Hovey v. Donald

Decision Date05 November 1883
Citation3 S.Ct. 136,109 U.S. 150,27 L.Ed. 888
PartiesHOVEY and another v. McDONALD and another
CourtU.S. Supreme Court

[Syllabus from pages 150-151 intentionally omitted] Chas. W. Hornor and Geo. F. Edmunds, for appellants.

Conway Robinson, for Riggs' Executor.

BRADLEY, J.

An award against the United States of nearly $200,000 having been made to one A. R. McDonald, a British subject, by the mixed commission appointed under the treaty of 1871, his bankrupt assignee, Thomas J. Phelps, filed a bill in the supreme court of the District of Columbia to restrain him from collecting the money, and to have it made subject to his debts, making one White also a defendant, who claimed to have purchased the claim. A restraining order, and subsequently a preliminary injunction, was granted according to the prayer of the bill, and George W. Riggs was appointed a receiver to collect and hold the money until the further order of the court. In the mean time a bill was filed by Charles E. Hovey and William Dole (the present appellants) against McDonald and White, setting up a lien upon one-fourth of the fund under an alleged agreement by which they were to receive that proportion as compensation for their services in aiding the prosecution of the claim, and praying that the lien might be established, and that the defendants might be enjoined from collecting or receiving more than three-fourths of the award. A preliminary injunction was also granted in accordance with the prayer of this bill. On the sixteenth of February, 1875, the following consent decree, or order, was made, to-wit:

'In the Supreme Court of the District of Columbia.

'THOMAS J. PHELPS, Assignee, v. AUGUSTINE R. MCDONALD and WILLIAM WHITE. (In Equity. No. 3,910.)

'This cause came on to be further heard on this sixteenth day of February, A. D. 1875; and thereupon, and upon consideration thereof, and with the consent of the parties to this suit, and of Charles E. Hovey and William P. Dole, parties complainant in a certain cause in equity in this court, numbered 3,937, against the same defendants, and claiming one-fourth of the award in the proceedings mentioned:

'It is, this sixteenth day of February, A. D. 1875, ordered, adjudged, and decreed—— '(1) That the restraining orders heretofore made in both said causes are hereby vacated.

'(2) That the decree made in this cause on the twenty-eighth day of December, A. D. 1874, appointing George W. Riggs, Esq., receiver, and granting a provisional injunction, is modified as follows, viz.: That the defendant William White may receive from the agents of the British government the one-half of the net amount of the award in the proceedings mentioned, free and discharged of all claims of the plaintiffs in both the causes above mentioned, to enable the said defendant to pay the expenses incurred by the defendant A. R. McDonald in the prosecution of this claim; which sum of one-half of said award the court finds to be the reasonable expense incident to the prosecution of the said claim by said defendant A. R. McDonald before said mixed commission, exclusive of said claim of Hovey & Dole.

'(3) That the remaining half of the net amount of said award shall be paid to the said George W. Riggs; and it is ordered, adjudged, and decreed that the defendants shall execute all such orders, receipts, and acquittances necessary to enable the said George W. Riggs to collect the same. And the said George W. Riggs shall hold the said half of the said award subject to the claims, liens, and rights of the said Charles E. Hovey and William P. Dole and of the plaintiff in this cause, to be determined by the further decree of this court in this cause, and in the cause of said Hovey & Dole, hereinbefore mentioned. It is further ordered that said receiver be directed to invest the money so placed in his hands in bonds of the United States, or in 3 65-100 bonds of the District of Columbia, guarantied by the United States, as he may deem best for the interest of the parties concerned, and that a copy of this decree be filed in this last-mentioned cause.'

This decree was carried out; the money was collected from the agent of the British government, one-half of it being received by Mr. Riggs as receiver, and the suits progressed in due course. Both bills were demurred to, and both demurrers were sustained, and the bills dismissed by the court in special term.

In the case of Hovey and Dole a decree was entered on Thursday, the twenty-fourth of June, 1875, simply decreeing that the demurrer to the bill be sustained, and that the bill be dismissed, with costs. An appeal to the general term was entered the same day on the minutes of the court.

On Monday, the twenty-eighth of June, 1875, the decree was amended by adding thereto the clause 'that the receiver appointed in this cause, and in Phelps, Assignee, v. McDonald and White, No. 3,910, be directed to pay the funds belonging to said cause to the said defendants, McDonald and White, or order, and thereon said receiver shall be discharged;' and at the same time a decree was entered in the suit of Phelps, assignee, that the demurrer be sustained, and the bill dismissed with costs, and the same direction was given to the receiver to deliver the funds to McDonald and White. An appeal was entered in this case also on the day the decree was rendered; but no appeal bond or undertaking was filed in either case until the twelfth of July.

Soon after the entry of the last decree, and on the same day, a copy of it was served on the receiver by the attorney of McDonald and White, and the fund in his hands, then consisting of district bonds, was demanded of him; but, before he delivered the bonds, the attorney of Hovey and Dole appeared and gave him verbal notice that an appeal had been taken, and insisted that it was a supersedeas of the decree. Thereupon the receiver and the attorneys repaired to the court, and the receiver asked the judge what he should do, and was simply told to obey the decree,—the complainants' attorney at the same time offering to furnish the security named by the court on the appeal. The receiver then delivered the bonds to the defendants.

In the case of Phelps, the bankrupt assignee, the decree of the special term was afterwards affirmed; but in that of Hovey and Dole the decree of the special term was reversed, and the counsel for the complainants obtained an order on the defendants to pay back into court the money, or funds, which they had obtained from the receiver. Failing to do this, they were adjudged in contempt, and a decree pro confesso was entered against them. Thereupon the complainants obtained an order on the receiver to file his account; and this being done, and if appearing thereby that, in obedience to the decree of the special term, he had delivered the fund to the defendants, the account was referred to an auditor, and the complainants filed exceptions thereto on the ground that he had delivered up the funds without due authority. The auditor took testimony as to the circumstances of the appeal, the notice given to the receiver, and his conduct in the matter, and reported that in his opinion the receiver had only done his duty. This report was confirmed by a decree of the general term, and from that decree the present appeal was taken.

The first matter to be determined is the motion on the part of the receiver to dismiss the appeal for the reason that he was not a party to the suit. This motion cannot prevail. The proceedings instituted by the order requiring the receiver to file his account, and the subsequent reference of that account to an auditor, and the exceptions thereto, were all directed against the receiver for the purpose of rendering him personally responsible for the fund which had been placed in his hands, and which he had delivered over in obedience to the original decree. It was a side issue in the cause, in which the complainants on the one side, and the receiver on the other, were real and interested parties. The decree confirming the auditor's report was, as to this matter, a final decree against the complainants and in favor of the receiver. We have so often considered cases of this sort, arising incidentally in a cause, but presenting independent issues to be determined between the parties to them, that it is unnecessary to enter into a detailed discussion of the subject at this time. The receiver, though not a party in the principal suit, was an officer of the court appointed in the suit, and was a principal party to the particular question raised by the proceedings referred to. It is only necessary to refer to some of the cases that apply to the subject. It will be found fully discussed in Blossom v. Railroad Co. 1 Wall. 655; Butterfield v. Usher, 91 U. S. 248; Trustees v. Greenough, 105 U. S. 531; and Hinckley v. Gilman R. Co. 94 U. S. 467. In the case last cited a decree was rendered against a receiver, directing him to pay into court a certain sum of money, being the balance found due from him on the settlement of his accounts. He appealed from this decree, and his right to appeal was sustained by this court. This case is a direct authority to show that the receiver in the present case, had the decree been against him, could have taken an appeal; and, if he would have had a right to appeal, surely the opposite parties have the same right.

We are brought, then, to consider the effect of the appeal taken from the decree of the special term upon the efficacy of said decree as a justification of the receiver in handing over to the defendants the fund in his possession. To arrive at a satisfactory conclusion, it will be necessary, in the first place, to take notice of the question as to the power of the court in special term to amend its decree after the appeal was entered.

By the laws relating to the District of Columbia, the supreme court of the district has general terms and special terms, the latter being held by a single judge and proceeding in...

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