Forrest v. Price

52 N.J. Eq. 16

• Court: New Jersey Court of Chancery
• Decided: October 15, 1893
• Status: Published

Opinion

The Chancellor.

The proceeding in which the orders contemned were made is designed to quickly discover and secure assets of a judgment debtor which cannot be reached by execution, and among them moneys due to the judgment debtor from another or others. When it is made to appear that there are such moneys, the statute expressly authorizes the court of chancery to restrain the debtor from transferring them and to require him to assign and deliver them to a receiver. Rev. p. 121.

It is not controverted that when the court took action in the present matter, by the orders in question, the defendant Price had become .entitled to moneys from the United States government. The act of congress had established his claim and the proper accounting officers had ascertained it. It remained only for the defendant to receipt for the moneys and obtain possession of them. They were in substance his property. Goreley v. Butler, 147 Mass. 8, 10; affirmed by the United States Supreme Court, 146 U. S. 303.

It was after the sum due to defendant was ascertained that the court, by its order, forbade the^defendant to endorse or transfer any drafts that might be delivered to him in payment of his property, and to assign to its receiver all moneys that remained undrawn from the- United States treasury.

It is no excuse in a proceeding for contempt that the orders contemned are erroneous in law. The method of correcting such error is by appeal, not by disobedience. When a person is proceeded against for disobedience to an order or judgment, he cannot allege in defence that, the court erred in that order or judgment. To be successful he must go further and make out that there was, in legal effect, no order, by showing that the court had no right to judge between the parties upon the subject People v. Sturtevant, 9 N. Y. 263, 266; Una v. Dodd, 12 Stew. Eq. 173, 180; S. C. on appeal, 13 Stew. Eq. 672, 706. Recognizing this well-established principle, the defendant denies the jurisdiction of the court to make the orders here in question, upon three grounds — -first, because the fund is a governmental bounty to him, designed for his personal maintenance and comfort, and therefore is not liable to application to the satisfaction of the judgment of the complainant, however meritorious it may be; second, because the restraint of the endorsement of the .governmental drafts tended to interfere with and delay the fiscal •operations of the government; and, third, because the assignment •of the moneys to a receiver, as contemplated by the orders of ■October 10th, 1892, and December 21st, 1893, would contravene the letter and policy of the law enacted in the three thousand four hundred and seventy-seventh section of the Revised Statutes of the United States and be a nullity.

In Munday v. Vail, 5 Vr. 418, 422, Chief-Justice Beasley defined jurisdiction to be the right to adjudicate the subject-matter in a given case, to constitute which it is essential that the court must have cognizance of the class of cases to which the one adjudged belongs; that the proper parties shall be before the •court, and that the point decided must, in substance and effect, be within the issue made by the pleadings. Testing the present case by the definition thus given, we first ascertain that its subject-matter is the application of the defendant’s established and .ascertained property in possession of the United States to the •satisfaction of the complainant’s judgment. That this court has •cognizance of this class of cases is not disputed. The defendant is regularly before the court, and the points to be decided are clearly within the issues presented by the pleadings. To urge that the particular money in question is exempt from the application desired, is to present a defence upon the merits of the case, .and to object that the temporary restraint of the-endorsement of •drafts will hinder and delay the fiscal operations of the United States, is to offer a reason why the court should not continue its temporary restraint, and so the insistment that, under the section •of the United States Revised Statutes which has been referred to, the assignment to a receiver would be a nullity, may be a reason why the court should not order it to be made. None of these matters, however, go to the court’s jurisdiction — they are defences properly belonging in the cause which the court has power to adjudicate upon. If the court err in that adjudication, the remedy is by appeal.

Confesión is avoided by bearing in mind that this suit is not a proceeding against the United States nor directly against a fund in its possession, but a proceeding in personam against the defendant Price.

But, assuming that the contentions of the defendant properly question the court’s jurisdiction, let us examine their merits.

Uo tenable ground upon which the first can be rested has been suggested in behalf of the defendant. His connection with the United States navy was severed some forty or more years ago. It does not appear that he now owes the government any duty, for which this fend is designed to maintain him. The case bears no resemblance to the unearned half pay of a retired officer, which is protected because of the service he may be called upon to render. Schwenk v. Wyckoff, 1 Dick. Ch. Rep. 560. I apprehend that a claim actually established, so that it now is property of the claimant, even though it spring from pure bounty, is not, in absence of express legislative provision to the contrary, exempt from the claimant’s debts. The act for the relief of the defendant does not intimate that the provision it makes is a sacred bounty.

But it affirmatively appears that the money, of which the statute authorizes payment, though not a legal claim, is not pure governmental bounty.

The provision in the act for the relief of the defendant Price, that payment should be made to him “ or his heirs,” has been urged as indicative of the legislative intention that the payment was not intended to benefit creditors. I do not so understand the act. The expression “ or his heirs ” was undoubtedly a provision against his death before the day of payment, and there can be no substantial doubt that it is used in the sense of personal representatives, the thing dealt with being personalty, and appears in the act to secure the moneys to his estate in the event of his death before they are paid.

The direction of the statute is to credit the defendant with a sum of money which he, many years ago, loaned to an officer and agent of the government for the use of the United States, and which that officer received in his official capacity for the purposes of the government. That officer was the successor of the defendant in a mission in which the defendant had been specially charged with the duty of going into a new and unsettled country, at a time when the inhabitants, as history records, had become mad in speculations, to establish a credit for the government. The method of establishing that credit, it is true, was prescribed, but it was difficult to literally follow the requirements of the prescription. Exigencies demanded that moneys .should be had. Of necessity, the government officials, five thousand miles, in course of usual travel, from home, were obliged to exercise some discretion. It was in this situation that the defendant Price advanced to his successor $75,000 of his private moneys for the use of the United States. The receipt of such a loan for the government was beyond the scope of that successor’s authority, and the moneys never having, in fact, been applied to the use of the government, the receipt of them was not ratified or recognized, and hence the defendant was subjected to a loss.

After many years, congress reviewed the transaction, and, recognizing in it a moral obligation upon the United States, directed that credit be made to the defendant for the amount of his advance. The environments of the whole situation, when the loan to "Van Nostrand was made, evinced to congress an appropriateness in the transaction and admitted of the advance being made in good faith, for the benefit and convenience of the United States. That it was made in good faith does not appear to have been doubted. The congressional proceedings show that it was upon consideration of these facts that the burden of the loss, without interest, was thrown by congress upon the public treasury. The statute was designed to restore to the defendant his property, which, in good faith, he had entrusted to an officer of the United States for the benefit of his principal.

I do not find in this situation even the bounty of a grateful government, partaking of the character of a pension or reward for a meritorious deed, but simply the restitution of property which had once belonged to the defendant, as assets for the liquidation of his pecuniary obligations; and I fail to understand how, upon its restoration to the defendant, it can be held to assume a new character.

Upon the second insistment, it is not perceived how the restraint of the endorsements of any drafts which should be delivered to the defendant pending the return day of the order to show cause, dated August 8th, 1892, would have materially interfered with the fiscal operations of the government. The restraint operated upon the defendant, not upon the government. It substantially forbade him to draw the money upon the drafts, leaving the government to pursue such course in the event of his failure to draw, that its regulations or practice permitted. Besides, the restraint was limited to a short day, when the defendant would be heard upon the question whether a receiver should be appointed. That delay, in point of fact, proved to be exactly one week from the delivery of the drafts. It has not been suggested how such a delay could operate prejudicially to the public service. I am not referred to any law, rules, regulations or policy of the governmental departments which show that such a delay, or kindred delays, can so operate. That it did not infringe governmental regulations amply appears by the fact that two of the four drafts were not endorsed and presented by the defendant for payment until the 3d of October, and were then paid, so far as appears, without objection.

It is unnecessary, under this state of facts, to discuss the question whether this court would have power to make an order which would directly or indirectly inconvenience and impede the fiscal operations of the United States. The order in question does not appear to have been of that character.

The third insistment of the defendant that an assignment of moneys in the United States treasury, as directed by the orders of October 10th, 1892, and December 21st, 1893, to the receiver, would contravene the policy of the law of the United States, and that, therefore, the orders were not within the jurisdiction of this court, remains to be considered. Upon this insistment the greatest stress had been laid. It is to be observed that the section of the Revised Statutes which is referred to declares that all assignments of claims upon the United States shall be absolutely null and void unless they are freely made after, the allowance of the claim, the ascertainment of the amount due and the issuance of a warrant for its payment. This section was taken from a statute of 1853, which was entitled “An act to prevent frauds upon the treasury of the United Stales.” The purpose of congress, in its enactment, inferentially was to protect the government from the necessity of dealing with those who were not directly and originally concerned in the claim — that is, with strangers to it whose numbers and possibly merely speculative interests in it might embarrass its speedy and just allowance or denial. Spofford v. Kirk, 97 U. S. 484; Goodman v. Niblack, 102 U. S. 556; Bailey v. United, States, 109 U. S. 432; Freedman’s Savings and Trust Co. v. Shepherd, 127 U. S. 494.

Viewed in the light of a protection to the government, it has been held that the statute is not to be interpreted according to the literal acceptation of the words it uses. In the case of Erwin v. United States, 97 U. S. 392, it was ruled that the statute applied to cases of voluntary assignments of demands against the government and did not embrace cases where the title was transferred by operation of law, such as the passing-of claims to heirs, devisees or assignees in bankruptcy, and, upon the same reasoning, in Goodman v. Niblack, supra, it was. adjudged that it did not extend to a voluntary assignment for the benefit of creditors, and in Bailey v. United States, supra, it "was held that the officers of the government might safely pay according to an unrevoked power of attorney if they saw fit to do so. So a partnership agreement to carry out a governmental contract, held by one of the partners, which subjected the moneys earned from the government under.the contract to the rights of other partners, was not regarded as within the policy of the act. Hobbs v. McLean, 117 U. S. 567.

It is not perceived that the assignment and consent to payment to the receiver in the present case differs in principle from an assignment to an assignee in bankruptcy, or to an assignee under a voluntary assignment for the benefit of creditors. The reason underlying the adjudications which exclude those cases from the operation of the statute is stated by Mr. Justice Miller, in Goodman v. Niblack, in this language, “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 ; that in such cases the exigencies of the party who held the claim justified and required the transfer that was made.”

This reasoning is not a whit less pertinent in its application to .the present receivership than in its application to either of the assignees adjudicated upon. The receiver here is actuated, in the performance of his trust, by the identical motives and desires which actuate assignees in bankruptcy and under voluntary assignments for creditors.

I am therefore of opinion that the assignment which was required from the defendant Price was not within the inhibition of the United States law.

In reviewing the disobedience of the defendant, I am strongly impressed that the objections now interposed are mere subterfuges urged to secure his escape from punishment for a deliberate defiance of the court’s authority.

It is remembered that, when the order of August 8th, 1892, forbidding the endorsement of drafts, was first served upon the defendant, the drafts were not in his possession, and that, with the plain command of that order before him, he went to Washington and there obtained the drafts, and upon the same day, although it was only a week before the time fixed for hearing in this court, he deliberately endorsed two of the drafts. Then holding the two remaining drafts until after he had procured an adjournment of the hearing upon the order to show cause, upon terms which continued the restraint upon him, he endorsed those two remaining drafts, obtained the money upon them and departed from the state so that the court’s process could not be served upon him, and practically remained without the reach of that process for fully nine months. Furthermore, after he was served with the writ of attachment and examined upon interrogatories, he refused to assign to the receiver or to consent to the receiver’s having the moneys remaining in the United States treasury. These circumstances, with other surroundings of his disobedience, convince me that his intention was not to surrender his moneys to the court’s receiver, and if, in carrying out that intention, it was necessary to disobey the court’s order, he would do so. Such intention carried into effect is, without question, a punishable contempt. State v. Trumbull, 1 South. 157; Fraas v. Barlement, 10 C. E. Gr. 84; Una v. Dodd, 13 Stew. Eq. 672, 719. The exercise of the court’s power to punish has a twofold aspect — -first, the proper punishment of the guilty party for his disrespect of the court or its order, and second, to compel performance of some act or duty required of him by the court, which he refuses to perform. In re Chiles, 22 Wall. 157; Stimpson v. Putnam, 41 Vt. 238. In the former case, the court, having regard to the gravity of the offence, must itself determine the nature and extent of the punishment, and in the latter case, the party refusing to obey should be fined and imprisoned until he performs the acts required of him, or shows that it is not in his power to do so. Our Chancery act (Rev. p. 123 § 103) is in harmony with this general principle. It provides that where a person shall be adjudged to be in contempt, before be is released or discharged, he shall pay to the clerk in chancery, for the use of the state, a sum not exceeding $50 as a fine for the contempt, and, being in court on process of contempt or otherwise, shall stand committed and remain in close custody until the court’s order shall be obeyed and until the fine imposed, with the costs, be fully paid. By infraction of the court’s order of August 8th, 1892, the defendant has possessed himself of $31,704.08 in moneys. It is within his power to make amends for his disobedience to the extent of paying those moneys to the receiver appointed herein. It is also within his power to obey the order of December 21st, 1893, but I assume it is not within his power to restore the draft for $13,500 or the moneys which it called for. I do not forget the injunction of the supreme court of the District of Columbia. It does not forbid the defendant to request the United States authorities to pay the moneys to the receiver and to assent to such payment. Such an act may be of great value to the receiver, for it will fully protect the treasury officials (Bailey v. United States, supra), and when the object of the injunction is considered it is conspicuous that its intent and meaning is not to prevent an assignment to the receiver, but, on the contrary, to protect him from assignments which may render it impossible for him hereafter to secure the money.

I will make this disposition of this matter: I will fine the defendant Rodman M. Price, for his contempt, the sum of $50, to be paid to the clerk in chancery for the use of the state, and will order him to pay the $31,704.08 above mentioned, within five days from the service upon him of a copy of the order or decree hereon, and order that unless the fine be paid to the clerk, and the said moneys be paid to the receiver, and the directions of the order of December 21st, 1893, be specifically complied with, and the costs of these proceedings in contempt be paid within five days from the service of such order, that the defendant shall be committed to the common jail of the county of Bergen, there to remain in close custody until he shall make said payments and comply with said order of the 21st of December, 1893, unless the court shall deem it proper, for good reason shown, to sooner discharge him.