United States v. Equitable Tust Co of New York

• Citation: 75 L.Ed. 1379,51 S.Ct. 639,283 U.S. 738
• Decision Date: 01 June 1931
• Docket Number: No. 21,21
• Parties: UNITED STATES v. EQUITABLE TUST CO. OF NEW YORK et al
• Court: United States Supreme Court

283 U.S. 738

51 S.Ct. 639

75 L.Ed. 1379

UNITED STATES

v EQUITABLE TUST CO. OF NEW YORK et al.

No. 21.

Argued Dec. 1, 2, 1930.

Decided June 1, 1931.

The Attorney General and Mr. Seth W. Richardson Asst. Atty. Gen., for the United States.

Messrs. John W. Davis, and Carroll G. Walter, both of New York City, and Almond D. Cochran, of Okmulgee, Okl., for respondents.

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

This writ brings under review a supplemental decree making allowances for attorney fees, expenses, etc., in a suit, instituted by a next friend, to recover and preserve a trust fund belonging to Jackson Barnett, an incompetent Creek Indian, and directing that the allowances be paid from that fund. The allowances are challenged by the United States as in conflict with existing restrictions on the disposal of the trust fund, and as excessive.

Barnett is a full-blood Creek Indian, so enrolled, who received an allotment out of the Creek tribal lands when they were divided in severalty pursuant to congressional legislation.¹ By that legislation and an amendatory act² his right and title under the allotment and the ensuing patent were subjected to restrictions against 'alienation, contract to sell, power of attorney, or any other encumbrance' prior to April 26, 1931,³ save in virtue of a full or partial removal of the restrictions by the Secretary of the Interior, and against leasing for oil, gas, or other mining purposes, save with the approval of that officer.

In 1912 the probate court of the county of Barnett's residence, in Oklahoma, adjudged him a mental incompetent and appointed a guardian of his estate. Later in that year Barnett and the guardian (the former described as 'an incompetent'), with the approval of that court and of the Secretary of the Interior, executed to one Bartlett an oil and gas lease of the land allotted to Barnett. The lease required that the royalties be paid to a local representative of the Secretary of the Interior and held for Barnett's benefit.

Royalties came in rapidly. In 1920 they had produced in the hands of the Secretary's local representative a fund of about $1,000,000, after various small sums had been turned over to the Oklahoma guardian for Barnett's support. Near that time the accumulated fund was taken over by the Secretary, invested in U. S. Liberty Bonds and held by him for Barnett's use.

News of Barnett's wealth became widespread and thereafter, as was found by the District Court, he was kidnapped by an adventuress who took him to two States other than that of his residence and had him go through a marriage ceremony with her in both; was harassed and annoyed by her attorneys and their allies; and on De- cember 15, 1922, was induced by them to put his thumb mark upon an instrument, not understood by him, requesting the Secretary of the Interior to distribute the greater part of the trust fund in the latter's custody by giving $550,000 in Liberty bonds to the wife, and a like sum in such bonds to the American Baptist Home Mission Society, on condition that it pay for his use $20,000 a year during the remainder of his life. Barnett was then about 73 years of age, and the designated annuity was less than the yearly interest on the bonds to be given to that society.

On February 1, 1923, the Secretary of the Interior approved that instrument, and soon after approving it he distributed the $1,100,000 in Liberty bonds as requested.

After the distribution was effected the wife took Barnett to California, and on her application a court of that state, in 1924, adjudged him an incompetent, incapable of caring for his person or estate, and appointed a guardian.

The Oklahoma guardian, on learning of the distribution, invoked the assistance of reputable attorneys with a vew t o asserting and protecting Barnett's interest in the bonds thus separated from his trust fund. These attorneys acquainted themselves with Barnett's mental incompetency and the other facts bearing on the validity of the distribution, brought the facts to the attention of the Secretary of the Interior, and earnestly and repeatedly requested that officer to take steps to secure a restoration of the bonds to the trust fund. The Secretary declined to take such action, insisted the distribution was valid and must stand, and refused to permit any moneys under his control and belonging to Barnett to be used in an effort to recover the bonds. The attorneys then laid the matter before the Department of Justice and urged the institution of suits on the part of the United States for the revocation of the distribution and the return of the bonds but this request, like that to the Secretary of the Interior, failed.

Thereafter, on January 22, 1925, the attorneys brought a suit in equity in the name of Barnett, by Elmer S. Bailey as next friend, against the American Baptist Home Mission Society and others to cancel the gift to that society and to protect and preserve Barnett's interest in the bonds so given and the income therefrom. Bailey, the next friend, was the Oklahoma guardian who had invoked the assistance of the attorneys. The suit was brought in the United States District Court for the Southern District of New York. Other suits relating to the other bonds were brought elsewhere, but they are without bearing here.

After the suit was begun, the Secretary of the Interior continued to oppose the effort to annul the distribution-and this notwithstanding he was advised in a letter of February 9, 1925, from the then Attorney General, Mr. Stone, to whom he had stated his opposition two days before, that the distribution appeared to be entirely unauthorized, and that the government was in duty bound to use its best efforts to assist in recovering the bonds. Mr. Stone retired from the officer of Attorney General Soon after the date of that letter, and thus was unable to carry his view into effect.

On January 20, 1926, the succeeding Attorney General, at the solicitation of the next friend and his attorneys, sought and obtained leave for the United States to intervene in the suit and thereby participate in the effort to effect a recovery of the bonds and their income for Barnett's benefit. After the intervention was accomplished, the attorneys for the next friend and the solicitors for the United States harmoniously prosecuted the cause to a successful conclusion. All rendered commendable service, but in many particulars the leading part and major burden fell to the attorneys for the next friend.

On the final hearing the court found that Barnett was illiterate and so stunted and undeveloped mentally that he was incapable of managing his own affairs or of understanding a transaction like the one in question; that the wife and her attorneys and allies, with selfish motives, induced him to place his thumb mark on the instrument requesting the distribution; and that he did this without any real comprehension or knowledge of what he was doing. The court also ruled that the Secretary of the Interior could not by his approval give validity to a gift which the apparent donor by reason of mental incompetency was incapable of understanding or making; that the defendants, although blameless, acquired no property or beneficial interest through the purported gift and must be regarded as holding the bonds and the income...