1. A suit in the nature of interpleader by the United States
against one to whom it had given a bill of sale of a vessel and
another whose bid had been overlooked, to determine their rights,
held cognizable in equity (all parties consenting)
although the plaintiff did not stand indifferent, but sought to
maintain the higher bidder's claim, and thus get the higher price.
P.
258 U. S.
200.
2. Under the Act of March 3, 1883, c. 141, § 5, 22 Stat. 599,
governing sales of vessels not needed for the Navy, the President
is empowered to direct a departure from the prescribed manner of
sale, and his direction to the Secretary of the Navy to sell "for
such price as he shall approve," empowered the latter to sell to
the lower of two bidders, notwithstanding the advertisement was
that the sale would be to the highest bidder. P.
258 U. S.
201.
3. The Secretary, overlooking a higher bid by mistake, approved
a lower one as the highest and issued a bill of sale of the vessel
accordingly.
Held that his action was conclusive in favor
of the lower bidder, and that the mistake, not attributable to the
latter, gave the competitor no equitable claim to the title. P.
258 U. S.
201.
4. An appeal here from a decision of the circuit court of
appeals adjudging property to one of two interpleaded defendants
held not affected by entry of decree, under that court's
mandate, in the district court, and the act of the plaintiff in
delivering the property under it. P.
258 U. S.
202.
267 F. 692 reversed.
Appeal from a decree of the circuit court of appeals which
reversed a decree of the district court in favor of Levinson and
adverse to Johnson in a suit in the nature of an interpleader
brought against them by the United States to determine their
respective rights in a vessel.
Page 258 U. S. 199
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a controversy between the appellant, Levinson, and
Johnson, one of the appellees, as to which of the two is entitled
to the steam yacht
Wadena. The yacht had been taken for
the purposes of the late war, and subsequently was offered for
public sale by the Secretary of the Navy in pursuance of an
Executive Order of January 7,
Page 258 U. S. 200
1919, authorized by the Act of March 3, 1883, c. 141, § 5, 22
Stat. 599. Levinson sent in a bid complying with the terms of the
offer, was declared the highest bidder, and sent his check for the
residue above the required deposit. Thereupon he received a bill of
sale under the seal of the Department dated September 3, 1919,
acknowledging that he had become the legal purchaser and had paid
the price and stating that the vessel "is hereby delivered to and
declared to be the property of the said Morris Levinson." On
September 8, it was discovered that Johnson had sent in a higher
bid which had been misplaced and overlooked. After making the
discovery, the Navy Department refused to give up the
Wadena to Levinson, and attempted to rescind the
transaction with him. He insisted on his rights, and Johnson, on
his side, offered to pay the amount of his bid and also demanded
delivery of the yacht. The United States thereupon brought the
present bill to determine the rights of the parties, and although
it did not stand indifferent and has endeavored to maintain
Johnson's right, and so to set the higher price, not to speak of
Levinson's claim in contract, still as all parties consented to the
jurisdiction, we do not feel called upon to raise a question upon
that score.
See McGowan v. Parish, 237 U.
S. 285,
237 U. S. 295
et seq.
The district court decided in favor of Levinson. Both Johnson
and the United States appealed. The circuit court of appeals
dismissed the appeal of the United States on the ground that it was
a mere stakeholder, but, one Judge dissenting, reversed the decree
of the district court and decided in favor of Johnson on the ground
that the Secretary of the Navy had no authority to accept any other
than what was the highest bid in fact. 267 F. 692.
We are of opinion that the circuit court of appeals construed
the authority of the Secretary of the Navy too narrowly, and that
the decision of the district court was right. The Act of 1883, § 5,
provides for an appraisal
Page 258 U. S. 201
and an advertisement for three months setting forth the
appraised value and that the vessel will be sold to the offerer of
the highest price above the appraised value, etc. The section
concludes:
"But no vessel of the Navy shall hereafter be sold in any other
manner than herein provided, or for less than such appraised value
unless the President of the United States shall otherwise direct in
writing."
The power of the President to direct a departure from the
statute is not confined to a sale for less than the appraised
value, but extends to the manner of the sale. The word "unless"
qualifies both the requirements of the concluding clause. The
executive order seemingly so construes the statute, for it merely
provides that, if the former owner of the vessel will not purchase
at the appraised value, the Secretary of the Navy shall sell at
public sale "for such price as he shall approve." The Secretary
construed the order to like effect. He did not advertise for three
months, and he allowed a variation from the statute in the form of
deposit required.
It seems to us that the practices of ordinary business dealing
ought so far to bind the United States that the ostensible
authority given by the executive order, the Secretary's declaration
that Levinson's bid was the highest, his approval of the price, and
his execution of a bill of sale, should be held conclusive in favor
of Levinson. The fact that the Secretary advertised that he would
sell to the highest bidder could not limit his authority or
diminish the effect of his acts. Even if Johnson's bid had made a
contract automatically by being the highest, it would not follow
that Levinson's title was bad. But a bid had no such effect, as the
right to reject it was reserved. We can see no justification beyond
the wish to secure a higher price, for the refusal to allow the
appellant to remove his yacht. The title passed to him upon the
execution of the bill of sale.
Hatch v. Oil Co.,
100 U. S. 124.
Page 258 U. S. 202
It is suggested that there is no longer a question before the
Court, because it is said that the district court entered a decree
in pursuance of the decision of the circuit court of appeals and
that the Navy Department thereupon delivered the yacht to Johnson.
This was a further departure from the position of stakeholder
assumed by the United States, but cannot affect the decree to be
entered upon its bill. It is urged for Johnson that there was a
mistake that relieved the government. There was no mistake that
Levinson had anything to do with or that would warrant a court of
equity in requiring him to give up the title that he acquired.
Decree of circuit court of appeals reversed.
MR. JUSTICE CLARKE was absent, and took no part in the
decision.
MR. JUSTICE McKENNA dissenting.
The opinion, in my view, gives too much prominence to the action
of the Navy Department and, in effect, determines the case by it as
if the controversy were between the Department and Levinson, and
not between him and Johnson. It caused the controversy, indeed, and
by its mistake gave a right to Levinson to which Johnson was
entitled. Has the law no redress for the injury thus inflicted? It
would be a reproach to it if it have not.
Let me repeat the facts. In pursuance of a statute, and in the
manner directed by it, the Navy Department offered the yacht
Wadena for sale. It was the duty of the Department to the
government, of which it was an instrument to accept the highest
bid, and it owed a duty as well to him who should be the highest
bidder. Johnson responded to the offer of sale, and his bid was the
highest. By mistake, however, the bid was assigned to a boat of
similar name. In consequence of the mistake, Levinson was
considered the highest bidder, and a bill of sale was issued to
him. Before the delivery of the yacht, however,
Page 258 U. S. 203
the mistake was discovered and the yacht was retained by the
Department. This being the situation, the Department, not in its
own interest, not in partiality to either claimant, caused this
suit to be brought that the rights of the claimants could be
adjudicated. The suit is a disclaimer of interest or favor; it is
in the nature of a bill of interpleader, and the contest is
remitted to the interpleaded, Levinson and Johnson, and the law of
their rights. And that law is dependent upon what they did, not
upon what the Navy Department did -- by the priorities between
them, not by a chance advantage. These are the elements that should
determine judgment, whether we assign to accident or mistake the
action of the Department in declaring Levinson to be the purchaser
of the yacht. I need not dwell upon the sufficiency of either as a
ground of relief.
Accident is said to be one of the oldest heads of equity
jurisdiction, and a learned authority says its first and principal
requisite is that, by an event not expected nor one party has
without fault and undesignedly undergone some legal loss while
another party has acquired a legal right, which it is contrary to
good conscience for him to retain and enforce. 2 Pomeroy, §
824.
The requisites and consequences are in this case, and exhibit
the relative situations and rights of Levinson and Johnson.
Levinson has acquired a right to which Johnson was entitled and
which Johnson lost by an accident to which he was not a
contributor. The law, in its sufficiency and prudence, meets such
contingent happening and gives a remedy to prevent or redress its
injury. That Levinson was given a bill of sale is not a serious
deterrent. As the bill of sale could have been refused, it can be
disregarded as an element of decision.
Mistake as well as accident (mistake may be considered a
corollary of accident) is a ground of relief which the law's
remedial consideration furnishes for the redress of
Page 258 U. S. 204
injustice. And that a mistake was made cannot be denied, and to
which no act or negligence of Johnson was accessory. He responded
to the solicitation of the Navy Department executing the law, and
he was entitled to the preference that the law commanded. It was
given to another by mistake. The law will not permit him to retain
it, and this is a necessary deduction, I confidently believe and
therefore confidently express, though it is opposed by the judgment
of my brethren. I repeat -- that there was a mistake cannot be
disputed, and I cannot think that its consummation protects it from
correction and that a remedy should be denied because it is needed,
all of its conditions existing.
It was the view of the circuit court of appeals in a well
reasoned opinion that the Secretary of the Navy had "no authority
to deliver the bill of sale to Levinson," but was "bound to deliver
it to Johnson." There is much to sustain the decision; I, however,
base my dissent upon the views that I have expressed, and think
that the judgment of the circuit court of appeals should be
affirmed.