
    ALLEN & STREET’S CASE. Allen & Street v. The United States.
    
      On the Proofs.
    
    
      The claimants, in their own name, sell and deliver• to a quartermaster personal property consisting of oxen and ivagons, amounting to ¡$112,113 75, and receive vouchers therefor. Of these vouchers some are paid, leaving $71,491 25 still due. The property thus left unpaid for, belonged to R. M. W., and was conveyed to the claimants in trust for their creditors. R. M. §• IF. are indebted to the defendants about $870,000. The claimants receive under the assignment $150,000 over what they seelc in this suit. They do not prove what disposition has been made of the same, nor show that they have complied with the laws of Missouri relating to assignments made for the benefit of creditors, nor that they have given security for the faithful execution of the trust. The defendants received and have retained undisturbed possession of the property purchased. They seelc to set off apart of R. M. if W.’s indebtedness to them m bar of this suit on the ground of the assignment being general, the debtors bankrupt, and that they have priority over all the other creditors.
    
    Tbe. case involves tbe rig-bt of tbe United States to plead their priority as creditors of an insolvent estate, as a bar to a suit brought by tbe assignees for tbe purchase-money of some of tbe assigned property sold by tbem, in their own name, to a quartermaster, whereof tbe defendants have bad tbe undisturbed possession. But tbe court, being equally divided on the law, agrees on tbe following finding of facts, and dismisses tbe petition that tbe claimants may take their appeal.
    
      
      Mr. W. P. Gambell
      
       and Messrs. Hughes, Denver & Pecke for the claimants:
    The history of the case is as follows: In November, 1861, the claimants entered into a verbal contract with the Government of the United States, by and through Major L. C. Easton, then a quartermaster in the Army of the United States, by the terms of which the claimants agreed to sell and deliver to the government, and the government agreed to receive, at Fort Leavenworth, Kansas, from one hundred and sixty to two hundred and seventy-three wagons, with -out-fit complete, and a sufficient number of oxen for the same, counting five yoke of oxen to each wagon, at the following prices: for the wagons with out-fit one hundred and forty-six 25-100 dollars each •, and for the oxen fifty-five dollars per yoke. Under this contract, on the first day of November, 1861, the claimants delivered to the said Major Easton, quartermaster at Fort Leavenworth, aforesaid, two hundred and seventy-three wagons, with out-fit complete, and one thousand three hundred and twelve and one-half yoke of oxen; and upon receipt thereof the said quartermaster, Major Easton, issued and delivered to the claimants seven vouchers or certificates for said property, in all amounting to the sum of 1112,113 75. Youchers numbered 4, 5, 6, and 7 were paid by the government to the holders thereof, but on vouchers numbered 1, 2, and 3, only the sum of $17,727 50 was paid.
    It is submitted that the evidence shows a sale and delivery of the property under the contract; that the authorized agent of the government received the proimrty and issued the proper vouchers therefor; that these vouchers have not been paid; that application for payment was duly made to, and refused by, the War Department, and that there remains unpaid the amount of said three vouchers, less $17,727 50 paid thereon.
    Thus far, the War Department has refused to pay this claim on two grounds:
    1. That these cattle and wagons were a part of the out-fit and stock of the firm of Bussell, Majors & Waddell; and that as the firm of Bussell, Majors & Waddell were indebted (as it was claimed) to the United States in a large amount, on account of tbe so-called u Floyd acceptances,” tbe government, being possessed of tbe property, should withhold payment until tbe alleged indebtedness of Russell, Majors & Waddell should be discharged.
    2. That the said firm of Russell, Majors & Waddell were under some liability to the government on account of the alleged' robbery of the “ Indian trust bonds.”
    ' In reference to the “ Floyd acceptances,” it is submitted that, inasmuch as this court has decided against their validity, these acceptances must be thrown entirely out of the case, in considering the claim now presented to the court.
    In reference to the Indian trust bonds, so far, the arguments and authorities cited upon the other branch of this case apply with equal force to the alleged “ robbery of the Indian trust bonds.” It will be borne in mind that the property out of which this controversy arises was the partnership property of Russell, Majors & Waddell, who assigned it to the claimants. There is nothing to show (and as a matter of fact it was never claimed by anybody) that the firm of Russell, Majors & Wad-dell had anything to do with this alleged robbery, or that they received a single dime of the proceeds arising from any sale that may have been made of these bonds. This affair was not, and from its very nature could not have been, a partnership transaction of that firm.
    It is deemed to be quite unnecessary to cite authorities to show that the partnership debts must be first satisfied before the assets of the firm can be apxuopriated to the payment of the liabilities of individual members of the firm. The rule in equity, which is uniform and stringent, is, that the property of a co-partnership must all be applied to the payment of the partnership debts, to the exclusion of the creditors of the individual members of the firm; and that the creditors of the latter are to be first paid out of the separate effects of their debtor before anything can be claimed by the partnership creditors.
    The government dealt with the claimants in their individual capacity, not as assignees; and the certified accounts on which this claim is founded are issued to Street & Allen as individuals, not as trustees. A purchaser will_ not be allowed to deny or impugn the title of his vendor ; and it makes no difference whether the purchaser be the government, or a private individual.
    
      Upon the whole case, it is submitted that the claimants are clearly entitled to a judgment against the United States for the amount claimed in the petition.
    I. Want of title in the vendor of personal property is no de-fence to an action brought for the recovery of the purchase money, where there has been no recovery by the owner against the purchaser. (Case v. Sail et al., 24 Wend., 102, per Nelson, Ch. J.; Patton v. Taylor, 7 Howard Supreme Ct. R.. p. 133.)
    And this is so, although the purchaser may have paid the real owner of the property, if he has done so without suit. ('Vibbardet al. v. Johnson, 19 Johns. R., 77, per Spencer, Ch. J.)
    II. An assignment for the benefit of creditors in violation of law is valid between the parties, and passes a title to the as-signee, which is good against every one excepting the injured creditors. (Van Winlcle v. McKee, 7 Missouri, p. 439 ; Bur-rill on Assignments, p. 509.)
    III. In the year 1801, the statute of Missouri prohibited assignments which contained preferences in favor of one creditor over others, expressed in the assignment. All the creditors named in the assignment must share alike; but creditors omitted from it altogether could not object.
    If the assignment contained preferences among the creditors named, it would not be void, but notwithstanding such'preference the creditors named would all share alike. (Shapleigh et al. v. Baird, 26 Missouri R., p.322; Johnson v. McAlUster, 30 Missouri R., p. 327.)
    IV. In this case the assignment does not contain any preferences. The United States is not a creditor of the assignor; there is no evidence of any such indebtedness, and that point was abandoned on the trial.
    
      Mr. Alexander Johnston (with whom was the Assistant Attorney General) for the defendants :
    The late firm of Russell, Majors <& Waddell made three assignments of property to Eugene B. Allen, Alexander Street, and Finis Y. Ewing, one dated the 25th, and the other two the 26th of January, 1861. The first of these assignments conveyed all the property of the firm, and was for the benefit of certain creditors designated in a schedule attached to the as-sig’nment. With tbe ‘second assignment we have nothing to do in this case.
    These assignees (or two of them) afterward., in the same year, sold to the government a portion of the property conveyed by these assignments, and, as Bussell, Majors & Waddell were indebted to the United States in a sum largely exceeding the proceeds of the sale, the Quartermaster General refused to pay for the proxierty. This suit is brought to secure the amount of the vouchers issued for the said property.,
    I. The property, the proceeds of which are claimed, toas held by claimants as trustees, under assignments from Bussell, Majors <& Waddell.
    
    This, we believe, is not denied. The- fact is abundantly proved and admitted by a stipulation of Eugene B. Allen, printed in the record.
    II. Bussell, Majors & Waddell, at the time they made the assignments, were indebted to the United States.
    
    Between about the middle of July and the 13th of December, 1860, Mr. Bussell, of that firm, received at the hands of Godard Bailey, disbursing clerk of the Interior Department, certain bonds held by the governmentin trust for various Indian tribes, amounting in the aggregate to the sum of $870,000. These bonds were used for the benefit of the firm of Bussell, Majors & Waddell,-and were never returned to the government. These facts are proved by the admissions of Bussell in his testimony and statements before a committee of the House of Bep-resentatives, which testimony and statements are verified by the deposition of Francis H. Smith, stenographer of the House, who reported them, and also by the testimony of Mr. Bussell in this case.
    That the United States assumed .the loss of these bonds, and made the loss good to the Indians, is shown by the act of Congress entitled “ An act relating to trust funds of several Indian tribes,” &c., (Stat. L., vol. Nil, p. 539,) the assent of the Indians to the said act being on file with the Secretary of the Interior, as is shown by certified copies thereof in the record in this case.
    There is a pretence that Bussell, Majors & Waddell have claims against the United States; but all that appears in this case is, that the sum of $17,487 84 has been withheld from them in making payments for transportation. If any other indebtedness to them from the government exists, these claimants are the assignees thereof, and should show what it is.
    III. Russell, Majors & Waddell tvere insolvent when these assignments were made.
    
    
      (a.) Their first assignment is to secure certain liabilities, a schedule of which is in the record. These are only liabilities “ on which there are securities or indorsers,” and amount to $502,380 99. The liabilities on which there are no endorsers are not set down, and nowhere appear in the case, except this liability of $870,000 to the United States. Of their liabilities on the Floyd acceptances, the court is well informed.
    (&.) They made an assignment of all their property for the benefit of their creditors. Their first assignment was to secure a class of creditors, or, rather, to indemnify their friends$ the second was to secure one firm •, and the third was for the benefit of all their creditors. Had they been solvent, the third assignment was all that would have been necessary.
    But if this firm were solvent when the assignment was made, and remained solvent ever since, the court should render judgment for the defendants. Their indebtedness to the United States is clearly proved. If they are solvent, the entire debt should be paid; whereas, in this case, but a small portion of it is involved. If they are not solvent, it is very clear that all they had or have should be devoted to the payment of the Government till that claim is satisfied.
    IY. This is a proper case for a set-off.
    
    By section 3 of the act of March 3, 1863, (Stat. L., vol. XII, p. 765,) it is provided, that this 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 ; and if upon the whole case it finds that the claimant is indebted to the government, it shall render judgment to that effect.”
    The argument that the amount claimed should be paid to the claimants, in order that they may first pay the expenses of the trust, might have some force in a case which involved all of tbe trust property; but it can bave none in tbis case. In tbis case not balf of tbe property assigned was sold to tbe government.
    
      
       Mr. Gambell died before tbe last trial of the case, but his very able writ-rten argument was considered by the court.
    
   Oaséy, Cb. J.,

announced tbe following findings of fact framed for tbe purposes, of appeal, tbe court being equally divided upon tbe validity of tbe defence set up.

1. On tbe 1st day of November, 1861, tbe claimants, Street & Allen, sold and delivered to Major L. 0. Easton, a quartermaster in tbe United States Army, and for tbe use of tbe United States, 273 wagons, at tbe price of $146 25 for each wagonand also 1,312J yoke of oxen, at tbe price of $55 per yoke for sucb oxen, amounting in tbe aggregate to tbe sum of $112,113 75. And for tbis sum, Major Easton issued to tbe claimants vouchers in due and proper form, being tbe vouchers appended to and fprming part of tbe petition. We also find that Major Easton bad full authority to make tbe purchase, and that tbe property was of tbe value agreed to be paid for tbe same ; and that it was used by tbe United States, and their title and possession to tbe same has not been in any way disputed or disturbed; and that tbe sum of $71,491 25 still remains unpaid upon tbe said vouchers, tbe balance having been paid by tbe United States to tbe claimants.

2. We find further that on tbe 25th and 26th days of January, A. D. 1861, Russell, Majors So Waddell executed and delivered to tbe claimants two several deeds of assignment, in trust for their creditors therein designated, which deeds of assignment are here referred to and made part of tbis statement of facts, together with tbe schedules accompanying tbe said deeds of assignment respectively, tbe said Russell, Majors & Waddell then and there being wholly insolvent. And we find that said deeds together convey all tbe property of Russell, Majors So Waddell in trust for tbe benefit of their creditors.

3. We further find that tbe amount claimed in tbis suit is for tbe price of so much of tbe property sold and delivered to tbe United States, as already stated, as bad belonged to Russell, Majors So Waddell, and was conveyed to tbe claimants, in trust for creditors, by tbe deeds of assignment already recited.

4. We find that at tbe date of tbe assignments heretofore set forth by Russell, Majors So Waddell to tbe claimants, in trust for creditors, tbe said Bussell, 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 the said Bussell, Majors & Waddell, through the collusion and connivance of certain officers of the United States in charge and custody of said bonds, illegally procured, and negotiated and sold the same, and applied the proceeds thereof to their own use. And the amount thereof, with interest thereon from the 1st of October, 1860, is still due and owing from Bus-sell, Majors & Waddell to the United States. But the United States have never prosecuted such indebtedness to judgment, and the same is still an unliquidated demand, disputed and denied by Bussell, Majors & Waddell.

5. That the claimants received, under the deeds of assignment recited, property of the assignors over and above that the price of which is claimed in this suit, amounting to $150,000. The claimants have not proved what disposition has been made of the same, nor have they shown what are or have been the expenses of the execution of the trust; nor have they shown that they have complied with the laws of Missouri relating to assignments made in trust for the benefit of creditors; nor that they have given good and sufficient security for the faithful execution and performance of the said trust.

And upon the facts so found the court ruled as matter of law—

1st. That the United States are entitled to priority of payment out of the proceeds of the property assigned to claimants by Bussell, Majors & Waddell under the trust deeds recited.

2d. That the money in suit, being the proceeds of such property, is not in law subject to any prior charge or lien in the hands of claimants.

3d. That the United States may, under and by virtue of the act of Congress of March 3, 1863, section 5, entitled “An act to amend ‘An act to establish a court for the investigation of claims against the United States,’ approved February 24; 1855,” set off so much of the indebtedness of Bussell, Majors & Wad-dell to them, as shall be equal to the amount claimed and proved in this suit by Allen & Street, the claimants. And the claimants’ petition is dismissed.

Nott, J.,

concurring:

I acquiesce in a judgment pro forma against the claimants as the only means for rescuing the case from the dead-lock of a divided court, and of bringing the important questions which it involves to the final decision of the Supreme Court.

I assent to the findings of fact as facts which have properly and improperly appeared in the case, and I agree to the first and second conclusions of law as abstract legal principles; but I regard the second, third, and fourth findings insufficient to constitute a defence; the fifth as wholly irrelevant under the pleadings, and the first and second conclusions of law as inapplicable to the facts of this case. As to the third and final conclusion of law, I think it error.

Under the very comprehensive language of the act reconstituting this court, which confers upon it jurisdiction of off-set and counter-claim against claimants, it may be that the defendants might have sought affirmative relief which the court might be able to grant. But the defendants have asked no affirmative relief, and have contented themselves with pleading in bar to a suit at law what might be at most the subject of a cross-bill in equity.

LoriNG-, J.,

dissenting:

The statutes cited give the United States no lien on the assets of an insolvent estate, but only a priority of payment, and they confine that to the assets- uin the hands of” the assignees, and make them personally liable for the debt to the United States. The statutes, therefore, cannot be used to prevent the assets from coming “ to the hands ” of the assignees.

Then the Act of March 3d, 1863, reconstructing this court, extends its jurisdiction in u set-off” by adding others to the kinds of claim that may be used in u set-off” at the common law. But it does not alter or relax the rule at law and in equity that the claim must be in the same right, for in express terms it confines the claims that the United States may set-off, to claims u on the part of the C-overnment against any person making claim against the Government in said court and Bussell, Majors & Waddell are not the claimants in this case either in form or substance, and the property sold and for which this claim is brought did not belong to them when sold) and they could maintain no action for its price, either in law or equity. And the evidence shows that the assignees were in possession of the property when they sold it, and therefore they may sue for and recover its price, on their title by possession, without proof of their title as assignees, exactly as an executor may, for goods sold by him when in his possession, sue for and recover the price on his title by possession without proof of his title as executor.

For these reasons I think the claimants are entitled to judgment.

Peck, J., did not sit in this case and took no part in the decision.  