit was, in legal effect, one against the Choctaw Nation, to which
the Nation was a necessary party, is without foundation. The suit
is neither directly nor indirectly against the Choctaw Nation, nor,
if made a party defendant, would the complainants be entitled to
any relief against the Nation. No claim is made against it, nor is
any attempt made to impair the effect of its legislation. By its
first contract with Cochrane, made by its agents, February 13,
1855, in pursuance and by virtue of resolutions of its legislative
council, of November 9, 1853, and November 10, 1854, it agreed to
pay Cochrane, for his services, thirty percent of all collections
made by him in their behalf. By its second contract, it doubtless
assumed that the first contract had been abandoned by Cochrane and
his successors, Lamon and Black and agreed to pay the same thirty
percent upon an amount which had already been fixed, with the
further stipulation that Blunt and McKee should pay to Mrs.
Cochrane five percent upon such thirty percent, and should adjust
the claims of all parties who had theretofore
Page 159 U. S. 322
rendered service in the prosecution of such claim upon the
principles of equity and justice, according to the value of the
services so rendered.
The Choctaw Nation had really no interest in the thirty percent
The stipulation was made by Blunt and McKee for the benefit of the
parties interested in the percentage, and as soon as the money
should be received by them, or either of them, they would hold it
as trustees for the persons legally and equitably entitled to it.
McKee, having obtained possession of the money, may be held
accountable by a court of equity for its proper distribution. There
can be no doubt of the general proposition that where money is
placed in the hands of one person, to be delivered to another, a
trust arises in favor of the latter, which he may enforce by bill
in equity, if not by action at law. The acceptance of the money,
with notice of its ultimate destination, is sufficient to create a
duty on the part of the bailee to devote it to the purposes
intended by the bailor.
Taylor v.
Benham, 5 How. 233,
46 U. S. 274;
Kane v. Bloodgood, 7 Johns.Ch. 110;
Barings
v. Dabney, 19 Wall. 1;
National Bank v.
Insurance Co., 104 U. S. 54;
Keller v. Ashford, 133 U. S. 610;
Union Life Insurance Co. v. Hanford, 143 U.
S. 187;
Ryan v. Dox, 34 N.Y. 307; Story's
Equity Jurisprudence §§ 1041, 1255; Mechem on Agency § 568. And in
enforcing such trust, a court of equity may make such incidental
orders as may be necessary for the proper protection and
distribution of the fund.
It is true that, in this case, the names of the beneficiaries
are not given in the instrument creating the trust, but they are
designated by class, as "all parties who have rendered service
heretofore in the prosecution of said claim," and were to be
rewarded "upon the principles of equity and justice, according to
the value of the services so rendered." And if there be any
conflict between individuals of such class, a court of equity is
the proper tribunal for the adjustment of their respective claims.
In such case, where the property is disposed of absolutely, the
original assignor or party creating the trust need not be made a
party to the bill. Story's Equity Pleadings § 153. This proposition
renders it unnecessary to consider
Page 159 U. S. 323
whether the Choctaw Nation is subject to be sued in the Supreme
Court of the District of Columbia. The fact that the act of
Congress making the appropriation required the money to be paid
"upon the requisition or requisitions" issued by "the proper
authorities of the Choctaw Nation" did not oust the court of equity
from controlling its subsequent disposition. The object of the bill
is not to change the direction of Congress in respect to such
payment, but to determine the further disposition of the money
after it has reached the hands of the designated payee.
The objection that there was no consideration for the promise
made by the appellant to adjust the claims of all parties, etc., is
untenable, since the original receipt of the money is a sufficient
consideration for all promises, expressed or implied, with
reference to its final disposition.
Walker v. Rostron, 9
M. & W. 411; Mechem on Agency § 568.
2. The history of this controversy may be epitomized as follows:
the Choctaws, believing that they had certain just claims against
the government, and particularly for the net proceeds of lands
ceded to the United States by the treaty of Dancing Rabbit Creek of
September 2, 1830, at first employed Albert Pike to prosecute such
claims, and upon his abandoning the same annulled his contract,
employed Cochrane and agreed to pay him thirty percent of the
amount collected by him. The contract with him was made February
13, 1855, and continued in force until it was superseded by the
contract made with Black November 8, 1866. Indeed, the contract of
1855 indicates that, for three years before that, Cochrane had been
acting as the agent of the Choctaw Nation in the prosecution of
certain other claims, in regard to which he had rendered most
important and valuable services, etc. During these fourteen years,
he seems to have had charge of the Choctaw claims, and been engaged
in their active prosecution. During this time the treaty of 1855,
submitting the Choctaw claim for the net proceeds to the Senate,
was concluded, and the award of the Senate of 1859 made, by which
the Choctaws were allowed the proceeds from the sale of such lands
as had been sold by the United States on the 1st of January
preceding, deducting
Page 159 U. S. 324
certain expenses therefrom, and referring the claim to the
Secretary of the Interior to state the amount due them according to
certain principles of settlement laid down by the Senate. During
this time also, the act of Congress of 1861 was passed, which
ratified and confirmed the Senate award, and provided for a partial
payment thereof. At the same time, Cochrane's express contract with
the Choctaws was that his compensation of thirty percent was only
payable when the money was paid over by the United States to the
Choctaw Nation, or its legally authorized representatives; in other
words, it was contingent upon success. Under this contract, he
seems to have been paid, for moneys collected before his death, the
sum of $282,600 -- thirty percent of the amount he had procured for
the Choctaws.
On November 8, 1866, McPherson, the executor of Cochrane's
estate -- Cochrane, in the meantime, having died -- acting under an
authority contained in his will, assigned to Black all the interest
of Cochrane in the thirty percent compensation, and substituted him
in the place of Cochrane, with the proviso that he should pay out
of the money to be received by him, to Cochrane's executor, such
sum as should be agreed upon between the parties, as well as all
other demands justly due and payable out of such thirty percent. In
this connection, Black seems to have been acting principally for
his partner, Mr. Lamon. It appears that the firm of Black Lamon
& Co. were actively engaged in an effort to secure from
Congress an appropriation to pay the Senate award during several
sessions, Judge Black appearing before committees of Congress on
behalf of the Nation and their award, and the other parties
preparing memoranda and briefs; that both Lamon and Black devoted
much time in explaining the said award, and the claims upon which
it was founded, to individual members of Congress; that in 1870,
Mr. Lamon, who had the principal charge of the case, advised the
Choctaw delegates to discontinue further efforts to obtain from
Congress the payment of the award by direct appropriation, and to
apply for the passage of a bill referring the same to the Court of
Claims for adjudication; that the delegates declined to accede to
this proposition, and
Page 159 U. S. 325
insisted upon a further effort to secure the appropriation
direct from Congress; that about this time they entered into the
contract with McKee, and that thereafter Lamon, who does not seem
to have been apprised of such contract, continued to urge upon
Congress the justice of their claim, and the duty of the United
States to pay said award, until about 1878, when he prepared at the
request of Pitchlynn, the chief delegate, a bill authorizing the
reference of such claim to the Court of Claims, and a memorial to
accompany the same.
About 1870, however, Black appears to have withdrawn from the
case, except so far as was necessary for the protection of the
interests of Thomas A. Scott, who had advanced some $75,000 to
Cochrane's executor, whom Black felt in honor bound to protect. His
reasons for so retiring are fully stated in a letter of March 27,
1883.
Whether, under Rev.Stat. § 3477, prohibiting the assignment of
claims against the United States, as interpreted by this Court in
Spofford v. Kirk, 97 U. S. 484, and
subsequent cases, the original contract between Cochrane and the
Choctaw Nation, or the assignment thereof to Black by Cochrane's
executor, McPherson, was of any force or validity, or not, it is
unnecessary to inquire. It is sufficient to say that the contract
was entirely contingent upon the money's being collected, and the
compensation therein provided for was payable only from such money.
As none was ever collected by Black or Lamon, they never obtained a
legal right to compensation. But the question still arises whether,
notwithstanding there was no legal claim, the Choctaws were not at
liberty to recognize the fact that important services had been
rendered, and that a moral obligation to pay for them existed on
the part of those who should ultimately succeed in making the
collection.
In this posture of affairs, the contract of July 16, 1870,
between the Choctaws and McKee, was entered into. There is very
little, if any, testimony to justify the charge in the amended bill
that this contract was fraudulently obtained for the purpose of
cheating the complainants and other persons interested in the
claim, and to obtain possession of the funds which McKee knew were
due, and justly payable out of the
Page 159 U. S. 326
proceeds. The truth seems to be that the Choctaws were either
discontented with the advice given by Lamon and Black -- to
discontinue their efforts to secure a direct appropriation for the
payment of the award, and apply for leave to go to the Court of
Claims -- or became satisfied that Black and Lamon were so much
engrossed in other matters that they could not bestow the proper
attention upon this; in short, that Black had practically abandoned
the case, and that further assistance must be obtained. That there
was no intention on the part of either party to ignore what had
already been done is evident from the concluding paragraph of their
contract, out of which the express trust is claimed to arise --
that Blunt and McKee would adjust the claims of all parties who had
theretofore rendered services in the prosecution of the claim, upon
the principles of equity and justice, according to the value of the
services so rendered. That this clause must have referred to
Cochrane and his assignees is evident from the fact that the
stipulation was made expressly in favor of those who had
"heretofore" rendered services. As such services had been rendered
only by Cochrane and his assignees, and as Cochrane's individual
claim was already provided for by the donation of five percent to
his wife, it is difficult to understand for what the subsequent
reservation was made, if not for Black and Lamon, who had succeeded
him, and who had certainly rendered some valuable services in the
prosecution.
The court below was of the opinion "that the Choctaws, in
defining the trust, did not mean that people whose contracts they
had annulled were to come within the trust," and hence that Black
and Lamon, whose services were all rendered under the Cochrane
contract, were not intended to be included. We do not think this
necessarily follows. It is true that, in 1874, the General Council
of the Choctaw Nation did pass an act annulling the contract with
Cochrane; but this act is really of very little value, since the
contract had already been practically abandoned as early as 1870,
and was as dead as any act of the legislative council could make
it. This act may have given it its
coup de grace, but for
all practical purposes it was null already. The object of the
stipulation in question was to
Page 159 U. S. 327
acknowledge that valuable services had "heretofore" been
rendered, and, as Cochrane had already been provided for, it is but
natural to suppose that his assignees were the ones intended to be
recognized.
We are therefore of opinion that complainants, as surviving
partners of the firm of Black Lamon & Co., are entitled to
recover the reasonable value of those services from the date of the
assignment from McPherson to Black to the date of the McKee
contract, which may be taken as denoting the time when the Black
contract was abandoned. Whatever services Lamon rendered prior to
that time he rendered as a member of, and for the benefit of, the
firm of Black Lamon & Co., and that, too, is the theory of this
bill, which is founded upon a partnership claim. If, subsequently
to that time, or to the time when Lamon first learned of McKee's
contract, Lamon rendered services which were of value to McKee,
they would not fall within the express trust of the McKee contract,
but perhaps might be subject to an implied trust in his favor. As
to that, however, and as to the question whether the bill is
properly framed to cover an individual liability, we express no
opinion.
The decree of the court below is therefore
Reversed, and the case remanded for further proceedings in
conformity with this opinion.
