Thayer v. Pressey

56 N.E. 5, 175 Mass. 225, 1900 Mass. LEXIS 740

• Court: Massachusetts Supreme Judicial Court
• Decided: January 25, 1900
• Status: Published

Opinion

Knowlton, J.

This case is reserved for our consideration on the bill and a demurrer which goes to the merits of the whole case. Ellen F. Pressey, hereinafter called the defendant, as she alone defends on the issues now raised, is the daughter and sole heir of John C. Howe, late of Worcester, deceased, and is the duly appointed administratrix of his.estate. As his legal representative she was paid about $67,000 by the treasurer of the United States under an act of Congress passed in April, 1898, which is as follows: “ Be it enacted, . . . That the Secretary of the Treasury be and he is hereby authorized and directed to pay to the legal representatives of John C. Howe, deceased, sixty-six thousand nine hundred and seven dollars out of any money in o the Treasury not otherwise appropriated, the same.being compensation in full for the use by the United States, to wit: in sixty-six million nine hundred and seven thousand three hundred and thirteen cup-anvil cartridges, of the invention secured to John C. Howe and his assigns by letters patent of the United States issued to him August sixteen, eighteen hundred and sixty-four, and numbered forty-three thousand eight hundred and fifty-one, during the entire term of said letters patent, as appears in the findings of law and of fact made by the United States circuit court for the district of Connecticut in the case of Forehand and others versus Porter, reported in volume fifteen of the Federal Reporter at page two hundred and fifty-six, and as further appears in the findings of fact made by the Court of Claims, after full testimony and full hearing in Congressional case numbered one, entitled Forehand and others versus The United States, heard on reference of the matter to said Court of Claims by the Committee on Claims of the Senate, under and pursuant to the Act of March three, eighteen hundred and eighty-three, commonly known as the Bowman Act, said findings of fact having been certified to the Committee on Claims of the Senate by said court on the twenty-sixth day of April, eighteen hundred and eighty-nine.” This money, less $10,752 paid by order of the court on account of expenses, is on deposit to her credit in the defendant bank, and the plaintiffs contend that, by virtue of an assignment and certain contracts, it is charged with a trust in their favor for the sum of $25,500 expended in preliminary litigation and in prosecuting the claim before Congress, and also for two thirds of the balance as the share to which they are entitled under the assignment and contracts, less the amount of said payments made by order of the court, making the amount of their present claim $42,352. The last of these contracts was executed on June 15, 1894, by the defendant herself. Her father died on August 13,1892, and she was appointed administratrix on October 18,1892. The assignment and contracts set out in the bill, with the accompanying averments, present a case of strong equities in favor of the plaintiffs, unless the existence of the statutes and decisions on which the defendant relies so affects their conduct as to prevent their recovery. The defendant contends that the assignment and contracts under which the plaintiffs claim are void under the Revised Statutes of the United States, § 3477, which is as follows: “ All transfers and assignments made of any claim upon the United States, or any part or share thereof, or interest therein, whether absolute or conditional, and whatever may be the consideration therefor, and all powers of attorney, orders, or other authorities for receiving payment of any such claim, or of any part or share thereof, shall be absolutely null and void unless they are freely made and executed in the presence of at least two attesting witnesses after the allowance of such a claim, the ascertainment of the amount due and the issuing of a warrant for the payment thereof. Such transfers, assignments and powers of attorney must recite the warrant for payment, and must be acknowledged by the person making them before an officer having authority to take acknowledgments of deeds, and shall be certified by the officer; and it must appear by the certificate that the officer, at the time of the acknowledgment, read and fully explained the transfer, assignment, or warrant of attorney to the person acknowledging the same.” This statute is a re-enactment from the U. S. St. of February 26, 1853, which is entitled “An Act to prevent frauds upon the treasury of the United States,” and which has frequently been considered by the Supreme Court of the United States. 10 U. S. Sts. at Large, c. 81. In Spofford v. Kirk, 97 U. S. 484, it was held that a duly accepted order given by the holder of a claim against the United States in favor of a third person, upon one whom he had employed to collect the claim, and afterwards transferred to a purchaser for value, who took it in good faith, could not be enforced against the drawer upon the fund. Mr.. Justice Strong, in giving the opinion, said : “ 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 claimant upon the government from creating an interest in the claim in any other than himself.” Notwithstanding this strong general language, the court has since recognized exceptions to its universal inclusiveness. In Goodman v. Niblack, 102 U. S. 556, 559, 560, it is said that the mischiefs intended to be remedied by the statutes are, “ 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 a party 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.” The court then says that “ 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.” It was decided in this case that a voluntary assignment of a claim against the United States with other property by an insolvent debtor, with preferences, was valid, notwithstanding the statute. It had previously been held in Erwin v. United States, 97 U. S. 392, that the statute did not apply to assignments by operation of law, and that such claims passed by an assignment in bankruptcy. See Price v. Forrest, 173 U. S. 410.

The doctrine that “ the object of the statute was to protect the government and not the claimant, and to prevent frauds upon the treasury ” has been strongly stated in numerous other cases. See Freedman’s Saving & Trust Co. v. Shepherd, 127 U. S. 494; Bailey v. United States, 109 U. S. 432; Hobbs v. McLean, 117 U. S. 567. Accordingly, while the government may always disregard an assignment of a claim against it, there is a class of cases in which claims against the United States have been included in assignments and transfers and have passed from the assignor to the assignee with full effect between the parties, as incident to the general subject of the contract. Hobbs v. McLean, 117 U. S. 567, was a case where one having a contract with the United States to furnish army supplies, made an agreement with others whereby they were to become partners with him and have a share in the money to be received from the United States. It was held that such a transfer of an interest in the claim was valid as between the parties and was not within the statute. In Freedman’’s Saving Trust Co. v. Shepherd, 127 U. S. 494, the United States government was a lessee of real estate and liable to pay-rent, and on an assignment of the lease and the rent under it, it was held that there was nothing in this statute which invalidated the transaction as between the parties, the government haying chosen to recognize the assignment. In Barrow v. Milliken, 74 Fed. Rep. 612, it was decided by the Circuit Court of Appeals, while considering this statute, that a sugar planter might mortgage and pledge his crop and his claim for a bounty to be received from the United States, in such a way as to be effectual against himself and others claiming under him, although the claim had not been presented and allowed. The plaintiff in Jernegan v. Osborn, 155 Mass. 207, was the owner of one sixteenth part of the ship Europa, whose owners sustained losses by reason of services rendered by the ship in assisting in the rescue of nine hundred seamen in the Arctic seas. Afterwards he sold his interest in the ship to the managing owner, and still later he sold to the same person all his interest in the voyage in which the losses occurred, including “ any claims by the owners of said Europa against the United States government.” After-wards, by an act of Congress, an award was made to the owners of the vessel in full compensation for these losses, and it was held that the plaintiff’s share in the award passed to the defendant under the assignment, and that the statute did not render the assignment void as between the parties. In all these cases there was something more than a naked assignment of a claim for the purpose of collection and enjoyment, and in each of them the claim, as a part of the transaction, or as an incident, was of substantial importance. In only one case, so far as we know, where the assignment of the claim was an incident to a larger transaction, has it been said that the assignment was invalid as between the parties. In that case (St. Paul & Duluth Railroad v. United States, 112 U. S. 733) another ground for the decision is stated which is conclusive, namely, that there is no description in the conveyance sufficient to include the claim, and it is then said that if there were, the assignment of it would be invalid under the Revised Statutes of the United States, § 3477. The question whether it should make a difference that the assignment was a mere incident to the conveyance of the principal subject to which the conveyance related, apparently was not considered. In one of the latest cases in which the statute has been considered, the present Chief Justice of the United States speaks of “ the intent of Congress that an assignment of naked claims against the government for the purpose of suit, or in view of litigation or otherwise, should not be countenanced.” In the next sentence he treats the statute as analogous to the rule against maintenance and champerty. Hager v. Swayne, 149 U. S. 242, 247. In Marshall v. Baltimore & Ohio Railroad, 16 How. 314, 336, Mr. Justice Grier says of the statute, “ This act annuls all champertous contracts with agents of private claims.”

Another exception to the broadest application of this statute has been established. It has repeatedly been held that if the government has recognized the validity of an assignment which otherwise would be void under the act, the assignor is bound by the recognition which in terms be authorized. Bailey v. United States, 109 U. S. 432. Freedman’s Saving Trust Co. v. Shepherd, 127 U. S. 494. Goodman v. Niblack, 102 U. S. 556. The late case of Ball v. Halsell, 161 U. S. 72, does not change the doctrine of any of the cases above cited. The decision rests upon a different statute from that in question, namely, the U. S. St. of March 3, 1891, which applied directly to the claim then before the court, and was held to be constitutional. The reference to the former statute was principally to show how the legislation had grown up, and what were the inducements to the enactment of the later act.

In the present case Forehand, the plaintiff Thayer’s intestate, and his partner Wadsworth, who has since deceased, took from Howe, the defendant’s intestate, an assignment of his patent, together with all his rights and claims for past infringements of it. The claim against the United States for an infringement was one in which they would have an interest as purchasers of the patent. The establishment of the claim that the manufacture of cartridges by the United States was an infringement, might have an important effect upon the value of the patent in reference to existing conditions, as well as to a possible renewal of it. They prosecuted a suit in their own names in the Circuit Court of the United States, and obtained a decree upon the merits ordering an accounting, no question having been raised by the representatives of the United States as to the validity of their title under the assignment. So far as appears upon the bill, their title to the claim against the United States seems to be similar to those in the cases above cited, where there was not an assignment of a naked claim for the purpose of collection, but a conveyance of substantive property with which the claim was connected and to which it was in a sense incident. So, too, their claim was similar to others above referred to, in having been recognized by. the government. Throughout the litigation in the Circuit Court of the United States the government, by its representatives, assumed that their title was good, and contested the claim only on the question whether the manufacture was an infringement of the patent. Moreover, the act of Congress first above quoted and the averments of the bill show that the money was given upon proceedings pending before Congress in the names of the assignees, and purporting to be for their benefit, and that the appropriation was in compensation for the use shown in the case in the Circuit Court of the United States prosecuted by the assignees. The findings of law and of facts in two cases prosecuted in the names of the assignees are adopted into the statute and made the foundation of the appropriation. The term “legal representatives,” used in the act, ordinarily means executors or administrators ; but it is a broad expression which may'refer to heirs, or to others who represent rights by succession under a conveyance. See Lodge v. Weld, 139 Mass. 499, 504. The power of sale in a common form of mortgage in this Commonwealth is to “ the mortgagee and his legal representatives,” which certainly gives the authority to assignees of the mortgage as well as to executors or administrators. It is to be noticed in the present case that when the statute was passed, the defendant had for a long time been the sole administratrix of John C. Howe’s estate, and this must be presumed to have been known when the bill was enacted. In view of the nature of the assignment from Howe, as stated in the bill, and in view of the recognition of the assignees by the representatives of the government, we are of opinion that the statute is no.t to be interpreted as giving the money to the defendant to be wholly distributed as a part of her father’s estate, but to be disposed of according to the interests then existing under the assignment of the patent and the claims for an infringement of it, and under the contract which Howe had subsequently made in reference thereto. There is the more reason for so holding, inasmuch as the defendant, after her father’s death, recognized the assignment and this contract in the most formal way, before the act of Congress was passed, and solemnly contracted that if the plaintiffs would continue to prosecute the claim she would transfer the treasury warrant for the payment of the proceeds as soon as it should be issued, to joint trustees, to collect the same and make distribution. Neither this contract which she made, nor the last contract of her father which she adopted, purported to be an assignment. He had previously made as effectual an assignment as he was capable of making.

It is contended in her behalf that she had no authority as administratrix to make such a contract. There is strong ground for an argument that the relation of her father’s estate to the claim under the assignment and the proceedings in court and before Congress and under the contract of November 8, 1889, recognizing the title of the assignees, was such as to make it proper for her to contract as she did. Whether as administratrix she could bind the estate in this way or not, so far as she undertook to bind herself and her interest as sole heir at law, it would be most inequitable to permit her to repudiate her agreement.

All that we have said is applicable to the claim of Thayer, administrator of Forehand, who with Wadsworth was one of the two original assignees. The bill avers that since the death of Wadsworth Forehand has been the owner of his legal interest as surviving partner, and that Thayer as administrator represents the entire claim, except as it is affected by the assignment from Wadsworth to Blake as collateral security for the payment of a note for $5,000, and by the agreement with the plaintiff Perry, and the subsequent agreements with Howe and with the defendant. That the equitable claims under the original assignment to Forehand and Wadsworth should be held to be good under the act of Congress we feel very certain. In regard to the claim of Perry we have more doubt. Perhaps we may presume that Congress, when it directed payment to the legal representatives of Howe and referred to the claims of the assignees, was aware of the facts in regard to the title, and that the act was passed in reference to Howe’s contract of November 8, 1889, and the subsequent contract of the defendant. Congress was legislating in regard to a title held by legal representatives, and it is fair to assume that it thoroughly understood the subject of the legislation. In that view, whether the original contract .with Perry was valid or not, inasmuch as these la,ter contracts had reference to a claim already assigned by Howe to Forehand and Wadsworth under an assignment which appears to have been proper, and to have been recognized by the government, perhaps we properly may infer an intent on the part of Congress that the money should be held and distributed by the defendant under these contracts. Seemingly, by agreement of the plaintiffs, Perry is joined as a plaintiff with the administrator of Forehand, whose title we have no hesitation- in upholding, and there is no demurrer to his claim, except that which is included in the demurrer to the whole title of the plaintiffs. Apparently it will make no difference to the defendant whether the suit proceeds in the names of both plaintiffs or in the name of Thayer, administrator, alone. This part of the case has not been argued by the defendant, and we do no.t know that she cares to object to Perry’s claim, if the only effect of the objection would be to leave his share in the hands of Thayer. These last contracts seem to have been advantageous to Howe’s estate, and as their validity is assumed by all the other parties, and as there is no demurrer applying particularly to Perry’s title, we are not inclined to sustain the defendant’s demurrer on account of Perry’s plaim under them, or on account of the assignment to Blake.

The defendant demurs to the bill because no copy of the original assignments is annexed and no sufficient statement of their contents is set out. We are of opinion that the plaintiffs were not bound to annex a copy of the assignments nor to state the substance of their provisions in detail. They were bound to state all the substantive facts on which their right to relief depends, among which is their title to a share in the fund. This they sufficiently set forth when they state that they are the owners by assignments in writing, from the patentee of all his right, title, and interest in and to any and all claims for past infringement, and show that the fund was appropriated by Congress as compensation for an infringement of the patent. See Story, Eq. Pl. §§ 257 et seq.; 6 Encyc. of Pl. & Pr. 287, and notes. Demurrer overruled.