Case: PEOPLE'S TRUST COMPANY, Receiver, v. THE UNITED STATES
Abbreviation: People's Trust Co. v. United States
Decision Date: 1903-03-09
Docket Number: No. 21091
Citation: 38 Ct. Cl. 359
Volume: 38
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: PEOPLE’S TRUST COMPANY, Receiver, v. THE UNITED STATES.
Judges: • Wright and Howry, JJ., did not sit in this case and took no part in the decision.
Pages: 359–398

Head Matter:
PEOPLE’S TRUST COMPANY, Receiver, v. THE UNITED STATES.
[No. 21091.
Decided March 9, 1903.]
On the Proofs.
Whaley & Taylor contract to erect certain barracks for the defendants at Willets Point. They become financially embarrassed; it is agreed that their creditors shall complete the work and be paid out of the proceeds of the contract, but that the contractors shall collect the money and immediately pay it over to the creditors, and shall indorse and deliver over all drafts or checks for the same. It is also agreed that the creditors may enforce this agreement in equity or by injunction. The agreement is carried out by the creditors, but not by the contractors. The Supreme Court of- New York enjoins the contractors from collecting the money and appoints a receiver. The defendants’ officers, after notice, pay money due on the contract to the contractors, who appropriate it. The receiver brings this suit.
I.The purpose of the statute (Kev. Stat., § 3477) making void the assignment of claims against the Government is to prevent frauds upon the Treasury, but not to aid persons to evade their obligations to their creditors.
II.Notwithstanding the statute, a court of competent jurisdiction may make such orders as will prevent a creditor of the Government from withdrawing the proceeds of his claim from the reach of his creditors.
III. If such a court should enjoin a creditor from collecting his claim, and appoint a receiver to do so, it will not be in contravention of the statute.
IV. By establishing the Court of Claims, Congress created a tribunal to determine the right of anyone to receive money due by the Government. The officers of the Treasury can not arbitrarily select between contending claimants.
V.A ministerial officer can not arbitrarily disregard the legal holder of the claim, a receiver, and pay the money in dispute to the creditor; and such a payment can not be set up as a lawful discharge of theUnited States. The decisions affecting the question reviewed.
The Reporters’ statement of the case:
The following are the facts of the cáse as found by the court:
I. That claimant is a citizen of the United States and a body corporate, duly organized and existing under the laws of the State of New York, and that it now is and at all the times hereinafter set forth was the duty appointed, qualified, and acting receiver in respect of the matters hereinafter particularly set forth, and having authority under its charter to act as such receiver.
II. That on January 23, 1892, Washington A. Whaley and Harry Taylor entered into a contract, in writing, with the United States for the construction and erection of two barracks at Willets Point, State of New York, at and for the sum of |43,950, the same to be paid in installments, and during the progress of said work certain installments were paid to ,said YVhaley & Taylor under said contract.
III. That during the prosecution of said work said Whaley & Taylor contracted certain indebtedness for labor and materials used in and upon said work, to wit, to John J. Leonard, $3,741.67; to George Scofield, $656.75; and to William K. Hammond, $2,500.
IV. That the said Whaley & Taylor thereafter entered into a certain agreement, in writing, on September 1, 1892, with the above-named Leonard, Scofield, and Hammond, which said agreement is in the words and figures following, to wit:
“Agreement made the first day of September, 1892, between W. A. Whaley and Harry Taylor, composing the firm of Whaley & Taylor, of the first part, and William K. Hammond, John J. Leonard, and George Scofield, of the second part.
“ Whereas the parties of the first part are the contractors for supplying the labor and materials for the construction and completion, except the plumbing and heating, of two buildings, each to be known as a one-company barrack, to be erected at the port of Willets Point, New York Harbor, Long-Island, which contract bears date January 23rd, 1892, and was made in form between First Lieutenant Henry Jervey, Corps of Engineers, as acting assistant quartermaster, United States Army, on behalf of the United States, of the first part therein, and the said Whaley & Taylor, of the second part therein, as by reference thereto will more fully appear, which reference is hereby made, which said contract is to be left at the ofiice of Nelson Smith, No. 97 Nassau street, for the inspection of all parties and for their use;
“And whereas the said parties of the first part are to receive from the United States for the erection of the said two building's according to said contract, the sum of $43,950, in installments, as tlie work progresses, and whereas they have commenced the performance of said contract for the construction of said barracks, respectively, and have received on account thereof some payments;
“And whereas the said parties of the first part now desire the parties of the second part to complete the said barracks for them according to the said contract; therefore
“This agreement witnesseth:
“ 1. That the parties of the first part hereby hire and employ the parties of the second part to provide all the work, labor, and materials of every kind necessary to complete the said contract and to go on and finish the said buildings according to the same.
“2. That the said parties of the first part shall pay the said parties of the second part, out of the proceeds to be realized on said contract from the Government, the cost of all work and labor and of all materials which shall be supplied, used, or provided by the parties of the second part in the completion of the said contract; the parties of the second part to keep an account of the work, labor, and materials which they shall supply and use in the performs nee of said contract; and the parties of the first part, in addition to paying for the said work and materials out of the proceeds of the contract, shall also pay the parties of the second part out of such proceeds such sum as maybe reasonable for their own services in the performance of said contract, and in the employing of the workmen and providing the materials and labor therefor and the superintendence thereof.
“3. The parties of the first part to secure the parties of the second part for all sums that may become due to them from time to time, on account of completing the said contract, and the indebtedness by the parties of the first part to the parties of the second part, respectively, do hereby sell, transfer, and assign to the parties of the second part all of the proceeds of the several and respective installments or payments which may'' become due upon the said contract; the parties of the first part to receive such proceeds so assigned, as agents for the parties of the second part, and to immediately pay or deliver the same over to them, and to indorse and deliver all drafts or checks that may be received on account of such proceeds over to the said parties of the second part.
“4. The parties of the first part further agree not to ask, demand, or receive any of the said payments or proceeds, except when the parties of the second part or some of them are present at the quartermaster’s office at Willets Point; and whenever any such payments are to bo made the parties of the first part, or one of them, will attend in person from time to time as may be necessary, at the said quartermaster’s office, upon being notified bjr the parties of the second part that such attendance is requested, and will then receive such payment or anjr draft or check that may be drawn therefor, and immediately indorse and deliver the same over to the parties of the second part.
“5. The parties of the first part further respectively agree that they will not, as between themselves, apply to any court for the appointment of a receiver of their copartnership property, or make any assignment of the proceeds of the said contract, or any installment thereof, or any payment to be made thereupon, to any person other than the parties of the second part.
“ 6. The parties of the first part further hereby covenant and agree with the parties of the second part that the provisions of this agreement may be specifically enforced in equity, or bjr injunction or mandamus, or other appropriate process, as may be agreeable to law and equity.
“T. It is further agreed that out of the moneys or proceeds which may be realized upon the said contract and handed over to the parties of the second part, they shall pay to themselves, first, for all work, labor, and materials supplied or used in and about the performance of said contact ana the completion of said barracks according to the provisions of the same, and for their own services performed in connection therewith or on account thereof, and which they, the said parties of the second part, are entitled to be paid under the provisions of this contract; second, that they shall next pay all of the indebtedness of the parties of the first part to the parties of the second part, respectively, which has heretofore been contracted, namely: To said William K. Hammond $2,500, to said John J. Leonard $3,741.67, and to said George Scofield $656.75, provided the balance of such proceeds are sufficient for that purpose, and if insufficient, then to apply such balance to the payment of said respective amounts ratably.
“8. After all of the work, labor, materials, and services supplied and other expenses incurred in the completion of the said contract have been paid for in full and after all of th'e indebtedness of the parties of the first part to the parties of the second part, respectively, has been paid in full, any balance that may then remain in the hands of the parties of the second part of 'the proceeds of the said contract shall be returned to the parties of the first part.
“9. And it is further agreed that subject to the performance of this agreement by the parties of the first part in all things required of them from time to time, the parties of the second part will proceed and complete the said buildings according- to the terms of the said contract for the erection of said barracks, and will pajT over to the parties of the first part any balance which thejT may receive of the proceeds of the said contract, after retaining therefrom and paying all the sums which they are entitled to retain and pay, as hereinbefore provided.
“ In witness whereof the parties have hereunto set their hands and seals the day and year first above written.
(Signed) “Whaley & Taylor. [seal.]
“W. A. Whaley. [seal.]
‘‘Witness:
“A. L. LocKwood.”
V. That upon the faith of said agreement the said Leonard, Scofield, and Hammond fully peformed and furnished, at their own cost, all the labor and materials necessary for the completion of said contract, and the buildings were completed and accepted by the United States, and that the United States had knowledge of the arrangement and agreement aforesaid under which the said work was so performed and completed.
VI. That the moneys arising under said contract with the defendant were paid and disbursed from time to time, as in said agreement provided, until the final payment on account of said contract, amounting to the sum of $18,350, became due, at which time the defendants sent a check for said amount to the disbursing officer at Willets Point, and all parties in interest were duly notified thereof by the defendants, as in said agreement provided and as had been done theretofore, but the said Whaley & Taylor thereupon refused and declined to indorse and deliver said check to said Leonard, Scofield, and Hammond.
Thereupon suit was instituted in the supreme court of Kings County, State of New York, b}?- said Leonard and Sco-field against said Whaley, Taylor, and Hammond (certified copy of proceedings of which is made part of the petition herein), whereby it was sought to enjoin said Whaley & Taylor from receiving, collecting, or indorsing any check or draft given for said final pajrment on' account of said contract, except in accordance with the terms of said agreement, and further sought to have a receiver appointed to hold said sum until a final adjudication of the cause, and generally to have said agreement specifically enforced and performed
The defendants were all duly and regularly subpoenaed, appeared in court, and answered the complaint, and such proceedings were thereupon had as that the said court, on, to wit, the 12th day of December, 1893, granted a preliminary injunction against said defendants, Whaley & Taylor, in the words and figures following, to wit:
“At a special term of the Supreme Court held at the courthouse, in the city of Brooklyn, on the 12th day of December, 1893.
“'Present: lion. Charles P. Brown, justice.
“JOHN J. Leonard and Geoege Scofield ' against “Washington A. Whaley, Haeey TayloR, William K. Hammond.
“ On reading and filing the summons and complaint in this action, and the affidavits of John J. Leonard and J. T. Marean, verified December 12,1893, and an undertaking dated December 12,1893, executed by John Hickey and Charles S. Lyman as sureties and approved by the court:
“On motion of J. T. Marean, attorney for the plaintiffs, it is ordered that the defendants, Washington A. Whaley and Harry Taylor, and each of them and their attorneys, agents, and servants, be and they are hereby enjoined and restrained, until the further order of this court, from collecting or receiving payment of the whole or any part of any check, draft, order, or warrant, which they, or either of them, or any agent or attorney of them, or either of them, .may at any time receive from the United States, or from any other person whatever, for the whole or any part of moneys due upon the contract for work at Wdiets Point, mentioned and set forth in the complaint in this action, and there stated to be the sum of $18,350; and also from indorsing or delivering any such check, draft, order, or warrant to any person whatever except the plaintiffs, or to a receiver to be appointed by this court, and from making any other disposition thereof whatever.
“And it is further ordered that the defendants and their attorneys show cause on the 18th day of December, 1893, at a special term of this court, to be held at the court-house, in the city of Brooklyn, Kings County, N. Y., on that day at 10 o’clock in the forenoon, or as soon thereafter as counsel can be heard, why the foregoing injunction should not be continued until the trial and determination of this action, and why a receiver of such check, drafts, orders, or warrants should not be appointed, with authority to receive and hold the same pending this action, and why the defendants, Whaley & Taylor, should not be required to indorse and deliver the same to such receiver; and why such other and further order in the premises should not be made as to the court may seem j ust.
“The grounds of the foregoing injunction are that the defendants threaten and are about to convert to their own use the checks, drafts, orders, or warrants aforesaid, which will render ineffectual any judgment which may be granted in this action.
“Service of this order on or before December 13, 1893, will be sufficient.
“Enter.
“C. F. Brown.”
Thereafter and on, to wit, the 6th day of July, 1894, the above-named claimant, People’s Trust Company, was by said court appointed receiver in said cause of the said fund so involved therein, said order of appointment being in the words and figures following, to wit:
“At a special term of the Supreme Court held at the courthouse in the city of Brooklyn, on the 6th day of July, 1894.
“Present: Hon. Willard Bartlett, justice.
“JOHN J. LEONARD AND GEORGE SoOEIELD m. “WASHINGTON A. Whaley, Haeby Taylor, and William K. Hammond.
“Certain of the issues in this action having been tried and determined by the court without a jury, and the trial justice, Hon. Willard Bartlett, having made and filed his decision, dated July 6,1894, directing an interlocutory order as follows:
“Now, on motion of J. T. Marean, attorney for plaintiffs, after hearing Charles S. Simpkins, attorney for defendants, Whale}’ & Taylor, and Nelson Smith, attorney for defendant Plammond:
“It is adjudged that the agreement of September i, 1892, between the parties to this action referred to in the complaint is valid, and the plaintiffs are. entitled to a specific performance thereof, and the defendants, Whaley & Taylor, are hereby commanded to attend at the office of the quartermaster at Willets Point upon such notice as is provided’ for by said agreement of September 1, 1892, to receive and they are hereby commanded to receive, indorse, and forthwith deliver to the People’s Trust Company, the receiver heretofore appointed, or its authorized agent, any check, draft, or war rant which said quartermaster, or any other representative of the United States may at any time or place draw and deliver to them for said sum of $18,350, or any part thereof; and also to pay over to said trust company any money which they may receive on account of said sum of $18,350. And said trust company is hereby appointed receiver of the said fund pending the action, with all the rights and powers of receivers according to law.
“It is further adjudged that the defendants,Whaley & Taylor, have a right to be paid $100 a month from September 1, 1892, and to have paid to Charles S. Simpkins $500, out of the fund, pursuant to the agreement as found, made by defendant Hammond, less payments and advances made by plaintiffs and said Hammond to them and to said Simpkins, since September 1, 1892; and it is hereby referred to Sanders Shanks, esq., as referee, to ascertain, determine, and report the amount of such payments and advances, and what amount remains unpaid; and the said receiver is hereby directed upon the filing of the report of said referee, to pay to said Whaley & Taylor and to said Simpkins out of the fund the amounts so found to remain unpaid; and the referee is hereby directed to first hear and forthwith determine the matters so referred, and make a report thereon before proceeding with the other matters referred to him.
“And it is further referred to said Sanders Shanks, esq., as referee, to hear and determine the rights of the plaintiffs and of the defendant Hammond in the fund, jointly, as against said Whaley and Taylor, and the rights of said Whaley and Taylor as against the plaintiffs and the defendant Hammond, under and pursuant to said contract of September 1, 1892; and the rights of plaintiffs and the defendant Hammond, sev-eralty, as between themselves therein; and upon the coming-in of the report of said referee, final judgment is hereby directed for the distribution of said fund according to the rights and interests of the parties as so determined. All questions of costs are reserved until application for final judgment.
“Enter.
(( Willard Bartlett, J. 8. G.
“Granted, July 10, 1894.
“John Cottier, Clerk.”
Thereafter and under date of the 20th day of February, 1895, a further order was entered in the said cause by said court, nunc pro tunc, as of the 10th day of Juty, 1894, in the words and figures following, to wit:
“Present: Hon. Willard Bartlett, justice.
“Joi-IN J. LEONARD AND GEORGE SCOFIELD VS. “Washington A. Wi-ialey, Harry Taylor, and William K. Hammond.
“Certain of the issues in this action having been tried and determined by the court without a jury, and the trial justice, Hon. Willard Bartlett, having made and filed his decision, dated July 6, 1891, directing an interlocutory judgment as follows:
“ Now, on motion of J. T. Marean, attorney for plaintiffs, after hearing Charles S. Simpkins, attorney for defendants Whaley and Taylor, and Nelson Smith, attorney for defendant Hammond—
“It is adjudged that the agreement'of September 1, 1892, between the parties to this action referred to in the complaint is valid, and the plaintiffs are entitled to a specific performance thereof, and the defendants Whaley and Taylor are hereby commanded to attend at the office of the quartermaster at Wil-lets Point, upon such notice as is provided for by said agreement of September 1, 1892, to receive, and they are hereby commanded to receive, indorse, and forthwith deliver to the People’s Trust Company, the receiver heretofore appointed, or its authorized agent, any check, draft, or warrant which said quartermaster, or any other representative of the United States, may at any time or place draw and deliver to them for said sum of $18,350, or any part thereof; and also to pay over to said trust company any money which they may receive on account of said sum of $18,350. And said trust company is hereby appointed receiver of the said fund pending the action, with all the rights and powers of receivers according to law.
“And all the right, title, and interest of all the parties to this action in and to any and every claim against the United States for the payments remaining unpaid, under the contract between said Whaley and Taylor and Lieut. Henry Jervey, on behalf of the United States, referred to in the complaint, is hereby vested in the receiver, with full power as such receiver to demand and receive payment thereof from the United States, and to prosecute any and all legal remedies for the recovery thereof.
“It is further adjudged that the defendants Whaley and Taylor have a right to be paid each $100 a month from September 1. 1892, to September 1, 1893, and to have paid to Charles S. Simpkins $500 out of the fund, pursuant to the agreement as found, made by defendant Hammond, less payments and advances made by plaintiffs and said Hammond to them and to said Simpkins, since September 1, 1892; and it is hereby referred to Sanders Shanks, esq., as referee, to ascertain, determine, and report the amount of such pajmients and advances, and what amount remains unpaid; and the said receiver is herebjr directed, upon the filing of the report of said referee, to paj^ to said Whaley and Taylor and to said Simpkins, out of the fund, the amounts so found to remain unpaid; and the referee is hereby directed to first hear and forthwith determine the matters so referred, and to make a report thereon before proceeding with the other matters referred to him.
“And it is further referred to Sanders Shanks, esq., as referee, to hear and determine the rights of the plaintiffs and the defendant Hammond in the fund, jointly, as against said Whaley and Taylor, and the rights of said Whaley and Taylor as against the plaintiffs and the defendant Hammond, under and pursuant to the said contract of September 1, 1892, and the rights of the plaintiffs and the defendant Hammond severally as between themselves therein; and upon the coming in of the report of said referee, final j udgment is hereby directed for the distribution of said fund according to the rights and interests of the parties as so determined. All questions of costs are reserved until application for final judgment.
“And it is further ordered that the hearing of the reference respecting the rights of the plaintiffs and the defendant Hammond severally as between themselves, in said fund, be staj-ed until after the receiver appointed herein shall gain possession of said fund, and the same is ready for distribution as the court may direct.
“It is further ordered that this judgment be entered mwne pro tune as of the 10th dajr of July, 1894, and that the interlocutory judgment of that date already entered, of which this decree is a resettlement on notice to all the parties be, and hereby is vacated.
“ Entered.
“ Willard Bartlett, J. 8. G.
“Granted February 20, 1895.
“Henry C. Saffeen, Glerh.”
After due proceedings had in said cause the same came on in said court for final hearing, and, upon consideration thereof, a final decree was rendered and entered therein on the 24th day of October, 1896, in the words and figures following to wit:
“Ata special term of the supreme court held in and for the county of Kings, at the county court-house, in the city of Brooklyn, on the 24th day of October, 1896.
“Present: Hon. N. H. Clement, justice.
“JOHN J. LEONARD AND GEORGE SCOFIELD, ' plaintiffs, against “Washington A. Whaley, Harry Taylor, and William K. Hammond, defendants. _ Final judgment.
“ An interlocutory judgment Jhaving been entered herein, dated July 6, 1894, and Sanders Shanks, esq., to whom certain matters were thereby referred, having made his two certain reports — the first dated August 28, 1894, and the second October 13, 1896 — whereby it appears that the defendants Whaley and Taylor have collected and received from the United States $1,000 of the sum of $18,350 mentioned in said interlocutory judgment, reducing the amount due from the United States to $17,350; and whereby it further appears that out of the said remainder of said moneys, to wit, $17,350, due from the United States upon the contract mentioned in the complaint between Henry Jervey, on behalf of the United States, and the defendants Whaley and Taylor, dated January 23, 1892, the defendants Whaley and Taylor are entitled to $710.75, Charles S. Simpkins to $250, and that the plaintiffs and the defendant Hammond collectively are entitled to the whole of the rest thereof, to wit, $16,339.25, in pursuance of the executory provisions of their contract with the defendants Whaley and Taylor, dated September 1, 1892, to be divided between them according to their several rights:
“Now, on reading and filing said reports, and on all the proceedings in the action, and on proof of due notice of application for this judgment—
“On motion of Josiah T. Marean, attorney for the plaintiffs, after hearing Herbert Titus, esq., counsel for defendants Whaley and Taylor, opposed, no one appearing for defendant Hammond—
“It is finally adjudged as follows:
“That out of the moneys remaining due and unpaid by the United States, to wit, the sum of $17,350, on the contract mentioned in the complaint between Henry Jervey, on behalf of the United States, on the one part, and the defendants Washington A. Whaley and Harry Taylor, on the other part, dated January 23, 1892, for the erection of certain barracks at Willets Point, the said defendants Whaley and Taylor are entitled to have and receive for their own use the sum of $710.75; Charles S. Simpkins is entitled to have and receive the sum of $250 for his own use, and the plaintiffs, John J. Leonard and George Scofield, and the defendant William K. Hammond are collectively entitled to have and receive for their own use the whole of the rest thereof, to wit, the sum of $16,339.25, pursuant to the executory provisions of their contract with the defendants Whaley and Taylor, dated September 1, 1892, mentioned in the complaint.
“That neither the said defendants Whaley and Taylor nor either of them have any fui’ther or other beneficial interest in the said moneys than is above adjudged.
“That the People’s Trust Company, heretofore appointed receiver of the said moneys due from the United States pending the action, be, and it is hereby, permanently continued and finally appointed as such receiver, and is hereby vested as such permanent receiver with the exclusive right to demand and receive the said moneys from the United States, and to prosecute any and all remedies for the recovery thereof. .
“And the said receiver is hereby directed out of said moneys, when received, to retain his fees and expenses and pay over to the defendants Whaley and Taylor the sum of $710.75, and to Charles S. Simpkins $250, and distribute between the plaintiffs John J. Leonard and George Scofield and the defendant William K. Hammond-the balance of said moneys according to their several rights therein as they may be established and determined, and either of them may appty at the foot of this judgment for further directions in that regard when said moneys shall be reduced to possession by the said i’eceiver.
“It is further finally adjudged that the defendants Washington A. Whaley and Harry Taylor be, and they are hereb}’-, directed and enjoined to forthwith pay over to said receiver any money and indorse and deliver to said receiver any check, draft, or warrant which they or either of them, or any one for their use or by their authority, shall at any time receive from the United States, or from any officer or agent of the United States, on account of said sum of $17,350;, also that they be, and they are hereby, further directed and enjoined to forthwith execute and deliver to said receiver, as such, an assignment of said moneys and of ’all right on their part to demand and receive the same from the United States, together with a power of attorney to said receiver, as such, to receive the same and to execute vouchers therefor in their name.
“It is further finally adjudged that said defendants, Washington A. Whaley and Harry Taylor, be, and they are hereby, enjoined and restrained from collecting or receiving from the United States, or from any officer or agent thereof, the said sum of @17,350, or aiy part thereof, due from the United States, as aforesaid, or check, draft, or warrant therefor.
“Enter.
“N. H. C.
“Jacob Worth, Clerk.
“ Enter in Kings County.
“Granted October 21, 1896.
“Wm. J. LyNoh,
“Deputy Ql&rk.n
That no appeal was taken from said final decree; it has never been modified, vacated, or reversed, and ever since the date thereof has been and still is in full force and effect.
VII. While said sirit was pending, and after the appointment of receiver therein as above, application was repeatedly made in writing to the then Secretary of the Treasury, and also to the then Secretary of War, asking that the check above referred to be delivered to said receiver, in order that it might be collected and disbursed in accordance with the decree of the said court. A like application was made on October 12, 1891, by the said receiver to Lieut. Edward Jadwin, U. S. Army, for said check or draft, which was then in his possession as the agent of the defendant in that behalf at Willets Point, N. Y.; and on the 19th of October, 1891, such application was also made by the receiver to the then Secretary of War. Prior to March 12,1895, said draft for @18,350 was recalled by the Secretary of the Treasury and two drafts were issued in lieu thereof, one for @1,000, which was by the defendant delivered to counsel for said Whaley & Taylor and thereafter paid, and the other for @17,350, issued upon war warrant No. 793, of August 29,1891. Repeated applications were made by the People’s Trust Company, receiver, as aforesaid, to the then Secretary of the Treasury and to the then Secretary of War, asking that the draft for @17,350 be turned over to it, and also filed with said Secretary of War certified transcript of the proceedings had in said Supreme Court and herein-before referred to, and on May 18,1895, an order was made by the Secretary of the Treasury that said draft be retained by the Treasury Department until litigation between the par ties should be ended, and the said Secretar}' so notified the attorneys for said receivers as follows:
“In the matter of the application of Messrs. Whaley & Taylor for the delivery to them of a certain check for the sum of $17,350, I have examined the records and briefs of counsel, and after full consideration it is ordered that said check be retained and held in the Treasury Department until the litigation between the parties in relation to the same is concluded. The only doubt in my mind is whether the check should be retained or sent back to the United States quartermaster at Willets Point, to whom it was origin all y forwarded; but inasmuch as it appears that an action is pending in the United States Court of Claims, to which the United States is a party, in which Whaley & Taylor seek to obtain judgment for this same indebtedness, it is considered that the interest of the Government will be best subserved by retaining it in the custody of the Department.
“ J. G. Carlisle, Secretary.
“May 18, 1895.”
YIII. That thereafter and on, to wit, November 1, 1895, the claimant above named instituted a suit in this court, known as No. 19600 on the dockets thereof, setting forth therein the premises above recited, and prayed judgment against the United States for the amount so claimed by it, as aforesaid, and which action was pending, undetermined, at the times hereafter mentioned; of the filing of which suit and the pendenc}*" thereof the defendant had due notice.
IX. That during the summer of 1896, the then Secretary of War was notified by counsel for said receiver of the institution and pendency of certain proceedings in equity, brought on its behalf in the supreme court of the District of Columbia in aid of the execution of the interlocutory decree of the supreme court of Kings County, State of New York, above referred to; whereupon the said Secretary of War referred the matter of said draft to the Attorney-General of the United States, requesting an opinion as to what disposition to make thereof. This reference and request was, however, subsequently recalled upon the request of counsel for said receive]1, who thereafter and in the month of October, 1896, filed with the Secretary of W ar a duly certified copy of the ■final decree rendered in said supreme court of Kings Countyj State of New York, a true and correct copy of which said final decree is part of finding No. 6 (supra). Thereupon the matter of the ownership of said draft or the proceeds thereof was again submitted by the Secretary of War to the said_ Attorney-General; and thereafter, on November 16, 1896, an opinion was rendered by the then Solicitor-General of the United States, the same being reported in volume 21 of the Opinions of the Attorney-General, pages 447 to 449, inclusive.
X. On November 19, 1896, the Secretary of War wrote to counsel for said receiver, acknowledging receipt of certified copies of the records in said several suits, and therein particularly called the attention of said counsel to the concluding-paragraph of the opinion of said Solicitor-General above referred to, said letter being as follows:
“WAR DEPARTMENT,
“ Washington, D. 0., November 19, 1896.
“Gentlemen: Acknowledging the receipt of your letters of July 16 and 25, 1896 — the latter inclosing copies of record of People’s Trust Company vs. The United States et al., in United States court, eastern district of New York; also certified copy of the record of the suit of The People’s Trust Company, receiver, vs. Whaley et al., in the supreme court, District of Columbia, and requesting that these records be submitted, with other papers in the case, to the Attorney-General for his opinion as to the effect they ought to have upon the payment of the claim of Whaley and Taylor pending these suits — 1 beg to inform you that the Attorney-General, to whom the matter was referred, concludes an opinion on the subject as follows:
“‘I venture to advise, therefore, on the whole case, that the fund in your hands be retained by you until the controversy between these parties, now pending under different forms of procedure and in several jurisdictions, be determined by a final adjudication of the whole matter by the tribunal to which the parties may last resort.’
£ ‘ Yery respectfully,
“Daniel S. Lamont,
“ Secretary of War.
“Messrs. Worthington & Heald,
“ 900 F Street, NW., Washington, D. O.”
XT. The draft in question was retained by said Secretary of War until, on January 18, 189T, it was sent by the then Assistant Secretary of War to said Secretary of the Treasury at the request of the latter, and which draft was thereafter, on the order of said Secretary of the Treasury, without any notice whatever to said receiver and with full knowledge by the defendants of the facts aforesaid, delivered to said Whaley & Taylor, and the same was collected bjT and paid to them by the defendants on January 21, 1897, but no part thereof was paid to said receiver, claimant herein, or to said Leonard, Scofield, and Hammond.
XII. That claimant has at all times borne true allegiance to the Government of the United States and has not in any way voluntarily aided, abetted, or -given encouragement to the rebellion against the United States.
Mr.' C. L. Frailey and Mr. A. A. IIolMing, jr., for the claimant. Worthington, Ileald c6 Frailey were on the brief.
1. The Supreme Court of the United States has said in a recent case decided in 1899, the facts of which-are somewhat similar to those of the case at bar,- and in which a New Jersej-court had appointed a receiver of a sum duo one Price from the United States (Price v. Forrest, 173 U. S., 410, 422):
“While the present case differs from any former case in its facts, we think that the principle announced in Frwin v. United States and Goodman v. Inblaclc justified the conclusion reached by the State court. That court held that it had jurisdiction under the laws of the State and as between the parties before it to put into the hands of its receiver any chose in action of whatever nature belonging to Price and of which he had possession or control.”
The jurisdiction of a court of equity in a case quite- similar in its facts to the one at bar has also been asserted and sustained in the comparatively recent case of Didany v. Scudder et al., decided on March 28,1899, in the United States Circuit Court of Appeals, fifth circuit.
It would seem that there can be no serious controversy in respect of the power of the New York court to appoint a receiver, or of its jurisdiction for that purpose, nor can its jurisdiction be collaterally questioned or raised in these proceedings. (.Railroad Company v. Gorman, 7 App. Cases D. C., 91.) It is a final decree, and as such entitled to full faith and credit. Surely'- the officials of the United States should give effect to, rather than set at naught, the solemn judgment of a State court of competent jurisdiction for the sake of the due administration of justice and to discourage disobedience of judicial decrees, if for no other reason, and this especially where no rights of the Government were thereby in any way interfered with or impaired. The courts of the various States are by law thus commanded to respect the judgment of one another, and unless incompatible with the administration of the affairs of the Government, its officers should be held to the same respect and duty as the courts.
2. The claimant, as receiver, had and has a right to receive the fund in controversy.
This point has been settled by the case of Price v. Forrest, (supra), in favor of the claimant.
This court has also decided, following the decisions of the Supreme Court, and in accord with the decision in Price v. Forrest (supra), that section 3477 of the Revised Statutes does not apply to the transfer by operation of law of claims against the Government. (McKay v. U. S., 27 C. Cls. R., 422.)
The receiver, therefore, having a right to the fund “to prevent one who has a claim for money against the Government from withdrawing the proceeds of such claim from the reach of his creditors,” and being the proper person to whom the fund should be paid by the United States, is the proper-party before this court and is the rightful claimant and has the right to maintain an action in this court. (Pedfteld, rec&i/ce)', v. United States, 27 C. Cls. R., 393.)
The appointment of the claimant by the New York court as receiver effected a transfer of the fund due Whaley & Taylor by operation of law (Pedfieldv. U. 8., supra), and, this being so, unquestionably the proper and only party legally competent to receive the Treasury draft from the officers of the United States was the present claimant. Specially is this fact emphasized by reference to the final judgment of the Supreme Court of New York, where it will be seen that the receiver is vested with the exclusive right to demand and receive the fund in dispute from the United States and to “prosecute any and all remedies for the recovery thereof.” This judgment was valid and entitled to consideration at the hands of defendant.
So far as the New York court is concerned, that court rendered a final judgment (and the only final judgment in the case) on the 24th day of October, 1896, adjudging-, among other thing's, that the claimant be the receiver of the fund, and that final decree has never been appealed from or modified or reversed. So far as this court is concerned, Messrs. Whaley & Taylor then had pending- and undecided a suit against the United States claiming the fund, as also had this claimant, the latter being No. 19600 on the docket of this court, of both of which suits the defendants had knowledge; so that if the advice of the Attorney-General was correct and proper in the premises the only final adjudication of the whole matter binding upon the pi-oper parties, as to whom the' fund should ultimately go, was that of the Supreme Court of New York, adjudging claimant to be the lawful party to whom the fund should be paid. In the face of all these facts, as well as the solemn assurances to the contrary by defendant, payment should not have been made to Whaley & Taylor, certainly not before some adjudication in their favor either in this or some other court.
The defendant, with full knowledge of the final decree of the New York Supreme Court, passed on the 26th day of October, 1896, adjudging the claimant receiver, with full power to collect the fund in question, having delivered to Whaley & Taylor, without notice to the claimant, the Treasury draft for the sum of $17,300, and having- paid the same to them, no part thereof being- paid or turned over to the claimant or to Hammond, Leonard and Schofield, is liable to the claimant for the whole sum of $17,300, because the payment thereof to Whaley & Taylor was a payment to parties not entitled to receive it, and did not discharge the debt of the defendant, and was void as a payment.
This proposition seems to be established beyond question by the opinions of the several Attorneys-General of the United States,“and by the decisions of this court. On November 19, 1849, Attorney-General Reverdy Johnson decided that—
“The payment of a liquidated demand against the Government to a person not authorized to receive it does not relieve the Government from responsibilhy to make payment to the proper claimant.
‘ ‘ There is no distinction in principle between such a case and that of an individual debtor, who, instead of paying his creditor, has made payment to a third person, to whom the money was not owing.
“If accounting officers err, designedly or by mistake, in making payments, the loss must fall on the United States.” (5 Op. Atty. Gen., 183, syllabus.)
In that case it appeared that certain moneys were due one Captain Rogers, and payment had been made by the United States to persons not his heirs, and the question presented was whether such payment was a bar as against the real heirs. The Attorney-General held that it was not.
In a subsequent case, where certain moneys were due from the United States to one Hilgert, one Kelly was a judgment creditor of the latter. Hilgert had absconded and left the country, and there "was little or no probability of his return, and he had left no duly authorized agent. Upon these facts Kelly, as such judgment creditor, requested payment to him of the money due Hilgert. The matter was referred to Attorney-General Brewster, and on February 23, 1881, he decided that payment to a j udgment creditor of a claim against the judgment debtor, if made without the latter’s consent, is unauthorized by law; and in his opinion the Attorney-General says:
“In general, a claim upon the Government can only be discharged by payment to the claimant himself, or to his duty constituted agent, or to those upon whom title to the claim or right to receive payment thereof is devolved by operation of law.” (17 Op. Atty. Gen., 675.)
It is noticeable that the Attorney-General’s language would seem to cover exactly the case at bar, where we maintain that the Government could only have been discharged by the payment to the claimant in this suit, as receiver, “upon whom the title to the claim or the right to receive payment thereof is devolved by operation of law.” Therefore payment to Whaley & Taylor after their title to the claim had devolved upon the claimant herein by operation of law and with full knowledge by defendant of that fact was no discharge of the demand against the United States.
Again, in the case of The Buffalo Bayou Railroad v. U. 8. (16 C. Cls. R., 238), it was held that an action may be maintained against the Government upon a Treasury draft not in the claimant’s possession if it was improperly paid by the Treasury Department to a third person without the indorsement or authorization of the payee.
It is to be observed that in the present case there was absolutely no excuse for the payment or delivery of the Treasury draft to Whaley & Taylor, because by reference to requests for findings Nos. 9 and 10 (supra) it will be seen that the Attorney-General had advised that the fund should be retained by the Government until a final adjudication of the controversy had been obtained, and defendant had assured claimant that that course would be pursued; and also because it appears that the Government had full notice of the proceedings had with reference to the claim, both on behalf of Whaley & Taylor and The People’s Trust Company, receiver, claimant herein; and by request for findings No. 9 (supra) it appears that a duly certified copy of the final decree of the New York Supreme Court adjudicating the claimant to be the proper and rightful party to receive the fund was in October, 1896, and but a few months prior to the delivery of the Treasury draft to Whaley & Taylor, filed with the Secretary of War. So that the draft was paid not only without the in-dorsement or authorization of the party entitled to receive it, but against the advice of the Attorney-General, with full notice of the final decree rendered in the Supreme Court of the State of New York, and in utter disregard of the assurances given by it to claimant.
The attention of the court is directed to the following authorities in support of this point: (State Wational Bank of Boston y. The United States (24 C. Cls. It., 488); Orame v. U. S. (25 C. Cls. R., 204); Holt, executor, v. U. S. (29 C. Cls. R., 56).
From the foregoing it may be seen that there is no room for doubt that the liability of the Government in a case such as the one at bar is to be determined by the same principles which govern similar transactions between individuals. (5 Op. Atty. Gen., 183; The United States v. State Bank, 96 U. S., 35,'36.) In the latter case, upon the concluding page of the opinion, the court says:
“In these cases, and manj7 others that might be cited, the rules of law applicable to individuals were applied to the United States. Here the basis of the liability insisted upon is an implied contract by which they might well become bound in virtue of their corporate character. Their sovereignty is is in nowise involved.”
This language is equally applicable to the case at bar.
It seems hardly necessary to refer the court to any authorities in support of the proposition that a payment by an individual to a third person who has no right to receive the sum paid does not extinguish the debt or relieve the debtor of payment to the proper person. This matter has been decided, however, in Wetterville v. Stevens (2 How., Miss., 642); Loehen Meyers v. Fogarty] (112 111., 572); Weist v. Lee (3 Yeates, Pa., 47); Parker v. Downing (13 Miss.., 465).
Mr. William II. Button (with whom was Mr. Assistant Attorney-General Pradt) for the defendants:
The only point involved in the controversy is whether or not this suit can be distinguished from the suit of United States v. Bovcherling, recently decided by the United States Supreme Court. If it can not be so distinguished it is apparent that the receiver is entitled to re-collect the amount of said draft. But it is submitted that this case does not fall within the ruling in that case, but is, on the contrar}*-, governed by the holding of the Supreme Court in the case of St. Paul Railroad Oo. v. The United States (112 U. S., 733). It is apparent that the contract under which the suit was brought in which the receiver was appointed was a contract of assignment pure and simple, to secure the assignees for amounts already due to the contractors, and also to secure them for amounts which thereafter might become due to them, and that the receivership has no object in view except to enforce the provisions of such contract of assignment.
The real point in all these cases involving receiverships and assignees is the question of whether or not the assignment, whether voluntary or by operation of law, is prohibited by section 3477 of the United States Revised Statutes. In a general way it has been held in the case of the. United States v. Bovcherling and other cases preceding it that that statute was not intended to prohibit an assignment by operation of law, such as an assignment to an assignee in bankruptcy or to a general receiver. There is, however, a distinction between such an assignment by operation of law and the one in this case, which is simply a decree whereby it is attempted to enforce a voluntary assignment of a particular claim, and this is exactly what was attempted to be done in the case of St. Paul Bailroad Company v. The United States {stopra).
An examination of the question irrespective of judicial holdings on the subject seems to indicate that this is a case which is within the statute mentioned. It is the manifest policy of that statute to forbid, as against the United States, assignments of contracts and debts due from the United States until they shall have reached a certain stage of adjudication. Under this statute it might well be held, as it has been held, that an assignment by operation of law with which the original creditor had no connection and which he did not institute and which he could not prevent is not intended to be prohibited by that statute; but if that statute intended to prohibit anything it must have intended to prohibit just this sort of a contract. The terms of the statute seem to so indicate, and there is no reason why those terms should not be literally interpreted. If, then, this contract was originally within the prohibition of the statute, is it possible that a judicial proceeding and the appointment of a receiver therein simply for the purpose of enforcing that contract can take such a contract out of the operation of the statute í If this is the law it would practically nullify the statute. Where such a contract is made and the United States is willing to make the payment to the assignee, it was held in the case of Bailey v. The United States (109 U. S., 432) that such payment would be good as between the parties. In such a case, then, the statute would be inoperative. If, on the other hand, the original contractor or the United States was unwilling to recognize such contract, it would only be necessary for the asignee to begin a proceeding in equity for the specific performance of his contract and get a receiver appointed whereby his contract would be made good not only as between the parties to it but also as against the United States. In what instance, then, would there be an exception which would come within the terms of this statute? It seems clear that such a proceeding as this, which is simply a proceeding to enforce a voluntary assignment and not a proceeding to protect the rights of general creditors, or in which a distribution to general creditors is sought, can have no effect to cure the invalidity of the original contract of assignment. In the case in the Supreme Court of New Yoi^k County in which the final judgment was rendered, the question could not and did not come up, so far as the United States was concerned. It was specifically held in that proceeding that the contract was good, but this simply meant that it was good as between the parties, and the decision is in accordance with the case of Bailey v. The United States {supra). In that case Mr. Justice Harlan stated:
“ In the case before us no question arises as to the transfer or assignment of a claim against the Government. ”
The payment had been made bj^ the United States in accordance with the assignment, and he practically held that the contract was good as between the parties who made it. This is all that was held in the case in the Supreme Court of New York.
This question in this case has been passed upon by the Supreme1 Court of the District of Columbia. The record in that case has not been offered in evidence, as it seems to have no bearing on the issues here except as a legal authority, and it is only referred to in that light. In the first place, a suit was brought in equit}1' in the Supreme Court of the District of Columbia by this claimant, the People’s Trust Company, as receiver, against Whaley & Taylor, for the appointment of a receiver in the District of Columbia, but Judge Cole held that the receiver of a New York court had no authority to maintain such an action in the District. Afterwards, Messrs. Leonard, Scofield, and Hammond filed another suit in equity in the District of Columbia for the same purpose, and in that case the plaintiffs made a motion for the appointment of a receiver and an injunction, which matters were heard before Mr. Justice Cox, and it appears that in that case the situation was set forth practically as it is set forth in this case. Mr. Justice Cox denied the motions, and in doing so filed an opinion, a copy of which is attached to this brief as an appendix. He bolds that this contract is void by reason of United States Revised Statutes, section 3477. Whatever may be the merits of this decision in a case in which only the original parties were concerned, it certainly is sound in a case in which the United States is a party, and his language is very strong to the effect mentioned. If this is not the law, it must be concluded that the statute referred to was not intended to have any effect except in those cases in which the assignee of a claim against the United States did not see fit to take the trouble to bring legal proceedings thereunder.
This case is distinguishable from all the cases that have been decided by the Supreme Court in which it has been held that an assignment by operation of law is valid. The last of such cases, as above indicated, is that of the United States v. Porch - erUng. In that case one Price owned a certain fund in the United States Treasury. Mrs. Forest, a judgment creditor of Price, brought a suit in equity in New Jersey to enforce her judgment, and therein a receiver was appointed, not only of that claim against the United States, but of all the property of Price of whatever description, and it was held that the payment thereafter to Price in disregard of such receivership was invalid, and that the receiver could collect the amount over again. It had been formerly held in the case of Price v. Forest by the Supreme Court that such receivership was not prohibited by section 3477, United States Revised Statutes. It is evident that in that case the situation was one in which no voluntary assignment had ever been made. The assignment by operation of law was entirely involuntary and against the will of Price. It was, pure and simple, an assignment by operation of law. It was not a case in which Price had made a voluntary assignment, and some one in attempting to enforce it had procured the appointment of a receiver.
In the case of Hobbs v. McLean (117 U. S., 567) the holding was simply that a partnership made in expectation of a Government contract did not constitute an assignment void under the statute referred to. The contract had been performed and the money had been paid over to the assignee in bankruptcy, and the United States had lost all interest in the fund.
In Erwin v. The United States (97 U. S., 392) the assign ment was one in bankruptcy proceedings, and was in no sense a voluntary assignment, nor one in which it was attempted to uphold a voluntary assignment by legal proceedings. In the case of Goodman v. Nidlack there was practically the same situation.
Claimants’ counsel in reply:
The facts herein are undisputed. Defendant, however, undertakes to distinguish this case from the decision in Borcherling, receiver, recently affirmed, on appeal, by the Supreme Court of the United States, and in support of the contention cites the case of St. Pcrnl R. R. Co. v. United States (112 U. S., 733). It is submitted that said decision has no material application to the present case, as will clearly appear from an examination of the record and facts herein.
It has been repeatedly held, both in this court and in the Federal courts, that said sections of the Revised Statutes were not enacted to assist contractors to fraudulent^ escape payment of their debts, but that their sole purpose was to protect the Government, (See Hobbs v. McLean, 117 U. S., 516; Goodnnam. v. Niblaclt, 102 U. S., 560; Bailey v. U. S., 109 U. S., 432; Burck v. Taylor, 152 U. S., 648, and Dulaney v. Scudder et al., 94 F. R., 6.)
The case of Dulaney v. Scudder et al. {swprd) was one the facts in which were almost identical with those here involved. There Dulaney, a Government contractor, entered, into an agreement with Scudder & Co. to furnish all necessary moneys, labor, and material to do the work required under said Government contract, the same to be repaid out of the several amounts to be thereafter paid by the Government under its said contract. There, as here, the Government had knowledge of the arrangement and acquiesced therein; and likewise, as here, the contractor, when the final payment from the Government became due and payable, undertook to ignore said arrangement and to get possession of said final payment in fraud of his said creditors. Scudder & Co. brought suit in equity against said contractor, Dulaney, for an injunction, accounting, decree, etc. It was likewise there contended, in opposition to the relief so sought, that an arrange ment or agreement of the kind in question was in contravention of sections 3477 and 3737, Revised Statutes of the United States, and void. The court, however, after reviewing the authorities, declined to so hold, and decided that, as between the parties, such arrangement is valid and enforceable, and that a court of equity has jurisdiction to determine such controversy as to the ownership of the funds and to grant an injunction, etc.
In the case at bar, a litigation between the parties involving the question of ownership of said draft and final payment, had been had and finalty determined, awarding a perpetual injunction against the contractors and vesting title to said draft and final payment- in said receiver. This in no sense or way interfered with any rights of the Government, but simply ascertained and fixed judicially which of the conflicting and contending claimants was legally entitled to the fund.
Here, just as in the Borcherling case, the Government was not the donor of the mone3r so in controversy, but was simply its custodian, awaiting its lawful distribution.
In the case of the St. Paul Railroad Company, relied upon herein by defendant, the claimant undertook to maintain a suit in its own name against the United States under an assignment alleged to be contained in a mortgage, thereafter foreclosed, of certain moneys which, it asserted, were due to its assignor, and also certain other moneys alleged to be due it as assignee of the Government contract. The court, however, decided that said claimant could not, as assignee, maintain such a suit. The same thing, however, has been held in many other cases; but it is submitted that that doctrine has no application whatever to the facts in this case.
No question of that kind is here involved. The Government, merely as custodian of the draft representing the final payment, and in which draft it had no interest, and upon which it asserted no lien or claim, invited the contending parties to settle by final decree, in appropriate litigation, the question of ownership of said draft and moneys, with the clear implication that, upon that fact being so judicially ascertained, it would make payment accordingly.

Opinion:
Peelle, J.,
delivered the opinion of the court:
The claimant, as receiver by virtue of appointment by the supreme court of Kings Countjy NY., of the money due from the United States to the firm of Whaley & Taylor, seeks to recover the sum of §17,300 due said firm and which Avas paid to them by the United States after they had been notified of the appointment of said receiver and of the issuance of an order restraining said firm from receiving said money or- draft therefor.
The facts about which there is no controversy briefly are these:
On January 23, 1892, Whaley & Taylor entered into a contract in writing with, the Government to construct at Willets Point, N. Y., two barracks for the sum of §13,950, to be paid in installments during the progress of the work.
Whaley & Taylor entered upon the performance of their contract and so continued until September 1, 1892, during which time they incurred certain indebtedness, shown in finding m, to John J. Leonard, George Scofield, and William K. Hammond, aggregating nearly §7,000.
On the date named, Whaley & Taylor entered into a written contract with their creditors above named whereby it was in substance agreed that they should complete the construction of the barracks so contracted for bj*- them with the defendants, and to that end they were, as recited in said contract, "hired and employed ® to provide all the. work, labor, and materials of eveiy kind necessary to complete the said contract, and to go on and complete the said building according to the same," in consideration of which it ivas agreed that they should be paid, "out of the proceeds to be realized on said contract from the Government, the cost of all work and labor and of all materials which shall be supplied, used, or provided by the parties of the second part in the completion of said contract;" and to secure them in the payment for said work the contractors Whalej" & Taylor agreed to, and did by said agreement, "sell, transfer, and assign to the parties of the second part all of the proceeds of the several and' respective installments or pajunents which may- become due upon the said, contract; the parties of the first part to receive such proceeds so assigned as agents for the parties of the second part, and to immediately pay or deliver the same over to them, and to indorse or deliver all drafts or checks that may be received on account of such proceeds over to said parties of the second part."-
That Whaley & Taylor agreed not to demand or receive any of the payments or proceeds arising from the work except when the said Hammond, Leonard, or Scofield, or some one of them, were present at the quartermaster's office at Willets Point, and that when any payment was to be made the said Whaley & Taylor, or one of them, would attend in person at the said quartermaster's office upon being notified, and would then receive such payment or any draft or check that might be sent there, and immediately indorse or deliver the same over to said Hammond, Leonard, or Scofield.
They further agreed not to apply to any court for the appointment of a receiver of their copartnership property, or make any assignment of the proceeds of said contract, or any installment thereof, or any payment to be made thereupon to any person other than the parties of the second part.
While, on the other hand, it was agreed that said second party might enforce the agreement "'in equity, or by injunction or mandamus, or other property process as may be agreeable to law and equity;" that out of the money to be handed to said second party they were first to pay themselves for the work and labor and materials they had performed and furnished in and about the construction of the barracks, and then to pay the indebtedness of Whaley & Taylor to said parties so incurred before said contract'was entered into, and the residue, if any, was to be paid to said Whalejr & Taylor.
The claimants' contention is that as the Supreme Court of Kings County, N. Y., had jurisdiction of the parties and of the subject-matter, the receiver thereby appointed was legally invested with the rights of Whaley & Taylor in respect to the money due them from the United States for the work done by the parties they had so hired and employed, and that therefore the ruling in the case of The United States v. Borcherling (185 U. S., 223) is controlling in the present case.
On the other hand, the defendants contend that the case is ruled by the earlier decision in the ease of St. Paul and Duluth R. R. Co. v. The United States (112 U. S., 733).
It will thus be seen that the decision in the present case turns in the main upon the question as to which one, if either, of the two cases cited is applicable to the facts in the present case.
He vised Statutes, section 3477, provides:
" Sec. 3477. All transfers and assignments made of any claim upon the United States., or of any part or share thereof, or interest therein, whether absolute or conditional, and whatever may be the consideration therefor, and all powers of attorney, orders, or other authorities for receiving payment of anj"- such claim, or of any part or share thereof, shall be absolutely null and void unless they are freely made and executed in the presence of at least two attesting witnesses, after the allowance of such a claim, the ascertainment of the amount due, and the issuing of a warrant for the pajmient thereof. Such transfers, assignments, and powers of attorne}^ must recite the warrant for payment, and must be acknowledged by the person making them before an officer having authority to take acknowledgments of deeds, and shall be certified by the officer; and it must appear by the certificate that the officer, at the time of the acknowledgment, read and fully explained the transfer, assignment, or warrant of attorney to the person acknowledging the same."
The language of that section is broad, and, as was said in the case of United States v. Gillis (95 U. S., 407-413), "the words embrace every claim against the United States, however arising, of whatever nature it may be, and wherever and whenever presented."
Referring to the assignment of a claim before its allowance and the issuance of a warrant therefor, the court in the case of Spofford v. Kirk (97 U. S., 484-488) said:
"We are brought, then, to the inquiry whether such an assignment of a claim against the U nited States, made before the claim has been allowed, and before a warrant has been issued for its payment, has any validity, either in law or equity."
And referring to the language of section 3477, the court further says:
"It would seem to be impossible to use language more comprehensive than this. It embraces alike legal and equitable assignments. It includes powers of attorney, orders, or other authorities for receiving payment of any such claim, or any part or share thereof. It strikes at every derivative interest, in whatever form acquired, and incapacitates every claimant upon the Government from creating- an interest in the claim in any other than himself."
Further, in the same case, the court, in speaking of their ruling in the case of the United States v. Gillis (supra) in respect to the right of the assignee of a claim to maintain an action in the Court of Claims, said:
" We held he could have no standing there. We held also that such an assignee could not prosecute the claim in any court, or before the Treasury, against the Government. We were not called upon to decide whether such assignments were invalid as between the assignor and the assignee. But, if after the claim in this case was allowed, and a warrant for its payment was issued in the claimant's name, as it must have-been, he had gone to the Treasury Department for his money, it is clear that no assignment he might have made, or order he might have given, before the allowance would have stood in the way of his receiving the whole sum allowed. The United States must have treated as a nullhy any rights to the claim asserted by others. It is hard to see how a transfer of a debt can be of no force as between the transferee and the debtor, and yet effective as between the creditor and his as-signee to transmit an ownership of the debt, or create a lien upon it. Yet, if that might be — and we do not propose now to affirm or deny it — the question remains whether the act of Congress was not intended to render all claims against the Government inalienable alike in law'and in equity, for every purpose, and between all parties. The intention of Congress must be discovered in the act itself. It was entitled ' An act to prevent frauds upon the Treasury of the United States.' It may be assumed, therefore, that such was its purpose. What the frauds were against which it was intended to set up a guard, and how they might bo perpetrated, nothing in the statute informs us. We can only infer from its provisions . what the frauds and mischiefs had been, or were apprehended, which led to its enactment. One, probably, was the possible presentation of a single claim by more than a single claimant, the original and his assignee, thus raising the danger of paying the claim twice, or rendering necessary the investigation of the validity of an alleged assignment. Another and greater danger was the possible combination of interests and influences in the prosecution of claims which might have no real foundation;" and further they say that "the language of the act is too sweeping and positive to justify us in giving it a limited construction."
Nor is the assignment sufficient in substance or form to pass title to the claim after its allowance and the issuance of a warrant for the payment thereof. Hence there is no escape from the conclusion that, in so far as Whaley & Taylor, upon whatever consideration, sought to transfer o'r assign absolutely or conditionally their claim against the Government, such assignment as against the Government was " absolutely null and void."
But was the agreement so made void as between the assignors and the assignees, for, if it was, then it could not form the basis of an action for the appointment. of a receiver. That is to sa}^, if the agreement as between the parties thereto was null and void, because made so by statute as against the Government, then, of course, no proceedings, based thereon looking to its enforcement, could be maintained.
But though the assignment of a claim may be void as between the assignor and his assignee, yet the title to such claim maj'' devolve by operation of law so as to pass from the original claimant into the hands of an officer authorized by a court of competent jurisdiction to collect it. Such was the ruling in the case of Erwin v. United States (97 U. S., 392), whore the court, in this respect, said:
"The act of Congress of February 26,1853 (10 Stat. L., 170), to prevent frauds upon the Treasury of the United States, applies only to cases of voluntary assignment of demands against the Government. The passing of claims to heirs, devisees, or assignees in bankruptcy is not within the evil at which it aimed."
In the case of the St. Paul and Duluth Railroad Co. v. United States (112 U. S., 733), upon which the defendants rely, it was held that the voluntaiy transfer of a claim against the Government by way of mortgage, made absolute bjr judicial sale on foreclosure, was within the provision of the Revised Statutes, section 3177, prohibiting the assignment of claims against the Government; and that therefore the assignee of a claim so arising could not enforce the collection thereof against the Government in its own name — -i. e., that the claim was not one assigned bjr operation of law.
However, in that case the court, in respect of the claim Avhich it was alleged had passed by virtue of the mortgagé and sale, held that the words of description in the mortgage and decree as to the property and interests conveyed wore not "sufficient to pass the interests therein of the original company to the purchaser at the sale." Nor did the purchaser under the decree of foreclosure thereby become assignee of the contract between the mortgagor and the Government for carrying the mail, and for these reasons the court say the purchaser "can claim nothing as such in this suit." So the question in the present case was not involved in that case.
In construing section 3477 the Supreme Court in the case of Price v. Forrest (173 U. S., 410-423) said:
"As this court has said, the object of Congress by section 3177 was to protect the Government, and not the claimant, and to prevent frauds upon the Treasury (Bailey v. United States, 109 U. S., 432; Hobbs v. McLean, 117 U. S., 567; Freedman's Savings Co. v. Shepard, 127 U. S., 494, 506). There was no purpose to aid those who had claims for money against the United States in disregarding the just demands of their creditors. We perceive nothing in the words or object of the statute that prevents any court of competent jurisdiction as to the subject-matter and parties from making such orders as majr be necessary or appropriate to prevent one who has a claim for money against the Government from withdrawing the proceeds of such claim from the reach of his creditors; provided such orders do not interfere with the examination and allowance or rejection of such claim by the proper officers of the Government, nor in anywise obstruct any action that such officers may legally take under the statutes relating to the allowance or payment of claims against the United States. If a court, in an action against such claimant by one of his creditors, should, for the protection of the creditor, forbid the claimant from collecting his demand except through a receiver who should hold the proceeds subject to be disposed of according to law under the order of court, we' are unable to say that such action would be inconsistent with section 3477."
In the case of the United States v. Borcherling (supra), affirming the judgment of this court (35 C. Cls. R.., 311), a judgment had been obtained by one Forrest against Price m the Supreme Court of New Jersey and an execution had been returned unsatisfied. Thereafter the United States became indebted to Price in a large sum of money, the amount of which had been determined and was about to be paid to him, to roach which an application was made in the New Jersey court for tbe appointment of a receiver of tbe money or draft soon to be delivered to bim and for an order restraining him from receiving tbe same from tbe Government or indorsing such draft, of all of which the United States were notified, but disregarded and delivered to their creditor Price tbe money so sought to be applied on the judgment against him instead of to the receiver under the order of the court.
The court, after reviewing the authorities showing the distinction between payments by way of gratuity and not of right, said:
' ' Here the Government was not the donor of the money of Price, but was its custodian, awaiting its lawful distribution. As to the contention that the debt due from the United States to Price could not be transferred from Price to the claimant bjT operation of the laws of New Jersey, nor by any decree the courts of New Jersey, operating under such laws, could make, it is sufficient to say that this court has held otherwise."
in the case of Vaughan v. Northup (15 Pet., 16) the court said:
" The debts due from the Government of the United States have no locality at the seat of government. The United States in their civil capacity have no particular place of domicile, but possess, in contemplation of law, an ubiquity throughout the United States; and the debts due by them are not to be treated like the debts of a private debtor, which constitute local assets in his own domicile."
In the case of Price v. Forrest (supra). the question was between the heirs of Price and the receiver as to which was entitled to receive from the United States the money due Price. The New Jersey court held that the receiver was, and on appeal to the Supreme Court of the United States the decree was affirmed in respect to the Federal question involved, and in speaking of what was settled in that case the court in the Borcherling case says:
"Two things were thus determined — first, generally that it was competent for a State court of the domicile of the creditor of the United States, and having jurisdiction over his person, to decide a controversy between his heirs and creditors as to the right to receive monejrs held in trust by the United States; and, second, specifically under the facts of the present case, that the title to the money of Price in the Treasury of the United States had passed, under the laws of the State of New Jersey'and the decree of its courts, from Price and his heirs, and had become vested in Borcherliug, the receiver."
And in speaking of the jurisdiction of the Court of Claims .to entertain jurisdiction in such cases the court said:
"It is not open to doubt that the Court of Claims has jurisdiction to entertain a claim of the receiver to receive the fund, the title to which had thus become vested in him. The jurisdiction of that court extends throughout the United States. It issues writs to every part of the United States, and is specially authorized to enforce them (10 Stat., 612, sec. 3). By establishing this court, the United States created a tribunal to determine the right to receive moneys due by the Government. Such legislation did not leave the Treasury or its officers free to arbitrarily select between conflicting claimants the one to whom payment should be made. When analyzed, this contention will be perceived to be only a renewal of the one already considered, namety, that a ministerial officer, having no judicial or statutory powers in the premises, in a case wherein the Government was the debtor, could arbitrarily, without notice to the legal holder of the claim, pay the monej' in dispute in this case over to Price. This, we have seen, he had no power under the law to do, and such a disposition of the money could not be successfully pleaded in the Court of Claims as a lawful discharge of the United States."
Prom the authorities cited we may fairly conclude:
.First. That the object and purpose of section 3177 was to prevent frauds upon the Treasury and not to aid those having claims against the Government to disregard the demand of their creditors.
Second. That the language of the section does not prevent any court of competent jurisdiction as to the subject-matter and parties from making such orders, not inconsistent therewith, as may be necessary to prevent a creditor of the Government from withdrawing the proceeds of his claim from the reach of his creditors.
Third. That if such court in any action against such claimant by one of his creditors should, for the protection of the creditor, forbid the claimant from collecting his demand except through a receiver who should hold the proceeds subject to be disposed of according to law under tlie order of court, such action would not be inconsistent with said section.
Fourth. That by establishing- the Court of Claims the Congress "created a tribunal to determine the right to receive moneys due by the Government. Such legislation did not leave the Treasury or its officers free to arbitrarily select between conflicting claimants the one to whom payment should be made."
Fifth. That a ministerial officer, having no judicial or statu-toiy powers in the premises, in a case wherein the Government is the debtor, can not arbitrarily, without notice to the legal holder of the claim, pay the money in dispute to such creditor, and that such payment "could not be successfully pleaded in the Court of Claims as a lawful discharge of the United States."
Applying the principles thus formulated from the authorities cited, how stands the present case?
By the terms of the agreement or assignment of Whaley & Taylor, William K. Hammond, John J. Leonard, and George Scofield were hired and employed to provide all the work, labor, and materials of every kind necessary, and to complete the buildings according to the contract of Whaley & Tajdor with the Government, for which, as the agreement recites, they w'ere to be paid " out of the proceeds to loe realized on said contract from the Government/" that the proceeds thus to be realized might be applied as agreed upon, Whaley & Taylor agreed to and did "sell, transfer, and assign" to Hammond, Leonard, and Scofield the payments to become duo from time to time on account of said work, they, said Whaley & Taylor, reserving the right to receive from the Government theproceeds so assigned as agents for Hammond, Leonard, and Scofield; and upon the receipt thereof "to immediately pay the same over to them or to indorse any check or draft given therefor.
The legal effect of the agreement, taken as a whole, was that Hammond, Leonard, and Scofield were employed to furnish the labor and materials therefor and complete the work according to the contract of Whaley & Taylor with the Government, and that upon the receipt of payments from the Government therefor from time to time by Whaley & Taylor, they would at once pay the same over to Hammond, Leonard, and Scofield.
The assignment did not invest or purport to invest Hammond, Leonard, and Scofield with the right to receive or collect such payments or to interfere with the allowance and payment of the claims by the Government, but the purpose of the agreement was that while Whaley & Taylor were to continue to receive the payments as they became due for the work, they were upon the receipt thereof, as between them and Hammond, Leonard, and Scofield, to become the agents of the latter, and as such to at once pay the same over to them.
It was further agreed by Whaley & Taylor that the agreement or assignment might " be specifically enforced in equity, or by injunction or mandamus, or other appropriate process, as may be agreeable to law and equity." On the other hand, Whaley & Taylor agreed not to make demand or receive any of said payments or proceeds from the Government except when Hammond, Leonard, and Scofield, or some one of them, was present at the quartermaster's office at Willets Point, at which time they were to receive such payment or any draft or check drawn therefor and immediately indorse and deliver the same over to them.
Of course as soon as the draft or check went into the hands of Whaley & Taylor, who were alone responsible to the Government for the work under their contract, section 3477 ceased to apply, and they could then make any contract in respect thereto they saw fit, or they might before that time make any contract they saw fit looking to the application of such proceeds after the same came into their hands, and the latter appears to be what they endeavored to make by the agreement or assignment which they made.
While the assignment thus made may have, and perhaps did, become known to the quartermaster at Willets Point, through whom the payments were from time to time made in accordance therewith, such knowledge would not operate in law to change or transfer the legal liability of the Government from the contractors to their assignees. Such transfer could only be made effective in the manner prescribed by section 3477 after the allowance of the claim or by operation of law.
From the facts in this case and the authorities we have re viewed, we reach the conclusion that .as between the parties the assignment was valid and enforcible in equity; and the Supreme Court of Kings County, N. Y., having acquired jurisdiction of the parties and of the subject-matter, the orders and decree óf said court in respect of the rights of the parties before it are binding and therefore entitled to full faith and credit.
The court then having acquired jurisdiction, and having ascertained that Whaley & Taylor had not only refused to comply with their agreement to receive and indorse the draft to Hammond, Leonard, and Scofield, but were about to receive and appropriate the proceeds thereof to their own use, made such orders in the premises as to prevent them from withdrawing the proceeds of their claim from the Treasury, and appointed the claimant herein as receiver to collect and apply the proceeds thus to be received under the order of the court, which orders were followed with a final-decree for specific performance, i. e., Whaley & Taylor were commanded to receive, indorse, and forthwith deliver to the receiver any check, draft, or warrant issued and delivered to them for the money due under their contract; and to that end the court decreed that all the right, title, and interest of all the parties to the transaction were vested in the receiver with full power and authority to demand and receive payment thereof from the United States, of all of which, as the findings recite, the Secretaiy of War, under whose supervision the work was performed and the payments theretofore made, and the Secretaiy of the Treasury were duly notified and from each of whom payment was demanded by said receiver before the delivery of the draft to said Whaley & Taylor as aforesaid.
Acting on the advice of the Attorney-General, the Secretary of War, while the case was pending in the State court of New York, and after the appointment of a receiver as aforesaid, informed the receiver, through his attorneys, that the Attorney-General had advised the Secretary of War to retain the fund in his hands until the controversy was "determined by final adjudication-of tho whole matter by the. tribunal to which the parties may last resort." •
Notwithstanding the Secretary of the Treasury was advised of the restraining and other orders of the court and of tho appointment of the receiver, and notwithstanding payment had been demanded of him by the receiver, he, in disregard of the orders so made by the court and without any notice to the receiver, delivered the draft or check, theretofore sent to the quartermaster at Willets Point and by him returned, to Whaley & Taylor, who indorsed the same and received tho money thereon and appropriated it to their own use.
In delivering tho draft to Whalej' & Taylor tho Secretary of the Treasury thereby aided them to disregard, if not to defraud, their creditors, which latter, with the knowledge of the Government agent— the quartermaster — had in good faith performed the work in constructing the barracks according to the contract of Whaley & Taylor, and consequently to tho satisfaction of the Government, who received the benefit thereof.
The equities of this case are clearly with the employees who performed the work. The contractors did not bj" their agreement deprive themselves of the right to receive from tho Government the several payments as they became due for tho work performed by their employees. On the contrary, that right they reserved to themselves, but as between thorn and Hammond, Leonard, and Schofield they agreed upon the receipt thereof to become the agents of the latter and as such to at once account to them therefor.
It was to enforce this latter agreement — i. e., tho agreement of Whaley & Taylor, to indorse to their employees the draft so issued by the Government in payment of the final completion of the work — that the proceedings were commenced in the Now York court. As set forth in the'findings, it was shown to the New York court that Whaley & Taylor had refused to indorse and deliver the draft sent to them through the quartermaster at Willets Point, and for that reason the quartermaster, acting in the interest of the employees who had in good faith performed the work, refused to deliver the draft to Whaley & Taylor and thereafter returned it to the Secretary of W ar.
As shown from the certified copy of the proceedings in the New York court, made a part of the petition herein, the court found as matters of fact that, while Whaley & Taylor had made certain progress in the performance of their contract with the Government, they had contracted certain indebtedness to Hammond, Leonard, and Schofield which they were', unable to pay, and were also unable to complete their contract; that Hammond, Leonard, and Schofield had, pursuant to their employment by Whaley & Taylor, completed the work, for which there remained due them the sum of $18,350, then about to be paid by check or draft to Whaley & Taylor through the quartermaster at Willets Point, but which Whaley & Taylor declared they would not indorse and deliver to Hammond, Leonard, and Schofield as they had agreed; and further the court found "that the said Whaley & Taylor are insolvent."
The New York court had jurisdiction of the parties, and by its order forbade Whaley & Taylor from collecting their demand, "except through a receiver who should hold the proceeds subject to be disposed of according to law under the order of the court." Price v. Forrest (supra), or, as was further said in that case, at page 424, "If section 3477 does not embrace the passing or transfer of claims to heirs, devisees, or assigns in bankruptcy, as held in Erwin v. United States, nor a voluntary assignment by a debtor of his effects for the benefit of his creditors, as held in Goodman v. Niblack, it is difficult to see how an order of a judicial tribunal having jurisdiction of the parties appointing a receiver of a claim against the Government and ordering the claimant to assign the same to such receiver, to be held subject to the order of court for the benefit of those entitled thereto, can be regarded as prohibited by that section."
The appointment of the receiver and the orders of the court put in dispute the rightful claimant to the fund in controversy, and it was not for the Secretaiy of the. Treasury to determine, in violation of the rights of the receiver and the orders of the court, to deliver the draft or the proceeds thereof to Whaley & Taylor until the final termination of the cause, as had been advised by the Attorney-General, the law officer of tlie Government, and therefore we are of the opinion, though not free from doubt, that the proceedings in the New York court in the appointment of the receiver coupled with the orders made by that court, operated in law to transfer the claim in controversy; as against Whaley & Taylor, to the receiver, who had the right to receive and collect the same and apply it according to law under the order and direction of the court appointing him, and such payment bjr the Secretary of the Treasury to him would have been a complete and final' discharge of the United States.
It follows, if we are right in our conclusion, that the Secretary of the Treasury, under the circumstances of this case, had no right to pay the proceeds or deliver the draft therefor to Whaley & Taylor, from the collection and receipt of which they had been restrained by the order of the court, and whose right thereto had been transferred by operation of law to the receiver, and the receiver being entitled thereto, he is entitled to recover on the facts of this case, and judgment will be entered accordingty.
• Wright and Howry, JJ., did not sit in this case and took no part in the decision.