if accounting officers give effect to such contracts. Good faith is essen-
tial to the validity of a subcontract. If a subcontract be made, giving
in terms to the subcontractor the right to the whole compensation pro-
vided for in the original contract, yet, in fact, with an agreement or under-
statiding aliunde that the original contractor shall receive a portion of
the compensation, this will be so far an attempted fraud at least, against
the United States, as to subject it to the operation of the act of May
4, 1882, and authorize the accounting officers to retain the whole con-
tract price of service to satisfy damages arising by defaults of the orig-
inal contractor under other contracts.
Pending the consideration of this appeal, there were filed with the
First Comptroller papers dated January 19, 1883, to wit iv affidavit of
A. E. Boone, that the subcontract was "executed by him at the time
and date it purports on its face to have been executed;" certificate of
the Second Assistant Postmaster General, "that mail service was per-
formed on route No. 30107 according to contract during the quarter
ended September 30, 1882;" and affidavit of Chase Andrews, that "he
bag [considered] and does consider himself responsible for the mail ser-
vice performed on route No. 30107 from July 1, 1882, to the end of the
contract term • • ♦j and that he has caused the service on said
route to be performed since July 1, 1882, and • » • has paid his
carrier for said service." This evidence with some other relating to the
circular regulations of October 15, 1880, was not before the Auditor
when he declined to certify a balance in favor of the claimant. It is
proper that he should have an opportunity to consider all this and other
evidence, if any be presented. The action of the Auditor, in refusing
to certify a balance due the claimant for service prior to the date of the
subcontract, September 15, 1882, is affirmed. The right of the claim-
ant to compensation for service since Sei^tember 15, 1882, depends on
the questions of fact (which are not distinctly shown), when he exe-
cuted the subcontract, and of his performance of service under it, and
on any other evidence affecting its validity.
In order that the Auditor may re-examine the subject, upon the prin-
ciples of law stated, and with the additional evidence mentioned, his ac-
tion thus far as to all matters relating to compensation since September
15, 1882, is reversed. The original contractor and subcontractor will
be notified of the action of this Office, so that they may be again heard
by the Auditor on all questions remaining to be disposed of.
Treasury Department,
First Comptroller's Offi<ie^ January 19, 1883.
Digitized by VjOOQIC
36 Firgt Comptroller's Ojffioej Treasury Department
CONSTRUCTION OF SECTION 3477 OF THE REVISED STATUTES, IN RE-
GARD TO ASSIGNMENTS OF CLAIMS AGAINST THE UNITED STATES,
AND IN REGARD TO POWERS OF ATTORNEY, ORDERS, AND OTHER
AUTHORITIES FOR RECEIVING PAYMENT OF SUCH CLAIMS.— CLAIMS-
ASSIGNMENT CASE.*
1. Section 3477 of the Revised Statutes is applicable to accounts for definite sums of
money due upon contract or by operation of la^.
2. This section is equally peremptory in r^aquiriufif that the power of attorney
therein mentioned must be executed ** after the allowance of the claim"; and it
seems reasonable to conclude from the whole act that the allowance of the claim
and the ascertaioment of the amount due is the esseutial demand, and that the
recital of the warrant is required, by way of proof that the claim has been allowed
by the accounting officers.
Besides this, the statute makes a valid power impossible in a case when no war-
rant is to be drawn.
3. The reference in United States r. Gillis (5 Octo 407) to certain claims which are
excepted from the operation of the statute because liquidated by being audited,
Hho^s a clear recognition of the principle that the express exception, in the
statute, of claims that were thus liquidated, negatives any inference that other
than audited claims can be within that exception because of the degree of cer-
t^binty that may char.iRterize them; and in Spofford t». Kirk (7 Otto 484) the
court evidently desired it to be understood that the nature of an unaudited claim,
and the question whether it was disputed or undisputed, certain or uncertain
In amount, were in no way material, aud that the statnt<o was equally operative
agaiust the aseigunient of an unauditt'd debt, no matter how fixed in amount as
against th'3 assignment of any claim, "however arising, or whatever its nature."
4. This ruliug is not new. The sufficiency of such power of attorney waa questioned
(in view of the opinion of the court iu United States r. Gillis) by the Second
Auditor, in a letter addressed by him to the Second Comptroller, July 11, 1878,
and as early as November, l^H, the rule that suoh powers were not sufficient
authority for receiving money due for supplies under contract, or on other ac-
counts, was enforced by the Second Auditor with the .approval of the Second
Comptroller; and after the rule had been enforced a few weeks all indications
of seriouH inconvenience disappeared.
5. Cases in which the attorney makes no claim as an aasignee cannot be di8tin;;riii8hed
by an examination of the instrument containing the power from those cases in
ivhich the attorney claims iu his own right a part or the whole of the balance;
»ur does the statute make the sufficiency of the power of attorney as an authority
for receiving money depeu-l upon that question.
6. A naked power is as clearly within the words of the statute as one that attempts
to convey an interest.
7. By General Orders No. 116 of the General of the Army, made September *^5. 1882, by
direction of the Secretary of War, paragraph 1664 of the Army Regulations is
ameudetl to read: ** 1664. An assignment or a power of attorney executed before
the account or voucher to which it pertains has been auditetl by the accounting
officers of the Treasury is not sufficient to authorize payment to an assignee
or attorney. Disbursing officeni will therefore make payments only to, and take
receipt of, the party or parties to whom the money is due from the United States.
' NoTK BY First Comptroller.— The qnevtions so ably discussed in the foregoing
tt were also considered in *• Claims Assignment case,** 3 Lawrence, Compt. Dec. 13.
Digitized by VjOOQIC
Powers of Attorney — Claims- Assignment Case. 37
When an account is presented by an individnal who is not known to the disbars-
ing officer, the latter will require such evidence of identity as will secure the
Govemiuent, as well as himself against loss/^
TbEASXTRY DEPARTarENT,
Second Comptroller's Office,
Washi7igto7i^ D. (7., May 22, 1882,
Sib : Referring to your inquiry in regard to tbe right to make pay-
ment to attorneys in cases where a general power of attorney is exe-
cuted by the claimant before the allowance of the claim, I respectfully
present the following considerations :
Shortly after the passage of tlie act of February 26, 1853 (10 Stat.,
170), the position was taken that the act was not applicable to accounts
for definite sums of money due upon contract or by operation of law;*
but since the decisions of the United States Supreme Court in United
States vs. Gillis and in Spoftord vs. Kirk, I think it is not attempted to
maintain that position. It has recently been proposed that there are
claims that are not required to be adjusted by the accounting officers
which may be paid to one holding a general power of attorney, and it
is argued that a quartermaster or paymaster may pay to attorneys, ia
cases when such course could not be taken if the same account should
be allowed by the accounting officers.
The argument in support of this position rests solely on a supposi-
tion or assumption that claims or debts paid by a disbursing officer are
not claims or debts that are required to be audited by the accounting
officers, a supposition that is without foundation, because every claim
that can be paid by a quartermaster mnst be audited by the account-
ing officers, either before or after payment is made. If the payment is
illegally made, or made to a wrong party or upon insufficient authority,
it becomes chargeable by the accounting officers, both to the quarter-
* Note by the First Comptroller. —In Billings v. O'Brien (45 Howanl, N. Y,,
Practice Reports, 392), decided in 1873, it was held that " the purchase by payiuent
in advance, of the future earnings of the salaries of the officers or einploy6» of the
United States Government is void as against public policy ,'' and that ** it is also in
direct violation of the act of Congress of February 26, 1853." (Rev. Stat., 3477.) It
wonld not seem probable tlfat this statute was intended to destroy a wise rule of pub-
lic policy. It contains no language indicating such a purpose.
If salaries could be assigned, the effect in practice would be ruinous. Tbej would
often be purchased at heavy discounts, and the whole land would swarm with men
speculating on the necessities of officers.
In Trist v. Child (21 Wallace, 441 ), it appeared that there was an assignment of a
definite part of a claim against the United States, the amonnt of which claim was
fixed absolutely by an act of Congress. Yet the court, referring to that claim and
the act of February 26, 1853 (Rev. Stat., 3477), declared that it was " fatally adverse
to the claim of a lien "created by such assignment. It thus seems that nnder the
statute an assignment is void even though the amount of the claim is absolutely fixed,
definite, and not controverted. The principles decided in the text may now be re-
garded as the law recognized by the Comptrollers. The opinion of the Solicitor-Gen-
eral of Jane 29, 1888, discusses the same subject with great ability.
Digitized by VjOOQIC
-38 First Comptroller's Office, Treasury Department.
master aDd tlie party wrouglj paid, and if the amount can be and is
recovered from the party wrongly paid, the quartermaster will then be
relieved from the charge.
The argument in support of this position ignores the fact that claims
paid by a disbursing officer must be passed upon by the accounting
officers; that the action of the disbursing officer is not final and does
not partake of the nature of a decision, and that it is merely a payment
made at the risk of the disbursing officer, who pays with a knowledge
that his act must be approved or disapproved by the accounting officers.
Stress is laid on the words of section 3477, Revised Statutes, '* after
the issuing of a warrant," and on the injunction of the statute that the
power of attorney ** must recite the warrant," as if such specific mention
of the warrant affords ground for concluding that the statute is not
applicable to any case where a subsequent formal warrant on the
Treasury proper is not required.
But issuing the >yarrant is not the only prerequisite. The statute is
equally peremptory in requiring that the power must be executed " after
the allowance of the claim"; and it seems reasonable to conclude from
the whole act that the allowance of the claim and the ascertainment of
the amount due is the essential demand, and that the recital of the
warrant is reciuired, by way of proof that the claim has been allowed
by the accounting officers.
Besides this, the statute makes a valid power impossible in a case
when no warrant is to be drawn. The requirement of the statute, that
assignments and powers of attorney shall be void unless executed "after
the allowance of such claim," is a strong indication that disbursing
officers are not to pay upon powers of attorney. The Treasury needs
protection against frauds as much when the claim is presented to a
disbursing officer as when it is presented to the accounting officers.
Many arguments are on file in this office attempting to prove that
the statute does not include a claim which is certain in amount, but I
am not aware that the position was ever before taken that a power of
attorney may be good when the claim is presented to a disbursing
officer which would be void if the claim was being audited by the ac-
counting officers.
There is a disposition to treat rulings recently made on this i)oint
as a new departure from settled practice, and there is a tendency to
treat the question in cases where the attorney claims no interest adverse
to his client Jis one of minor importance. But the ruling is not new,
and cases in which the attorney makes no claim as an assignee cannot
be distinguished by an examination of the instrument containing the
power from those cases in which the attorney claims in his own right
a part or the whole of the balance; nor does the statute make the
sufficiency of the power of attorney as an authority for receiving money
<iepend upon that question. The papers filed in cases in which tho
attorney claims to have acquired an interest may be precisely similar
Digitized by VjOOQIC
Powers of Attorney — Claims-Assignment Case. 39
to tlie papers presented by a disinterested attorney, and in one of the
cases of the former class the attorney may rely on an implied agree-
ment for a reasonable percentage as his fee; in another, on an express
agreement in writing (not filed or presented) for such reasonable fee;
in a third, on a written agreement for a specified percentage as his fee ;
and in a fourth case a written instrument not presented may be relied
on and intended as a transfer of the whole claim to the attorney for
value. (Trist v. Child, 21 Wall., 441.)
The case presented by a disinterested attorney is no Icvss withi^i the
restriction of the statute than those above referred to, and if payment
can be made on the naked power in such a case, it would seem that the
whole object of the statute can be thwarted by suppressing so much of
the writings as relates to an assignment.
In a case where the attorney claims to be owner of the debt or of a
percentage thereon, adverse to his client, I do not think any one at all
convers^vpt with the subject would attempt to argue in favor of his
right to receive the money by virtue of his alleged power of attorney;
yet a naked power is as clearly within the words of the statute as one
that attempts to convey an interest. I think also that the danger of
inconvenience resulting from an adherence to the construction given to
the statute by the Supreme Court is not as great as seems to be appre-
betided. The sufficiency of such power of attorney was questioned (in
view of the opinion of the court in United States vs. Gillis) by the Sec-
ond Auditor, in a letter addressed by him to this office, July 11, 1878,
and as early as November, 1878, the rule that such powers were not
sufficient authority for receiving money due for supplies under contract
or on other accounts was enforced by the Second Auditor with the
approval of this office; and after the rule had been enforced a few weeks
all indications of serious inconvenience disappeared.
The following notes of rulings of this office, made in relation to ac-
counts settled by the Third Auditor, will also show that the question
is not new :
After the decision of the Supreme Court in United States vs. Gillis,
and before being advised of the ruling in Spofford vs. Kirk, this office,
having under consideration a power of attorney executed by Chauucey
D. Spaids, contractor for dredging in Occoquan River, Virginia, appoint-
ing E. C IngersoU (one of his bondsmen) his attorney, to receive such
funds as may become due for work done, held that, in view of the un-
certain condition of the adjudications and rulings on the question
whether a power of attorney to collect an unaudited debt against the
United States is valid, the Comptroller could not be justified in recom-
mending that payment be made through the agent when it might be
made directly to the principal;" that (in view of the indications con-
tained in the correspondence submitted that the power was intended
to convey an interest) " the restrictions of section 3737 of the Revised
Statutes are such as to prevent the attorney from acquiring any rights
Digitized by VjOOQIC
40 First Comptroller's Office^ Treasury Department.
by virtue of the power adverse to those of the original contractor."
(Vol. 40, pp. 613, 615.)
November 22, 1878. — In regard to a power of attorney from the sure-
ties of Brainard & Rice, contractors for dredging in Hampton River, Vir-
ginia, and in the harbors of Washington and Georgetown, said contract-
ors having failed to perform the work under their contract, it was held
<Hhat a contract cannot be annulled as to the principal and remain in
force as an executory contract as to the sureties, and that the power sub-
mitted does not warrant payment to the attorney." (Vol. 40, pp. 641-643.)
July 15, 1879. — In the matter of a proposed arrangement between
Hubbard & King, creditors, and Larkin & Patrick, contractors, it was
held that, since the decision in the cases of United States vs. Gillis and
SpoflFord vs. Kirk, the accounting officers have not felt authorized to
allow payments to be made to an agent where they might be made direct
to the principal, although the practice had formerly been otherwise in
certain cases." (Vol. 41, p. 567-569.)
November 11, 1880.— Power of attorney from W. B. Hugus, contractor,
to deliver fresh beef, hay, and wood at White River, Colorado, to Joseph
B. Adams, " to take charge of, manage, fulfil, carry out, do, and perform
and complete all contracts, agreements, and undertakings I have made
or entered into with the United States.^' It was held that the proposed
transaction was intended as a sale and transfer of the contract, and that
as such it is expressly prohibited by law, and would, if completed, annul
the existing contract; that the United States, by assenting to it, would
release the sureties on the contractor's bond; that the United States
officers may not recognize Adams as the contractor, and that said offi-
cers must look to Hugus, settle with Hugus, and pay to Hugus. (Vol.
43, pp. 328-330.)
March 7, 1881. — Power of attorney from Pardessus & Anthony, con-
tractors, to F. B. CoVton, " to collect all money that may hereafter be-
come due to them under their contract for dredging in Norfolk Harbor/'
It was held that the purpose of the power appears to be to transfer to
Golton an interest in the contract ; that any attempt to make such trans-
fer is in conflict with section 3737, Revised Statutes ; that all payments
should be made as money due to the original contractor. (Vol 43, pp.
615, 616.)
May 5, 1881. — Power of attorney from John J. Shipman, contractor,
to Joncithan Magarity, between whom a controversy has arisen, each
claiming the moneys due under the contract in his own right. Held
that the power of attorney in question cannot operate as an assignment,
or give to Magarity any interest in the contract or in the pay due or
to become due thereunder; that the contractor could revoke the power
at any time, and that he is the only party to whom the Government
may make payments; that so long as the contractor fulfils the contract
he is authorized to receive whatever money may become due under it.
(Vol. 44, p. 67.)
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Potoers of Attorney — Claims-AsHgnment Case. 41
The act of February 26, 1853, section 3477, Revised Statutes, has been
considered by the Supreme Court of the United States in the following'
octavo •
In the United States vs. Oillis (5 Otto, 407) the plaintifif, claiming as
assignee of Ryan, sued in the Court of Claims for moneys on deposit
in the United States Treasury, as proceeds of cotton captured by the
military forces of the United States, Ryan having assented to the at-
tempted assignment and to the commencement of the action.
It was held that the act of February 26, 1853, "excepted from its
sweeping provisions certain claims which were liquidated [that is,
audited] and for which warrants were drawn"; that the act " covers
all claims against the United States in every tribunal in which they
may be asserted"; that the assignment was void.
In Erwin vs. United States (7 Otto, 392) the claim was also for the
proceeds of captured cotton. It was held that the claim passed to the
assignee in bankruptcy.
In Spoflford vs. Kirk (7 Otto, 434) which was an appeal from a judg-
ment of the supreme court of the District of Columbia, the plaintiff
sued, claiming to be assignee of a part of the proceeds of a claim for
supplies furnished the Army, and for damages sustained by reason of
military occupation of his, the assignor's property.
The court said of this statute, the act '* declares that all transfers
and assignments thereafter made of any claim uiK)n the United States"
shall be absolutely null and void. <'It would seem impossible to use
langaage more comprehensive than this. It embraces alike legal and
equitable assignments. It includes powers of attorney, orders or other
authority for receiving payment of any such claims, or any part or
share thereof. It strikes at every derivative interest in whatever form
acquired, and incapacitates every claimant upon the Government from
creating an interest in the claim in any other than himself"; and refer-
ring to the case of the United States vs. Gillis, the court said : " We
then concluded that it embraced every claim against the United States,
however arising^ of whatever nature, and wherever and whenever pre-
sented." And, apparently, to emphasize its disapproval of the idea
that there might be unaudited accounts or debts against the United
States that were not claims, because they were liquidated, or because
they were definite and certain in amount, the court used the word
" debt" interchangeably with the word "claim." In addition to saying^
" every claim, however arising," it said, " it is hard to see how the trans-
fer of a debt can be of no force as between the tran^^ferrer and the
debtor, and yet effective as between the creditor and his assignee."*
In McKiiight vs. United States (8 Otto, 179), the sum of $30,675.68,
* It mnet be apparent that this emphatic language was intended to change the con-
stmction which had been pat upon the statute by ComptroUer Whittlesey, in his cir-
cular of May 2, 1853 (1 Lawrence, Coinpt. Dec, 2d ed., 294, paragraph 12.)
Digitized by VjOOQIC
42 First Comptroller^^ Office, Treasury Department.
4ae from the United States to Simeon Hart for flour delivered by him
at an agreed price in pursuance of a contract, which indebtedness he
had assigned, or attempted to assign, to McKnight & Richardson,
was afterwards (January 6, 1873) audited by the accounting officers in
favor of McKnight & Richardson as assignees of said Hart, but Hart
being charged as indebted to the United States on another account,
the Secretary of the Treasury ordered . that $9,000 of the amount be
deposited in the Treasury, virtually to await the settlement of Hart's
account.
McKnight, claiming to have succeeded to the rights of McKnight &
Bichardson, brought his action in the Conrt of Claims for the $9,000.
The United States claimed, by way of counter-claim in the action, the
$21,675.68 that had been paid to McKnight & Richardson. The conrt
denied the counter-claim, not because of the sufficiency of the assign-
ment to McKnight & Richardson, but because the transaction was com-
pleted and no injustice appeared to have been done by the payment of
the $21,675.68.
The court said: ''It is true the assignment was contrary to law, and
therefore a nullity; but there was nothing contrary to good morals or
conscience in the payment or receipt of money." * # # "The as-
signment, as we have already said, was wholly void (Spofford vs. Kirk,
97 U. S., 484); it conferred no right that the United States was bound
to regard. The payment of a part was not a waiver of this objection
as to the residue." The court denied the plaintiff's claim for the $9,000
on the ground that the assignment was void under the act of 1853.
In Goodman v. Niblack (12 Otto, 556), Albert G. Sloo was a con-
tractor for transportation of the United States mails, and he ha^l, prior
to the passage of the act of 1853, entered into an agreement with Rob-
ert and others by which they contracted to construct ships and do the
transportation in accordance with the contract, and Sloo was to receive
one half of the not profits of the venture, and they the other half. Sloo,
Laving subsequently become insolvent, in 1860 executed a general as-
signment of his property to Cheever & Wiles, and the question was