Case: MARY A. WARDWELL, Administratrix, v. THE UNITED STATES
Abbreviation: Wardwell v. United States
Decision Date: 1895-12-07
Docket Number: No. 19965
Citation: 32 Ct. Cl. 30
Volume: 32
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: MARY A. WARDWELL, Administratrix, v. THE UNITED STATES.
Judges: 
Pages: 30–36

Head Matter:
MARY A. WARDWELL, Administratrix, v. THE UNITED STATES.
[No. 19965.
Decided December 7, 1895.]
On the defendants’ Demurrer.
Claimant sues to recover the amount of three checks, one issued by a paymaster and two by a quartermaster in June, 1869, in payment of balances due for quartermaster stores. It is alleged that in the year 1872 the amount of said checks was, in pursuance of the Act %9 May, 1866 (Revised Statutes, § 306), covered into the Treasury and carried to the account of outstanding liabilities, and that no part of either of said checks has ever been paid; that neither of them has been assigned or transferred by decedent or claimant, and that they have been lost or destroyed.
I. When a claim passes into the form of checks its legal character changes from that of a demand for goods sold and delivered to a claim represented by the checks given in liquidation of the original demand. It then becomes a legal obligation arising upon the new form of indebtedness. •
II. The fund established by section 306, Revised Statutes, bears upon it the impress of a trust, and the statutes of limitation can not be set up against money credited to the claimant in the permanent apxsropriation for outstanding liabilities. Such money is held as a trust fund payable on demand without limit of time.
The Reporters’ statement of tbe ease:
The allegations of the petition demurred to are set forth in the opinion of the court.
Mr. George 3. Gormcm (with whom was Mr. Assistant Attorney-General Dodge) for the demurrer:
If the Congress had purposed to create a “trust fund” out of such moneys, and to have made the Secretary of the Treasury or other officer a trustee for the benefit of the payee, they would have said so, plainly and unmistakably, as was done in the case of the surplus proceeds of direct tax sales in certain parishes in South Carolina. (Act of August 5,1861, ch. 45; 12 Stat. L.j 292, § 36.) There was a direct, express, technical trust, with the Secretary of the Treasury as trustee. This statute provides that the surplus of the proceeds of the sale of real estate sold for a direct tax due to the United States shall, after satisfying tbe tax costs and charges and commissions, be deposited in tbe Treasury, to be there held for tbe use of tbe owner of tbe property, until be or they shall make application therefor to tbe Secretary of tbe Treasury, who, upon such application, shall, by warrant on tbe Treasury, cause tbe same to be paid to tbe applicant.
Here we have a direct, express, technical, and unmistakable declaration of trust, tbe creation of a trust fund, specific directions to tbe trustee as to tbe method of executing tbe trust, and an express declaration that tbe trust money was to be held until and paid whenever demanded. And under this statute tbe Supreme Court held (United States v. Taylor, 104 U. S., 216) as a matter of course, that the trust was such a direct, express, and technical trust as would prevent the running of tbe statute of limitations.
But that decision can not possibly be stretched or tortured or twisted into an authority for claimant’s contention here, because there is utterly lacking tbe instrument creating tbe trust such as there existed (tbe act of August 5,1861); and without such instrument there can be no such trust and no such consequences. It will not avail to say that section 306, Revised Statutes, “is in tbe nature of a trust,” or that tbe courts will imply a trust from its language, or that a constructive trust is created by it, for against all such trusts the statute of limitations runs with full force. In order to escape from this statute and from tbe doctrine of laches a direct, express, technical trust must be shown. There is no such trust created by this statute. To invoke tbe doctrine of tbe Taylor Case in any except a direct, express, technical trust is to totally misapprehend, not only tbe letter but the spirit of that decision.
I say that tbe statute of limitations, at law, and the analogous doctrine of stale claims, in equity, runs with full force against every species of trust except a direct, express, technical trust, solely cognizable in courts of equity. Tbe clearest and most masterful statement of tbis fact is to be found in tbe language of that great American commentator, Chancellor Kent, as reported in Kane v. Bloodgood (7 Johns. Ohy., 89-109-110).
And such is the doctrine of the Supreme Court of the United States. In Spridell v. Hennoi (120 U. S., 377) it is held that implied trusts are subject to the bar of the statute and to the doctrine of laches, and that if the bill shows upon its face that the plaintiff, by reason of lapse of time and his own laches, is not entitled to relief, the objection may be taken by demurrer.
The rule is similarly announced by all the text writers. In Angel on Limitations (6 ed., § 166) it is said:
“To exempt a trust from the bar at the statute, it must be, first, a direct trust; second, it must be of the kind, belonging exclusively to the jurisdiction of a court of equity, and third, the question must arise between trustee and cestui que trust.” (See also §§ 469 and 471.)
To the same effect is 2 Perry on Trusts (4ed.), section 865, and the multitde of cases cited in note 8.
No case cited in the claimant’s brief has the slightest application to the running of the statute of limitations, except the case of Wayne (26 O. Gis. R.,274).
Ostensibly the decision is rested upon the authority of Taylors Case (104 IT. S., 216), the court saying that “the case can not be distinguished in principle” from that case. I have already shown, it seems to me, the total .dissimilarity between the act of August 5, 1861, upon which the Taylor Case is founded, and section 306, Revised Statutes, upon which the Wayne Case and the case at bar are founded. In the Taylor Case, the statute expressly and in terms created an express, direct, technical trust; but section 306 does no such thing, but only provides for a method of bookkeeping for the settlement of the Treasury accounts. If there is any trust about it, it can only be an implied or constructive trust. And this fact would seem to be conceded in the Wayne Case, when the learned judge says (p. 288) that “ money carried to the appropriation account of ‘outstanding liabilities’ is held in the nature of a trust fund.”
But, as we have seen, this does not avail against the statute of limitations or the doctrine of laches. To prevent the running of the statute there must be a direct, express, technical trust, created by the instrument itself, and not merely a case of holding money in the nature of a trust — in other words, an implied trust. Herein lies the error, it seems to me, of the Wayne decision.
So far as the case of Becker (O. Cls. R., 172) is concerned, I do not regard it as a decision against the exclusiveness of section 3646, Revised Statutes, as contended for in my brief on the demurrer, where the amount of the check (as in the case at bar) is within the sum of $2,500. The amount of the check in the Becker Case is far in excess of that amount, and therefore the court did not consider that section applicable to the case. If the amount of the check had been within the sum mentioned in the statute, I apprehend that a different conclusion would have been reached.
It is entirely unnecessary, however, to insist on the point of exclusiveness of jurisdiction in section 3646. Section 1069— the jurisdictional statute of limitations — is a complete bar to this suit, and I submit that the demurrer should be sustained and the claimant relegated to Congress for relief.
Mr. George A. King in opposition:
In McKnight v. United States (13 C. Cls. B., 292), it was said with reference to Treasury drafts (pp. 305, 306):
“Such drafts are understood to constitute new contracts on the part of the Government, into which the previous claims upon which they issue are merged, and are valid and binding upon the United States in the hands of bona fide holders, by indorsement for valuable consideration, as commercial bills of exchange and promissory notes are between individuals, whatever valid objections or defenses there may have been to the original claims and accounts upon which the settlements were made and drafts issued. (Bev. Stat., § 308; The Floyd Acceptances, 7 Wall., 666.)”
The McKnight Case was affirmed by the Supreme Court (98 U. S., 179), and was followed íd Buffalo Bayou B. B. Go. v. United States-(IQ C. Cls. B., 238, 250).
See also Kinney v. United States (19 C. Cls. B., 671); Becker v. United States; WayneY. United States (26 C.Cls.B., 172,274).
Any ruling contrary to that made in the Wayne Case would not only result in hardship and positive injustice to payees of Treasury drafts, checks, or warrants, but would be in contravention of the very purpose of the Act of May 2, 1866 (14 Stat., 41), constituting sections 306-310 of the Bevised Statutes, as expressed in its title, as well as in opposition to the practice of the Treasury Department ever since its enactment.
It is only necessary to say in reference to the case of Carlisle v. United States (29 C. Cls. E., 414), cited on behalf of the United States, that it involved no such question as that which arises in the present case, but was a mere suit on an ordinary contract balance, brought more than six years after the alleged performance of the contract by the claimant. No element of a trust fund was involved or claimed to be involved in the .case,

Opinion:
Weldon, J.,
delivered the opinion of the court:
The claimant sues to recover the amount of three checks, one issued by a paymaster and the other two by a quartermaster of the Army in favor of decedent.
They were issued in June, 1869, and in the aggregate amount to the sum of $1,979.17, being divided as follows, to wit: No. 2135, $461.87; No. 2176, $500, and No. 2179, $1,017.30.
It is alleged that said checks were issued in payment of balance due for quartermaster stores sold to the United States; " that in the year 1872 the amounts of said checks were, in pursuance of the.act of May 2,1866, now constituting section 306 of the Revised Statutes of the United States, covered into the Treasury of the United States and carried to the account of outstanding liabilities, and no part of the amount of either of said checks has ever been paid. Said checks were neither of them assigned or transferred by said Wardwell or by the claimant, and have been lost or destroyed."
The effect of the demurrer is to admit every allegation of the petition properly pleaded, and we have only to pass upon the question as to whether such allegations constitute in law a sufficient cause of action against the defendants entitling the claimant to recover. When the claim of the decedent passed into the form of checks, its legal character changed from that of a demand for goods sold and delivered upon the contract to a claim represented by the checks given in liquidation of the original demand, and then became an obligation of the defendants arising upon the new form of indebtedness.-
The checks not having been presented within three years from the date when they were issued, the amount represented by them was covered into the Treasury under said section, and now remains there under the designation of "Outstanding liabilities" to the credit of the said claimant or his legal representative.
The theory upon which the claimant predicates her right to recover is that the amount of the checks having been carried to the account of "Outstanding liabilities" and covered into the Treasury, it becomes a trust obligation upon the part of the defendants, and not subject to the operation of the statute of limitations until there is a refusal to pay and the trust is disavowed.
It is insisted by tbe counsel for tbe defendants that inasmuch as tbe lie vised Statutes, section 3646, gave to the decedent the right to have a duplicate check issued, that therefore all other remedies are excluded; that his rights were remitted to the remedy prescribed by that law, and that the claim is now barred by the statute of limitations, the claim not having the legal qualities which protect it from the implication of payment and discharge arising from lapse of time; that if a trust exists, it is only a quasi or constructive trust, which is not within the equitable doctrine that prevents the application of the statute of limitation.
If the suit had been brought within the three years prescribed by section 306, it may be that the decedent would have been without a remedy in this court, as he would have been compelled to sue on a lost instrument, when the statute afforded him a remedy to supply the loss by having duplicate instruments issued; and the question arises in this proceeding, Did that special remedy so affect the' rights of the party as that the claimant is without remedy upon the allegations of her petition?
There is no doubt about the justice and fairness of the claim. The plaintiff asserts it and the defendants admit it, but insist that the remedy is in Congress and not in this court.
The suit is based upon the Act of May 2, 1866 (14 Stat. L., 41), now constituting in substance section 306 of the Revised Statutes. The title of the original act is as follows:
"An act to facilitate the settlement of accounts of the Treasurer of the United States and to secure certain moneys to the people of the United States or to the persons to whom they are due and who are entitled to receive the same."
In connection with the purpose and operation of that statute, it is pertinent to quote what Chief Justice Richardson said while Secretary of the Treasury:
"The act of Congress, passed May 2,1866, entitled 'An act to facilitate the settlement of the accounts of the Treasurer of the United States, and to secure certain moneys to the people of the United States, or to the persons to whom they are due, and ivho are entitled to receive the same,' has relieved this office of numerous accounts, some of which had remained on the books of the Treasury for forty years. By the operation of this law, all moneys represented by these accounts that had remained unchanged for three years or more on the books of the Treasury, or any of the offices thereof, were covered into the Treasury by warrant to an appropriation account denominated ' Outstanding liabilities.' The workings under this law have-been satisfactory to all persons claiming payment on drafts and checks. There has been no difficulty in the way of persons entitled to receive pay therefor, such payment being made upon the statement of accounts in their favor by the First Auditor."
We have carefully considered the very able brief filed by counsel for the defendants and his oral argument on the trial of this cause, and while we are impressed with the distinction which he makes in the classification of trusts, we are not disposed to disturb the decision of this court in the case of Wayne (26 C. Cls. R., 274).
In that case the question of limitation was decided by the court in express terms.
The counsel for the claimant took substantially the same position taken by counsel for claimant in this case, that " The fund established by section 306, Revised Statutes, bears upon it the imprint of a ' trust fund.'"
In that contention this court substantially concurred, saying-in substance the statute of limitations can not be set up against money credited to the claimant in the appropriation account of outstanding liabilities. Such money is held as a trust fund payable on demand without limit of time.
That case not having been appealed from, but acquiesced in by the defendants, and not now being impressed with the opinion that the court mistook the law, the case is adhered to and the demurrer is overruled with leave to the defendants to plead over-if they so desire.