United States v. Beebe, 180 U.S. 343 (1901)

United States v. Beebe

No. 71

Argued November 6-7, 1960
Decided February 26, 1901
180 U.S. 343

APPEAL FROM THE CIRCUIT COURT

OF APPEALS FOR THE FIFTH CIRCUIT

Syllabus

It is entirely plain that there was no fraud in this case, and therefore this ground for the complainant’s relief cannot be sustained.

A district attorney of the United States has no power to agree upon a compromise of a claim of the United States in suit, except under circumstances not presented in this case.

An attorney, by virtue of his general retainer only, has no power to compromise his client’s claim, and a judgment entered on a compromise made under such circumstances is subject to be set aside on the ground of the lack of authority in the attorney to make the compromise on which the judgment rests.

Generally speaking, the laches of officers of the government cannot be set up as a defense to a claim made by the government.

When an agent has acted without authority, and it is claimed that the principal has thereafter ratified his act, such ratification can only be based upon a full knowledge of all the facts upon which the unauthorized action was taken.

On the tenth day of March, 1890, the United States brought suit in the Circuit Court of the United States for the Middle District of Alabama against Eugene Beebe and the heirs at law of one Ferris Henshaw, deceased, praying that two separate judgments in favor of the United States (one against Beebe and the other against the administrator of Henshaw) should be set aside and vacated; for the removal of the administration of the estate of Henshaw into that court; for an accounting by Beebe and the other defendants by reason of the liability of Beebe and Henshaw on the bond of Francis Widmer, late Collector of Internal Revenue in the Second District of Alabama, and that the amount found due on the accounting should be made a prior lien on the land described in the bill, and for other relief.

The defendants demurred to the bill, and the court sustained the same, after which the bill was amended and again demurred to. The defendant Beebe died August 24, 1894, and the complainant revived the suit against his heirs at law, and subsequently the court sustained the demurrers to the amended bill, and the judgment dismissing the bill was, upon appeal, affirmed by the Circuit Court of Appeals for the Fifth Circuit, and from that judgment of affirmance the United States has appealed to this Court.

The following facts were set forth in the bill: sometime in 1873, one Francis Widmer was appointed Collector of Internal Revenue for the Second District of Alabama, and Eugene Beebe and Ferris Henshaw became sureties on his bond in the sum of $50,000. Widmer defaulted and failed to account for and pay over to the government the sum of $28,158.56 public moneys that had come into his hands as collector, which sum was due the United States, with interest thereon from January 1, 1874. Beebe and Henshaw had for many years been partners in business, and were joint owners in fee of certain real estate described in the bill and situated in the County of Montgomery and State of Alabama. Henshaw died there, intestate, April 19, 1879, leaving certain of the defendants named in the suit as his heirs at law. The administrator of the estate of Henshaw reported to the court that his estate was insolvent, and in accordance with that report, the estate was on July 2, 1880, declared to be insolvent, and no settlement of the estate has since been had. Beebe before and since July 2, 1880, was and has been insolvent, without sufficient property to pay his debts. Ferris Henshaw was also insolvent at the time of his death. By reason of the insolvency of Eugene Beebe and Ferris Henshaw and the insolvency of the latter’s estate, the United States became and was entitled to priority of payment over any and all other creditors of Beebe and Henshaw out of their property and estate, of the full amount collected, withheld, and appropriated by Widmer, the collector, and due to the United States. It is averred that the land above described is liable for such debt, and also that the complainant has a prior lien upon it therefor.

On June 3, 1880, separate actions in the Circuit Court of the United States for the Middle District of Alabama were commenced, one against Beebe and the other against the administrator of the estate of Henshaw, for the recovery of the sums for which Widmer, collector, was in default, and amounting, as stated, to over $28,000, with interest, and those suits were continued from time to time at the request of the defendants, until February 6, 1885, when judgments were severally entered in that court against Beebe and also against Hatchett, as administrator of Henshaw, for $100 and costs, and Beebe on July 1, 1886, paid into the Treasury of the United States the sum of $109.85 as the amount of the judgment and costs rendered against him, but the judgment against Hatchett, as administrator, remained unsatisfied to the date of the filing of the bill in this suit.

The bill then proceeds as follows:

That said judgments were entered under the following circumstances: that said defendants came into court and stated and represented in open court, and they caused to be stated and represented for them, that said Beebe and said Ferris Henshaw were poor men, and that said Beebe and the estate of said Ferris Henshaw were without property out of which the said judgments could be paid and collected; that no part of said judgments could be collected by due process of law; that nothing could be made out of them, or either of them or their estates by execution, but that, if the court would allow a jury and verdict to be entered against them for one hundred dollars, they and each of them would pay said judgments and costs; that no evidence or proof was or had been introduced in said causes or either of them, the indebtedness of said Beebe and Henshaw to the United States then being twenty-eight thousand one hundred and fifty-eight dollars and fifty-six cents ($28, 158.56), and interest, or other large sum, and the statements and representations aforesaid only were before the said circuit court at the time of the entry of said judgments, and no hearing or determination upon the law or the facts involved in said cases was ever had in said court; whereupon the court remarked that, unless the district attorney of the United States objected, the causes might be disposed of as suggested aforesaid. Said district attorney did not object, and said judgments for $100 and costs were entered in each of said causes. . . . [And orator avers and charges] that said statements and representations made as aforesaid by and on behalf of, and for, said Beebe and said Ferris Henshaw, and the estate of said Ferris Henshaw, were wholly untrue, and were made to deceive said court and United States attorney and for the purpose and with the intent to defraud the United States. [Orator further avers and charges] that said court and United States attorney had no authority in law to accept said statements and representations, which were not made under oath nor in the course of any judicial proceeding and were not supported nor verified by evidence or proofs, and that said acts of said court and United States attorney amounted in law and in fact to, and was, and was intended to be, a mere naked compromise of the claim and demand of the United States against said Eugene Beebe and Ferris Henshaw, and the estate of said Ferris Henshaw, which said court and the United States attorney had no authority, but were inhibited by law, to make, entertain, and consummate. That said court was without jurisdiction and power to determine said causes in the manner aforesaid, and that said alleged judgments for $100 and costs are null and void ab initio, and of no effect, and should be vacated and held for naught in this Court of equity.

The bill then asks for the appointment of an administrator ad litem of the Henshaw estate to represent it in the proceeding. It alleges that several of the defendants, naming them, assert some claim against the property described in the bill, which claims are alleged to be subordinate to the rights of the United States to condemn and subject the land already mentioned to the satisfaction of the indebtedness of Beebe and Henshaw as sureties on the bond of Widmer, as collector, by reason of the default of the latter, and it is alleged that if any conveyance of the land has been made by Beebe of Henshaw or the heirs of the latter, that such conveyances were void and ought to be vacated and set aside. It is further stated that the facts and circumstances set out in the bill as the basis of the relief asked for only recently came to the knowledge of the complainant, to-wit, on or about March 5, 1890. The bill also set forth that, on March 22, 1877, Beebe conveyed by deed to Ferris Henshaw, then his partner in business, all his interest and estate in the property described in the bill for certain purposes therein set forth, and this deed complainant alleges was without consideration and fraudulently made to hinder, delay, and defraud the existing creditors of Beebe, and was void, and all the property described in the bill was bound, even in the hands of the heirs at law of Henshaw, for the payment of the debts due the United States from Beebe. The complainant prayed that the judgments might be set aside and vacated, and the property sold and the proceeds thereof applied to the payment of the debts above mentioned.

The defendants severally demurred to the bill on various grounds (1) for want of equity, (2) that the bill showed that the matters complained of against Beebe and Henshaw, by reason of their being sureties for Widmer, the collector, had been adjudicated in the Circuit Court of the United States for the Middle District of Alabama, in a suit commenced by the complainant against them, and that no sufficient ground was shown for vacating and setting aside the judgments therein rendered, (3) that it appeared from the allegations in the bill that the judgment against Beebe had been paid by him, and had been received and accepted by the complainant, the United States, and the bill contained no offer to refund the money, and it does not show that the same had ever been tendered to Beebe. Other grounds were stated in the demurrers.

Upon the hearing, the court sustained the demurrers and granted leave to amend the bill. On January 5, 1891, the complainant amended its bill, the amendment alleging that Beebe had executed another official bond as surety for one Dustan, deputy postmaster at Demopolis, Alabama; that a default had occurred and judgment been recovered against Beebe for $579.45 in 1878, and the judgment was still due and unpaid, and execution thereon having been issued was duly returned "no property."

The amended bill also contains an averment that there was in fact no jury drawn in the cases in which the two judgments were obtained and no verdicts rendered therein, although the records of these judgments show a jury trial and a verdict in each case.

To this bill as amended the defendants demurred, setting up the same grounds of demurrer as to the original bill, and also the additional grounds, (1) that the bill made a new case; (2) that the matters stated in the amendment were not germane to the purposes and object of the original bill, and stated new matter; (3) that the bill as amended was multifarious.

The demurrers to the amended bill were sustained, and the bill was finally dismissed.