Hall v. Chandler

• Decision Date: 25 May 1923
• Docket Number: 1613.
• Citation: 289 F. 675
• Parties: HALL et al. v. CHANDLER et al.
• Court: U.S. Court of Appeals — First Circuit

289 F. 675

HALL et al. v. CHANDLER et al.

No. 1613.

United States Court of Appeals, First Circuit.

May 25, 1923

Stanley P. Hall, of Taunton, Mass. (Arthur V. Harper, of Boston Mass., on the brief), for appellants.

Judd Dewey, of Boston, Mass., for appellees.

Before JOHNSON and ANDERSON, Circuit Judges, and MORRIS, District judge.

MORRIS District Judge.

This is an appeal from a decree of the District Court of the United States, District of Massachusetts, in equity, dismissing the petitions of appellants, Stanley P. Hall et al administrators of the estate of Alfred L. Lincoln, the Tanners' National Bank of Woburn, Mass., and the Mattapan National Bank of Boston, Mass., in which petitions they sought to establish a priority over general creditors to the sum of $18,500.53 in the hands of F. Alexander Chandler and Carleton Hunneman, appellees, coreceivers of the Nelson Blower & Furnace Company, which was paid the receivers in February, 1920, in settlement of a claim against the United States arising out of the cancellation of a war contract to furnish 5,000 mounts for the Browning machine gun. The petitioners claim an equitable lien upon said fund by reason of written contracts which were given them by the Nelson Company as security for the repayment of money borrowed in connection with the munition contract.

The three petitions were heard together in the District Court upon an agreed statement of facts, and are before this court on the joint appeal of the administrators of the Lincoln estate and the Mattapan National Bank.

The lien contract with Alfred L. Lincoln, deceased, was dated May 31, 1919, and contained an assignment as security for a loan of $20,000 of money due or to become due from the United States in language in part as follows:

'The Nelson Blower & Furnace Company, a Massachusetts corporation, for valuable consideration paid, hereby sells and assigns to Alfred L. Lincoln * * * all and whatever sum or sums of money now due or coming due from the United States,' etc.

The lien contracts with the Mattapan National Bank were dated, one August 15, 1919, and the other September 8, 1919, assigning the claim against the government as security for loans of $15,000 and $5,000, respectively. Both contracts contained apt words of assignment.

All the notes accompanying the above-mentioned instruments contained the following language:

'This note is secured by assignment of receivables due us this date from the United States government.'

No claim was made upon the United States in behalf of either of the petitioners.

The uncompleted war contract between the Nelson Company and the United States was canceled by the latter in the winter of 1918, and in March, 1919, the Nelson Company made several claims upon the United States for damages arising therefrom, which were allowed in part and disallowed in part. In December, 1919, subsequent to the assignments above mentioned, the receiver presented a further claim against the United States for damages arising from the cancellation of the same contract.

On February 28, 1920, the same was allowed in part and the receiver obtained $18,500.53 in final settlement of all claims between the government and the Nelson Company.

On or about October 1, 1919, the petitioner's intestate, Alfred L. Lincoln, verbally and in writing notified the receivers that he held the instrument dated May 31, 1919, above referred to, and gave them a copy of the same. Notices of liens were given to the receivers by other petitioners on October 6, 1919.

The important question here is whether or not the District Court erred in ruling that the assignments by the Nelson Company, set forth in the written instruments relied on by the petitioners, are void under section 3477 of the Revised Statutes of the United States (Comp. St. Sec. 6383). Said section is worded 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 powers 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.'

A number of cases are cited in the briefs of counsel in which the application of section 3477 has been determined by the United States Supreme Court. Most of these cases fall into one of three classes-- cases in which an assignee of a claim has brought suit...