Case Name: Thomas Johnston v. The United States
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1877-12
Citations: 13 Ct. Cl. 217
Docket Number: 
Parties: Thomas Johnston v. The United States.
Judges: Peck, J., was absent when the case was decided, but agreed in the above conclusion that the claimant should recover.
Reporter: United States Court of Claims Reports
Volume: 13
Pages: 217–230

Head Matter:
JOHNSTON’S CASE.
Thomas Johnston v. The United States.
On the Proofs.
An Indian agent purchases a thrashing-machine of .one O'Keefe, who admits an indebtedness to the claimant and directs payment to him. The agent issues a voucher to him in his, the claimant’s, name. Subsequently O’Keefe revolees the authority. The claimant brings suit on the voucher.
I. An authority given by the vendor of an article at the time of sale to pay tlie purchase-money to a third person, to whom he is indebted, may be revoked at any time before payment; and then no action can be maintained by the third person ag'ainst the vendee.
II. An Indian agent purchasing an article is without authority of law to issue a voucher for the purchase-money to a third person at the vendor’s request, made at the time of sale.
III. One who is in legal effect merely the assignee of a claim against the Government cannot maintain an action upon it, though he holds an official voucher for it issued to him in his own name.
The Reporters’ statement of the ease:
This cáse was tried at the preceding term and the facts were found by the coirnt. , A reargument upon the' facts found was subsequently ordered, which was heard at the present term.
The following are the facts found:
I. The threshing-machine described in the petition was purchased by the defendants’ Indian agent of one C. C. O’Keefe, in whom title and possession then were. .
II. At the time of the purchase O’Keefe admitted a present indebtedness then existing from himself to the claimant, the amount whereof is not shown, and, in the presence of the claimant, directed tbe Indian agent to pay- the purchase-money to him.
III. After delivery of the machine by O’Keefe' the Indian agent issued the voucher set up in the petition to the claimant. Before payment, O’Keefe denied and revoked the direction to pay the claimant; and the purchase-mpney has not been paid to any person.
Mr. B. JP. Grafton for tlie claimant:
The facts found by the court constitute an original tripartite agreement between the United States, the claimant, and 0. 0. O’Keefe. They do not constitute either a novation or a u promise to answer for the debt, default, or miscarriage of another.”
* An agreement between A, B, and C, that B shall sell his horse to A and A shall pay the price to C, is a valid original agreement. If as between B and 0 there is a valid consideration for this contract, then even as between them the contract is in all things and everywhere final and obligatory. If, however, there is no valid consideration as between B and 0, nevertheless the contract being three sided, and providing for payment not to B, but to 0, is as between A and each of the other parties absolutely binding. The question of consideration as between B and 0 does not affect the rights or obligations of these parties as between themselves and A. Those rights and obligations are absolutely fixed by the contract. It is of no possible consequence to A what they were. He has promised to pay C and has not promised to pay any one else. The promise which he has made, and not the promise which he has not made, is to be enforced.
The contract between the United States, the claimant, and O’Keefe would have been absolutely binding as between the Government and each of the other parties, even if there had been no valid consideration as between the claimant and O’Keefe. But there was such valid consideration. It consisted of O’Keefe’s indebtedness to the claimant; and the result of the agreement was to discharge that indebtedness to the extent to which the moneys payable for the property purchased by the Government would satisfy it. And while it is true, as a matter of fact, that the promise of the Government to pay Johnston operated as an extinguishment pro tanto of the indebtedness of O’Keefe to Johnston, that fact is wholly immaterial to the validity of the promise by the Government.
This is not a case of novation. If A owes B and B owes 0, an agreement of the three that A shall owe C, B dropping entirely out of the case both as the creditor of A and the debtor of G, then the case becomes one of novation. But there must be two original debts, one from A to B and another from B to 0, and the novation consists in the substitution for both of these old debts of a new indebtedness from A directly to 0.
Tn tbe case at bar there ivas never any indebtedness from tbe Government to O’Keefe. Tbe contract for tbe purchase of tbe property was tbe first transaction between tbe Government and O’Keefe, and tbe original agreement between all tbe parties was that tbe money should be paid, not to O’Keefe, but to Johnston. But, then, if it could be regarded as a case of novation it would be a valid novation; for not only is there a valid consideration as between O’Keefe and tbe Government and as between O’Keefe and tbe claimant, but tbe claimant’s demand against O’Keefe was discharged so far as tbe-price of tbe machine sufficed for that purpose.
That tbe facts of tbe case as found by tbe court do not constitute a “ promise to answer for tbe debt, default, or miscarriage of another ” is very plain. In tbe first place, wherever the main purpose and object of tbe promise is not to answer for another, but to subserve some purpose of bis own, bis promise is not within tbe statute, although it may be in form a promise to pay tbe debt of another, and although tbe performance of it may incidentally have tbe effect of extinguishing tbe liability of another. In tbe second place, a promise by A to answer for tbe debt of B to 0 is collateral, not an independent undertaking; it is a guarantee by A of B’s debt to 0, not a promise by A to pay bis own debt to 0; it is a promisé by A to pay 0 if B does not, and not an absolute promise by A to pay 0. Tbe payment of O’Keefe’s debt to Johnston was not tbe main purpose and object of tbe Government in this transaction, but its main purpose and object were to subserve a purpose of its own, that is, to procure by purchase a thrashing-machine for tbe public use; and tbe undertaking of tbe Government in this case was not collateral to O’Keefe’s promise in favor of Johnston, was not a guarantee of O’Keefe’s debt to Johnston, was not a promise by tbe Government to pay Johnston if O’Keefe did not, but was an absolute promise by tbe Government to pay Johnston tbe price of tbe property purchased by tbe Government. Tbe following-principles of law are applicable to the. case:
It was said by Shaw, 0. J., in delivering tbe opinion of tbe court in Nelson v. Boynton (3 Met., Mass., 396), that—
“The terms original and collateral promise, though not used in tbe statute, are convenient enough to distinguish between tbe cases where tbe direct and leading object of tbe promise is to become tbe surety or guarantor of another’s debt, and those where, although the effect of the promise is to pay the debt of another, yet the leading effect of the undertaker is to subserve or promote some interest or purpose of his own. The former, whether made before or after, or at the same time with the promise of the principal, is not valid, unless manifested by evidence in writing ; the latter, if made on good consideration, is unaffected by the statute, because, although the effect of it is to release or suspend the debt of another, yet that is not the leading object on the part of the promiser.’7 (See also Alger v. Sco-ville, 1 Gray, 391; Dyer v. Gilson, 16 Wis., 557; Stephen Mount, v. Lalceman, L. R, 7 Q. B., 196.)
In Williams y. Leper (3 Burr., 1886), Taylor, a tenant to the plaintiff, being in arrear for rent and insolvent, conveyed all his effects for the benefit of his creditors. He employed the defendant as a broker to sell the effects, and accordingly he advertised a sale. On the morning of the sale, the plaintiff came to distrain the goods in the house; whereupon the defendant promised to pay the arrear of rent if he would desist from distrain-ing ; and he did thereupon desist. Upon these facts the court held that the defendant’s promise was not within the statute. To the same effect is Houlditch v. Milne (3 Esp., 86.) There the plaintiff had in his possession certain carriages belonging to one Copey, upon which he had a lien for repairs. The defendant, in consideration that the plaintiff would relinquish his lien and give up the carriages to him, promised to pay the plaintiff the amount due him. And Lord Eldon held the case to be out of the statute, on the principle established by Williams v. Leper. (See also JBarrett v. Trussell, 4 Taunt., 117; Slingerlmd v. Morse, 7 Johns., 463 5 Hindman v. Langford, 3 Strob., S. C., 207 ; Blount v. Hawlcins, 19 Ala., 100; Allen v. Thompson, 10 N. H., 32; Handle v. Harris, 6 Yerg, Miss., 508.)
Lithe case of Curtís v. Brown (5 Cush., Mass., 488,492) Shaw, C. J., who delivered the opinion of the coimt, says: “ When by the new promise the old debt is extinguished, the promise is not within the statute; it is not then a promise to pay the debt of another which has accrued, but it is an original contract, on good consideration, and need not be in writing.” (See also Bird v. Gammon, 3 Bing., N. C., 883; Buteher v. Stewart, 11 Mee. and W., 857; Deeleer v. Shaffer, 3 Ind., 187; Bmericlc v. Sanders, 1 Wis., 77; DraughanY. Bunting, Ired., N. C., 10; Stanley v. Hen-dióles, 13 Ired., N. C., 86; Bason v. Hughart, 2 Tex., 476.)
But if tbe court bad merely found that tbe government bad bought tbe machine from O’Keefe, and,.without tbe knowledge or presence of Johnston promised to pay tbe price to Johnston, while that state of facts would have been far less favorable to tbe claimant than tbe facts actually found, nevertheless it would have constituted a perfect basis for this demand. In the case of Farley v. Cleveland (9 Oowen C39), Aybere Moon owed Farley and sold to Cleveland a quantity of bay, in consideration of which Cleveland promised to pay Moon’s debt to Farley, tbe court held that Farley could recover, and placed bis right to recover on the ground that the hay received by Cleveland from Moon was a valid consideration for Cleveland’s promise to pay Farley, and that the subsisting liability of Moon to pay Farley was no objection to tbe recovery. This case has often been referred to and has never been doubted, as a sound authority for tbe principle by it upheld. (Barlcer v. Bualclin, 2 Denio, 45; Hudson Camal y. Winchester Bank, iid., 97.)
In 1606, tbe Supreme Court of New'York decided that where one person makes a promise to another for tbe benefit of a third person, that thud person may maintain an action upon it. (Scher-merhorn v. Yanderheyden, 1 Johns., 140.) Tbe same principle has been adjudged in a number of cases in Massachusetts. In Hall v. Marston, the court say:
“ It seems to have been well settled that if A promises B, for a valuable consideration, to pay C, tbe latter may maintain assump-sit for tbe monéy.”
In Breioer v. Dyer (7 Cush., 337), tbe court say:
“ Upon tbe principle of lav long recognized and clearly established, that when oneperson, for a valuable consideration, engages with another by a simple contract to do some act for tbe benefit of a third, the latter, who would enjoy tbe benefit of the act, may maintain an action for tbe breach of such engagement; that it does not rest, upon tbe ground oí any actual or supposed relationship between tbe parties, as some of tbe earlier cases would seem to indicate, but upon the broader and more satisfactory basis, that tbe law, operating on the act of the parties, creates the duty, establishes a privity, and implies the promise and obligation on which the action is founded.” (See also Baiorence v. Fox, 20 N. Y., 268, and cases there cited.)
Tbe doctrine of Baiorence v. Fox was unanimously reaffirmed in Burr v. Buss, 24 N. Y., 178, and it remains tbe rule of decisions in eases of tlie class there decided. (Mcard v. Sanderson, 41 N. Y., 179; Breemcm v. Auld, 44 id., 55; Hutchins v. Miner, 4C id., 456; Garnsey v. Rogers, 47 id., 233; IMmJc v. Bank, 46 id., 82; Barlow v. Myers, 04 id., 41; Hodges v. Bastman, 12 Vt., 358.)
ilír. A. N. Robinson (with whom was the Assistant Attorney-General) for the defendants:
This transaction must be considered either under the head of novation or a promise to pay the debt of another. If a novation, then claimant should have then and there promised and agreed that his debt was discharged. If a promise to pay the debt to claimant, then it is void by the statute of frauds of Montana, which says: “ In the following cases, any agreement shall be void unless such agreement, or some note or memorandum thereof, expressing the consideration, be in writing and subscribed by the party charged thereunto. Second, every special promise to answer for the debt, or default, or miscarriage of another.” (Laws of Montana, 393.) Nothing of this kind was done here.

Opinion:
Drake, Oh. J.,
delivered the opinion of the court :
D. Shanahan, an Indian agent of the Government, purchased of one C. C. O'Keefe a thrashing-machine for $800 for the farm-service of his agency.
At the time of the purchase O'Keefe admitted a present indebtedness then existing from himself to the claimant, the amount of which does not appear, and in the presence of the claimant directed Shanahan to pay the pm'chase-money to him.
After delivery of the machine by O'Keefe, the agent issued the voucher annexed to the petition, and which is as follows:
"The United States to T. Johnston, Hr.
"1873.
"Octo. 20. For one threshing-machine, complete, furnished for the farm-service of the Flathead Indian agency .$800 00
"I certify, on honor, that the above account is correct and just; that the threshing-machine was actually furnished as stated; that the exigencies of the sendee did not admij; of the delay incident to advertising; tbat it was purchased at tbe lowest attainable rate; tbat no part of tbis account bas been paid, and tbat there is due to T. Johnson tbe sum of eight hundred dollars ($800).
"D. SHANAHAN,
UU. S. Indian Agent.
Before payment of tbis voucher, O'Keefe revoked tbe direction to pay tbe claimant, and tbe purchase-money bas not been paid to any one.
Tbe single question arising on tbe case as thus presented is, whether tbe claimant bas a legal cause of action upon a u contract, expressed or implied, with tbe Government of tbe United States."
Tbe claimant's petition avers tbat he sold and delivered tbe thrashing-machine to tbe Indian agent and received therefor tbe voucher, and tbat tbe Indian agent promised on behalf of tbe United States tbat tbe United States would pay tbe claimant for tbe machine tbe sum of $800.
Were tbe case of tbat character, there would not probably have been any occasion for tbis suit, for tbe voucher would doubtless have been long ago paid at tbe Treasury; but tbe fact as found is, tbat tbe claimant did not sell tbe machine to tbe Indian agent, but it was sold to tbe agent by O'Keefe, who directed tbe agent to pay tbe purchase-money to tbe claimant, to whom tbe voucher was issued.
A voucher issued by an officer of tbe Government is only prima-facie evidence of tbe Government's indebtedness, which may be rebutted by proof tbat it was issued without an actual indebtedness to sustain it. It is an official misconduct in any officer to issue a voucher of tbe Government's indebtedness to any other than tbe party whose property was purchased or whose services were rendered for tbe Government. There can, therefore, be no recovery here under tbe voucher, for it was falsely issued to one who bad not sold tbe machine, and between whom and tbe Government there was, therefore, no contract of sale.
It is contended, however, tbat O'Keefe's direction to tbe agent to pay tbe money to tbe claimant authorizes tbe latter to recover in tbis action. But there are insuperable objections to tbis view:
1. Supposing tbat tbe agent was officially authorized to act upon such a direction, it was a mere naked authority, which O'Keefe had a right to revoke at any time before payment was actually made, and which he did, in fact, revoke, and so ended the authority.
2. Under no circumstances could the claimant hold the United States, in virtue of that authority, unless the United States, through some legally authorized officer, agreed to pay the money to him. We have looked in vain for any authority in this Indian agent to enter into any such agreement on behalf of the Government. There was, therefore, no agreement.
3. If the claimant has any right whatever to this money, it is only as O'Keefe's assignee; and since tlie decision of the Supreme Court at its present term, in United States v. Gillis (95 U. S. E., 407), it is settled law that no assignee of a claim against the United States, claiming under an assignment by the act of the Government's creditor, can sue on the claim in this court.
In no view can this suit be maintained; and the petition is dismissed.