The Elmbank

• Decision Date: 04 March 1896
• Docket Number: 10,639
• Citation: 72 F. 610
• Parties: THE ELMBANK. v. THE ELMBANK. PRICE In re COFRAN et al.
• Court: U.S. District Court — Northern District of California

72 F. 610

THE ELMBANK.

PRICE v. THE ELMBANK.

In re COFRAN et al.

No. 10,639

United States Circuit Court, N.D. California.

March 4, 1896

Van Ness & Redman, for petitioner Cofran.

Chickering Thomas & Gregory and Gerstle & Sloss, for petitioner Neumann.

MORROW District Judge.

A decree was entered in this court on July 18, 1895, in favor of the libelant, in accordance with the mandate of the circuit court of appeals, for the sum of $6,000, less the costs of the appeal. The sum awarded was for certain salvage services rendered by the libelant in putting out a fire in the cargo of sulphur stowed in the hold of the bark Elmbank while the vessel was being discharged at a wharf in the port of San Francisco. See 62 F. 306, for opinion of district court, and 16 C.C.A. 164, 69 F. 104, for opinion of the circuit court of appeals. Upon the entry of the decree, the claimants of the ship and cargo, instead of paying the amount of the award to the libelant, and securing a satisfaction of the decree, deposited the sum in the registry of the court and obtained a full satisfaction of record, and the entry of an order that the several bonds given by the claimants for the release of the vessel and cargo be exonerated. This course appears to have been taken by the claimants in view of certain assignments executed by the libelant before the adjudication of the award, whereby the latter made such transfers to his creditors of his claim against the vessel that the aggregate of these claims is in excess of the sum now remaining in the registry of the court. The claimants having been released from all liability in the case, are not concerned in the disposition of the award, and the same may be said of the libelant, who has failed to present any petition, or make any application for any part of the proceeds of the decree in his favor. Two petitions have, however, been presented to the court for the balance in the registry, based upon orders or assignments executed by the libelant. One of these assignments is in favor of J. W. G. Cofran for $1,585.42, and the other is in favor of Rudolph Neumann for $3,200. The amount in the registry of the court is $3,054.75, and the court is asked to determine the sum accordingly. This may be done under the forty-third admiralty rule. Schuchardt v. Babbidge, 19 How. 239; The Lottawanna, 21 Wall. 558; The Guiding Star, 18 F. 263; The E. V. Mundy, 22 F. 173. The petition of Cofran was filed on July 23, 1895, and that of Neumann on July 25, 1895. Cofran's claim is based on an order to pay the sum of $1,585.42, signed by Price, and drawn upon 'M. J. Brandenstein & Co., and Whom Concerned. ' It is as follows:

'Thomas Price & Sons.

'San Francisco, June 28, 1898.

'Ship Elmbank, M. J. Brandenstein & Co., and Whom Concerned: Pay to the order of J. W. G. Cofran the sum of $1,585.42 from any money or moneys which may be awarded to me, or which I may recover from the ship Elmbank and/or cargo service by reason of recent fire aboard said ship.

'(Signed) Thomas Price.'

The instrument under which Neumann claims is as follows:

'San Francisco, June 28th, 1893.

'For value received I hereby assign, transfer, and set over unto Rudolph Neumann, of San Francisco, California, all my right, title, and interest in and to any compensation for services performed by me upon the bark Elmbank in the matter of rescuing said vessel from destruction by fire; and I hereby direct Messrs. M. J. Brandenstein & Co., Mr. C. V. S. Gibbs, adjuster, the owner or owners, cosignee or consignees, of said ship, or any other person or persons in whose hands the money for my services shall come, to pay the sum of $3,200 out of the same to the said Rudolph Neumann, his agent, or attorneys. Thomas Price.'

'Received a copy of within document this 28th day of June, 1893.

'M. J. Brandenstein & Co.'

The matter was referred to the commissioner to ascertain the facts and make his report thereon. He finds that both of these assignments were made by Price on the same day, viz. June 28, 1893; that the one to Cofran was made at 8:30 o'clock in the morning, and the one to Neumann at 11 or 12 o'clock of the same day. He recommends, therefore, that the Cofran assignment, being the first in point of time, be paid in full, with his costs, and the remainder be paid to Neumann. Exceptions are presented to this report, by counsel for Neumann on several grounds. In support of these exceptions, it is claimed: (1) That the assignments to Neumann was a legal assignment of an entire fund, while that to Cofran was only an equitable assignment of a part, without the consent of the debtor, and that therefore Neumann's assignment is superior and entitled to priority; (2) that the assignment to Cofran was for part of the fund only, and therefore void, because the debtor was not notified, and did not accept the assignment; (3) that Neumann's assignment and claim are superior to Cofran's, because he first notified the United States marshal and clerk of this court.

It may be noticed, preliminarily, that, in referring to the instruments under which the petitioners claim, counsel speak of them as 'assignments.' Properly speaking, they are 'orders to pay.' But an order to pay, when given by a creditor upon his debtor, acts as an equitable assignment of the fund or of the personal property upon which it is drawn. 17 Am.& Eng.Enc.Law, p. 226; and cases there cited.

It becomes important, at the outset, to determine the legal effect of Neumann's assignment,-- whether it was to the whole of the fund, or only a part of it. While it purports to be, in the first part of the instrument, an assignment of the whole fund, yet, in the last part, it is limited to a specified sum, viz. $3,200, and it directs 'Messrs. M. J. Brandenstein & Co., Mr. C. V. S. Gibbs, adjuster, the owner or owners, consignor or consignees of said ship, or any other person or persons in whose hands the money for my services shall come, to pay the sum of $3,200 out of the same to the said Rudolph Neumann, his agent, or attorneys. ' It is a well-settled maxim of equity jurisprudence that equity will look through and behind the mere form of a transaction, and scrutinize the substance. Applying this rule of interpretation to the assignment to Neumann, looking through the mere legal form of the words employed, and taking the instrument as a whole, it is difficult to escape the conclusion that it was intended as an assignment pro tanto; that is, to the extent of $3,200. Otherwise, why specify any sum? The amount of the award which libelant might be adjudged entitled to was then undecided and unliquidated; and if it was intended that Neumann should get the whole award, why interpolate this limitation as to amount? The language of the sixth subdivision of Neumann's petition confirms this view. It is as follows:

'That on the 28th day of June, 1893, Thomas Price, the libelant herein, by an instrument in writing sold, assigned, and set over to this petitioner all his right, title, and interest in his said claim for salvage against the said bark Elmbank and her cargo, and also in the judgment and decree rendered therein, to the amount and sum of thirty-two hundred dollars.'

I am of the opinion that the general words in the assignment were inserted as a matter of precaution, and to give priority to this assignment, to the extent of $3,200, over any others that there might be. The designation of persons who are directed to pay this amount, includes every one who, in the regular course of proceedings, could obtain possession of the fund, and they are directed to pay the sum of $3,200, and not the whole award. Both assignments were, therefore, orders to pay specified sums of money out of the salvage award when it should be determined, and both were given, so far as appears, for pre-existing debts. In other words, they are given as security for debts previously due by Price to Cofran and Neumann. It may be observed that there does not appear to be any direct proof that the consideration for Neumann's assignment was a pre-existing debt, but that such was the fact seems to be conceded by counsel for Neumann. This view of the nature of Neumann's assignment practically disposes of the first proposition contended for by his counsel, except as it relates to the validity of an assignment of part of a fund not yet in existence, without notifying and obtaining the assent of the holder of the fund, which is precisely the same question presented in the second proposition and will now be considered.

To fully understand this contention, the facts and the nature of this proceeding must first be clearly comprehended. This is not an action at law, but it is a proceeding of an equitable nature to distribute a fund in the registry of the court. The proceeding is in the nature of interpleader. The case of Mandeville v. Welch, 5 Wheat. 277, and other cases following the doctrine laid down in that case, cited by counsel for Neumann, to the effect that there can be no assignment of a part of a fund or debt without the consent of the debtor, were actions at law. The rule at law is undoubtedly correct, as it is laid down in Mandeville v. Welch in the following language:

'Where the order is drawn, either on a general or a particular fund, for a part only, it does not amount to an assignment of that part, or give a lien as against the drawee, unless he consent to the appropriation by an acceptance of the draft; or an obligation to accept may be fairly implied from the custom of trade or the course of business between the parties, as a part of their contract. The reason of this principle is plain. A creditor shall not be permitted to split up a single cause of action into many actions without the responsibilities not contemplated in his

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