Dexter v. Meigs

• Citation: 21 A. 114,47 N.J.E. 488
• Parties: DEXTER v. MEIGS et al.
• Decision Date: 03 February 1891
• Court: New Jersey Court of Chancery

21 A. 114

47 N.J.E. 488

DEXTER

v. MEIGS et al.

Court of Chancery of New Jersey.

Feb. 3, 1891.

(Syllabus by the Court.)

Final hearing on bill, answer, and proofs.

J. A. Blair and Otto Crouse, for complainant.

G. Collins and Willard C. Fisk, for defendants.

PITNEY, V. C. By this bill the complainant claims from the defendant Meigs the sum of $3,000, besides interest, part of a sum of $24,000 received by Mr. Meigs from the treasurer of the United States by his draft No. 14,773, dated July 12, 1888. The jurisdiction of this court is based upon the allegation that Mr. Meigs received the sum in question as trustee for the complainant and other persons interested with him in it. The payment was made to Mr. Meigs as assignee of one John B. Luce, who was assignee of the Choctaw Nation of Indians, of a portion of a claim held by said nation against the United States, and which was finally adjusted and covered into the treasury for payment shortly before the payment to Meigs. The defendant Meigs admits the receipt of the money, and that he so received it in trust; but he alleges that the trust was confined to himself and three others, one-fourth to each, and he denies that the complainant had any interest in it. Other defenses were made at the hearing, not specifically set out in the answer. The facts of the case, as they appeared at the hearing, are as follows:

The Choctaw Nation of Indians had a meritorious claim against the United States, finally adjusted at a trifle less than $2,800,000, which had its origin many years prior to the year 1870, and which claim the nation had been trying for years to collect by successive applications to congress to make the necessary appropriation for that purpose, but without success. In 1870 the nation made a contract with one Henry E. McKee, of Arkansas, by which he agreed to prosecute the claim, and to pay all the expenses attending its prosecution, and to receive for his compensation 30 per centum of the amount realized. McKee continued the prosecution of the claim on the plan of procuring its direct recognition and payment by congress by an appropriation for that purpose, but without success. In 1875 he changed his plan, and set about procuring is reference by act of congress to the court of claims, and in 1880 congress passed an act directing that it should be so referred to the court of claims for adjudication and adjustment; and McKee, in pursuance of that act, in June, 1881, presented a proper petition to that court in behalf of the nation. At this stage of the proceedings McKee found himself embarrassed for want of funds, having already expended all that he could command or raise by ordinary means, and without pledging his interest in the claim. Subsequent to the making of his contract with the Choctaws, congress had passed a series of acts, afterwards consolidated in sections 2103 and 2106 of the second edition (1878) of the Revised Statutes, relative to the dealings between the United States and the Indians, which rendered it impracticable for him to raise money by assigning to a third party a fractional interest in his contract. The legislation referred to did not invalidate his contract, but under section 2104 he could only realize the compensation therein provided for by submitting his claim for adjustment to the commissioner of Indian affairs and the secretary of the interior, and that could only be done after the establishment of the whole claim. In order to avoid this difficulty, Mr. McKee procured Mr. Folsom, the duly-authorized delegate and agent of the Choctaws, to make an assignment of 5 per cent. of the nation's claim to one John E. Luce, an attorney, who had been, and afterwards continued to be, in the employ of, or in some way associated with, McKee in the prosecution of the claim. This assignment bears date April 26, 1881, and was executed with the proper formalities, and was in such form as to entitle it, under the acts above mentioned, to receive, and it did receive, the formal approval of the secretary of the interior and the commissioner of Indian affairs, and was duly recorded in the department of the interior. The amount so assigned was credited on McKee's original contract for 30 per cent., and formed a part of it. The practical result of this assignment was that Mr. Luce, as such assignee, or his assignee, would, and did upon the establishment of the claim, receive payment direct from the treasury of the amount so assigned. In February, 1883, Mr. McKee was again in want of money to pay current expenses in the prosecution of the claim before the court of claims, and through a Mr. John J. Weed, a practicing lawyer in Washington, in his employ in the prosecution of this claim, applied to the complainant, a practicing physician in the city of Washington, to assist him. The amount needed was $5,000, and McKee offered to secure the lender of that sum by an assignment to be made by Luce of $25,000 out of the amount which Luce might receive under his assignment of April 26, 1881, of 5 per cent. of the whole amount recovered, which latter amount it was supposed would be at least $4,000,000, and perhaps more. The complainant tried, without success, to interest several persons living in Washington in the project, and finally mentioned it to Mr. John H. Brewer, a member of congress from this state, and he, in his turn, mentioned it to a Mr. Ferris Jacobs, a member of congress from New York. These persons manifested a willingness to look into the affair, and a meeting was brought about by complainant between Brewer, Jacobs, McKee, and his leading counsel, Mr. Wilson, (of Shellabarger& Wilson,) Mr. Weed, and the complainant, in which the merits of the claim were explained and discussed. The result was that Brewer and Jacobs undertook to raise the needed $5,000 on terms offered, viz., an assignment by Luce to them, or to a trustee to be named by them, of $25,000 out of the proceeds of the claim which would come to Luce under his assignment, or, as it was called at the hearing, on the basis of five to one. The object of having the assignment made to a trustee was to enable Brewer and Jacobs to divide the advances among their friends as occasion might require; or, in other words, to form a syndicate to raise the money. As soon as this arrangement was agreed upon, and before anything was done under it, complainant asked how he was to get compensation for his services, and it was proposed by McKee that he should be compensated by a contingent interest to the extent of $5,000, and the amount named in the assignment to be made to secure Brewer and Jacobs should be increased accordingly, and made $30,000, instead of $25,000, and this was agreed to by the complainant, Brewer, and Jacobs.

It was understood, as before stated, that Brewer and Jacobs expected to induce other persons to join them, and, as between the two. Brewer undertook to raise $2,000 and Jacobs $3,000. The latter procured, as he said, his uncle, Josiah Lasell, of Massachusetts, and the defendant Meigs, who was his brother-in-law, to join him, and each put $1,000 into the venture. But the circumstances and evidence tend to prove that Lasell's contribution was in reality a loan to Jacobs, and it was finally settled on that basis. The defendant Meigs was chosen to act as trustee for the others, and, on the 9th of February, 1883, Luce made an assignment to him, (Meigs,) under which he finally received the payment in question. It was so executed as to bring it within the provisions of section 2100, Rev. St., and it received the sanction of the officials there named, was duly recorded, and was offically recognized and acted upon by the treasury officials. That assignment recited the assignment to Luce of the 26th April, 1881, and that Meigs, as trustee, "had advanced to Luce certain sums of money," amount not mentioned, "for and on account of the said contract, in order to enable him to pay expenses incident to the prosecution of the said claim in the court of claims and in the supreme court;" and in consideration of the said advances Luce assigned to Meigs, as trustee, the sum of $30,000, payable out of his (Luce's) contract when the amount therein mentioned should become payable to him (Luce.) Meigs executed to Luce a paper of the same date, which recited the assignment from Luce to him, and in which Meigs, as trustee, agreed to pay Luce $5,000 in the manner therein stated. Brewer paid only $1,000 of the amount assumed by him, so that the amount received by McKee was only $4,000; and by an arrangement made with the complainant's assent the defendant Meigs reassigned to Luce $6,000 of the $30,000 covered by his assignment, and the complainant consented to take $4,000, instead of $5,000, for his compensation. Throughout the transaction Luce acted as the attorney, agent, and trustee of McKee, and, while I am satisfied that at the date of the assignment he had full notice of complainant's interest in it, yet he does not seem to have charged his mind with it, and in his subsequent correspondence with the defendant Meigs treated the affair as if the contributors to the fund advanced were entitled to $6,000 for each $1,000 advanced, instead of $5,000, according to the actual contract. Shortly after the assignment was made, Brewer and complainant asked through Jacobs for something in writing from Meigs to show their interest in the agreement, and on that occasion Jacobs showed a disposition to take advantage of the situation to ignore the complainant, and divide the whole $30,000 among the cash contributors. Brewer remonstrated with him against the injustice of such a course, but in vain. Jacobs said he would not give complainant anything to show for his interest in the assignment, because "he hadn't done much anyhow." Shortly afterwards Jacobs became insane, and died in that condition. Lasell also died. Both were non-residents of this state, and each are represented in this suit by an administrator...