Court Opinion

ID: 8845658
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:56:28.59364+00
Date Added: 2024-06-11T17:05:20.233816
License: Public Domain

HUGHES, District Judge,
(dissenting.) Jurisdiction in this case is derived from the judiciary act of March 3, 3887, which authorizes the suit to be in tbe form of petition, and to be instituted in cases where the petitioner would he entitled to redress against the United States, either in a court of law, equity, or admiralty, if the United States were suable. Such petition is an action at common law, or a bill in chancery, or a libel in admiralty, according as the redress sought and nature of the claim may determine. In the present case the proceeding is clearly one for relief in equity. The petitioner, while he had redress by attachment in his own power, was assured by the agent of the defendant that his claim would he paid, and that the defendant woidd not take steps apprehended by petitioner that woidd defeat- its payment. Relying upon the good faith of the defendant in giving these assurances, petitioner allowed property which he could have replevied to be used by the defendant, only to find the payment of his claim defeated by the defendant’s resort to the very steps which he had been assured would not he taken. This petition is therefore in the nature of a bill in chancery for equitable relief. Yet we can, give no effectual redress. Our decree can be but a mere recommendation to congress for an appropriation. The case in detail is as follows:
The naval secretary of the lighthouse hoard of the United States contracted on the 12th of February, 1887, with Ramsay & Son, of Baltimore, for the construction of a steel twin screw steamer, which was afterwards named the Zizania. The vessel was to he built according to specifications and drawings which were made part of the contract. The amount agreed to he paid and received was §66,900. This sum was to be paid in five installments respectively as the work should reach stages specifically defined in the contract. The contract was to he liable to forfeiture by tbe secretary of the treasury if the work should not he completed at the end of seven months from the date of its approval by the secretary, and §35 was to be forfeited by Ramsay & Son for each day’s delay beyond that period in completing the steamer.
Ramsay & Son made poor progress with the work. The ship was not completed by October, 1887. They fell behind not only with their work, but in their payments to men and firms from whom they obtained material. One of the firms to which they became indebted was that of Coates & Co. of Baltimore, for steel plates and other material. On the 18th of February, 1888, — 12 months after the contract had been made, and 5 months after the steamer had become liable to forfeiture by the United States at their discretion,— *994Ramsay & Son gave to Coates & Co. a power of attorney to collect from the lighthouse board, at Washington city, the sum of $6,000 then due to Coates & Co. for plates, etc., which had been supplied to Ramsay & Son for this vessel, most of them still lying in the ship yard, and not yet put into the steamer.
A letter from Ramsay & Son, addressed to the chairman of the board, accompanied this power of attorney, stating that the $6,000 was for value received in steel plates furnished for the steamer by Coates & Co. The power of attorney and the letter both stated expressly that this money was to be paid out of the final payment that might be due to Ramsay & Son on account of the steamer Zizania, and the letter requested that the board should hold this order, and pay the amount when it might be due. The power of attorney and the letter were promptly presented by L. R. Coates, of-the firm of Coate & Co., to Commander R. D. Evans, at Washington, then in charge of the business of the lighthouse board, who was informed that, unless the amount due was paid, the firm would attach the material in the ship yard, and prevent its being put into the vessel. L. R. Coates testifies that Commander Evans took possession, of these papers, and placed them on file, and assured him that he would see the claim paid.
Commander Evans staffed to this witness that the government did not care to declare the contract forfeited, and that, while he did not believe his firm could sustain a mechanic’s lien against the engine, boilers, etc., yet he did not care about the government being put to the delay which the attachment would entail, nor desire that Coates & Co. should cease furnishing material for the ship, and thereby cause further delay. On the faith of what occurred in this interview, Coates & Co. allowed their material to be put into the Zizania. Afterwards, to wit, on the 8th of June, 1888, the government found it necessary to forfeit its contract with Ramsay & Son, and to complete the vessel itself. The final payment, therefore, did not become due nor become payable to Ramsay & Son. The cost of completing the vessel consumed the residue of the contract price of its construction, except about $726; and this cost of completion did not embrace any payment to Coates & Co. for the material which, on the assurance of Commander Evans, which has been stated, they had allowed to be built into the Zizania.
The record shows that a few days after the interview between L. R. Coates and Commander Evans the payment of the claim of Coates & Co. was the subject of official correspondence among officers of the treasury. Acting Solicitor of the Treasury F. A. Reeve, in a letter to the secretary of the 24th of February, 1888, advises that the claim of Coates & Co. for $6,000 should be paid out of the sum that should be finally due to Ramsay & Son, but that the account should be stated in the name of Ramsay & Son, who should be required to receipt for the draft issued for it, before its delivery to Coates & Co. A letter of March 5, 1888, from Hugh S. Thompson, assistant secretary of the treasury, referring to and approving of the letter of the acting solicitor, and addressed to the chairman of the lighthouse'board, informs the chairman that “authority is granted to the *995board for the payment of the amount named in the manner suggested in the letter of the acting solicitor.”
Nearly three years after the date of the two letters just alluded to, to wit, on the 10th. of January, 1891, the acting solicitor of the treasury, F. A. Beeve, addressing the secretary of the treasury, sa.ys, among other things:
“Assuming that the power of attorney dated February 18, 1888, for $6,000, referred to by Commander Evans, is the same power of attorney executed to Coates & Oo. by Ramsay & Son, I am of opinion that the sum of $6,000 should be paid to Coates & Go. out of any moneys withheld by the department in the settlement with the contractors. If, however, the money has been disbursed to the contractors or other parties, then I should recommend that upon application of Coates & Oo. the case bo sent to the court of claims, as suggested by Commander Evans in his letter of January 11th, 1889.”
This opinion was written, as appears upon its face, apropos of a letter received by the secretary of the treasury from Commander Evans, suggesting his inability to adjudicate “as to what amounts should be paid by the lighthouse board for sums due to creditors of Bamsay & Son for materials furnished and actually built into the Zizania, and for money loaned them, ostensibly for the prosecution, of the work.” Coates & Co. adopted the recommendation of the solicitor of the treasury, except that they brought their suit in the circuit court of the United Btates for Maryland, under the option given in section 2 of the judiciary act of March 3, 1887, (24 St. at Large, p. 503,) of suing in such cases as the one at bar, either in the court of claims at Washington, or a circuit court of the United States. This suit of Coates & Co., petitioners below, was dismissed by that court with, costs, and is here by writ of error.
If technicalities could be held to defeat equitable claims, this case would be clearly with the defendant. The power of attorney from Bamsay & Bon to Coates & Oo. expressly provided for its payment out, of the final or fifth installment of money that should bo doe to Bamsay Bon; and the fifth installment never fell due. Promises and pledges by individual officers of the government do not, in general, hind the government, and cannot be enforced by suit. Hence suits brought on such promises and pledges against the government cannot and should not be maintained; and so the mere assurances given by Commander Evans to Coates & Co.' that his claim should be paid cannot be recognized as binding upon the government. But this is not equivalent to saying that equitable claims cannot arise against the government, just and binding upon its conscience, under any circumstances whatever.
In the case before us the plaintiffs supplied a large quantity of material necessary in the construction of the ship which contractors were building for the government. They had been promised payment out of the third and fourth installments of money that shouid accrue to the contractors, and had found their claim postponed to more exacting creditors. They consented to accept a power of attorney, pledging payment out of the final installment to become due to the contractors. Most of the material for which this claim was due was iu the yard, but not put upon or built into the ship. It was their right to reclaim this material unless payment for it were *996assured. They accordingly went to Washington city to present their power of attorney, and learn whether or not it would be. paid. There was one contingency in which it certainly would not be paid, to wit, the forfeiture by the government of its contract with Eamsay & Son. For five months it had been optional with the government to declare this forfeiture. It was material for Coates & Co. to know whether it intended to exercise this option, an act which would nullify their claim; and this was a chief point of solicitude with the holders of the power of attorney, and their chief subject of inquiry at Washington.
There seems to have been a very full conversation on the subject between Commander Evans and L. E. Coates, the result of which was that Coates became confident that the forfeiture would not be declared, and that the final installment of construction money would accrue to the contractors, and would be available for the payment of his claim. Believing from what Commander Evans said to him that there would be no forfeiture, and that their claim would be protected and honored by the authorities at Washington, Coates & Co. allowed their material to be put into the ship, hut only to find in a few months that their confidence in the assurance which had been given them had beeen misplaced.
There is no pretense that the officers of the government did not act in the utmost good faith. It became necessary in dealing with these contractors to declare a forfeiture in June, which they had no intention of declaring in the preceding February. Throughout, their action was taken in the utmost good faith; and it is one of the chief merits of this claim that it is due upon equities not in the least tainted with fraud or misconduct. The authorities in charge of the matter have already adjudicated this claim in favor of Coates & Co., and I can discover no reason why the court should refuse to do likewise.
The solicitor of the treasury, in his letter of 10th of January, 1891, already referred to, says:
“H. A. Ramsay & Son, of Baltimore, the contractors for building the Zizania for the lighthouse hoard, being indebted to Ooates & Company in. a large amount for materials, etc., executed a power of attorney for $6,000. It was optional with the government to recognize or not this power of attorney. It appears that Commander Evans, the naval secretary of the lighthouse board, did recognize it, and that Coates & Company understood they were to be paid this sum. Good faith and fair dealing would require that the arrangement he carried out. There can he but little doubt that the then secretary of the board not only recognized the claim of Coates & Company, but accepted the power of attorney with the intention of paying them $6,000 of the balance due to Ramsay & Son. In a letter addressed to Henry Williams Elliott under date of May 28th, 1888, (ten days before the forfeiture,) Commander Evans says: ‘As it is possible that some misapprehension exists as to the amount due to Messrs. Ramsay & Son, it is brought proper to call your attention to tlie fact that there are now due under the contract two payments, — the fourth, amounting to $12,042, and the fifth, amounting to $18,732. The entire fourth payment is pledged under power of attorney given by Mr. Ramsay. Under the last payment there were $6,000 pledged, under a power of attorney granted February 18,1888, leaving but $12,732 to meet any further claims.’ ”
After quoting the above from Commander Evans, the solicitor continues:
*997‘‘I am ot' tlie opinion that tlie sum of $6,000 should be paid to Coates & Company out of any moneys withheld by the department in the settlement with the contractors.”
I tliink that decree onght to be entered here in favor of the plaintiff in error, and that the decree of the court below should be re-' versed.