Bank of Washington v. Nock

ERROR to the Supreme Court of the District of Columbia; where the case was thus:

The trustees of the Bank of Washington filed in May, 1867, a bill against Nock, complaining that in 1840, he having received a patent for a mail lock, made a contract with the Postmaster-General to furnish the government from time to time with the sort of patented lock, at a price stipulated, for the use of the government; that Nock, not having means at his command to manufacture the locks, agreed with the bank, if they would advance money for him, on his drafts on the Postmaster, or otherwise on the proceeds to arise from his said contract, to enable him to fulfil the same, that he would give them a specific lien on, and empower and authorize them to take out of said drafts, when paid, or proceeds, whenever realized, sufficient to repay to them the advances made, or to be made. The bill averred that under this arrangement they did make advances, and that Nock was so enabled to fulfil his contract; but that for some reason but a small amount of the said proceeds were ever realized by Nock until lately; that he still owed the bank $8078.82.

That some time after the principal part of the advances were made, Nock executed an agreement, on the 2d of December, 1852, with the bank, to make to him further advances to prosecute his claim for payment; and that they did make such further advances; Nock agreeing that 'the debt due by him to the bank for former advances, as well as the further advances then and thereafter to be made, for the purpose of prosecuting his said claim, should be first paid out of any receipts relaized by him from the government.'

That Nock, on the 6th of January, 1865, by written obligation, which was in these words, and signed by him: 'I hereby renew and revive my indebtedness and obligations to the Bank of Washington, arising out of certain advances made to me for drafts on the Postmaster-General of the United States in 1840, and all the accruing interest thereupon, as well as for any other advances which have been made to me, or which may be made to me, on any account whatever, by the said Bank of Washington,' did acknowledge all his said debt for the advances, and all the interest accruing thereon, and formally renewed his obligation to pay the same.

That after a long prosecution of his said claim, Nock had recently been awarded by the Court of Claims the sum of $27,000, in satisfaction of the contract to furnish locks, and the same was now about to be paid, but that Nock, refusing to pay the bank its advances, or to recognize the specific lien which it had on the fund, or the validity of his contracts, especially that of the 2d December, 1852, was about to and was seeking to receive the money, and to appropriate it to his own exclusive use, in contravention of equity.

The answer and proofs, which, independently of the answer, were few, showed the patent-right, and the contract with the postmaster, as alleged; that for the purpose of executing the contract Nock had got the advances; that he had drawn several drafts on the Postmaster-General, in reduction of them; that the drafts were all paid, and that the balance asserted remained unpaid. They showed, also, that about four months after the first sum of money advanced by the bank, Nock having now received about $3000 of advances, by an instrument dated June 6th, 1840, reciting the advances to that date, and reciting also his desire to secure, 'by an assignment of the patent, in manner hereinafter expressed,' payment not only of those advances but of all such further sums as might be thereafter advanced, transferred the patent to the bank, upon trust, in case of his failure to pay the bank the money advanced or to be advanced, as it became due, to sell the patent after sixty days' notice by advertisement, and reimburse itself.

The answer, which was not disproved on these points, further set forth that the government having annulled its contract with the respondent, he, for the purpose of procuring the means necessary to sue it in the Court of Claims, entered into the agreement of 1852; but that that prosecution resulted, A.D. 1864, in a judgment adverse to his claim. That desiring to begin a new suit against the government, and to get from the bank money to carry it on, he signed the paper of 1865; but that the bank had never advanced under that agreement but $100 (which the respondent professed himself ready to pay back), declaring that they had no confidence in his claim, and would never advance another cent; that the bank thus refusing to advance money to prosecute the case anew, it then became necessary for the respondent to make other arrangements to get money, and that by aid of these new arrangements with other persons, he procured an act of Congress referring his claim again to the Court of Claims, in which court, without any assistance from the bank, he prosecuted his claim anew, and after having laid out over $11,000 in doing so, got the award of $27,000, upon which the bank sought to fix a lien.

The answer expressly denied that the drafts which Nock drew were to be 'any lien on the contract,' though it admitted that they were founded on it, and made to enable the bank to receive pay for such locks as should be delivered, and the testimony of the officer of the bank with whom Nock made his original arrangement said: 'We made different advances at different times on drafts. The understanding was, that as soon as the locks were delivered we were to draw the money.' The bank prayed an injunction against Nock's drawing the amount of the judgment from the treasury until it was first paid its advances.

The Supreme Court of the district at special term granted the injunction and directed an account; but at general term dismissed the bill, when the bank brought the case by appeal here.

Messrs. Edward Swan and W. D. Davidge, for the bank:

It is submitted that the lien of the bank upon the fund is too plain for controversy. Without adverting to the effect of the drafts and the assignment of the patent, the lien is expressly declared and established by the agreements of December 2d, 1852, and January 6th, 1865.

The lien being established, the jurisdiction of equity to enforce payment attached.

Mr. Morris, contra:

The only lien really set up in the bill itself, notwithstanding its loose language-'or otherwise on the proceeds to arise from said contract'-is a lien on the drafts or their proceeds. The testimony of the officer of the bank who made the original arrangement, shows that this was the only lien thought of. All the drafts given were paid. The whole case, therefore, falls.

Independently of this, the alleged contract was made in 1840. Within four months of the first sum given, and while but a part of the money way yet advanced, Nock assigned his patent. That the patent had value is proved by the judgment in the Court of Claims for $27,000. It had value when assigned. This bill was filed in 1867. The bank has never offered to reassign. Nock could not, now, compel a reassignment. Had the bank sold, it could have retained the proceeds. This long retention of the patent-a retention for twenty-seven years-amounts to an appropriation of it for the advances. At all events, the bank should show that the security was exhausted. If it has held on to it till it has lost all value, it has no case for equity.

The agreement of 1852 don't keep alive a debt not sued for till 1867. And as an agreement to create one by its own force, the sufficient answer is, that the prosecution which it was meant to assert ended in an adverse judgment.

As to the paper of 1865, the whole consideration for it fails, the bank not having advanced money for the second suit, it being impossible to suppose that $100, which was all that was advanced under it, was what was meant to be advanced to prosecute a claim whose prosecution cost $11,000. Under pretence of an advance, its real purpose was to get an acknowledgment of a debt no longer capable of being enforced. And to use it for any purpose, would be to use it fraudulently. The lien, if the bank ever had any, was lost by the abandonment and refusal on their part to prosecute, or to permit means for the prosecution of the claim. And when thereon, upon his own resources-the bank having declared themselves unwilling to further prosecute, or to provide means for prosecution-Nock was left to proceed in his own way, they virtually accepted the then condition of the case, with an adverse judgment; and when thereafter Nock, with such assistance as was within his power, prosecuted the matter, he prosecuted it for his own benefit, and not for the benefit of the bank.

Mr. Justice CLIFFORD delivered the opinion of the court.