Case Name: SAINT PAUL AND DULUTH RAILROAD COMPANY v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1883-04-23
Citations: 18 Ct. Cl. 405
Docket Number: No. 12403
Parties: SAINT PAUL AND DULUTH RAILROAD COMPANY v. THE UNITED STATES.
Judges: Dbake, C. J., was not present at the hearing of this case, and took no part in its decision. 4
Reporter: United States Court of Claims Reports
Volume: 18
Pages: 405–420

Head Matter:
SAINT PAUL AND DULUTH RAILROAD COMPANY v. THE UNITED STATES.
No. 12403
April 23, 1883.
First claim. — The Lake Suxierior and Mississippi Railroad Company, a land-grant road, having a contract "with the Postmaster-General for carrying the mails when the Act of July 12,1876, reducing the compensation for such service hy such roads, was passed, the Postmaster-General, thereafter, during the term of the contract, retained the amount of such reduction from the contract rate.
The company afterwards failed, and .all its assets and franchises passed, under a decree of foreclosure of a mortgage, to the claimant, who now sues to recover the amount so retained from its mortgagor or assignor.
Second claim. — After the transfer of Sdie assets and franchises of the Lake Superior Company, hy the foreclosure of said mortgage, the claimant corporation continued to carry the mails according to the terms of said contract with its assignor, and from the contract rate of pay deductions were in like manner made and retained hy the Postmaster-General, under the Acts of July 12, 1876, and June 17, 1878. The claimant now sues to recover the deduction thus retained.
Held :
I.On the authority of the decision of the Supreme Court in other land-grant railroad oases (104 U. S. R., 680, 687), the acts of Congress reducing the compensation of land-grant companies for carrying the mails do not apply to contracts previously niado.
II.Whether an accrued claim against the United States passes to the purchaser of all the assets and franchises of a failed railroad company, under a decree of foreclosure of a mortgage, notwithstanding the provisions of Rev. Stat., § 3477, malting void all assignments of claims against the United States, before the issuing of a warrant for payment, gttero. The judges are divided in opinion.
III.A contract made with a railroad company for carrying the mails is annulled by the provisions of Rev. St-at., § 3737, upon the foreclosure of a mortgage of all its assets, and the sale thereof to a new company ; and such now company, the purchaser, cannot maintain an action thereon against the United States.
The following are the facts found by the court :
I. On the 8th day of October, 1875, the Lake Superior and Mississippi Eailroad Company, a corporation created under the laws of the State of Minnesota, entered into the following contract with the defendants :
This article of contract, made the eighth day of October, in the year one thousand eight hundred and seventy-five, between the United States of America (acting in this behalf by the Postmaster-General) and the Lake Superior and Mississippi Railroad Company, by J. P. Ilsley, its president, and William Dawson and John B. Cook, as sureties, witnesseth:
That whereas the said railroad company has been accepted, according to law, as contractor for conveying the mail on route No. 26007, from Saint Paul, c. h. (Minn.), by White-Bear Lake, Centreville Sta. (local), Forest Lake, Wyoming, North Branch Sta., Harris, Rush City, Rock Creek, Pine City, Hinkley, Kettle River Sta., Moose Lake, Barnum (n. o.) Junction, Thomson, Fond-du-Lac, Onevta, and Rice’s Point to Dnluth and hack, by railroad, 12 times a week, from May 1st to October 31st, and 6 times a week the residue of the year, or as much oftener as trains may run, by a schedule satisfactory to the Department, at thirteen thousand eight hundred and fifty-nine and ninety-seven one-hundredths dollars per year (being at the rate of ¡§89 per mile per annum), for and during the term beginning July first, eighteen hundred and seventy-five, and ending June thirty, eighteen hundred and seventy nine:
Now, therefore, the said Lake Superior and Mississippi Railroad Company, as contractor, and the said William Dawson and John B. Cook as sureties, do, jointly and severally, undertake, covenant, and agree with the United States, and do bind themselves—
1st. That the mail (including British, Canada, and other foreign mails) shall he conveyed in a secure and safe manner, free from wet or other in jury, in a separate and convenient oar, or apartment of a car, suitably fitted up, furnislied, warmed, and lighted, under direction of the Post-Office Department, and to the satisfaction of the Postmaster-General, or of his authorized agent, at the expense of the contractor, for the assorting and safekeeping of the mails, and for the exclusive usé of the Department and -its mail agent, if the Department shall employ such agent; and such agent is to he conveyed free of charge. When there is no agent of the Department, the railroad company shall designate a suitable person, upon each train, to be sworn, to receive and take charge of the mails, and of way-bills, accompanying and describing them, and duly deliver the same. And the mail shall be taken from and delivero'd into the post-offices at the ends of the route; and also from and into the intermediate offices on the route, or that may hereafter be established on the route,'provided the latter are not over one-quarter of a mile from a depot,or station, or from the railroad track when-no station has been established.
2d. That if the company shall run a regular train of passenger oars more frequently than is required by the contract to. carry the mail, the same increased frequency shall be given to the mail, and without increase of compensation, and the like as to the increase speed of the mail trains, if desired by the Postmaster-General.
3d. That the company shall convey, free of charge, all mail-bags and post-office blanks, and also all accredited special agents of the Department, ■on exhibition of their credentials.
4th. That the company shall not, by itself, nor by its agents, transmit, nor be concerned in transmitting, commercial intelligence more.rapidly than by mail, nor carry out of the mail any letters not inclosed in postage-stamped envelopes, except such as may have relation solely to some article at the same time conveyed.
5th. That in every case of failure to perform the trip (unless it is shown that the same was not caused by misconduct, neglect, or want of proper skill) there may be a forfeiture of the pay for the trip; and a failure to arrive at the end of the route, so as to loso the connection with a depending mail, shall be considered as equal to a whole trip lost, unless the detention ■Or delay be the result of unavoidable causes.
6th. That the company shall be subject to fine -for failure to take or deliver a mail, or any part of a mail; for suffering the mail to be wet or otherwise injured, or lost, or destroyed, unless it shall appear that such failure, or other incident, as aforesaid, was not caused by misconduct, hegr lect, or want of proper skill on the p'art of the company or its officers.
7th. That the company shall be answerable for the adequacy of the means of transportation; for the faithfulness, ability, and diligence of its agents; and for the safety, duo receipt, and delivery, as aforesaid, of the mails.
8th. That the company will collect quarterly, if required by the Postmaster-General, of postmasters on the route, the balances due from them to the United States on their quarterly returns, and faithfully render an account thereof to the Postmaster-General in .the settlements of its quarterly accounts, and will pay over to the Auditor of the Treasury for the Post-Office Department, on the order of the Postmaster-General, all balances remaining in its bauds. '
9th. That the Postmaster-General may discontinue or curtail th.e service, in whole or in part, whenever the public interests, in his judgment, shall require such discontinuance or curtailment for any^sause; he allowing, as a full indemnity to the contractor, one month’s extra pay on the amount of service dispensed with, and a pro rata compensation for the amount of service retained and continued.
. 10th. The said United States covenant with the said company to pay, as aforesaid, at the rate aforementioned, quarterly, in the months of November, February, Hay, and August, or in the preceding months, at the option of the Department.
Provided always, that this contract shall, in all its parts, be subject to the terms and requisitions of an act of Congress passed the twenty-first day of April, in the year one thousand eight hundred and eight, entitled “An act concerning public contracts.”
In witness whereof the said Postmaster-General has caused the seal of the Post-Office Department to be hereto affixed, and has attested the same by his signature; and the said railroad company, by its president and sureties, have hereunto set their hands and seals the day and year set opposite their names, respectively.
Signed, sealed, and delivered by the Postmaster-General in the presence of—
MARSHALL JEWELL,
Postmaster- General.
Attest:
[corporate seal. ] Tiros. M. Davis, Secretary.
October 18, 1875.
Lake Superior and Mississippi Railroad Company.
Signed, this 18th day of Oct., 1875, by—
I. P. Ilsley, Pres’t.
II. The following circulars were sent on the days of their respective dates by the Second Assistant Postmaster-General:
Seduction of pay for mail service on land-grant railroads, under act of Congress, of July 12, 1876.
Post-Office Department,
Office of the Second Assistant Postmaster-General,
Washington, D. G., Oct. 20, 1876.
Sir: The act of Congress entitled “An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,” approved July 12,1876, section 1, contains the following proviso, namely:
“Provided, That the Postmaster-General bé, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, eighteen hundred and seventy-six, for transportation of mails on railroad routes by reducing the compensation to all railroad conrpa-nies for the transportation of mails ten per centum per annum from the rates fixed and allowed by the first section of an act entitled ‘An act making appropriations for tlie service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-four, and for other purposes,’ approved March third, eighteen hundred and seventy-three, for the transportation of mails on the basis of average weight.”
The same act also contains the following section:
“Sec. 13. That railroad companies-whoge railroad was constructed in whole or in part by'a land grant made by Congress on the condition that the mails should be transported over their road at such price as Congress should by law direct, shall receive only eighty per centum of the compensation authorized by this act.”
Consequently for mail service performed on and after July 1, 1876, on your road, route 26007, between St. Paul and Duluth, the compensation will be reduced from $13,859.97 per annurn_(the amount warranted by the latest returns under the act of March 3, 1873) to $11,087.97 per annum. The reduction amounting to $2,772 per annum is due to the thirtieth section of the act of July 12, 1876, above quoted.
Yery resxmctfully,
Thos. J. Beady,
Second Ass’t Postmaster-General.
To Geo. H. Smith,
St. Paul, Minn.
Peadjustment of pay for mail service on railroad routes, tinder act of Congress of Jane 17, ,1878.
POST-OFFICE DEPARTMENT,
Office of tiie Second Ass’t Postmaster-General,
Washington, D. C., Aug. 28, 1878.
Sir : The act of Congress making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-nine, and for other purposes, approved June 17, 1878, contains the following proviso, namely:
“That the Postmaster-General be, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, eighteen hundred and seventy-eight, for transportation of mails on lailroad routes by reducing the compensation to all railroad companies for the transportation of mails five per centum per annum from the rates for the transportation of mails on the basis of the average weight fixed and allowed by the first section of an act entitled ‘ An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,’ approved July twelfth, eighteen'hundred and seventy-six.”
Therefore, please take notice that the Auditor of the Treasury for this Department has been directed to decrease the pay of your company, for the conveyance of the mails on route 26007, between St. Paul and Duluth, from July 1, 1878,, to June 30, 1879, $498.96 per annum, leaving the pay from the first-named date $9,480.21 per, annum, being a reduction of five per centum from the rates fixed for weight of mails, in accordance with the provision of the act of June 17, 1878, above quoted.
Very rospoctfully, your obedient servant,
Tiros. J. Beady,
Second Ass’t Postmaster-General.
To G. H. Smith, Esq.,
Swpt. Saint Paul, Minn.
III. The amount deducted from tbe compensation for tbe transportation of tbe mails on this route from July 1, 1876, to June 30,1879, under Act of July 12,1876, was $11,642.40; tbe amount deducted from July 1,1878, to June 30, 1879, under Act of June 17,1878, was $498.96, making a total of $12,141.36. Of tbe said sum of $12,141.36 there was deducted $3,686.76 prior to June 12, 1877, and $8,454.60 after that day.
IY. To secure payment of certain indebtedness, tbe said Lake Superior and Mississippi Eailroad Company, on tbe 1st January, 1869, executed a deed of trust, of which the following is an abstract:
This indenture, made this first day of January, anno Domini one thousand eight hundred and sixty-nine (1869), between the Lake Sux>erior and Mississippi Railroad Company, a corporation created by and existing under the laws of the State of Minnesota, party of the first part, and J. Edgar Thomson and William G. Moorhead, of the city of Philadelphia and State of Pennsylvania, parties of the second part.
Whereas, * * *
Now this indenture witnesseth that the party of the first part, in consideration of the premises, and of one dollar to it in hand paid, the receipt whereof is hereby acknowledged, and in order to secure the payment of the principal and interest of the bonds aforesaid issued, or to be issued as herein recited and x>rovided, and every part of the said principal and interest, as the same shall become x^yable according to the tenor of the said bonds, and of the coux>ons or interest warrants thereto attached, has granted, bargained, and sold, assigned, set over, released, conveyed, and confirmed, and by these x>resents does grant, bargain, sell, convey, and transfer, assign, set over, release, convey, and confirm unto the parties of the second part all the right, title, interest, claim, or demand whatsoever which the party of the first x>art now has, or which it shall or may at any time hereafter acquire or become entitled to, of, in, and to all those lands or sections of land so as aforesaid granted in and by said acts of Congress of the United States of America and in and by said acts of the legislature of the State of Minnesota, and every of them, for the x>urpose of aiding in the construction of a railroad from Saint Paul to Lake Superior as aforesaid, being seventeen sections, or ten thousand eight hundred and eighty acres for each, mile, amounting in tlie aggregate to one million six hundred and thirty-two thousand acres of land,-be the same more or less, and situated in the present State of Minnesota, adjoining and adjacent to the line of railroad of the said party of the first part as hereinbefore described, in aid of construction, equipment, or completion of said railroad, full.lists of which will be appended to this instrument as said lands are' surveyed, selected, and certified, which said lists are to be signed by the president of said company and to be taken and considered as part and parcel of this deed, without reference to the dates of said lists. Also all and singular the railroad of the party of the first part constructed or to be constructed upon'or over the line or route hereinbefore designated, viz: Ifrom Saint Paul to the waters of Lake Superior, and also the lands, tenements, and hereditaments, acquired or appropriated, or which may hereafter be acquired or appropriated for the purpose of alight of way for the said railroad, or any continuation or portion thereof, and all the easements and appurtenances thereunto belonging, or in anywise appertaining, and all railways, ways, and rights of ways, depot grounds, and other lands; all tracks, bridges, viaducts, culverts, fences, and other structures, all depots, station-houses, engine-houses, car-houses, freight-houses, wood-houses, warehouses, machine-shops, work-shops, superstructures, erections, and fixtures, whether now held or hereafter at anytime acquiredfor the use of the said railway", or in connection therewith, or the business thereof; also alllocojnotives, tenders, ■cars, and other rolling stock, or equipment, and all machinery, tools, implements, fuel, and materials for constructing, operating, repairing, or replacing said railway or any part thereof, or convenient or necessary for use in connection therewith, together with all eqiripinents or appurtenances, whether now held or hereafter acquired, and also all franchises connected with or relating to said railway and said line of telegraph, or the construction, maintenance, or use thereof, now held or hereafter acquired by the party of the first part, and all corporate franchises of any nature, including the franchise to be a corporation, which are now or may hereafter be possessed or exercised by the party of the first part, together with all and singular the endowments, income, and advantages, tenements, heredita-ments, and appurtenances to the above-mentioned lands, railroad, or property belonging or in anywise appertaining, and the reversion and reversions, remainder and remainders, toll, income, rents, issues, and profits thereof, and also all the estate, right,.title,.interest, property, possession, ■claim, and demand whatsoever, as well in law as in equity, present or prospective, of the said party of the first part, of, in, and to the same, and every part and parcel thereof, with the appurtenances, subject nevertheless to the provisions of the acts of Congress of the United States and of the State of Minnesota, as aforesaid.
Y. On the 8th of March, 1876, a bill was filed in the circuit court of the United States for the district of Minnesota praying a foreclosure of all right and equity of redemption in and to the premises and property set fort-lx in the deed aforesaid j whereupon it was decreed among other things, as follows:
George Philler and Stephen A. Caldwell, trustees, citizens of the State of Pennsylvania, plaintiffs, against The Lake Superior and Mississippi Railroad Company, Edward Eice and William Dawson, as trustees, citizens of tlie State of Minnesota, and the Northern Pacific Eailroad Company, a citizen of the State of New York, defendants.
Final deoree.
This cause having heen duly brought on for hearing ujion the hill of complaint of the said plaintiffs, the several answers of the said defendants the Lake Superior and Mississippi Eailroad Company, and of Edmund Eice and William Dawson, and the Northern Pacific Eailroad Company, and upon the exhibits and testimony,* and the same being argued by counsel, and the court now being fully advised in the premises, doth find that the equities of the case are with the plaintiffs, and further find, that the said defendant the Lake Superior and Mississippi Eailroad Company did, by authority of law, on the 1st day of January, A. D. 1879, make, execute, and deliver the said trust deed in said bill of complaint named, and of which exhibit to said bill is a correct copy. * * *
And it appearing to the court to be for the benefit of all parties interested in the said mortgaged premises that the same should be sold, it is, therefore, now, viz, the 8th day of March, 1877, on motion of counsel for plaintiffs, and by consent of such of said several defendants now in court, given by their said solicitors, ordered, adjudged, and decreed by this court that the said defendant the Lake Superior and Mississippi Eailroad. Company pay or cause to be paid to the said complainants, as trustees for the holders of said bonds and coupons, the several sums of money, -with interest thereon, as hereinbefore proved to be due and owing, to wit, the said sum of five millions seven hundred and seventy-one thousand two hundred and sixty dollars and fifty-five cents (|5,771,260.55) in gold coin, within thirty days from and after the entry of this decree, and in default thereof that all and singular the said mortgaged premises, property, rights, telegraph line, immunities, and franchises hereinbefore andin said bill of complaint described and enumerated bé sbld at public action. * * *
That the same be sold in one parcel and as an entire property, to the highest and best bidder therefor, nnloss said corporation the Lake Superior and Mississippi Eailroad Company, or other defendants, shall, prior to the day appointed for such sale, pay the full amount of principal and interest so found due as aforesaid upon said first mortgage bonds and coupons, with the accruing interest, in gold coin of the United States, together with the costs and expenses of this suit hereinafter adjudged to be paid, including the expenses of advertisement and other proceedings to effect such sale; that the right and equity of redemption of the said defendants, and each .of them, and of all persons claiming by, through, or under them, or either ■of them, shall he absolutely foreclosed and barred, and the said property shall, in ease of non-payment, as aforesaid, within the time aforesaid, be sold absolutely and without redemption, and free from any alleged right of redemption under the laws of Minnesota or otherwise, to the highest and best bidder. * * *
It is further ordered that said sale bo made in accordance with the provisions aforesaid, and that the same be reported to this court for such other order, decree, and proceeeding as to this court shall seem meet and as to equity may pertain; and this cause stands continued and for further direc-iions.
VI. The master in chancery made sale of the same to William H. Ebawn, Edwin M. Lewis, George Whitney, Nathan Hilles, Frederick E. Shelton, Edwin A. Ehwlins, and Fisher A. Baker, which sale was on the 12th day of June, 1877, confirmed by the court, The purchase so made by William. H. Ebawn and others was in trust for the use and benefit, of such of the bondholders, creditors, and stockholders of said company as had in that behalf agreed or were entitled to participate in the benefits thereof by becoming parties to the plan of sale, purchase, and reorganization upon the terms prescribed by the laws, of the State of Minnesota'; and thereupon, in accordance with the laws of Minnesota, said purchasers organized themselves on the 27th June, 1878, into the corporation plaintiff, and conveyance was made to the plaintiffs of the property and estate so purchased by said trustees.
VIL Dp -to the 27th June, 1877, service on route No. 26007 was performed by the Lake Superior and Mississippi Eailroad Company, and after that date by plaintiff.
The whole of the required service was performed, with the exception of a casual failure in 1876, for which a deduction of $33.19 was made.
Mr. J. F. Farnsworth for the claimant:
This was. not such a case of “ assignment of a claim” as is prohibited by Eevised Statutes, ■§§ 3477, 3737.
A deed of trust, or mortgage, in Minnesota, does not convey title, but has to be foreclosed by the courts, and property sold, before possession can be taken.
The claimant corporation is successor of the contracting company, owning all its property and franchises, &c., and is the only party that could sue, and under the statutes of Minnesota is entitled to all the rights of the Lake Superior and Mississippi Eailroad Company.
Jlir. John S. Blair (with whom was Mr. Thomas Simons, Assistant Attorney-General) for the defendants :
1. Deductions from the contract price made prior to June 12, 1877, are not recoverable, because assignment of claims against theUnited States is prohibited by Eevised Statutes,3477; andas to the deductions after June 12,1877, no privity ever existed between plaintiff and defendants, and the operation of the statutes of 1876 and 1878 was not restricted by the obligations of any contract. (Eev. Stat., § § 3737, 3903.)
2. The transfer of this chose in action is not within the exceptions laid down by Strong, J., in United States v. Gillis (95 U. S. E., 407-416); for it is not a devolution of title by force of law u without any act of the parties.” Marriage, death, bankruptcy, and (if provided by statute) attachment will, I think, complete the list of such devolutions. To effect the transfer the claim must have beefl within the deed of trust; the power of the court over the claim depended entirely on its inclusion in the deed, and thus it is the “ act of the parties ” upon which the whole proceeding rests. Besides, section 3477 as expressly prohibits conditional transfers as those which are absolute. It is not admitted that the deed of trust by either expression or inference includes this claim; but discussion of that point seems unnecessary. It is not unworthy of note that the supreme court of the State of Minnesota has refused to give validity to assignments of claims against the United States. {Becker v. Swcetzer, 15 Minn., 427.)
3. The judgment of the circuit court of Minnesota was in a proceeding to bar an equity of redemption and to make absolute that which had theretofore been conditional. If a contract not in existence was within the scope of the deed of trust, which I deny, the transaction was an agreement to transfer contracts thereafter to be obtained, and an appointment of agents to make the transfer; the law was simply the machinery to carry out an agreement which was in violation of Eevised Statutes, 3737, 3963.

Opinion:
OPINION.
Davis, J.,
delivered the opinion1 of'the court:
This case has two branches, with quite distinct questions of law for decision.
I. On the 8th of October, 1875, the Postmaster-General made a contract with the Lake Superior and Mississippi Eailroad Company for the transportation of mails during a term of four years, which contract contained the following provision:
9th. That the Postmaster-General may discontinue or curtail the service in whole or in part whenever the public interests, in his judgment, shall require such discontinuance or curtailment for any cause; he allowing as a full indemnity to the contractor one month's extra pay on the amount of service dispensed with, and a pro rata compensation for the amount of service retained aud continued.
After the passage of the Act of July 12,1876, ch. 179, § 13 (Suppl. Eev. Stat., 226, aud 19 StatL., 79), the compensation paid to the company for the service was reduced in conformity with its provisions. In June, 1877, the Lake Shore and Mississippi Eailroad and rolling stock and the other property and franchises of the company were sold - under a decree for the foreclosure of a mortgage, and were purchased by trustees for the benefit of such bondholders,, stockholders, and creditors as had combined together for the purchase. The purchasers organized themselves together into the corporation which is the plaintiff in this suit, and received conveyance .of the property and estate sold under the decree. Among the property thus sold and assigned was the claim for the reduction in the pay for the service under the contract. That claim amounted at the date of the sale to $3,686.76. This claim constitutes the first branch of the case.
The defendants first contend that the Postmaster-General was authorized by the Act of 1876 to make these reductions in the pay for the service, and that therefore the Lake Superior and Mississippi Eailroad Company had no just claim for amounts • thus reduced and detained which could be assigned to the claimants.
In the case of the Illinois Central Eailroad Company, decided at the present term, this question was raised and decided by us adversely to the Government, in conformity with the rulings of the Supreme Court in the cases of The Chicago and North western Railway Cnmpany (104 U. S. R., 680) and The Chicago, Milwaukee and Saint Paul Railway Company (104 U. S. R., 687). The opinion of the court in that case [ante, 118) is made part of the opinion in this one, in order to explain why we must now hold against the defendants on this point.
The defendants also contend that this assignment is within the prohibition of Revised Statutes, § 3477. This section, which has often been construed by the courts, provides that—
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 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.
This statute, enacted in 1846 and in 1853 for the protection of the Treasury, was found in practice to be sometimes harsh and frequently onerous: Parties tried to evade it, and invoked the aid of the courts in their efforts. Finally, in 1877, it received an elaborate and carefully considered construction from the Supreme Court, in Gillis's Case (95 U. S. R., 407). The court says of the acts of 1846 and 1853:
So far are they from giving new potency to assignments and transfers of rights in action, so far from changing the common-law rule that such rights are not assignable, the statute strikes down and denies any effect to powers of attorney, orders, transfers, and assignments, which before were good in equity, and which a debtor was bound to regard when brought to his notice. It is an unwarrantable assumption to set up that Congress had in mind only claims presented to the Treasury Department. When the act was passed many claims were presented to Congress, and a vast number were set up by way of defalcation, in suits brought by the Government, where there was a full opportunity to cross-examine the witnesses called in their support. That Congress had all such claims in view, and intended to prevent their assignment and debar any assignee from setting them up, is, we think, altogether probable,, It must be admitted that the act [of 1855, establishing the Court of Claims] contemplates the possibility of an effective assignment of some claims. What those are it is not necessary now to determine. Even the act of 1853 excepted from its sweeping provisions certain claims which were liquidated, and for which warrants were drawn. That the act creating the Court of Claims did not work a repeal of any provisions of the act of 1853, nor itself make claims assignable that were incapable of assignment before its enactment, is beyond reasonable doubt. At most it suggests that claims which are assignable may be sued in the Court of Claims in the name of undertaking to declare what claims may be assigned. That there may be such claims is clearly stated in the act of 1853, and there are devolutions of title by force of law, without any act of parties, or involuntary assignments, compelled by law, which may have been in view.
Erwin's Case (97 U. S. R., 392) the court gave a further intimation of its views as to the classes of claims which were assignable, notwithstanding the Act of 1853. It said:
The act of Congress of February 26, 1853,- to prevent frauds upon the Treasury of the United States, which was the subject of consideration in the Gillis Case, applies only to cases of voluntary assignment of demands against the Government. It does not embrace cases where there has been a transfer of title by operation of law. • The passing of claims to heirs, de-visees, or assignees in bankruptcy are not within the evil at which the statute aimed; nor does the construction given by this court deny to such parties a standing in the Court of Claims.
An opportunity was offered to the court in Spofford v. King (97 U. S. R., 484) to 'express its views further upon the class of claims within the operation of the statute, and it held not only that the attempted assignment was void as against the United States, but that it was void' as between the parties. It said:
We cannot say that when the statute, declares all transfers and assignments of the whole of a claim, or any part or interest therein, and all orders, powers of attorney, or other authority for receiving payment of the claim, or any part thereof, shall he absolutely null aiid void, that they are only partially null and void; that they are valid and effective as between the parties thereto, and only invalid when set up against the Government.
' Nevertheless, at the same term the court did give.effect to an assignment, so far as to sustain a partial payment made at the Treasury to an assignee (McKight's Case, 98 U. S. R., 179); and it is worthy of remark that a subsequent ease in this court (Hart's Case, 16 C. Cls. R., 459) shows conclusivley that the transaction whose validity was sustained by the court in McKnight's Case was a fraud, and was the very evil which the statute was framed to prevent.
In the case of Goodman v. Niblack (102 U. S. R., 556) it appeared that the plaintiff claimed under a general assignment by one Sloo for the benefit of creditors, and that among Sloo's .assets was a elaim against the. Government which had been paid to Niblack as the administrator de bonis non of Sloo. This assignment was sustained by the court, which says:
In what respect doeáthe voluntary assignment for the benefit of his eredit-.oi-s, which is made by an insolvent debtor, of all his effects, which must, if it "be honest, include a claim against the Government, differ from the assignment which is made in bankruptcy? There can here be no intent to bring improper means to bear in establishing the claim, and it is not perceived how the Government can be embarrassed by such an assignment.
Burlce's Cáse (13 C. Cls. B., 231) was decided in this court at the same term in which Brivin's Case (13 C. Cls. B., 49) was decided here, the decisión in which was affirmed above, as already noted. In Burke's Case there were two claimants under assignments, one under an assignment made for good consideration before bankruptcy, the other under an assignment in bankruptcy. We held that the assignment prior to the bankruptcy was void under the statute, but upheld the assignment in bankruptcy.
From these cases we deduce the general principle proceedings to which the United States are a party the courts, are to maintain the statute in its integrity, as voiding all assignments of claims against the United States made before the issuing of a warrant for payment, except such as are made in a general transfer of the claimants' property by operation of law, or by a voluntary transfer of all the claimants' property honestly made by him for the benefit of all Ms creditors. That is the extent to which the Supreme Court has thus far, in the interest of equity and good conscience, lent itself to modifications of the stringent provisions of the law originally enacted in 1846, (9 Stat. L., 41), re-enacted in 1853 (10 Stat. L., 170),. and again re-enacted in the Bevised Statutes in 1874.
The question which presents itself to the court in this branch of the case is this: Is a transfer under a decree for the foreclosure of a mortgage, and a sale for the benefit of mortgage creditors, and a transfer to a reorganization composed of mortgage bondholders, other creditors, and stockholders entitled to the equities which induced the Supreme Court to take out of the operation of the statute a voluntary assignment by a debtor for the benefit of all his creditors?
On this point the judges who take part in this decision are not agreed. Inasmuch as the Act of June 23,1874, ch. 468 (18 Stat. L., 252, and Supplement to Bev. Stat., 105), makes the concurrence of three judges necessary to the decision of any case, and the claimants have failed to convince the three judges who heard the case that the transfer in question is not such an assignment-as is made invalid by the Bevised Statues, therefore the court, in order to afford an opportunity for presenting this question to the higher court, are against the claimants on this, branch of the case.
II. The claimants after the transfer of the railroad to thenr. continued to perform the service for the remainder of the contract term. The defendants coritinued to make deductions from > the contract price in conformity with the Act of July. 12, 1876, ch. 179, § 13 (Suppl. Eev. Stat., 226, and 19 Stat L., 79), up to the 30th June, 1878, and after and until the ehid of the contract term in conformity with the provisions of the Act of 1876 and. of the further provisions, of the Act of June 17,1878, ch. 259,. pant 4 (Suppi. Eev. Stat., 359, and 20 Stat. L., 140). These-reductions amounted to $8,454.60, and the claim for them constitutes the second branch of the claimants' case.
The defendants contend—
1st. That the claim is invalid by reason of the Acts of 1876' and 1878, which we dispose of as we disposed of the similar claim under the first branch of the case.
. That the assignment annulled the contract, leaving the claimants, as mail-carriers, subject to the operation of the Acts of 1876 and 1878. In support of this contention reference is made to section 3737 of the Eevised Statues. That section reads as follows:
Séc. 3737. No contract or order, or any interest therein, shall he transferred by the party to -whom such contract or order is given to any other party, and any such transfer shall cause the annulment of the contract or order transferred so far as the United States are concerned.
There are n'o equities in this case to induce the court to say that a statute which says that an assignment of a contract shall cause its annulment means that it shall occasionally cause its annulment. The claimants made no time contract with the United States which courts must support against the manifest will of Congress. On the contrary, they are seeking to exact of the Government a rate of pay which the statute forbids, and invoke in support of their claim the benefit of a contract with another party, which they have received in assignment in violation of the express provisions of the statute.
It is not necessary in so plain a case to go behind the statute and inquire why Congress enacted it; but if we should do so there would be no difficulty in finding reasons, of the highest public importance why Congress should wish to give to the Executive absolute control over tbe personnel of contractors, and should not leave it subject to have its contracts assigned to persons with whom it would not originally have contracted. (Wheelers Case, 5 C. Cls. R., 504; Wanless Case, 6 C. Cls. R., 323; Gill's Case, 7 C. Cls. R., 522; affirmed on appeal, 10 C. Cls. R., 156.)
For this reason we decide unanimously against the clairm mnts on the second branch of their case.
The judgment of the court is that the claimants' petition be 'dismissed.
Dbake, C. J., was not present at the hearing of this case, and took no part in its decision. 4