United States v. Borcherling/Opinion of the Court

The facts and law of this case were so fully and satisfactorily discussed in the court below that its opinion might well be adopted as that of this court. 35 Ct. Cl. 311.

We shall, however, briefly examine some of the propositions urged in the brief of the government filed in the case.

The first and principal contention is that the United States is a sovereignty, and has absolute control of the manner in which it shall pay its debts, the persons to whom they shall be paid, and, in fact, whether they shall be paid or sued upon at all; that it is incompetent for the state of New Jersey, through a statute or a decree of its courts, to direct to whom such a debt shall be paid; that the United States, through comity, may or may not recognize such a New Jersey statute or decree, as it may determine, but without such recognition such statute or decree is inoperative upon the disposition of such debt; that the United States does not recognize, through comity, the passing of title to a claim against it to a receiver appointed under a state statute or decree; and that consequently, in the present case, the United States had a right to pay the debt to the original creditor, and was discharged by such payment.

It is not necessary for us to consider whether the power of the United States over debts due by it and over the mode by which such debts shall be paid is wholly unrestricted, because the United States has not chosen to stand upon its sovereignty in such particulars, but has provided in the act of March 3, 1887 (24 Stat. at L. 505, chap. 359), that the court of claims and, concurrently, the district and circuit courts of the United States, 'shall have jurisdiction to hear and determine all claims founded upon the Constitution of the United States or any law of Congress, except for pensions, or upon any regulation of any executive department, or upon any contract, express or implied, with the government of the United States, or for damages, liquidated or unliquidated, in cases not sounding in tort, in respect of which claims the party would be entitled to redress against the United States either in a court of law, equity, or admiralty, if the United States were suable.' This is not a case within the category of payments by way of gratuity, payments as of grace, and not of right, as was the case of Emerson v. Hall, 13 Pet. 409, 10 L. ed. 223, and where it was said by Mr. Justice McLean: 'A claim having no foundation in law, but depending entirely on the generosity of the government, constitutes no basis for the action of any legal principle. It cannot be assigned. It does not go to the administrator as assets. It does not descend to the heir. And if the government, from motives of public policy, or any other considerations, shall think proper, under such circumstances, to make a grant of money to the heirs of the claimant, they receive it as a gift or pure donation, a donation made, it is true, in reference to some meritorious act of their ancestor, but which did not constitute a matter of right against the government. In the present case the government might have directed the money to be paid to the creditors of Emerson, or to any part of his heirs. Being the donor, it could, in the exercise of its discretion, make such distribution or application of its bounty as circumstances might require. And it has, under the title of an act 'for the Relief of the Heirs of Emerson,' directed, in the body of the act, the money to be paid to his legal representatives. That the heirs were intended by this designation is clear; and we think the payment which has been paid to them under this act has been rightfully made; and that the fund cannot be considered as assets in their hands for the payment of debts.'

This distinction between mere grants by the government by way of gratuity and debts or claims of right was likewise recognized by this court in the French spoliation cases, where it was held that the payments prescribed by the acts of Congress were gratuities, and that creditors, legatees, and assignees in bankruptcy could be rightfully Blagge v. Balch, 162 U.S. 439, 40 L. ed. 1032, 16 Sup. Ct. Rep. 853.

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 by operation of the laws of New Jersey, nor by any decree that the courts of New Jersey, operating under such laws, could make, it is sufficient to say that this court has held otherwise.

In Vaughan v. Northrup, 15 Pet. 1, 10 L. ed. 639, Mr. Justice Story, delivering the opinion of 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 sovereign capacity have no particular place of domicil, but possess, in contemplation of law, an ubiquity throughout the Union; 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 domicil;' and, accordingly, it was held in that case that 'the administrator of a creditor of the government, duly appointed in the state where he [the creditor] was domiciled at his death, has full authority to receive payment and give a full discharge of the debt due his intestate in any place where the government may choose to pay it, whether it be at the seat of government or at any other place where the public funds are deposited;. . . but the moneys so received constituted assets under that administration, for which he was accountable to the proper tribunals. . . [of the state where he was appointed].'

Price v. Forrest, 173 U.S. 410, 43 L. ed. 749, 19 Sup. Ct. Rep. 434, was one phase in the present controversy. There the question was between the heirs of Rodman M. Price and Borcherling, who had been appointed by the chancery court of New Jersey receiver of the assets of Price, including the money belonging to him in the Treasury of the United States. It was held by the courts of New Jersey that the receiver was entitled to the money in the Treasury, and the heirs and administrator of Price were enjoined from demanding or receiving from the Secretary of the Treasury, or any officer thereof, the said money or any part thereof. The cause was brought to this court, and, after full consideration, the decree of the court of errors and appeals of the state of New Jersey was affirmed. Two things were thus determined,-first, generally, that it was competent for a state court of the domicil of a 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 moneys held in trust by the United States; and, second, specifically, under the facts of the present case, that the title to the moneys 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 Borcherling, the receiver.

It is not open to doubt that the court of claims has jurisdiction to entertain the 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. at L. 612, chap. 122, § 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.

It is finally contended, in behalf of the government, that even if it was competent for the state courts to determine the controversy between the rival claimants to this fund, and even if the court of claims has jurisdiction to give effect to such determination, yet the rights of creditors resident within the District of Columbia were paramount to those of the New Jersey receiver, and that a payment made directly to them by the acting Secretary of the Treasury would be a lawful discharge of the United States.

Undoubtedly, as between different states or sovereignties, the general rule is that the courts of one will not aid the officers of another to withdraw funds or property of a decedent without providing for local creditors. But such a rule has no application in a case like the present, where the government of the United States has ubiquity in all the states of the Union, and does not hold moneys due a creditor subject to the local demands or claims of residents of the District of Columbia. Moreover, such a rule is for a court having control over the fund in dispute. It is not for a ministerial officer of the Treasury, having no judicial powers, to give effect to such demands.

It is, indeed, suggested that the action of the supreme court of the District of December 22, 1893, was a legal determination which operated to relieve Price, as to a portion of this fund, from the injunction of that court enjoining him from receiving or collecting monevs due him in the Treasury of the United States, and to authorize the Treasurer of the United States to pay such portion of the fund in disregard of the decree of the New Jersey court.

But it is obvious that the supreme court of the District had no jurisdiction or control over the money in the Treasury of the United States. It was dealing only with the parties before it, of whom the United States was not one. The order referred to doubtless did relieve Price from the existing injunction of that court, and left him free, so far as that injunction was concerned, to urge his claim against the United States; but it did not, and could not, relieve Price from the injunction and decree of the New Jersey court. Nor could such order operate as a legal adjudication which would permit the Treasurer of the United States to disregard the decree of the courts of New Jersey and the title of the receiver thereunder, of which the Department had full notice. In point of fact, inspection shows that this order was not intended as an adjudication. It was merely ex parte, and its only purpose or effect was to permit Price to push elsewhere his claim against the government. Such an order could not have been the subject of an appeal, even if an opportunity had been afforded to the receiver to take an appeal.

When analyzed, this contention will be perceived to be only a renewal of the one already considered; namely, 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 money 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.

For these reasons, and referring, for a fuller discussion of the questions involved, to the opinion of the court of claims, we think the conclusions of that court were correct, and its judgment is accordingly affirmed.

Mr. Justice White dissented.

Mr. Justice Harlan took no part in the decision of this case.