Case ID: us-ct-cl_32/html/0368-01.html
Source: Caselaw Access Project
Author: {"author": "Nott, Oh. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

TRANQUILINO LABADIE, Administrator, v. THE UNITED STATES AND THE CHEYENNE INDIANS. GEORGE W. KERR, Administrator, v. THE SAME.
    [Indian Depredations, 1774, 6376.
    Decided April 19, 1897.]
    
      On the claimant’s Demurrer.
    
    Partners present a petition to tlie Secretary of the Interior and severally sign and make oath to it. One partner dies. His widow continues to prosecute the claim. It is finally “ allowed to W. S. M. and the heirs of W. C. M.” The administrator of the surviving partner firings suit to recover the whole award; the administrator of the other, to recover a moiety. The United States plead a set-off against the surviving partner, individually, which if maintained will absorb the whole of the award. The claimant demurs to the plea. The administrator of the other party comes into court and asks to fie heard as to his moiety of the award.
    I.The theory of the common law is.that a debt due to partners is due to them jointly; and upon the death of one the sole right survives in rhe other.
    II.In the Indian depredation cases there is no obligation known to the law as a debt. The claims rest on a promise or moral obligation, but, not being legal demands, fall within the classification of gratuities.
    III.In giving a legal character to claims which in law are gratuities, Congress may impose conditions and give preferences and make exclusions.
    IY. The Indian Depredation Act, 1891, excludes assignees and creditors and deals with the succession of such claims in a manner differing from the rule of the common law.
    Y. The widow and next of kin of a deceased partner are claimants within the.intent of the statute, and their right to a moiety of an award for partnership property will be protected by the court.
    YI. The Government can not in an Indian depredation case maintain a set-off or counter claim against one partner, individually, to a greater extent than his individual interest in the award of the Secretary of the Interior.
    YII. The Government can maintain such a set-off against one partner’s individual interest in an allowed case which neither party has reopened.
    
      The Reporters’ statement of the case:
    The allegations of the defendants’ plea of set-off and the record of the two cases are stated in the opinion of the court.
    
      
      Mr. G. P. Montague (with whom was Mr. J. B. Agneio) for the demurrer:
    It is hardly necessary to cite authorities to the fact that the contract of suretyship is to be strictly construed.
    “Nothing can be clearer, both upon principle and authority, than the doctrine that the liability of a surety is not to be extended by implication beyond the terms of his contract. To the extent, and in the manner, and under the circumstances pointed out in his obligations, he is bound, and no further.” {Miller y. Stewart, 9 Wheaton (U. S.), 680.)
    “The law is too well settled to admit of discussion that sureties are favorites of the law and are not bound beyond the strict terms of the engagement; that their liability is not to be extended by implication beyond the terms of their contract, which contract is said to be strietissimi juris.” {Lafayette v. Jemes, 92 Ind., 240; 24 Encyclopedia of Law, 749, etc.)
    The principle of strict construction applies to cases where the United States is a party, as well as to controversies between private persons. Thus, for example, United States v. Convine (1 Bond (U. S.), 339), cited in 24 Encyclopedia of Law, 837, in a case where a slight change in the contract was held to discharge the surety, though the change was favorable both to the principal and the surety.
    In the case at bar it is contended that the formal acceptance by the President of Major Bhett’s, the principal’s, resignation, coupled with the failure on the part of the United States to take any action for more than twenty years to collect the alleged indebtedness, shows that it was the intention of the Government to regard any claim it otherwise might have had against Major Bhett as settled, and that the acts and omissions of the Govertment had the legal effect of releasing the principal and consequently the surety as well.
    The distinction between principal and surety is not destroyed by judgment.
    “A surety is entitled to the same rights after judgment has been rendered against him as before, and any act upon the part of the creditor which would have released the surety before judgment will equally release him afterwards.” — (24 En cy.. of Law, 748, and cases cited.)
    In this particular case where judgment appears to have been obtained against the surety without interpleading the principal, if the surety did pay the judgment and bring suit against his principal for the amount so paid, be would, it is thought, be unable to recover for the reason that the principal could successfully interpose the plea that the acts and omissions of the Government operated as a settlement of his accounts and a release to him of all liability. If, therefore, the surety can not recover against the principal, in case he (the surety) should pay the judgment, for the reason that the principal could plead payment and satisfaction of the original indebtedness, it surely follows that the surety *can not be called upon to pay it at all. The surety must certainly be discharged, even after judgment, if, as it is confidently contended, the acts and omissions of the Government operated to discharge the principal.
    The claim in the present suit is a partnership claim against the United States and. the Indians, while the set-off consists of judgments against one of the partners on an individual liability owing to the United States alone.
    There is, therefore, in this case a double want of mutuality.
    The general rule is that “ those demands only can be set off which are due from and to all the parties to the action.”
    “ The authorities are very clear,” says Butler, J., in Kenedy v. Cunningham Cheves (S. 0.), 50, “that a single defendant can not set off a demand due to himself from on e of a number of joint plaintiffs;” and again, in the same case: “The rule analyzed and reduced to simplicity is this: To an action by two persons, the defendant can not set.off a debt due him from one of them; nor can one of several joint defendants set off a debt due to him alone from the plaintiff.” (See Ency. of Law, p. 290, and cases cited.)
    Further, it has been expressly decided by this court in the Boehm Case (20 O. Ols. B.., 142), in an opinion delivered by the present Chief Justice, that a judgment against individual members of a firm can not be set off against a firm debt or demand. ■
    Thus far the authorities seem to be clear against the right of set-off in the case at bar. The case, however, is brought in the name of the surviving partner, which introduces a new element, for “ on the death of one of two or more joint creditors or debtors, the legal right or liability survives and vests in law exclusively in or against the remaining creditor or debtor.” (22 Ency, of Law, p. i96.)
    
      The same authority proceeds to give several illustrations of the effect of this principle of law, and sums up by saying: “So far, at least, the rights of the representatives of the deceased partner and of the partnership creditors are not affected. But it has been doubted whether, when the suit is for a debt due to the partnership, the defendant can set off a debt separately due by the plaintiff,” and goes on to say, in effect, that on the last proposition the authorities are divided.
    JVhile it is not denied that there are authorities both ways, it .is submitted that the better reason as well as authority favors a disallowance of the set-off.
    ■ Jn Wain v. Reíos (5 S. & B,. (Pa.), 471), a case decided in 1820, cited in Encyclopaedia of Law, page 296, note, the court, by Gibson, J., observes:
    “There is no case to show that where the suit is for a debt due to the partnership, the defendant can set off a debt separately due by the plaintiff, for though a surviving partner may choose to treat a partnership debt as due to him in bis own right, it does not follow that a defendant sued for a debt separately due has a corresponding right. And even if he had such a right at law, a court of equity, if the surviving partner were insolvent, would doubtless interfere to prevent it from being exercised.”
    See also Olay v. Freeman (118 IT. S. Sup. 0., 97), where Bradley, J., after stating that partnership assets are subject to a lien for partnership debts, goes on to say:
    “ The proposition that the partnership property can betaken out of the surviving partner’s hands and distributed amongst the several partners and their representatives without a settlement and payment of the partnership debts, including any balance due the surviving partner, is a proposition that equity will not for a moment entertain.”
    While these authorities may not decide the exact point in issue except by implication, they do go to show that partnership property is not to be diverted to the payment of the private debts of one member of the firm until the debts of the firm have been ascertained and settled, nor at the sacrifice of the rights and interests of the other partners in the partnership property.
    Moreover, the doctrine of surviving partner is mainly legal and technical, and it should not be extended so as to work injustice.
    
      Finally, in this case the want of mutuality is double, and I have found no authority whatever for the right to set off the claim of one of several defendants against the claim of a surviving partner in his representative capacity. Even allowing the doctrine of surviving partner the fullest scope that may be claimed for it, such a claim of set-off is clearly in autre droit.
    
      Mr. Richard 11. Spencer for George W. Kerr, administrator, etc.:
    If the court should come to the conclusion that, under the ordinary rules of partnership), the set off by the Government should apply to the whole claim due the partnership of W. H. Moore & Co., yet this claim is not within the ordinary rules of partnership, for under section 9 of the act of March 3,1891, it is provided that “ all warrants issued by the Secretary of the Treasury in payment of such judgments shall be made payable and delivered only to the claimant or his lawful heirs, executors or administrators, or transferee under administrative proceedings,” etc., manifestly contemplating that the heirs should have the first right to the proceeds of these claims, and hence the personal representative of the heirs of William C. Mitchell, deceased, George W. Kerr, the administrator of the estate, claimant in case No. 6376, should collect this sum due, and not the personal representative of the surviving partner; at least this should be so where there are no debts and no partnership estate to be wound or settled up, and where the payment has already been directed to be made directly to the heirs.
    The last award of the Interior Department for $22,950, being the amount sued for by Labadie, administrator, etc., claimant in case No. 1474, and upon which award George W. Kerr, administrator of the estate of William 0. Mitchell, deceased, sues and asks for a separate judgment for one-half of said award, to wit, $1.1,475, is to William H. Moore and the heirs of William 0, Mitchell, deceased. Such being the case, should not the final judgment of this court be in conformity with that award! If so, the set-off by the Government, consisting of judgments against Moore, one of the former partners, manifestly can not apply to these heirs or their personal representative, the claimant in case No. 6376, George' W. Kerr, administrator of the estate of William 0. Mitchell, deceased, and particularly in view of tbe fact, as tbe court says in an opinion in this case June 29, 1896, that “neither party desires to question tbe ' award by wbicb it comes into court proved and liquidated.”
    
      Mr. Charles W. Bussell opposed:
    Tbe claimant elected not to reopen. The Government bled a plea. It made no election not to reopen, intending to elect when tbe proper time came, after the plea should be overruled. Whether to overrule the plea is tbe present question. A plea in bar or any other plea properly precedes an election to go into tbe merits of tbe case. We do not expect to need to go into tbe merits. Our plea raises a preliminary question, Who is tbe proper claimant here; who is the owner of the claim? We raise that question by pleading that tbe representative of tbe surviving partner is tbe legal claimant, and, if he is, there is no necessity for going into tbe merits, since be is -indebted to tbe Government to a larger amount than be claims, and so can recover nothing.
    Cases were cited to show that a surviving partner holds per tout what before be held per my et per tout when bis partner dies, and that be is tbe owner of what would have been the partnership claim; that bis individual debt can be set off against such a claim. Among others tbe case of Solbroolc v. Laelcey (13 Met. R., 132).
    Tbe law to that effect is absolutely settled and indisputable. But it is contended that we are outside tbe rules of law in these cases. Tbe jurisdictional act says tbe judgments are to be rendered upon tbe facts and tbe law. It has been repeatedly held to be merely a jurisdictional act. The law, then, must mean some other law. If some other law and if pleas, demurrers, set-offs, counter claims, and other defenses are to be passed upon, it must be law applicable to such defenses. No law of set-off being referred to, that mere phrase must, according to a familiar principle of tbe construction of Federal statutes, refer to tbe common law, more especially as that is tbe only possible law that it could refer to, just as tbe words “murder,” “arson,” “embezzlement” in tbe Federal statutes bring into play all the common law applicable to such offenses.
    If we are not to proceed here according to such law, what is to be tbe rule of decision? The jurisdictional act merely tells you to decide upon pleas, set-offs, and tbe like. Decide bow? Merely according to the facts and the law. Congress must have supposed there was already a body of .rules to guide you, or it made a very extraordinary omission.
    If Congress meant by “set-off” and “the law” concerning it something not familiar to this court, something new and strange, it would have explained what it meant or referred you to some key. As a matter of fact, this jurisdictional act is but a repetition, with only unavoidable adaptations, of the general jurisdictional act of 1887. That being so, similar provisions in one should be construed as those in the other and as Congress knew those in the other had been construed. The other refers to the common law as the guide. If this does not, then we are at sea without a compass. We are left to your discretion, and yet told that we may appeal. Appeals from discretionary decisions are novelties in our system, and the manner of deciding them should have been declared by Congress.
    We care not whether these were legal or moral claims in their origin. The question is, What was the rule of decision to be applied to them — the law or something else or nothing at all? Nor are we concerned with any claim the representatives of the predeceased partner might have against the representative of the survivor, if he could recover. Nor is this a probate court to say in any way what shall become of what a petitioner may recover. The act says the Treasury shall pay the judgment only to “the claimant, or his lawful heirs, executors, or administrators, or transferee under administrative proceedings.” We are not here considering what the Treasury shall do after the claimant shall recover judgment, but what judgment the court shall render upon this plea of set-off.
    The court will find it the safest course to construe the law as it is written without trying to guess, not even what was, but what would have been, the intention of Congress, had particular cases like this been specially considered by it at the passing of the act of 1891. The act leaves them all to the rules of law and the court is not told to make any exceptions.
   Nott, Oh. J.,

delivered the opinion of the court:

On the 27th October, 1886, the Secretary of the Interior made an award in an Indian depredation case by allowing the same and recommending it to Congress. The claim had been presented to the Department by William H. Moore and William C. Mitchell, partners. Each partner signed the petition severally, and each made oath to it. While it was pending-before the Department William C. Mitchell died. His widow continued to prosecute it on behalf of both the surviving partner and the heirs or the next of kin of the deceased partner. When it was finally allowed, the recommendation of the Commissioner of Indian Affairs was in these words: “That the claim be allowed to William H. Moore and the heirs of William 0. Mitchell, deceased, for the sum of $22,950.” EÉis recommendation was concurred in by the Secretary of the Interior.

After this allowance of the claim the surviving partner, William H. Moore, died. Subsequently his administrator de bonis non brought an action in this court under the Indian Depredation Act, 1891, in which he seeks, as representative of the surviving partner, to recover the whole amount of the award. George W. Kerr, administrator of the estate of William C. Mitchell, the partner who first died, also brought his separate action, in which he seeks to recover a moiety of the award for the benefit of the widow and distributees of that estate.

After legal proceedings were instituted in this court all parties, claimants and defendants, elected not to reopen the award of the Interior Department. By the Indian Depredation Act, section 4, it is provided that certain claims, of which the claim now under consideration is one, “which.have heretofore been examined, approved, and allowed by the Secretary of the Interior,”. “ shall have priority of consideration by such court, and judgments for the amounts therein found due shall be rendered, unless either the claimant or the United States shall elect to reopen the case and try the same before the court.” ' In these cases, as - has been said, no party elected to reopen. There is therefore an award before the court for a fixed and determined amount for which one or the other or both of the contending claimants are entitled to have judgment; and this award, in view of the facts that it is for a determined amount, and that by the direction of the statute the court must award judgment therefor without further inquiry or litigation, bears a very strong resemblance to a fund in equity.

These are the facts relating to the two cases as they appear upon the records of the court. But in the case of Labadie, administrator of Moore, which is the case now before the court, on tbe one band all of these facts do not appear, and on the other there are some additional facts which have not been stated.

The claimant, as has been said, is seeking to recover, as representative of the surviving partner, the whole of the award; and the defendants, as has been said, have elected not to reopen the case. But the defendants, the United States, have interposed a plea of set-off founded upon judgments which they recovered against the surviving partner individually, and their set off, if it be maintained, will more than absorb the whole amount of the award. The defendants, the Cheyenne Indians, consent, through their representative, the Attorney-General, to have their liability thus extinguished. At the previous term the claimant raised an objection to the United States filing a plea of set-off in a case which they had not elected to reopen; but the court held that where neither party wishes to disturb or question the award of the Secretary a counter claim maybe set up against it under the first section of the act without reopening the case. (31 C. Cls. R., 436.) If the defendants had elected to reopen, the burden of proof would have been upon them, so the act provides, and they would be in danger of being cast in damages for a larger amount than the Secretary awarded. All parties, therefore, concurred in letting the award stand.

Pursuant to an intimation of the court in the decision just referred to, the claimant demurred to the plea of set-off filed by the United States. The demurrer, of course, confesses all facts well pleaded, but confesses nothing more. That plea alleges that “the said William H. Moore was, at the time of his death, indebted to the defendants, the United States, in the sums of $10,000, $3,320.71, and $20,000, upon three several judgments rendered on the 1st day of August, 1873, the 16th day of June, 1874, and the 19th day of July, 1874, respectively, by the United States district court for the first judicial district of the Territory of New Mexico, said judgments being legally and properly rendered and now remaining in full force and effect.” The plea does not refer to the suit of the representative of Mitchell, but that party now comes into court and asks to be heard in the case of Labadie, and contends (1) that under the award of the Secretary of the Interior one-half of the amount there allowed is payable and due to the estate of Mitchell; (2) that neither the surviving partner nor his administrator de bonis non has ever had a right to receive or control the whole of the award; (3) that the Indian Depredation Act, section 9, recognizes the natural and equitable rights of a deceased claimant’s “lawful heirs,” and expressly provides that payments of judgments may be made to them directly; (4) that there is no partnership estate in these cases to be wound up, and that payment in this case has already been ordered to be made directly to the heirs of the deceased partner; (5) that these claims do not come within the ordinary rules of partnership, by reason of the provisions of the statute.

In the elaborate arguments addressed to the court at the hearing upon the single legal question whether a set-off against a surviving partner individually can be maintained where it will exceed his individual interest in the cause of action and thereby absorb the whole of the judgment which the firm may be entitled to recover, it was contended by the counsel of the United States that such is the law of partnership. Some courts have certainly gone a long way in this direction, and notably the Supreme Court of Massachusetts in the case of Holbrook v. Lackey (13 Metc. R., 132), where Chief Justice Shaw said of a.surviving partner suing to collect a partnership debt:

“At law he is the sole creditor, and has the sole power to collect the debt and to maintain a suit to recover it. And all the legal consequences resulting from this principle are held to flow from it. The surviving partner, in suing, may join a separate debt of his own. (Hancock v. Haywood, 3 T. R., 433.) So a surviving partner, in a suit against him for a separate debt of his own, may set off a debt due to him and his deceased partner jointly. (Slipper v. Stidstone, 5 T. R., 493.) So a debt due from the plaintiff',, as surviving partner, may be set off' against a debt due from the defendant to the plaintiff severally. (French v. Andrade, 6 T. R., 582.) In our own courts it has been held that a surviving partner of two firms may join demands of both in one suit. It is so far held to be his duty to do so that he can have but one bill of cost if he brings two actions. (Stafford v. Gold, p. Pick., 533.) Neither the administrator of the deceased partner nor any creditor of the partnership can have any suit or proceeding, in law or in equity, against the partnership debtor, unless through legal proceedings in insolvency, instituted on the application of the debtor or of the creditors. Till then the law makes no distinction between a debt originally due to a party severally and a debt due to him as surviving partner.”

The theory of the common law is that a debt due to partners is due to them jointly. Accordingly, upon the death of one partner the sole right survives in the other. It is then as if the debtor had owed the surviving partner individually, ab initio. It is as under the law of real estate in cases of joint tenancy, where upon the death of one the entire estate remains vested in the survivors. But in these Indian depredation cases there is no obligation known to the law as a debt. The obligation, such as it is, is created by the statutes. From' a legal point of view the claims rest on a promise, an assurance, a moral obligation, but nevertheless they are not demands or choses in action known to the law, and consequently fall within the classification of gratuities. In giving a legal character, a validity to such claims, Congress may impose conditions and give preferences and make exclusions. The widow may be preferred to the children, the children to the assignee in bankruptcy, and creditors may be wholly excluded from the benefits of a statute. (Semple’s Case, 24 C. Cls. R., 422; Durkee’s, 28 id., 326.) In this instance the statute, not in express terms, but by necessary implication, does exclude assignees and creditors, for it provides that payments shall be made “only to the claimant dr his lawful heirs, executors, or administrators, or transferee under administrative proceedings.” (§ 9.) By “heirs” the court understands his widow and next of kin. That is to say, if a claimant be dead, payment may be made to his widow and children without the interposition of a legal representative. Whether they can maintain an action in this court without the appointment of an executor or an administrator is a question not before the court. It is enough to say that Congress have dealt with these claims in a manner differing materially from the strict rule of the common law.

But there is a question before the court, presented, indeed, by the administrator of a deceased partner, but going to the right of the widow and children to recover in one of these depredation cases. If they had acquiesced in the prosecution of their claim by the administrator of the survivingpartner, it •is probable that he would have been allowed to recover for the entire claim of the partnership. But the facts of the case do not show such acquiescence. On the contrary, she presented the claim of her deceased husband, or joined in its prosecution in tbe Interior Department, and procured an award payable in terms to tbe beirs of Mitcbell; and sbe or they subsequently, through tbe administrator of her husband’s estate, have prosecuted the award in this court. She was a claimant before the Department, and the heirs were among those claimants before Congress for whose benefit tbe Indian Depredation Act was passed. It is not to be supposed that Congress intended to create legal gratuities technical in their nature and for the benefit of persons not equitably entitled to receive the same. In other words, it is not to be supposed that Congress intended to allow a surviving partner or the administrator of a surviving partner to recover amid circumstances which will amount practically to the exclusion of a deceased partner’s widow and next of kin. We are of the opinion, therefore, that such widow and next of kin are claimants within the intent and meaning of the statute, and that their rights are to be protected by the court.

The order of the court is that the demurrer of the claimant Labadie to the plea of set-off filed by the United States be overruled, with leave to su'ch claimant to file a traverse to the plea, if he be so advised, within thirty days. If no such traverse be so filed, the defendants may move for judgment on the demurrer without further notice. But this order and the j udg-rnent, if any, rendered on the demurrer shall be without prejudice to the claim of Kerr,, administrator of Mitcbell, in case 6376.