FEDERAl:. \REPORTER, vol.
OALDER et at v. HENDERSON etat. · (OlrcuitOourt of J\.ppeals,Fttth No.'63.
REVENUlllLAWS-SUGAR BOUNTY-RIGHTS OF SUGAR RAISERS.
The suglU' bounty provided for by the act of October 1, 1890, i9 not 8. pure gratuity by the government, or a mere recompense for persol),81 services, but is compensation otreredfor the PU1pose of stimulating production; anl1when ,8. producer'accept$ the offer,and complies with the statute, there is a contract between him and the government.
l5.SAME-VES::\,ED RIGllTS-ASSIGNMENT FOR BENEFIT OF CREDITORS.
A Claim for li\uch bounty, earned by rlUslng sugar, is a vested right, constituting property, which is subject to be sold on execution under the laws of Louisiana, and will therefore pass, under the Insolvency laws, to the provisional syndics, whE\n the owner makes a cession of his property tor the benefit'of creditors. '
8. Al'PEAL---DECISION-MATTERS NOT ApPEALED FROM.
On an appeal by defendants from a general decreeagalnst them, the plaintiffs cluln.ot have reinstated an Injunction which was dismL'lSed by the trial court as toone of the parties, when they took no appeal therefrom.
Appeal from the Circuit Court of' the United States for the East- ' ern District of Louisiana. In Equity. Suit brought'in the civil district court for the parish of Orleans. by William' Henderson and Leopold Loeb, provisional syndics of John Calder & Co. and David R. Calder, against John Calder & Co. ilnd David R. Calder, to enjoin them from disposing of a claim against United States for sugar bounties earned. Defendants removed the case to the United States circuit court, where j;udgment was rendered against them, from which judgment theyappeal"ed. Affirmed. Statement by PARDEE, Circuit Judge:
John Calder & .Co., and David R. Oalder Individually, on the 15th day of Pebmary, 1892, made It cession of their property under the insolvency laws of Louisiana, and William Henderson and Leopold Loeb were appointed provisional syndics. The insolvents filed a schedule of their assets and liabilltles, upon which a'XIl!'lmorandum was made of bounty al!owanGe claimed to be the property of David R. Oalder, which he was authorized by law to keep, as exempt from seizure under any process of court, and as not subject to be surrendered under the insolvent laws of the state. The provisional syndics brought this suit in the civil district ,court for the parish of Orleans, alleging the above facts, and furQl,er averring that the amount of bounty which David R. Calder is to collect from the national government is not stated upon the schedule; that the amount thereof exceeds the sum of $40,000, and is due to said David R. Calder because of certain claims made by him under a license granted to him by the natlonalgovemment; that the'ftrm of John Oalder & Co. and David R. Calder, the Insolvents, were actively engaged, for a number of years prior to their surrender, in commercial business in the city of New Orleans, and in the cultivation of sugar plantations; that they cultivated four different plantations, the property of John Calder & Co., to wit, the Alice C.and the Choupique, situated in the parish of St. Mary; the Arag'on, in the parish of Terrebonne; and the Orange Grove,1n the parish of Lafourche,-upon which plantations the sugar was produced for which the bounty claimed is due; that under the insolvent proceedings and surrender there passed to the creditors of sald insolvents all the property, either movable or immovable, or other rights or claims, except that which the law authorizes insolvents to retain. and whicll X)roperty should come under the control of petitioners, as prov!-
syndics; 'that the bouhtYallowa#ce claimed by Dav'1d R. Calder for sugar produced in the United States, under the act of congress, is an asset belonging to said insolvents, and: is, by the operation of the'insolvency laws of Louisiana, subject to the, control of petitioners, as syndics, to be applied to the payment of tl;1e debts of said insolvents, and is not· exempt, as between peti· tioners and aIDd John Calder & Co. and David R. Calder,from the operation of the insolvent laws of the state. Complainants81so averred that they had reason to fear that, if the saidins6lvents should obtain. possession of said boun·' ty, they would divert the same to the prejudice of, their creditors; and upon the prayer of said syndiCs an Injunction was granted, ex parte, prohibiting David R. Calder from disposing of the drafts'received by him from the United States for such bounty allowance, and also prohibiting Andrew Hero, assistant treasurer of the United States, from paying such drafts pendente lite. The defendants moved the suit into the circuit court of the United States for the eastern district of Lousiana,as one arising under the laws of the United States. In the circuit court the, petition of the syndics was by agreement treated as a bill in equity, and the defendants moved to dissolve the injunction, and also demUrred to,the bill. Upon a hearing the motion to dissolve the injunction was denied, except as to the assistant treasurer of the United States, as to whom it was granted, and the bill dismissed, and the demurrer of the defendants was overruled. The defendants electing to stand upon their demurrer, a final decree was made, adjudging that said bounty allowance formed a part of the assets of said insolvents, and passed, by their assignment, by operation of law, to their syndics, for the benefit of creditors; and said insolvents were enjoined from collecting or disposing of said drafts, or ,parting with their possession, except to said syndics. From this decree the defendants appealed to this court.
John D. Rouse and Will. Grant,fQr appellants. Henry L. Lazarus and Horace E. Upton, for appellees. Before PARDEE and McCormick, Circuit Judges, and LOCKE, District Judge. PARDEE, Oircuit Judge, (after stating the facts.) The assignment of errors covers substantially the merits of the case, and the case presents the question whether the claims of David R. Calder under the act of congress approved October 1, 1890, for allowance of bounty for the production of sugar earned on the plantations of John Calder & Co. in the year 1891, passed to the creditors of John Calder & Co. and David R. Calder individually, under the insolvent laws of Louisiana, by the cession of property made and accepted on the 15th day of February, 1892. Prior to 1890 the production of sugar was fostered by the government of the United States by a protectiv'e tariff, which imposed such duties upon imported sugar as practically enabled the producers in this country to obtain a price for the sugar produced by them" compensatory of the cost of production; it being well understood that, without the enhanced price resulting from the tariff, sugar in quantities could only be produced in the United States at a loss to the producer. In 1890 the government of the United States, without changing its policy in respect to sugar produced, changed the method of encouraging production by practically placing sugar upon the free list, and enacting the bounty system. The law granting the bounty, so far as it is material to this case, is as follows :
"231. That on and atter July first, eighteen hundred and ninety-one, and until July first; nineteen hundred and five, there shall be paid, from any mon-
eys in the treasury not otherwise approp$ted, under the provisions of section three thoUsand S1.X hundred and elghty-nlne.of the Revised Statutes, to the producer of testing not JesS than ninety degrees by the polariscope, from sugar cane grown Within the United States, a bounty of two cents·.pel;.pound, and . upon such sugar testing less than,ninety degrees by the pol::j.r.breope, and not less than eighty degrees, a bounty of one and three fourths. cents per; pound, under such and regulations as the commissioners reVenue, with of secretary of the treasury, shall llrescl'ibe. ... . ., .' . "232. The producer of $Rid sugar, to be entitled to saldboUJj.ty, shall have first filed, .prior to July first of eachYIla,r,. with the commissioner of internal of production, with a generaJ,description of the revenue, a notlce of the machinery and methods to be employed by him, with an estimate of the amount.of sugar proposed to be produced IJi the current or next ensuing year, including the number of maple trees. to be tapped, and an application for a license to so produce, to be accompanied by a bond in a penalty and with sureto be approved by the commissioner fiJf internal revenue. conditioned that he.}Vill faithfully obserye. all rules and regulati0I1E1 that shlill be prescribed for such manufacture and production of sugar." 26 St. at Large, p. 583.
Ins to be noticed that the bounty offered by the statute is for sug;:tr thereafter to be produced, and to those producers only who shall accept the provisions of the act, and comply with its terms, as to takingout a license, giving bond in penalty, etc. In our opinion, the "bounty," so called in the statute, is not a pure gratuity or donation by the government, but' was intended to be, and is in fact, a standing offer of reward and compensation to sugar producers, to encourage and stimulate them in the oth¢:rwjse losing business of producing sugar in the United States. It was intended to be, and is in fact, a guo.ranty of reimburse:ment to sugar,producers accepting the terms of the statute, of part, at least, of the cost of production. When a producer of sugar accepts the offer, and complies with the statute, it would seem ·to be as much a contract as it is possible for any citizen to make with the government. All tb.e. elements of a contract are present,:+;::the terms, the the lawful object. It is true that the government -cap repeal the and refuse to pay the earned upon sugar that hasl;leen produced under the promise, and within the statute, but so could the government do with an admitted contract for any public work. The appellants contended in the circuit court, as in this court, that the bounty offered 1>Y the government of the 1;Jnited States was a pure gratuity, without consideration, revocable at pleasure, and, until· payment of the same is actually made, is not property, Qut only a hope that mayor may not be realized. The judge of the circuit court, in a very clear and well· reasoned opinion, discllssed the case on this line, and, citing Williams v. J;leard, 140 U. :S. 529--531, 11 Sup. Ct. Rep. 885, held that sugar bounty earned was property. In the cases of Comegys v. Vasse, 1 Pet. 193, and in Williams v. Heard, supra, it was held that equita· ble claims against our own and foreign governments, not arising un· der anY.statute, and not allowed at the gate of bankruptcy, were ex· pectancies coupled with an interest, and, as such, were property rights that passed under assignment in bankruptcy, under both the bankrupt laws of 1800 and of 1867. The claim of David R. Calder, who the te1'IUsof the act for the year 1891, for sugar produced .during that year, is a claim arising under a contract,-a just
elaim,-and one that the government cannot avoid otherwise than by repudiation. It is more than a possibility coupled with an interest. It is an actuality, a vested interest, (see People v. Board of State Auditors, 9 Mich. 327,) and a right for which there is a remedy under existing statutes Qf the United States. <offering the bounty makes a standing appropriation to pay it, and it is the duty of the treasury officials to warrant for it; and if there is a dispute as to facts or amounts the court of claims has jurisdiction. See "An act to provide for bringing suits against the government of the United States," (24 St. at Large, p. 505.) The law governing insolvency proceedings in Louisiana, so far as this case is concerned, is as follows:
"The debtor shall annex to his petition his schedule,-that is to say, a summary statement of his affairs, and the losses he may have expetienced,-mentioning the name$ of his creditors, their places of residence, and the amount of their respective claims; and the schedule shall, besides, contain a statement of all his property, as well movable as immovable, and hiB rights and actionsj (except those which hereinafter are secured to him,) together with a mention of the approximate value of the property by him Section 1786. Rev. St. "The debtor is not obliged to comprehend in hiB surrender any property that is not subject to be seized and sold on executions against him." Section 1787, Id. "The debtor is not obliged to comprehend in his surrender any property that is not subject to be seized and sold in execution against' him, bUt, witb this exception, all his property must be surrendered." Article 2183, Rev. Civil Code. "There are alBo rights which' are merely personal, that cannot be made liable for the payment of debts, and ,herefore no contrac( them comes within the provisions of this section. These are the rights of personal servitude; of use and habitation; of usufruct of the estate of the minor child; to the income of dotal property; to money due for the salary of an office, or wages, or recompense for personal services." Article 1002. Rev. Civil Code.
The appellants contend that, under these statutes, Calder's claim for bounty for sugar produced in 1891 did not pass to his creditors, because, they say, said claim was not subject to be seized apd sold on execution; it was not placed upon the schedule as by the insolvent, and the claim is one for personal services,· and therefore specifically exempt under section 1787. The limitl:ttion contained in section 1787 clearly applies to property exempt from: execution, and does not include property which, although not exempt from execution, there is a difficulty, regal or physical, in seizing under execution. As a matter of Louisiana law, the of Calder against the government is one subject to seizure on execution; and while the officers of the government cannot be garnished, nor funds in their hands attached, there is no difficulty whatever, under the Louisiana practice, in levying an execution upon 1he claim, and selling the same according to law. La. Code Pl'. art 647; Flower v. Livingston, 2 Mart. (N. S.) 615; Harris Y. Bank, 5 La. Ann. 538; Rightor v.Slidell, 9 La. Ann. 606; McDonala. v. Insurance Co., 32 La. Ann. 596; Levy v. Acklen, 32 La. Ann. 545. In the case of West v. His Creditors, 8 Rob. (La.) 123, it was held by the supreme court of the state of Louisiana that the claim of
"'l!-,insQlv.:ent 1 ;the .gQ'Vernment, represented! bya eer· tificateot,indebtedneltS' on the government, passed by a to ,tke .sy:q.mc. We quo.te .from the opinion of the court as fpllpws:
shows :most conclusi've)y that this was a debt owing to West not onlY previous to the sun'ender of his property, ..in to bis .application for a respite, in 1819. By refusing or put it on his bUan at ,the latter period, or not surrendering it in 1821,. wl1en ordered,.'he has not. acqUired any right to it, nor can he, by putting the'debt onbis'schedule When he went into bankruptcy, take it aw.ay fl\om the syndicGf tile creditors, and'deprive them of a fund out of wPicll they are entitled to be paid. This debt was in fact as much given up as any' other, in The books in which the entries were made, relating to it, were given up. Efforts were made to collect it, or get it recognized by the debtoJ;.. TheY were for a longttnle, but at last successful."
the insolvent laws of Louisiana, that all . the o.abts, rights, and property of an insolvent making a cession pass to his creditors by the surrender, whether placed on the schedand the syndic may s.1le to recover them. West v. His Creditors, supra; Lawrence v. GUice, 9 Rob. (La.) 219; Dwight v. Siw.91lo4.La. Aun.49(;)r Bank v. Horn, 17 How. 157; Geilinger v. Philippi, 133 U; S. 246,,255, 10 Sup. Ct. Rep. 266. In the recent case of B11,1;ler v. Goreley, 146 U. S. 303, 13 Sup. Ct. Rep. 84, the supreme,court affirmed the doctrine of Williams v. Heard, supra, and that section 3477 of the Revised Statutes of the United of claims upon States, which prohibits transfers or the United States until ,-after the allowance, the ascertainment of the attl.0unt due', an;d theJssliing of warrant for the payment thereof, and. :then provides, that they. shall be' freely made and executed in the presence of two attesting witnesses,' does not apply to assignments in; insolvency, nor to other transfers by operation of law. We IIJ.'e of opinion :that the claim of Calder for bounty under the the United States 'is a claim for reward and compensation, and ripened into ,a vested interest by compliance with the statute, and the aotual produotion of sugar thereunder. While sugar may be, tO$O'me,extent, produced by ,personal semces, in the guise of labor, it is, in the main, produced by the cultivation of lands, and the use of, expensive machinery; and it is a well-known fact that, under the present methods of raising sugar, capital and credit are. both required to,:meet the necessary outlays for seed, labor, supplies, and machineI1)':, and it would materially hamper the bmd- . ness iftbeproceeds of the crop, whether in bounty or otherwise, are notavailable to meet the demands of creditors who, it may be, which in reality produced the crop. It have furnished the would t"erefore tend to defeat the acknowledged object of the statute to give.it the narrow construction that the bounty offered for the production' of Sl1gar was intended as a mere recompense for personaLsemces,. Case v. Taylor, 23 La. Ann. 497, cited by appeUant1il, does not appear to be applicable. In that case Taylor had the state a public canal, binding himself to make certaw' ,jmImovements, pay o'VeriW the state certain rents, and
UNITED STATES '!l. WILLAMETTE VAL. &: C. Y. WAGON-ROAD CO.
acquiring from the state the right to receive ·andcolleeti the tolls. Conceding the cOITectness of therulmg,-and it was doubted at the time by some of the judges of the court,-it goes no' further than to hold that the contract was not a lease, and that the compensation which might result to ,Taylor for operating the canal was in the nature of recompense for personal services. In the case in hand there is no public work to be operated, no agency for the government, but a simple contract, as we view it, to pay so much for sugar produced under certain circumstances. As to the present the claim, although in the name of David R. Calder, as holding the license" is really for sugar'produced on the plantations of John Calder & Co., cultivated by that firm, and it should not be restricted toa claim ,for rec()mpense for the personal services of David R. Calder. Weare of opinion, :therefore, that none of the contentions of the appellants are well taken; and we hold that the claim of David R. Calder against the United States for bounty for sugar produced upon the plantations of John Calder & Co. during the year 1891 is property that passed by the cession in the insolvency proceedings to the syndics of John Calder & Co. and David R. Calder indiVidually, as a fund to be applied to the payment of creditors. The application of appellees to amend the decree of the circuit court by reinstating the injunetionagainst the assistant treasurer, on the authority of Clark v. Clark, 17 How. 315, as approved in Phdps v. McDonald, 99 U. S. 298, cannot be considered, as di:l not appeal. The decree appeal<!d from is affirmed, with costs.
UNITED STATES v. WILLAMETTE VAL. & C. M. WAGON-ltoAD CO. et al. (Circuit Court, D. Oregon. May 18, 1892.)
SUIT TO ENFonCE FORFEI-
GRANT OF PUBLIC LANDS IN AID OF WAGON ROAD TURE-LACHES-ESTOPPEL.
Congress granted certain lands to Oregon in 1866 to aid in the construction of a wagon road from Albany to the eastern boundary of the state. In 1874 congress enacted that, when the road is shown by the certificate of the governor of Oregon to have been constructed and completed, patents to the lands should issue. By 1871 such certificates had been made. In 1882, after complaint to the department of the interior that the road had not been constructed, and after reference of the matter to congress and .its refusal to act, and after investigation by the department, the patents issue. The defendants Weill and Cahn claim to be purchasers of the land in good faith upon the strength of the gavernor's certificates, and further claim to have expended large sums of money on said lands after the issuance of the patents, and to have sold portions thereof with warranty; also to have fully rebuilt the rpad before the passage of the act of March, 1889, authorizing this suit to enforce forfeiture. HeU, on exceptions to their answer setting forth these, tacts,, (1) that the defense of laches is not applicable to the United States; (2) that the United States are estopped to enforce the forfeiture; (3) that, the grant being jp. praesenti with condition subsequent,a construction of the road after the time limited in the grant, but before the assertion of a claim to a forfeiture, may be pleaded in defense of this; suit. "