The Floyd Acceptances

APPEALS from the Court of Claims.

The facts, as found by that court, were thus:

Russell, Majors & Waddell had contracts for supplies and transportation, to be furnished to the army in Utah. By these contracts, they were to be paid either by the quartermaster at St. Louis, or by his drafts on the assistant treasurer of the United States in New York. In all the contracts, except one, these payments were to be made on the final delivery of the supplies in Utah; but in one contract there was an agreement that partial payments should be made when the trains were started. In all cases, such payments were to be made upon certificates of the proper quartermaster.

The performance of these contracts required a very large outlay of money, and Russell & Co. finding it difficult to advance this and wait for its return until they were entitled to receive payment under their contracts, made an arrangement with the Secretary of War, under which they should draw time-drafts on him, payable to their own order, at the Bank of the Republic in New York, which should be accepted by the secretary. On these drafts they were then to raise the money necessary to enable them to perform their contracts, and as the money for the transportation and supplies became due, they were to receive it, and take up the acceptances of the secretary before or at maturity. Under this arrangement the secretary accepted drafts to the amount of $5,000,000, most of which were taken up by Russell, Majors & Waddell, as agreed; but over a million of dollars in amount remain unpaid.

The drafts, with unimportant verbal differences and differences of date, were in this form:

$5000.

WASHINGTON, November 28, 1859.

Ten months after date, for value received, pay to our own. order, at the Bank of the Republic, New York City, five thousand dollars, and charge to account of our contract for supplies for the army in Utah.

RUSSELL, MAJORS & WADDELL.

Hon J. B. FLOYD, Secretary of War.

[Indorsement.]

'RUSSELL, MAJORS & WADDELL.'

[Acceptance.]

WAR DEPARTMENT, November 28, 1859.

'Accepted:

JOHN B. FLOYD, Secretary of War.'

The drafts passed into the hands of different holders; among them T. W. Pierce, the Dover Five Cent Saving Bank, E. D. Morgan, and the Boatmen's Saving Institution; and Mr. Floyd having retired from the War Department, and the department refusing to pay the acceptances, Pierce, by his separate bill, and the other parties in a proceeding treated by the Court of Claims as one in substance, brought suit in that court. The petition of Pierce averred:

'That the said Floyd, as Secretary of War, and in behalf of the United States, and as the principal officer of an executive department, had authority to accept the drafts, and that, in accepting them, he acted in his official capacity, and in behalf of the United States. And that he, in behalf of the United States, as such Secretary of War, was authorized to accept drafts of such and the like tenor and effect as the drafts aforesaid; and that the said Pierce, relying upon the apparent, as well as upon the actual authority of the said Secretary of War to make such acceptances, and upon the fact of his acceptance of the bills, became the holder and owner of them, in a regular course of business, before they severally matured and for valuable consideration.'

Similar averments were made in the petitions of the other three parties. And by an amended petition they set forth the further facts:

That when the bills were accepted, and when they became due, the government owed the contractors a larger sum than the amount of them.

That at that time the army in Utah was in imminent danger from cold and starvation; that it was the duty of Floyd, as Secretary of War, to save it; and that to so save it he authorized the drawing of the bills and accepted them.

That as secretary he had authority by law to make advances to the contractors after their trains were ready to start; and that their trains being ready to start, he did what was done.

That he had authority by law to ascertain and determine the debt of the United States to the contractors, and did so determine; that there was due them the sums specified in the bills; and that the bills so drawn and accepted were conclusive evidence of the debt as against the government.

These same additional matters were considered by the court below in the case of Pierce. The general issue was pleaded in all the suits.

To present the case more completely, it must be stated that by statute of 31st January, 1823, it is enacted:

'That from and after the passage of this act no advance of public money shall be made in any case whatever; but in all cases of contracts for the performance of any service, or the delivery of articles of any description, for the use of the United States, payment shall not exceed the value of the service rendered, or of the articles delivered previously to such payment.'

The Court of Claims-upon a full history of the facts, as presented by evidence introduced by the government, and whose introduction was opposed by the petitioner, Pierce,-the admission being one of the errors alleged by Pierce himself-dismissed all the cases, holding, in the case of Pierce, that the secretary had no power to bind the United States by the acceptances; that the acceptances were to be regarded as within the act of 31st January, 1823, and as an attempt to avoid it, and were, therefore, void; that no decision of the Supreme Court authorized such acceptances; that the evidence failed to establish any usage, in the different departments, by which the Secretary of War was authorized to accept, in behalf of the United States, the bills in suit, and that if such usage or practice were established, it could not avail the claimant, because forbidden by law.

And finding, in the other three cases, that though it is and has been the practice of heads of departments to accept drafts or bills of exchange for the transmission of funds to disbursing officers, or the payment of those serving in distant stations, or for services rendered, the cases were still substantially the same as the case of Pierce, and, like it, to be dismissed.

The record did not show that anything remained due to the contractors, or was due when the bills matured; no evidence on the state of the accounts being given on either side.

Messrs. Black, Curtis, and Gooderich, for the appellants:

The Court of Claims declared the acceptances to be null and void, for the reasons, in substance, that—

1. To accept these particular bills was a violation or evasion of the act of 1823.

2. No usage to accept bills like these existed in the department, and that such usage would be unlawful if it did exist.

3. No decision of the Supreme Court authorized these acceptances, or made them binding.

Now was this an advance of public money? Take it to be true that the acceptance was given for money yet to be earned. Then the case is this: The contractor comes to the secretary and tells him that the army in a distant and hostile territory is in danger of suffering for lack of supplies, and he (the contractor) cannot furnish them without more capital than his present means will command. The secretary says, 'I can pay you no money out of the public treasury until it is due, according to the very terms of your contract; but your credits are daily accumulating, and in a few months the sum you want will be legally payable. I have no objection to put the future obligation of the United States into a negotiable form, so that if you are willing to pay the discount, you can get somebody else to make the advance, which I cannot make. But I must do this cautiously. I will subject the government to no risk. I will accept your bills only for fifty per cent. of the amount which will be due upon the delivery of the goods which are now actually in transitu.' This was the reverse of an advance of the public money.

The court assert that the acceptances were not authorized by the decisions of the Supreme Court. Yet the power is recognized in many decisions, and in The United States v. Bank of the Metropolis, at least, it is directly and positively affirmed.

The authority of the secretary to give these acceptances, is proved beyond a doubt, unless the practice of eighty years, with the sanction of Congress and the express adjudication of this court, is to be disregarded. It is a curious fact, that the Court of Claims in the case of Pierce, deny the authority of a secretary to accept bills of exchange, and accompany that denial with an assertion that the practice does not exist; while in the other case they admit that 'it is and has been the practice of heads of departments to accept drafts or bills of exchange for the transmission of funds to disbursing officers, or for the payment of those serving at distant stations, or for services rendered.' This last statement is true. Being true, it shows the existence of the power in a secretary to bind the United States in that way.

The Equities.-So far as regards these, the defence is utterly naked. All the facts found by the court show that there was no fraud or collusion between the drawers and Floyd, nothing done and nothing intended except what was right and proper.

In United States v. Reeside, tried before the late Mr. Justice Baldwin, a case very similar to this, though the acceptance there was by the Postmaster-General, he charged the jury thus: