Allen v. United States (84 U.S. 207)

APPEAL from the Court of Claims; the case being thus:

A statute of the United States, passed March 3d, 1797, enacts that,

'When any revenue officer or other persons hereafter becoming indebted to the United States, by bond or otherwise, shall become insolvent. . . the debt due to the United States shall be first satisfied, and the priority hereby established shall be deemed to extend to cases in which a debtor not having sufficient property to pay all his debts, shall make a voluntary assignment thereof. . . as to cases in which an act of legal bankruptcy shall be committed.'

And a statute of March 3d, 1863, amending the act establishing the Court of Claims enacts:

'SECTION 3. That said court, in addition to the jurisdiction now conferred by law, shall also have jurisdiction of all set-offs, counter-claims, claims for damages, whether liquidated or unliquidated, or other demands whatsoever on the part of the government, against any person making claim against the government in said court; and upon the trial of any such cause, it shall hear and determine such claim or demand both for and against the government and claimant,' &c.

These statutes being in force, Russell, Majors & Waddell, partners in business, being at the time wholly insolvent, executed and delivered, in January, 1861, to one Allen and a certain Massey, two deeds of assignment, conveying all their property in trust for the benefit of their creditors. In November following, the claimants sold to the United States a portion of the property thus conveyed, consisting of wagons and oxen, for a sum exceeding $112,000. And the quartermaster of the United States, who acted as agent of the government in the purchase, gave to them certificates that the bills were 'correct and just, and that the articles had been accounted for on his property return.' Of the sum mentioned, only a part was paid; leaving a balance amounting to $71,491, of which payment was refused.

Thereupon Allen and Massey filed their petition in the Court of Claims, to obtain payment of that balance.

It appeared from the findings of the Court of Claims, that at the date of the assignments, Russell, Majors & Waddell were indebted to the United States in the sum of $870,000 or thereabouts, for certain Indian trust bonds belonging to the United States, which they had illegally procured and sold, and the proceeds of which they had applied to their own use, and it was by reason of this indebtedness that the payment to the claimants of the above mentioned balance was refused.

The Court of Claims held that the United States were entitled to priority of payment out of the proceeds of the property assigned by Russell, Majors & Waddell, under the trust deeds, and to set off so much of the indebtedness of that firm to them, as would be equal to the amount claimed and proved; and accordingly dismissed the petition. Hence the present appeal.

Mr. James Hughes, for the appellants:

1. The findings of the Court of Claims show affirmatively that the claim which was set off against the appellants' vouchers, was an unliquidated and disputed claim which the government had never established, nor prosecuted to judgment, against Russell, Majors & Waddell, the peculiar character of which was such, that it could not be paid and adjusted by the claimants acting as trustees under the assignment.

2. It was competent for the United States to waive their right of priority of payment under the deeds of assignment, and the purchase of the property and delivery of the formal vouchers sued upon, constitute such waiver.

Mr. G. H. Williams, Attorney-General; Messrs. C. H. Hill, and W. McMichael, Assistant Attorneys-General, contra:

Mr. Justice FIELD delivered the opinion of the court.