United States v. United States Fidelity & Guaranty Co.

• Decision Date: 03 September 1938
• Docket Number: No. 6451.,6451.
• Parties: UNITED STATES v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: U.S. District Court — Eastern District of Oklahoma

24 F. Supp. 961

UNITED STATES v. UNITED STATES FIDELITY & GUARANTY CO.

No. 6451.

District Court, E. D. Oklahoma.

September 3, 1938.

Charles N. Champion, Asst. U. S. Atty., of Muskogee, Okl., for the United States.

W. G. Stigler, of Stigler, Okl., for Choctaw and Chickasaw Tribes.

Bower Broaddus, of Muskogee, Okl., for defendants.

RICE, District Judge.

Briefly the facts out of which this controversy arose are as follows: In 1902 the trustees for the Choctaw and Chickasaw Nations executed two certain coal mining leases to the Kansas and Texas Coal Company. These leases by assignment became the property of the Central Coal and Coke Company. At the time of the execution of the leases the United States Fidelity and Guaranty Company, a corporation, executed a bond in the sum of $75,000 conditioned upon the faithful performance by the lessee of the conditions named in the leases. The surety company agreed to the various assignments by and through which the Central Coal and Coke Company became the owner of the leases. The Central Coal and Coke Company, a corporation, filed proceedings in bankruptcy under the corporation reorganization law in the United States District Court for the Western District of Missouri. J. M. Bernardin was appointed trustee. In an ancillary proceeding in the United States District Court for the Eastern District of Oklahoma, in a cause entitled First National Bank of Chicago, Illinois, plaintiff, v. Central Coal and Coke Company, defendant, and J. M. Bernardin, receiver, the Superintendent for the Five Civilized Tribes for and in behalf of the Choctaw and Chickasaw Nations filed a claim for royalties and rentals due under the terms of said coal mining leases from the Central Coal and Coke Company to the Choctaw and Chickasaw Nations, the total amount of the claims being $4,800. Upon the trial of this case it was admitted that $2,800 of said claim could not be collected, and the Government contended at this trial that only $2,000 of this claim was valid. The trustee for the Central Coal and Coke Company, J. M. Bernardin, filed an answer denying that there was anything due under said leases, and setting up that there was due from the said Choctaw and Chickasaw Nations to the Central Coal and Coke Company under said leases, and two other leases from the Choctaw and Chickasaw Nations, a sum greatly in excess of the amount claimed by the Superintendent for the Five Civilized Tribes for and on behalf of the Choctaw and Chickasaw Nations. By stipulation the matter was referred by the Honorable Albert L. Reeves, Judge of the District Court of the United States for the Western District of Missouri, to James H. Gordon as Special Master to make findings of fact and conclusions of law with reference to the claim of the United States and the answer thereto of the Central Coal and Coke Company. The Special Master made findings of fact and conclusions of law finding that there was due to the Choctaw and Chickasaw Tribes for advance royalties the sum of $2,000; that the Central Coal and Coke Company had a claim against said sum in the amount of $11,060.90. The Judge of the United States District Court in which the matter was pending approved the findings of fact and conclusions of law as made by the Special Master and entered its judgment decreeing "That the United States in behalf of the Choctaw and Chickasaw Tribes take nothing by virtue of its said claim and that the credit of Nine Thousand Sixty Dollars and Ninety Cents ($9,060.90) of the Central Coal and Coke Company be and is hereby fixed as against the Choctaw and Chickasaw Tribes and to be secured and collected in the manner provided by law." No appeal was taken and said judgment is final. Thereafter the United States of America filed this suit against the United States Fidelity & Guaranty Company, a corporation. The suit seeks to recover against the defendant as the surety of the Central Coal and Coke Company on the bond executed by the defendant at the time the original leases were executed by the Trustees for the Choctaw and Chickasaw Nations. The defendant United States Fidelity & Guaranty Company pleads the judgment of the United States District Court for the Western District of Missouri, wherein the claim of the Central Coal and Coke Company and the claim of the Choctaw and Chickasaw Nations were litigated. The Government contends that the judgment of the United States District Court for the Western District of Missouri is void and is not a bar to its maintaining this suit. The contention of the Government being that before the United States District Court in Missouri had a right to consider the claim of the Central Coal and Coke Company, or any jurisdiction to render a judgment thereon, the same had to be presented to the General Accounting Office of the United States and disallowed, under the provisions of Section 774, Title 28, U.S.C. A., which reads as follows: "In suits brought by the United States against individuals, no claim for a credit shall be admitted, upon trial, except such as appear to have been presented to the General Accounting Office for its examination, and to have been by it disallowed, in whole or in part, unless it is proved to the satisfaction of the court that defendant is, at the time of the trial, in possession of vouchers not before in his power to procure, and that he was prevented from exhibiting a claim for such credit at the General Accounting Office by absence from the United States or by some unavoidable accident."

The defendant contends that the applicable provision of Congress as to its claim is Section 18 of the Act of April 26, 1906 (34 Stat. 137, 144), which is as follows:

"That the Secretary of the Interior is hereby authorized to bring suit in the name of the United States, for the use of the Choctaw, Chickasaw, Cherokee, Creek or Seminole tribes, respectively, either before or after the dissolution of the tribal governments, for the collection of any moneys or recovery of any land claimed by any of said tribes, whether such claim shall arise prior to or after the dissolution of the tribal governments, and the United States courts in Indian Territory are hereby given jurisdiction to try and determine all such suits, and the Secretary of the Interior is authorized to pay from the funds of the tribe interested any costs and necessary expenses incurred in maintaining and prosecuting such suits: Provided, That proceedings to which any of said tribes is a party pending before any court or tribunal at the date of dissolution of the tribal governments shall not be thereby abated or in anywise affected, but shall proceed to final disposition.

"Where suit is now pending, or may hereafter be filed in any United States court in the Indian Territory, by or on behalf of any one or more of the Five Civilized Tribes to recover moneys claimed to be due and owing to such tribe, the party defendants to such suit shall have the right to set up and have adjudicated any claim it may have against such tribe; and any balance that may be found due by any tribe or tribes shall be paid by the Treasurer of the United States out of any funds of such tribe or tribes upon the filing of the decree of the court with him."

Some point is made in the argument as to the interest of the United States in the proceedings had in the Missouri court, as well as in this court. It may be conceded that in either action the United States is a real party in interest, U. S. v. Minnesota, 270 U.S. 181, 46 S.Ct. 298, 70 L.Ed. 539, and is entitled in its own right to maintain actions for and on behalf of the Indian tribes. However, this does not obscure the real fact that in the Missouri court, as well as in this court, the action is maintained for the benefit of the Indian tribes and any recovery by the plaintiff would be the property of the two tribes. Neither does it obscure the fact that the claim asserted by the Central Coal and Coke Company was essentially a claim against the Choctaw and Chickasaw Tribes of Indians (not against the United States), growing out of its contractual relationship with said tribes of Indians, and the Missouri court in adjudicating this controversy was careful to fix the liability as "against the Choctaw and Chickasaw Tribes," and not against the United States.

The judgment of the Missouri court absolved the principal, Central Coal and Coke Company, of any liability under the coal mining leases to the two tribes. The Government in its brief admits that a valid judgment in favor of the principal absolving it from any liability is a good defense in a suit against the surety.

This suit presents the identical claim against the surety, United States Fidelity & Guaranty Company, in this court that was presented against the principal, Central Coal and Coke Company, in the Missouri court. The same parties by the same attorneys appeared in both courts. Herein the plaintiff seeks to recover against the surety what it failed to recover against the principal in the Missouri court. The question for consideration is whether the judgment relied upon is void.

At the outset, in considering the judgment of the Missouri court, it may be stated that this court will reluctantly take the view that the judgment of another court of like jurisdiction is a nullity. Courts do not seek for some ground upon which to set aside the judgment of another court of competent...