National Bank of Commerce of Seattle v. Downie No 31 Seattle National Bank v. Downie No 32

• Decision Date: 28 November 1910
• Docket Number: Nos. 31 and 32,s. 31 and 32
• Citation: 54 L.Ed. 1065,20 Ann.Cas. 1116,218 U.S. 345,31 S.Ct. 89
• Parties: NATIONAL BANK OF COMMERCE OF SEATTLE, Appt., v. R. E. DOWNIE, Trustee; St. Paul & Tacoma Lumber Company, Barber Asphalt Paving Company, Mukilteo Lumber Company, Gamwell & Wheeler, Bankrupts, and the Seattle National Bank. NO 31. SEATTLE NATIONAL BANK, Appt., v. R. E. DOWNIE, Trustee; St. Paul & Tacoma Lumber Company, Barber Asphalt Paving Company, Mukilteo Lumber Company, Gamwell & Wheeler, Bankrupts, and National Bank of Commerce of Seattle. NO 32
• Court: U.S. Supreme Court

218 U.S. 345

31 S.Ct. 89

54 L.Ed. 1065

NATIONAL BANK OF COMMERCE OF SEATTLE, Appt.,

v R. E. DOWNIE, Trustee; St. Paul & Tacoma Lumber Company,

Barber Asphalt Paving Company, Mukilteo Lumber

Company, Gamwell & Wheeler, Bankrupts, and the

Seattle National Bank.

NO 31.

SEATTLE NATIONAL BANK, Appt.,

v. R. E. DOWNIE, Trustee; St. Paul & Tacoma Lumber Company,

Barber Asphalt Paving Company, Mukilteo Lumber

Company, Gamwell & Wheeler, Bankrupts, and National

Bank of Commerce of Seattle.

NO 32.

Nos. 31 and 32.

Argued and submitted November 3, 1910.

Decided November 28, 1910.

Messrs. George E. de Steiguer, Frederick Bausman, and Daniel kelleher for appellants.

[Argument of Counsel from pages 345-348 intentionally omitted] Messrs. J. E. Horan, H. D. Cooley, W. A. Peters, J. H. Powell, and Harold Preston for appellees.

Mr. Justice Harlan delivered the opinion of the court:

There is no dispute as to the facts out of which the present controversy has arisen. Substantially the facts are these: On the 16th day of April, 1907, the appellee Downie was appointed receiver of the property of Gamwell & Wheeler, partners, who had previously, on the same day, been adjudged bankrupts. Subsequently he was elected and qualified as permanent trustee, and by order of the court, June 20th, 1907, was authorized to collect all moneys due the bankrupts from the United States or any of its departments.

Gamwell & Wheeler, as a firm, held sixteen unallowed claims against the United States, aggregating $33,517.48, the first one being dated December 10th, 1906, and the last February 15th, 1907. The National Bank of Commerce of Seattle was a creditor of that firm in the sum of $37,149.85. These claims were all assigned by Gamwell & Wheeler to the above bank. The Seattle National Bank was likewise a creditor of the firm and to the extent of $22,582.19, with interest, and that firm held certain unallowed claims against the United States, sixty-one in number, and amounting to $38,509.32. The first of the latter claims was dated September 25th, 1906, and the last April 4th, 1907. They were all assigned by Gamwell & Wheeler to the lastnamed bank.

The parties, by stipulation of July 10th, 1907, agreed: 'That each and all of said claims against the United States government, so assigned [to the banks named], were claims for money due from the government of the United States to the said bankrupts upon account of contracts entered into between said bankrupts and the United States for the furnishing of materials by said bankrupts to various departments of said government; that said assignments were each and all voluntarily made in consideration of a loan made by said bank to said bankrupts at the time of said assignments, and as collateral security for the repayment of said loans, and without notice to the other creditors of said bankrupts. That all of such assignments were made after the entering into of said contracts, and after partial performance thereof by said bankrupts, before the allowance of any such claims or the ascertainment of the amount due thereon, or the issuing of any warrant for the payment thereof, and that none of said assignments were executed in the presence of any witnesses at all, and that none of them recite any warrant for the payment of the claim assigned, and that none of them were acknowledged by any officer having authority to take acknowledgment of deeds, or any other acknowledging officer at all, and that none of them were certified as being acknowledged by any officer. The said loans to each of said banks exceeded in amount the value of said collaterals so assigned to secure the same, and there is now due to each of said banks on account of said loans an amount much in excess of the value of the said collaterals so assigned to each of said banks respectively.'

The claims of the two banks ($37,149.85 and $22,582.19, with interest) were allowed by the referee in bankruptcy, and it was adjudged by the court that the banks were entitled, respectively, to receive, on account of the claims assigned to them, whatever amount might be collected on them from the government, and the trustee was ordered to pay over to the banks holding the assignments the collections as they were made thereon.

The district court allowed the respective claims of the banks as general debts, but disallowed them as preferred. This order was affirmed in the circuit court of appeals, that court rejecting the claim of each bank for a lien upon the fund assigned. The case is here under a certificate by Justice Brewer, to the effect that the determination of the question involved in each case was essential to an uniform construction of the bankruptcy act throughout the United States.

The questions raised by the parties make it necessary to determine the scope and effect of § 3477 of the Revised Statutes (U. S. Comp. Stat. 1901, p. 2320) in its application to these cases. That section was brought forward from previous acts of Congress and is as follows: 'All transfers and assignments made of any claim upon the United States, or of any part or share thereof, or interest therein, whether absolute or conditional, and whatever may be the consideration therefor, and all powers of attorney, orders, or other authorities for receiving payment of any such claim, or of any part or share thereof, shall be absolutely null and void, unless they are freely made and executed in the presence of at least two attesting witnesses, after the allowance of such a claim, the ascertainment of the amount due, and the issuing of a warrant for the payment thereof. Such transfers, assignments, and power of attorney, must recite the warrant for payment, and must be acknowledged by the person making them, before an officer having authority to take acknowledgments of deeds, and shall be certified by the officer; and it must appear by the certificate that the officer, at the time of the acknowledgment, read and fully explained the transfer, assignment, or warrant of attorney to the person acknowledging the same.'

The words of that section are so clear and explicit that there cannot be, we think, any reasonable ground to doubt the purpose of this legislation. Its essential features are not new, as can be seen by an examination of the act of Congress of July 29th, 1846, 'in relation to the payment of claims' on the United States, and the act of February 26th, 1853, 'to prevent frauds upon the Treasury of the United States.' 9 Stat. at L. 41, chap. 66; U. S. Comp. Stat. 1901, p. 2320; 10 Stat. at L. 170, chap. 81, U. S. Comp. Stat. 1901, p. 2320. Turning to § 3477, we find Congress had in mind not only all transfers and assignments of any claim on the United States, or part of a claim or any interest therein, whether the transfter or assignment be absolute or unconditional, and whatever was the consideration of the transfer or assignment, but all powers of attorney, orders, or other authorities for receiving payment of any such claim, or of any part or share thereof. All such transfers, assignments, powers of attorney, order, or authorities are declared to be 'absolutely null and void,' except there be a compliance with the conditions fully set out in the statute. None of those conditions were complied with in these cases.

In United States v. Gillis, 95 U. S. 407, 24 L. ed. 503, it appears that suit was brought in the court of claims, by the assignee of an unallowed claim on the United States, and the question arose whether the assignee could maintain a suit in his name for the proceeds of the claim. The court of claims sustained the assignee's right to sue, but this court, upon careful examination of the act of 1853, re-enacted in § 3477 of the Revised Statutes, reversed the judgment, and directed the petition of the assignee to be dismissed. It was contended in that case that the act of 1853 had reference only to claims asserted before the Treasury Department. But that view was rejected. After observing that the comprehensive provisions of the statute excluded any exceptions to the rule presented, the court said: 'We think, therefore, the act of 1853 is of universal application, and covers all claims against the United States in every tribunal in which they may be asserted. And such, we think, was the understanding of Congress when the Revised Statutes were enacted. In the revision, the act of 1853 was included and re-enacted.'

Among the earlier cases on the general subject is Spofford v. Kirk, 97 U. S. 484, 488-490, 24 L. ed. 1032, 1034, 1035, frequently referred to in later...