Court Opinion

ID: 9442701
Source: CourtListenerOpinion
Date Created: 2023-08-03 18:56:17.324067+00
Date Added: 2024-06-11T17:29:11.577281
License: Public Domain

SOPER, Circuit Judge
(dissenting).
The decision of the court invites further discussion, since it seems to nullify the Federal Anti-Assignment Statute of 1853, R.S. § 3477, 31 U.S.C.A. § 203, insofar as the instant case is concerned, and to suggest a procedural pattern for future cases that will virtually destroy the statute, and to violate the principle that no one may sue the United States without its consent.
The statute declares that all transfers and assignments of any claim against the United States shall be absolutely null and void unless they are executed in the presence of two witnesses, after the allowance of the claims, the ascertainment of the amount due, and the issuance of any warrant for the payment thereof. Its primary purpose was to prevent influential persons from buying claims against the government and urging them improperly upon the officers of the government. Another purpose was to prevent multiple payment of claims, to make unnecessary the investigation of alleged assignments, and to enable the government to> deal only with the claimant. U. S. v. Ætna Cas. & Surety Co., 338 U.S. 366, 373, 70 S.Ct. 207. It has been enforced, subject to certain limitations not pertinent in this case, for ninety-seven years.
The Act was passed at a time when there was no general act permitting suits against the United States; and it prohibited officers of the government, engaged in the allowance of claims without suit, from giving any consideration to assigned or transferred claims. Permissive statutes allowing"1 suit against the United States have subsequently been enacted but none of them repeals the Assignment Act expressly or by implication. The Court of Qaims was established by the Act of February 24, 1855, 10 Stat. 612, and was given jurisdiction to hear and determine all claims founded upon any law of Congress or any regulation of an executive department or any contract, express or implied, with the United States; but it was held in U. S. v. Gillis, 95 U.S. 407, 24 L.Ed. 503, that this statute did not repeal the Act of 1853 or make claims assignable which, before its enactment, were incapable of assignment. The court said that the words of the Act “embrace every claim against the United States, however arising, of whatever nature it may be, and wherever and whenever presented.”
The Tucker Act of March 3, 1887, c. 359, 24 Stat. 505, gave the District and Circuit Courts of the United States concurrent jurisdiction with the Court of Claims as to claims against the United States when the amount did not exceed $10,000; and it has never been suggested that this Act in any way repealed R.S. § 3477.
The Federal Tort Claims Act of 1946, 60 Stat. 842, conferred upon the District Courts of the United States jurisdiction to hear and determine claims against the United States for damages to property caused by the torts of its employees; but it was held in U. S. v. Ætna Ins. Co., 338 U.S. at page 370, 70 S.Ct. at page 210, that neither the terms of the Act nor its legislative history precluded the continued application of R.S. § 3477.
The strictness which characterized the interpretation of the assignment statute in the earlier cases has been somewhat re*436laxed and claims have been excepted from its scope which might seem to be covered by its express terms. They include involuntary assignments compelled by law without any act of the parties, such as devolution of title, the passing o>f claims to heirs, devisees or assignees in bankruptcy, &c. which were not subject to the evil at which the Act was aimed.1
The interpretation of the statute has not been relaxed, however, as to voluntary assignments which have always been regarded as subject to the prohibitions of the Act. This has been the rule in the Court of Claims: Elizabeth Smith v. U. S., 96 Ct.Cl. 326; Bolivar Cotton Oil Co. v. U. S., 95 Ct.Cl. 182; Hitchcock v. U. S., 27 Ct. Cl. 185, affirmed 164 U.S. 227, 17 S.Ct. 142, 41 L.Ed. 412; and in the Federal Courts of Appeal; Coates v. U. S., 4 Cir., 53 F. 989; Greenville. Svgs. Bank v. Lawrence, 4 Cir., 76 F. 545; U. S. v. South Carolina State Highway Dept., 4 Cir., 171 F.2d 893, 899; 23 Tracts of Land v. U. S., 6 Cir., 177 F.2d 967.
In Martin v. Nat’l Surety Co., 300 U.S. 588, 596-597, 57 S.Ct. 531, 534, 81 L.Ed. 822, the court made it clear that the strict rule has not been abandoned where “the claims against the Government, which were the subject of the assignment had never been allowed, much less collected”; but that “After payments have been collected and are in the hands of the contractor or subsequent payees with notice, assignments may be heeded, at all events in equity, if they will not frustrate the ends to which the prohibition was directed.” The discussion of the scope and meaning of the statute by Chief Justice Vinson in U. S. v. Ætna Surety Co., 338 U.S. 366, 70 S.Ct. 207, shows the way to the solution of the problem in the pending case. The point actually decided was that nothing in R.S. § 3477 prevents an Insurance Company from bringing an action under the Federal Tort Claims Act in its own name on a claim of the insured against the United States to which the insurer has become subrogated by payment to the insured. The government at. first took the position that assignments by operation of law are exempt from the bar of the assignment statute only when procedural difficulties as to the government are involved. This contention was rejected on the authority of prior decisions and also on the ground that the Tort Claims Act itself indicates that a subrogated claim may 'be the subject of an action against the United States. Next, the Government took the position that although the subrogee of a claim might recover if it sued in the name of the insured to its use, it could not recover in a suit in its own name. The argument in effect was that R.S. § 3477 does not prevent the assignment of substantive rights against the United States but merely controls the method of procedure by which the assignee may recover. The court also1 rejected this argument, saying: 338 U.S. at page 372, 70 S.Ct. at page 211, Note 8.
“ * * * This position is in square conflict with Spofford v. Kirk, 97 U.S. 484, 24 L.Ed. 1032, and is not justified by anything said in Martin v. National Surety Co., 300 U.S. 588, 57 S.Ct. 531, 81 L.Ed. 822. Furthermore, it would require that the real party in interest provisions of the Federal Rules of Civil Procedure, rule 17(a), 28 U.S.C.A., be disregarded, despite the fact that they are made specifically applicable to suits under the Tort Claims Act, and that suits against the Government in which a subrogee owns the substantive right be. conducted according to the old common-law procedures in effect prior to, the promulgation of the Federal Rules. Petitioner admits as much by its reliance upon United States v. American Tobacco Co., 166 US. 468, 17 S.Ct. 619, 41 L.Ed. 1081. This is not to say that R.S. § 3477 was ‘repealed’ by the Federal Rules, but that a new interpretation of the statute which is incompatible with the *437Rules, as expressly incorporated in the Tort Claims Act, must be clearly justified.”
Thus it appears from the most recent decision of the Supreme Court that the substantive provisions of the statute, which invalidate assignments of claims against the United States, are still possessed of vitality, and may not be circumvented by the procedural expedient of bringing suit against the United States in the name of the assignor. In one of the pending cases the complaint is based upon the Tucker Act for damages to the land in breach of the contract of lease; in the other upon the Tort Claims Act for damages to property outside the lease caused by the negligence of the government employees. The decisions in U. S. v. Gillis and U. S. v. Ætna Surety Co., supra, are therefore applicable. Nevertheless, the court in the pending case adopts the procedural approach, declares that the claim is good and valid in the hands of the assignee, and requires the United States to pay it. The supporting argument is that the statute does not void claims, but only the assignment of claims, against the United States, and hence under equitable principles, an assignor may sue the United States on the claim in his name for the benefit of the assignee and any recovery will be impressed with a trust in favor of the assignee.
This is the premise on which the argument is based; but it is directly opposed to the decision in U. S. v. ¿Etna Surety Co., supra, that the statute was not designed merely to require suit in the name of the assignor. Moreover, the pending suit was not brought by the assignor but by the assignee against the United States and the assignor. It is pointed out in the opinion of this court that since all the parties to the assignments are before the court, the Government has the right to assert any defense, counterclaim or setoff, that it may have against the original claimants. It is hardly worth while to say that these defenses would be available to the United States in any case unless the claim were negotiable. The unescapabíe and controlling fact is that the suits are based on assignments and if it is adjudged that they are tenable, the United States will be required to inquire into the relationship and transactions between the parties, and the very purpose of the Act will be defeated.
A great deal is said in regard to the inequity and injustice of enforcing the statute upon parties who entered into the transaction under a mistake of law, supposing that the assignments were good. Heretofore in this case no one has relied on the theory of mistake. There was no mention of mistake in the formal pleadings, or in the evidence, or in the judgment of the District Court, or in the briefs in this court, doubtless for the reason that the parties well understood that they could not rid themselves of an Act of Congress by showing that they were unaware of it. The authorities on “Mistake”, cited in the opinion Note 6, relate to transactions between private parties in which the Government had no share, and hence have no bearing on the pending case. It is quite plain that little or nothing will be left of the statute if the plan devised to relieve the parties to this case from its terms is given the sanction of the courts. All that an assignee need do will be to bring suit on the assigned claim against the United States and join the assignor as party defendant or as an unwilling plaintiff under Federal Rules of ’Civil Procedure, Rule 19, 28 U.S.C.A., and the statute will be as lifeless as if it had been repealed by Act of Congress.
It may be helpful to state the facts in chronological order so. that it may be clearly seen that the officers of the United States had no part whatsoever in the transaction by which the claims against the United States were assigned to the plaintiffs and were in no way to blame for any mistaken notion of the law, which the parties may have entertained at that time. The facts stated most favorably to the plaintiffs are as follows: On January 1, 1943 the United States leased a tract of land of approximately 232 acres from Kathleen P. Boshamer and others at the *438annual rental of $250, renewable from year to year upon thirty days’ notice to the lessors. Two small frame houses and an acre of land belonging to the lessors were excepted from the lease. On' May 30, 1944 the parties to the lease entered into Supplemental Agreement No. 1 amending the lease so as to make it renewable from year to year without further notice. On April 10, 1946 the Shannons, plaintiffs in this case, bought the leased land subject to the lease and an additional acre from Mrs. Boshamer and other owners for $30 an acre. The Shannons had then recently made two- sales of land in the neighborhood at prices in excess of $100 per acre, and they testified that land in the neighborhood was worth $100 an acre and that the Bosh-amer tract, which consisted of 150 acres of tillable land beside woodland, was the-best farm in the county. The damages to the leased land and the small tract from the occupancy by the United States, according to the plaintiffs’ witnesses, amount-ed to $3,125. It is obvious that the Shan-. nons got a bargain even if the assigned claims prove to be valueless. These were included with the land as part of the consideration for the purchase price without’ much concern on the part of the sellers who stated in their pleadings in this case that they had no knowledge of the damages but were willing that the buyers should have them for whatever they were worth.
The first contact that the Shannons had with the government officers, took place after the assignments were executed, when the officers prepared a document called Supplemental Agreement No. 2, which was dated June 20, 1946 but was probably not executed until the early part of 1947 when the Government was preparing to surrender the lease and return the property to the owners. The property was actually surrendered on or about April 21, 1947. The Supplemental Agreement No. 2 made no real change in the rights or obligations of the parties to the assignments. It provided for the substitution in the lease of the names of the purchasers in place of the names of the sellers of the land; and that the rental up to June 30, 1946 should be paid to the sellers, and thereafter to the plaintiffs; and that the sellers should release the Government from all liability for damages to the land prior to June 3, 1946. The Shannons o-n their part accepted all the terms of the original lease and the document was signed by the sellers, the purchasers and officers of the Government. Appended to the agreement was a separate statement, signed only by the Shannons, in which they released the Government from all liability for .the restoration of the premises except that the release should not apply to any claim for damages which the Shannons might have for injury to the timber, fencing, digging of holes, &c. by the United States.
It will be noticed that the claims against the Government had been assigned long before the supplemental agreement was executed and that the government officers had no share in that transaction. The evidence indicates, however, that the Shannons were unwilling to sign Supplemental Agreement No. 2 until the appended paragraph was added, and hence it was prepared, and added to the agreement by the government agents. In the opinion of the court it is assumed- that when the agreement was signed, the agents of the United States knew that the parties to the assignments were laboring under a mistake of law; but if this be the fact it has no bearing on the validity of the assignments since they were executed in the previous year, entirely without government intervention or assistance. '
The United States has never consented to be sued in a case like the one at bar.

. See the cases cited in Note 4, supra, in the opinion of the court. In all of them a claim against the United States had been allowed and the money had been paid by the United States either to one of the parties to the assignment or into court. In none of the cases was any claim asserted against the government.