
    AMASA A. REDFIELD, Receiver. v. THE UNITED STATES. CHARLES WOOD v. THE UNITED STATES.
    [Nos. 17005, 17287.
    Decided June 27, 1892.]
    
      On the Proofs.
    
    The claimant Redfield is receiver of an insolvent contractor’s estate, appointed by the Supreme Court of New York in proceedings supplementary to execution. The claimant Wood is a material-man, who asserts a right to recover the value of his material under an arrangement made by the officers of the Treasury.
    I. The appointment of a receiver by a State court in proceedings supplementary to execution against an insolvent contractor effects a transfer of his claim against the United States by operation of law, and does not come within the act prohibiting the assignment of claims (Rev. Stat., § 3477).
    II. Where there was an unconditional remission of a forfeiture by the officer who by the terms of a contract was to determine and decide upon that question, it can not subsequently be used as a defense.
    HI. Where the Secretary of the Treasury remitted a penalty which might have been asserted against a delinquent contractor, the court can not go behind his act to inquire whether the remission was intended to be on condition that payment should be diverted in part from the contractor to his material-men.
    
      The Reporters1 statement of tbe case:
    These two cases,though not consolidated, were heard together at the same time, the principal contest being between the adverse claimants. No opinion was given in the case of Wood, but the opinion in the other case disposes of both, and judgment against Wood was accordingly rendered. The following are the facts as found by the court:
    I. On the day of the date thereof the said William Mitchell entered into a contract with the defendants, which contract is alleged in the petition and filed as Exhibit A.
    II. On the day of the date thereof the said Mitchell entered into a certain other contract, which is alleged in the petition and filed as Exhibit B.
    
      III. In pursuance of said contracts the said Mitchell entered upon the performance of the work mentioned therein, furnished the material and labor, and made the additions and alterations therein specified; and in relation to the contract dated 3d of September, 1880, the officers in charge of the work provided for by said contract report to the General Superintendent as follows:
    “ February 1,1888.
    “ Sumner I. Kimball, Esq.,
    “ General Superintendent U. S. IÁfe-Saving Service:
    
    “ Sir: We have the honor to transmit herewith bill, in duplicate, in favor of Mr. William Mitchell, No. 24 State street, Neiv York City, in the sum of $12,530.00, for balance due him for furnishing material and labor and making additions and alterations to seven (7) life-saving station-houses, known as the Oak Island, Gilgo, Jones Beach, Each Inlet, Point Lookout, Bockaway, and Bockaway Point stations, located on the coast of Long Island, N. Y., under contract dated September 3d, 1880.
    “ By the terms of the contract the houses were to have been completed on or before December 31, 1880, but the time was extended to the 30th day of June, 1887, in default of which a penalty of $30.00 per dayforeachday’sdelayisimposed. * * *
    “ The work was not completed until January 24th, 1888, as per report of our assistant, Mr. Dodge, herewith, or six months and twenty-one days after the time specified.
    “ Mr. Mitchell was called upon to give such explanation as he had to offer showing cause why the penalty should not be exacted, and inclosed is his reply, dated January 30th, 1888. * * *
    “It will be seen from the following statement that the Government has sustained no money loss on account of the delay in completing the stations by reason of the employment of an assistant superintendent of construction, viz: Date of contract, September 3,1880; houses to be completed December 31,1880; time of completion, extended to June 30, 1887; houses completed, January 24, 1888; time allowed the contractor to do the work, September 3, 1880, to June 30, 1887, 9 months and 27 days, and deducting therefrom two weeks, or 14 days, time estimated it would take the contractor to get men and material together to commence work after contract was made, leaves actual time to do the work 9 mos. and 13 days. Assistant’s date of oath, April 10,1887; completed work, January 24,1888, or eight months and 25 days.
    “In view of the above we respectfully recommend that the bill be approved for the full amount, and the remission of the penalty is recommended.
    “A statement from Mr. Michell that he has no bill for extras to present is enclosed.
    
      “ The report of Assistant Superintendent of Construction Miller, dated December 28,1887, wlio made an inspection of tbe buildings, is submitted with the accompanying papers.
    “Very respectfully, your ob’d’nt servants,
    “J. H. Merryman,
    “CrEORGE W. MOORE,
    “ Captains, U. S. B. M., Sup’ts Consfn, L. S.
    
    Upon receipt of said report the Secretary of the Treasury made the order following, to wit:
    “Treasury Department,
    “Oeeice oe the Secretary,
    
      “February 11,1888.
    “Approved in the sum of twelve thousand five hundred and thirty-six dollars ($12,536.00), and respectfully referred to the First Auditor of the Treasury for examination and settlement, amount found due to be paid from appropriation ‘LifeSaving Service, 1887.’ Draft to be sent Mr. William Mitchell, care of G-eneral Superintendent Life-Saving Service, Washington, D. C.
    “In view of the recommendation made by the superintend- ' ents of construction in their letter dated February 1st, 1888, copy herewith, the penalty named in the contract for failure to complete the work at the time specified therein is hereby remitted.
    “Contract transmitted with former bill.
    “ Final payment.
    Hugh S. Thompson,
    “ Acting Secretary.”
    IV. In connection with the communication addressed to the General Superintendent, as set forth in finding ii, the superintendents in charge of the work made the following voucher for said Mitchell:
    “voucher for general expenses.
    
      “The United States to William Mitehell, No. $4, State St., New York City, Dr.
    
    “second division.
    
      “1888.
    
    “Jau’y 25. To famishing the material and labor and mating additions and alterations to seven (7) life-saving station houses, being known as the Oat Island, Gilgo, Jones ¡Beach, Zachs Inlet, Point Lookout, Rockaway, and Rockaway Point stations, located on the coast of Long Island, N. Y., under contract dated Sept. 3d, 1886.$14.536.00
    Credit: Partial payment (Aug. 1, ’87). 2,000.00
    Total 12,536.00
    
      “¥e hereby certify that the above-named account is correct and just, that the work charged therein has been actually and satisfactorily performed, that the several articles purchased have been duly inspected and accepted, and that they were delivered on the 24th day of January, 1888. We further certify that they were necessary for and have been, or will be, used for the Life-Saving’ Service j that they are of good quality, and the prices just and reasonable, and in every respect according to contract, with the exception of date of completion and extension thereof.
    “J. H. Mebbymae,
    “Geobg-e W. Moobe,
    “ Superintendents.
    
    “2,1, ’88.
    “Received at-, this-day of-, 189-, of-, disbursing-, the sum of-dollars, in mil of the above account.
    “William; Mitchell.
    “Witness:
    “A. Doebflingeb.”
    V. The contract dated the 15th of October, 1886, was fully completed by said Mitchell and accepted as such by the defendants. There is still due said Mitchell on said contract the sum of $2,510.38 for work and labor performed and material furnished under said contract and not paid for. The said contract dated September 3,1886, was also fully performed and accepted by defendants.
    VI. A judgment having been obtained against said Mitchell in the Supreme Court of the State of New York and execution issued thereon, the following order was made:
    [Pol. 1. Supreme Court, city and county of New York. Patterson Brothers, plaintiff, against "William Mitchell, defendant. Order appointing receiver.]
    “An order in proceedings supplementary to execution upon the judgment in this action having been issued and made returnable before me, as prescribed in article 1 of title 12 of chapter 17 of the Code of Civil Procedure, and an examination having been had thereunder before me of William Mitchell, the judgment debtor, and it appearing from the oath of the said William Mitchell, the judgment debtor, that there is not pending against the said William Mitchell, the judgment debtor, any action of the character specified in article 1 of title 4 of chapter 15 of the Code of Civil Procedure, brought by Patterson Brothers, as plaintiff, and there is not pending against the said William Mitchell, the judgment debtor, any special proceeding instituted as prescribed in article 1 of title 12 of chapter 17 of part 2 of the Code of Civil Procedure against the said William Mitchell, the judgment debtor herein;
    “And it also appearing, by the like proof, that no receiver of the property of the said William Mitchell', the judgment debtor, has been appointed in any such action or proceeding, and an application for the appointment of a receiver herein having been made by the plaintiff at the close of the examination of said judgment debtor—
    “I do hereby order that Amasa A. Redfield, esq., of the city of New York, be appointed, and I do hereby appoint him, receiver of all the property, debts, equitable interests, rights, and things in action, effects, and estate, real and personal, ox the said William Mitchell, the judgment debtor herein. That the said receiver, before entering upon the execution of his trust under this order, execute and duly acknowledge his bond with at least two sufficient sureties, to be by me approved, to the people of the State of New York, in the penalty of five thousand dollars, and conditioned for the faithful discharge of his duties as such receiver, and that upon filing such bond and filing and recording this order in the office of the clerk of the city and county of New York the said receiver be invested with all the rights and powers as such according to law.
    “I do hereby order and direct the said William Mitchell, the judgment debtor herein, to execute, acknowledge, and deliver to the said receiver a good and sufficient deed and conveyance of his real estate, wheresoever the same may be.
    “And I do farther order that there be allowed to Patterson Brothers, the judgment creditor herein, the sum of-as costs and disbursements, and do direct that the same be paid by the said receiver out of any money which may come into his hands by virtue of his appointment as receiver herein.
    “And the said William Mitchell, his agents, servants, and attorneys, and all others are hereby forbidden, enjoined, and restrained from making or suffering any transfer or other disposition of, or interference with, the property not exempted from seizure by section 2463 of the Code of Civil Procedure belonging to the said judgment debtor, William Mitchell, or in which he is in anywise interested, except in obedience hereto, until further direction in the premises.
    “Dated February 27th, 1888.”
    The said receiver executed his bond, which was approved by the court, and the order was filed and recorded as provided. Said Mitchell did not own any real estate.
    VII. On February 15,1888, the General Superintendent of the Life Saving Service sent to the superintendent of construction at New York a draft for the sum of $12,536, being the amount due on contract dated 3d of September, 1886, payable to the order of said Mitchell, authorizing said superintendent of construction to deliver said draft to said Mitchell upon the condition that said Mitchell should meet at the office of said superintendent and adjust the claims of certain persons who had furnished material and performed labor in the fulfillment of said contract. Said Mitchell did not adjust the claims of said parties, and said draft was not delivered. The amount of said claims is $12,503.29, and included the sum of $8,848.77 claimed to be due Charles Wood.
    The said claims before that time were filed in the Treasury-Department as claims against said Mitchell for work done and material delivered in the performance of said contract. The officers in charge of the matter in the Treasury Department insisted upon a satisfactory adjustment of said claims before the delivery of said draft. Mitchell denied the right of the Department to impose such conditions upon the payment of the amount due him, refused to comply with the conditions upon which the draft was to be delivered, and the draft remained in the possession of the defendants. It does not appear that Mitchell consented that the draft might issue to be delivered to him on the condition that he should settle and adjust the claims of persons having demands against him for work done or material furnished in the performance of said first-mentioned agreement.
    On the 14th day of February, 1887, a draft for the sum of $2,010.38 was executed for work done on the second contract. The sum of $500 was due Mitchell, in addition to the said sum.
    
      Mr. Franklin JET. Mackey and Mr. George A. King for the claimant.
    
      Mr. Henry M. Foote (with whom was Mr. Assistant Attorney-General Ootton) for the defendants.
   Weldon, J.,

delivered the opinion of the court.

This proceeding is based on two contracts, made between William Mitchell and the defendants, bearing date on the 3d of September, 1886, and the 11th of October, 1886, both of which are made exhibits to the petition of claimant, who sues as the receiver and assignee of said Mitchell.

There '«vas no controversy as to the completion of the work and the amount due Mitchell. The findings show a complete performance of the agreements and the amount unpaid by the defendants.

The,only contention arises from the effort of the Treasury Department to protect labor and material-men, in their alleged right to be paid out of the proceeds arising from the performance of the contract, to which their labor and material contributed.

The power of the claimant to maintain this suit, although not seriously questioned by the defendants, is denied, and we are called upon to pass upon his legal capacity to recover what may be due Mitchell.

The plaintiff is not only a receiver, appointed by the Supreme Court, State of New York, sitting in the city and county of New York, but he has the additional claim of being the assignee of all demands against the United States on the part of Mitchell, the assignment being executed for the purpose of enabling the claimant to more effectually perform the duties of receiver under his appointment by the Supreme Court of the State of New York. It may be, that the personal assignment by Mitchell to claimant, it being for the indebtedness of the United States only, would not have the effect to transfer the claim to him, but his appointment as receiver under the order of the court has in our opinion that effect. It was held in the case of Erwin v. The United States (97 U. S. R., 392) The act of Congress of February 26, 1853, to prevent frauds upon the Treasury of the United States,” which was the subject of consideration in the Gilis Case, applies only to the voluntary assignment of demands against the Government. It does not embrace cases where there has been a transfer of title by operation of law. The passing of claims to heirs and devisees, or assignees in bankruptcy are not within the evils at which the statute aimed; nor does the construction given by this court deny to such parties a standing in the Court of Claims.”

In the case of Goodman v. Niblack (102 U. S. R., 556) it was held-that section 3477, Revised Statutes, did not prevent a claim from passing to an assignee under a general assignment for the benefit of creditors. The court said: “In what respect does the voluntary assignment for the benefit of creditors wMcb is made by an insolvent debtor of all bis effects, wbicb must, if it be bonest, include a claim against tbe Government, differ from an assignment wbicb is made in bankruptcy?”

In tbis case it is true no assignment in bankruptcy could be made, and no assignment of all tbe debtor’s effects is stfiown 5 but tbe appointment of tbe claimant as receiver in tbe proceeding in tbe State of New York bas tbe effect of transferring to bim tbe title of all tbe cboses in action of Mitchell, and if tbe voluntary assignment to claimant by Mitebell (it being for tbe claims against tbe United States and not all bis property) did not bave that effect, it bas tbe effect of curing any and all defects as to tbe legality of tbe appointment of claimant so far as tbe judgment debtor is concerned. Tbe reasoning of tbe Supreme Court in tbe case of Goodman v. Niblack, in favor of assignees in bankruptcy and voluntary assignees of “all effects” by tbe debtor, properly applied, will sustain a receiver appointed by a court of competent jurisdiction in asserting tbe same title to cboses in action wMcb might as against tbe Government be asserted by assignees in bankruptcy and under deeds of general assignment.

Tbe question of tbe claimant’s capacity to sue bas to some extent been determined by tbe Supreme Court of tbe District of Columbia, and tbe Supreme Court of tbe United States in tbe case of tbe United States ex rel. Redfield v. Windom (137 U. S. R., 636), in wMcb a petition for mandamus was beard by tbe Supreme Court of tbe District of Columbia, and by appeal taken to tbe Supreme Court of tbe United States. In both courts tbe case was beard on its merits, and no question was made by tbe defendants or tbe courts, as to tbe right of tbe petitioner to maintain mandamus for tbe delivery of tbe draft in question.

In tbe answer to tbe petition for mandamus tbe respondent said * * *: <£ and he avers that to leave tbe relator to Ms remedy at law would in tbe respondent’s opinion enable tbe Government to avail itself of tbe said forfeitures or other just damages in tbe premises.”

Tbe Supreme Court said: “We think tbis return showed a sufficient cause for.tbe discharge of tbe rule and a refusal to issue tbe writ.”

Following the line of judicial construction indicated by these decisions, we determine, that for tbe recovery of whatever may be due Mitchell under the two contracts tlie receiver lias a right to maintain the present form of action and have tlio com troversy settled upon the merits of the claim. Tlie defense in this court is based upon the alleged facts set up in the proceeding in mandamus. This issue was made in settling the questions of fact, as to whether Mitchell had agreed to accept the draft upon the condition, that he was to adjust the claims for the labor and material furnished by the parties whose claims had been brought to the notice of the Department. The defendants claimed that the remission of the penalty was upon the express agreement that Mitchell was to settle with his creditors. This was denied upon the part of Mitchell. The court has examined with great care the testimony on that question, and has found that no such arrangement or agreement was made. The preponderance of the testimony is, that while it might have been the purpose of the defendants to impose a condition of that kind on the statement and adjustment of the account and the execution of the draft set forth in the findings, Mitchell did not agree to it, but insisted that the draft should be issued to him without qualification or condition.

As will be seen by the contract dated September 3, 1886, a penalty of $30 a day for any and all delays in the completion of the agreement beyond the time limited is provided, and under that clause, if susceptible of enforcement to the extent of the penalty, a large amount would be due the defendants ; bnt the remission of the penalty by the Secretary of the Treasury waives and eliminates from the controversy all claim for the penalty. It is shown by the report of the officer in charge that no loss ensued by reason of - the failure upon the part of Mitchell to perform the agreement within the time, and upon that report, with other suggestions, the Secretary of the Treasury approved the allowance of $12,536, and added: “In view of the recommendation made by the superintendent of construction in the letter dated February 1, 1888 (copy herewith), the penalty named in contract for failure to complete the work at the time specified therein is hereby remitted.”

This was an unconditional remission of the forfeiture, by the officer, who by the terms of the contract had a right to determine and decide the question of forfeiture. Forfeitures are not favored in law, and unless enforced according to their letter and requirement become inoperative. The object of tlie penalty was to secure tlie defendants against losses whicli might occur to them from the failure of Mitchell to perform the agreement within the time if it is to be construed as liquidated damages; but it is not necessary to enter upon a discussion of that question. It is sufficient for the purpose of the present controversy to say, that the Secretary of the Treasury, upon reasons satisfactory to him, discharged Mitchell from the consequence of forfeiture as provided for by the agreement and his failure to perform within the time.

The brief of the counsel at some length discusses the legal effect of the execution of the drafts; but we regard that question as immaterial, inasmuch as the claimant in his petition declares on the original contracts and their performance, so that his right to recover is based upon the original cause of action springing out of, and dependent upon, the agreements between the defendants and Mitchell.

The remission of the penalty by the Secretary is not based upon any agreement made by Mitchell, but upon the recommendation of the superintendent of construction, and in the determination of the legal rights of the parties the court must accept that remission according to its legal effect and purport. The official acts of the Secretary can not be impeached or invalidated, by showing that some antecedent step taken by a subordinate officer is in contravention of the final and ultimate action of the chief of the Department.

The findings show the complete performance of the agreement by Mitchell and the amounts still unpaid by the defendants on both contracts, which in the aggregate make the sum of $15,046.38, andforthat amount a judgmentfor the claimantis ordered.  