Court Opinion

ID: 9442603
Source: CourtListenerOpinion
Date Created: 2023-08-03 18:52:42.842882+00
Date Added: 2024-06-11T17:29:08.989084
License: Public Domain

WILBUR K. MILLER, Circuit Judge
(dissenting).
This case went off in the United States District Court on a motion to dimiss, which of course admitted all facts well pleaded in the complaint. Those facts are: The appellees, who are the members of the Library of Congress Trust Fund Board, on or about September 28, 1945, authorized and empowered the appellant, a licensed real estate broker, to act as the Board’s agent in offering for sale certain valuable real estate in the District of Columbia, which the Board had the right and power to sell and convey. Pursuant to this employment, the appellant offered the property to one Eric Johnston, a representative of the Motion Picture Association of America, Inc. Mr. Johnston expressed interest. Appellant had floor plans prepared which he submitted to the prospect. He conducted the Association’s representatives through the building and negotiated with them for its sale. They asked appellant to ascertain the lowest price at which the property could be bought. He asked the question of the Board, giving the name of his prospect, and was told the price was $600,000. He passed the information on to the Association. Appellant kept the Board informed of the progress of his negotiations, but on or about January 1, 1946, and while Story was still negotiating with the prospective purchaser, the Board sold and conveyed the property to the Motion Picture Association for $600,000, but did not inform the appellant. Although Story was the procuring cause of the sale, the Board has refused to pay him the sum of $19,000, which is the usual and customary commission and which would be fair and reasonable compensation. Such, is the unconscionable conduct which the unanswered complaint attributes to the appellees.
The members of the Board may have had some affirmative reason for refusing to pay Story, or they may have been advised by counsel that they lacked legal authority to do so. However that may be, when the Board was placed in the position of admitting, by the motion to dismiss filed in its behalf, that it had employed the broker and had availed itself of his services and then had sold to his prospect without informing him and had subsequently refused, without any reason, to pay him any compensation at all, its position was indefensible morally and, I think, legally. The motion to dismiss conceded flagrant bad faith on the part of the Board.1
The majority of the court have found this to Ije a suit against the United States to which it has not consented, and for that reason have affirmed the District Court in dismissing for lack of jurisdiction. I am unable to agree for two reasons: (a) I do not think this is an action against the United States, and (b) if it is, I think Congress consented, in § 3 of the Act,2 *464for- the Board to be sued in circumstances such as those disclosed here.
' The appellant, in his brief, concedes his suit-to be against-the government, and argues it wag permitted by the statute. The concession does not establish the fact and was improvidently made, as I' shall demonstrate — at least to my own satisfaction. But even if appellant correctly conceded this to be an action against the1 United States, I think his'argument that Congress gave its consent tó the institution of such a suit is sound and should be upheld.
It may be presumed, I suppose, that the conception of this case as one against the United States is based on the idea that the plaintiff sought to subject to his debt a trust estate of 'which the government itself, through its agencies, the Library of Congress and the ’Smithsonian Institution, is the cestui que trust;3 4and that the action would not be thought of as one against the United States merely because the defendants constituted the Library Trust Fund Board, which is a government agency, if as a matter of fact recovery was sought from funds in the Board’s hands of which no federal agency was the beneficial owner.
The nature • of the gift to the Board which is involved in this case is, therefore,of prime importance in determining whether the plaintiff-appellant was attempting to reach a fund held in trust for the government. Although it is not in the record, fortunately we have access to salient paragraphs of the trust agreement4 which are quoted in an opinion of the Attorney General (40 Op.Atty.Gen. 66) of which we may take judicial notice.5
These paragraphs are:
“As a memorial to my father, Henry Kirke Porter, it is my pleasure to tender to the Library of Congress Trust Fund Board the conveyance of the parcels of land owned by me at the corner of Sixteenth and I Streets in the City of Washington, District of Columbia, as a gift, upon an agreement that when the property is sold one-half of the net proceeds of such sale will be added to the permanent invested funds held by your Board as trustees for the Library of Congress. * * * I authorize the Library of Congress Trust Fund Board to sell said property at such time or times and upon such terms or conditions as it may in its absolute discretion deem advisable.
“When a sale of the property is made by your Board, I direct your' Board to pay over to the Smithsonian Institution, of Washington, D. C., the remaining one-*465half of the net proceeds of such sale, to be applied by the Smithsonian Institution for such purposes as I have designated to it in a formal offer contained in my letter to the Institution bearing the date of this letter * * *»
For several reasons, it is apparent the donor intended the realty to be sold: (1) Her offer, quoted above, twice referred to “when the property is sold” but never to “if it is sold” (2) She dictated the disposition of the net proceeds of the sale of the property, a provision Inconsistent with an absolute and unqualified gift of realty as such. (3) The donor placed only one-half of the property’s net proceeds permanently in trust for the benefit of the Library, and directed the Board to pay the other half to the Smithsonian; as the property was not susceptible of division, this could be accomplished only by a sale. These considerations amply demonstrate that the donor gave the real estate, not to be retained by the Board, but to be sold so the net proceeds might be divided in accordance with her directions.
Since it was to be sold, the realty itself was not to be held in trust for the Library and the Smithsonian. But the donor did not place the gross proceeds of sale in trust for the two institutions. The trust agreement twice refers to the net proceeds of the sale, and directs that one-half of the net be held in permanent trust for the Library, and the other half of the net be paid to the Smithsonian. It should be noted that the Board accepted those instructions and agreed to handle the net proceeds in that fashion. This is seen in the fact that the offer to convey was “upon an agreement that when the property is sold, one-half of the net proceeds of such sale will be added to the permanent invested funds held by your Board as trustees for the Library of Congress”, and that the other one-half of the net proceeds of the sale should be paid to the Smithsonian Institution. The Board accepted the gift upon that agreement.
We must suppose this generous donor understood the meaning of the term “net proceeds of such sale”, which she twice employed in describing her gift to the two institutions, and that she used the words advisedly. The trust' agreement should, therefore, be construed in the light of the plain meaning of the expression “net proceeds of such sale”. The donor knew, of course, that the net proceeds would be the sale price diminished by the expense of selling, so in repeating the words “net proceeds”, she in effect authorized and directed the Board to pay the cost of selling the property out of the gross proceeds. The difference between the gross and the net proceeds (which in this case, as far as we can ascertain from the record, is the broker’s commission of $19,000) was not to go to either named beneficiary, according to the terms of the trust instrument.
If the Board has divided the gross sum of $600,000 between the two cestuis que trust, it has done so contrary to strict instructions to divide only the net; its act in so doing, if it has done so, amounts to an unauthorized seizure of $19,000 to place in the two trust funds. On the other hand, if the Board has followed instructions and has divided only the net proceeds between the two beneficiaries, in what fund and for what purpose is it holding the item of brokerage expense in the sum of $19,000? What did the donor want done with it?
The donor also knew that authorizing the Board to sell the property would result in bringing the gross proceeds of the sale temporarily into the Board’s hands. Yet she placed only the net proceeds in trust for the Smithsonian and the Library. Obviously she expected the Board to pay the expense of selling from the gross proceeds. It follows that the sum of $19,000 (the difference between the gross and the net) was received by the Board for the specific purpose of paying the brokerage commission. That being true, the sum is impressed with a trust in favor of the broker, which the Board should be required to honor.
In the present posture of the case, i. e., on a motion to dismiss, it would beg the question, and would anticipate a decision on the merits of the case, should the Board argue it does not owe the appellant $19,000 or any sum, that it incurred no such brokerage expense, and that the entire sum of $600,000 was therefore net proceeds, *466The motion to dismiss admits that the Board does owe appellant $19,000, that it did incur brokerage expense in that amount, and that the net proceeds of sale amounted to $581,000 and not to $600,000.
' It is therefore my view that only the sum of $581,000, which was the net proceeds, was received in trust for the Library and the Smithsonian; 'that the remaining sum of $19,000, the appellant’s commission, was received by the Board in trust for him; that that sum of $19,000 (by which the net proceeds differed from the gross) was not given by the donor either for the benefit of the Library or for payment to the Smithsonian, from which it follows that neither institution ever became beneficially entitled to that sum or any part of it. Nor was it given to the Board to be retained for any purpose. The consequence is that the 'sum which appellant sued for is a fund which does not belong to any government agency, actually or beneficially, and that this action is, therefore, not against the United States. Substantially to that effect was the holding of this court in Dollar v. Land, 1946, 81 U.S.App.D.C. 28, 154 F.2d 307, affirmed 1947, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209.
But if the suit be thought of as one against the government on the mere ground that the Board is a federal agency, nevertheless, the District Court erred, as I think, in dismissing the complaint for lack of jurisdiction. For § 3 of the Act, even under the narrow construction given it in the majority opinion, authorized the appellant to maintain his action. He was a creditor, to be sure; but he was a creditor of the Board and not of either of the two trust funds set up in the trust agreement. And while the appellant was a creditor of the Board, he was something more than an ordinary unsecured creditor. He was in a favored position because the donor had earmarked for his benefit enough of the gross proceeds of the sale to pay his commission and, in effect, had directed the Board to pay him that sum. So, in equity and good morals, which are much the same, the Board received $19,000 for the broker’s use and benefit, and not at all for either of the express trusts, nor for its own purposes. In suing to recover the money, the appellant was no mere creditor who sought to collect a debt; he was the beneficiary of an equitable trust, asking the court to enforce its provisions. If that be true, and I think it is, it must be conceded that § 3 of the Act is congressional consent to such an action against the Board.
If we go a step further, and concede arguendo that the gross sum of $600,000 was in trust for the two governmental beneficiaries, that there was no equitable trust impressed on $19,000 of the sale price in favor of the appellant, and that, in consequence, this is a suit against the United States, it still seems to me the District Court erred in disclaiming jurisdiction. Even in those circumstances, § 3 of the statute construed as a whole amounts, in my opinion, to a consent by Congress that the Board be sued. The whole tenor of § 3 is to that effect. There are only two sentences in it. The first is that the Board shall have “all the usual powers and obligations of a trustee” with respect to all money and property received by it. The second sentence is, the Board may be sued in the District Court “for the purpose of enforcing the provisions of any trust accepted by it.”6 One of the usual obliga*467tions of a trastee is to pay his debts. Congress imposed that obligation on the Board. Yet the Board has refused to pay and the court has sustained it by holding that a suit to enforce this statutory obligation is not for the purpose of enforcing the provisions of the trust.
I can imagine the surprise of the members of Congress who passed the Act if they were told how it is being construed. They imposed the obligation but, it is said, gave the obligee no way to enforce it. Regardless of the rule that only a beneficiary may sue to enforce the provisions of a trust, I think the second sentence of § 3 is related to the first and must be construed with it; that Congress intended thereby to give the District Court jurisdiction to require the Board to discharge all the usual obligations of a trustee with respect to the money and property which it holds. Compare Dollar v. Land, supra. I cannot think Congress provided no remedy against the Board when it deliberately repudiates one of the “usual obligations of a trustee” expressly imposed upon it. I would reverse and require the Board to plead.

. The court’s opinion goes so far as to say, “Plaintiff has stated a case having considerable moral and sympathetic appeal.”

. 43 Stat. 1107 (1925), 44 Stat. 2 (1926), 49 Stat. 1205, 1894, 1921 (1936), 56 Stat. 765 (1942), 2 U.S.C.A. §§ 154-163.

. This seems borne out by this excerpt from, the court’s opinion: “* * * We must presume that the funds donated to and administered by the Board have been stamped by Congress ’ with the characteristics of funds devoted to a public use. The same reasoning that precludes direct recovery against the general funds of the Treasury operates to preclude recovery against the specialized funds in the hands of the Board, in the absence pf legislative consent.”
I suggest that we must not presume that funds not donated to the Board (such as the sum of $19,000 here in question) .‘.‘have been stamped by Congress with the characteristics of funds devoted to a public use.”

. What I refer to as the “trust agreement” is the written offer of the donor, dated December 20, 1938, which was formally aeeepted by the Board on De- . cember 22, 1938. The subsequent conveyance-by the donor was subject to the conditions expressed in the accepted offer, and whatever power the Board received to deal with the real estate was limited by those conditions.

. That we may do so seems settled. Bowles v. United States, 1943, 319 U.S. 33, 35, 63 S.Ct. 912, 87 L.Ed. 1194; Jackson v. United States, 1913, 230 U. S. 1, 18, 19, 33 S.Ct. 1011, 57 L.Ed. 1363; The Paquete Habana, 1900, 175 U.S. 677, 696, 20 S.Ct. 290, 44 L.Ed. 320; Heath v. Wallace, 1891, 138 U.S. 573, 584, 11 S.Ct. 380, 34 L.Ed. 1063; Fletcher v. Jones, 1939, 70 App.D.C. 179, 182-183, 105 F.2d 58, 61-62, certiorari denied, 1939, 308 U.S. 555, 60 S.Ct. 116, 84 L. Ed. 467; Bed Canyon Sheep Co. v. Ickes, 1938, 69 App.D.C. 27, 31, 98 F.2d 30S, 312 ; Thorsch v. Miller, 1925, 55 App.D.C. 295, 5 F.2d 118; Quapaw Land Co. v. Bolinger, 5 Cir., 1929, 32 F.2d 627, 629, reversed on other grounds 1930, 281 U.S. 693, 50 S.Ct. 244, 74 L.Ed. 1122; United States v. Brewer-Elliott Oil & Gas Co., D.C.W.D.Okl.1918, 249 F. 609, 619.

. The majority rhetorically ask, “ * * * could Congress have meant, through this simple statutory promise, to furnish third party creditors of the Board with 'a remedy against the very trust funds which Congress was solemnly undertaking to devote to a specified public use? Or a remedy against the public treasury?”
It seems to me the questions are not relevant. This sum of $19,000 is not a part of “the very trust funds which Congress was solemnly undertaking to devote to a specified public use”. Nor is the remedy sought here against the public treasury; consequently, the following statement of the majority is inapposite:
“ * * * If the Treasury were subject to the multifarious claims which may arise against the Government without the necessity of prior Government consent to suit, the Treasury could be depleted and governmental policy hampered.”
*467There is no need for concern here about the Treasury being depleted if Story were allowed to recover. It does not appear that this sum of $19,000 is in the Treasury. If it is, it should not be, except as a temporary deposit, since it is not public money.