United States v. Hickey

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

In July, 1851, the Secretary of the Treasury, on behalf of the United States, agreed with one Eldredge, to lease from him certain warehouses in the city of San Francisco for the term of ten years. The rent for the first two years was fixed at $6000 per month, and it was agreed that at the expiration of every two years thereafter the secretary should have the privilege of having the rent fixed for the ensuing two years by a commission, of which the secretary should appoint one member, Eldredge another, and that the two thus selected should choose a third.

In February, 1856, the United States desiring to 'get clear of this lease,' the collector of the port of San Francisco, by authority of the Secretary of the Treasury, entered into an agreement with one Hickey, by which the United States leased to him the warehouses mentioned, during the term of the lease first mentioned. Hickey agreed to pay $500 per month until the 1st of May following (that is to say, till the 1st of May, 1856, at which time an appraisement was to be made as by the terms of the original lease), and to pay thereafter to the United States the sum which should be awarded to Eldredge for the two years ensuing, and after that time to pay such sum as should be awarded from time to time for the terms of two years thereafter ensuing:

'Provided, nevertheless, that the sum of $250 per calendar month is hereby saved and reserved to the said Hickey during the term of the aforesaid lease, as a bonus to him,. . . to be paid at the expiration of each month,. . . monthly until the completion of the same.'

Under this agreement Hickey paid rent as agreed until May, 1856. He then appointed one person to appraise the future rent. The secretary appointed another. They failed to agree, and failed to appoint an umpire; and the Secretary of the Treasury, although receiving notice of such failure, took no further steps in the matter.

On the 13th of April, 1857, difficulties and disputes having arisen between the government and Eldredge concerning the amount of rents lawfully demandable by Eldredge from the government, the secretary, without the knowledge of Hickey, entered into an agreement with Eldredge by which the United States transferred and assigned to him 'all their right and title and interest in and to the said lease, and authorized him to sue for, collect, and recover the Hickey lease, and the rights to the rent reserved under the same,' and agreed to pay him $110,000 in satisfaction of all future claims for rent under the original lease; this conveyance adding to its terms of assignment and transfer these words:

'It being distinctly understood that it is the object and purpose of this agreement to put the said Eldredge in the place and stead of the United States, so far as concerns the rights of the United States under the lease aforesaid.'

In August of the same year Eldredge took proceedings in the courts of California against Hickey for non-payment of rent on the lease, and in November dispossessed him of the premises.

In this state of things Hickey filed a petition in the Court of Claims, in which he alleged that the United States were indebted to him upon three items:

1. His bonus of $250 per calendar month, reserved, and extending, as he alleged, through a term of six years, $18,000.

2. For damages in the breaking up of his business by the eviction, against which he asserted his right to be indemnified by the United States, $28,000.

3. For storage of goods belonging to the United States during the years 1856 and 1857, the sum of $1370. The claim was for storage while Hickey was in possession of the warehouses as above mentioned.

Against this last claim (which was not denied) the United States set up a counter-claim of $9000 for rent alleged to be due by Hickey, from May, 1856, to November, 1857 (when Hickey was evicted), on the lease made by them to him. No evidence was given of the monthly value of the premises.

The Court of Claims rejected Hickey's first and second claims; that is to say, his claims of bonus, and for damages, but allowed his claim for storage; disallowing the counterclaim or set-off presented by the United States.

The United States alone appealed.

Mr. S. F. Phillips, Solicitor-General, for the appellants; Mr. J. W. Moore, contra.

Much of the argument was directed to the matter of the two items which were rejected by the Court of Claims; items not passed on by this court. On the remaining point, the refusal of the court below to allow the counterclaim of the United States, the Solicitor-General argued that the lease to Hickey was not a sub-lease, but a lease of the term (i. e., of the entire term), from February 1st, 1856, to the end of the lease. This was a transfer of the whole interest of the United States in the lease, and of necessity therefore an assignment of the lease.

As a consequence of this, Hickey became bound to Eldredge for all rent that the United States, the lessee and assignor, had agreed to pay. Now the United States had agreed to pay $6000 a month, unless arbitrators appointed from time to time should say otherwise. And upon a consideration of the whole transaction, including the relations of Hickey as assignee to Eldredge, and thereupon indirectly to the United States, it seemed clear that Hickey's obligation by his contract with the United States was, that if there was no assessment upon the 1st of May, 1856, he would in effect take the place of the United States in their contract with Eldredge as regards the payment of the rent, receiving the bonus of $250 a month by way of diminution of his rent. But Hickey paid rent to no one after the 1st of May, 1856.

Upon the whole, the case was one in which the assignee of a lessee, who is indebted to the original lessor for a large amount which the lessee has in fact paid, demanded that the lessee should pay him a debt much less than that already paid for him to the original lessor, and one, at that, growing out of the same transaction. The assignee of a lease in possession is to be regarded as the principal debtor for rent to the lessor, and the lessee as only secondary.

Mr. Justice HUNT delivered the opinion of the court.