United States v. Knabe

147 F. 802 | U.S. Circuit Court for the District of Middle Alabama | 1906

JONES, District Judge

(after stating the facts). As Knahe and Scott are not shown to be “parties in interest” who contributed the money paid to the government, and are not mentioned by name in the act of Congress, and the enacting clauses do not vest any title in them, or release anything to them, the government insists that the settlement and compromise cannot operate to discharge the defendants^ from, liability upon the bond in suit. Its insistence assumes that the intent and subject-matters of the “compromise and settlement” are to be gathered soleiy from the provisions vesting the title in the parties named in the act, and the nature of the commands Congress put upon the solicitor of the treasury to carry the settlement into effect with the parties in whom title was vested, and that, when thus considered, the act shows that the defendants were not intended to be included in the benefits of the compromise. Neither assumption is well founded.

The Secretary of the Treasury had authority, under section 3469 of the Revised Statutes [U. S. Comp. St. 1901, p. 2317], to compromise the liability upon the bond of the internal revenue collector; but that section gave the secretary no authority to settle the liability of the sureties on account of the defalcation of the postmasters. Under section 409 of the Revised Statutes [U. S. Comp. St. 1901, p. 229], the Postmaster General had authority to compromise the liability on the bonds of the postmasters. The presumption being that public officers, in the absence of showing to the contrary, rightly discharge their duties, the court is bound to presume, when the act says the money has been “deposited as. required by law, to abide action upon said proposition,” and, then, that the Secretary of the Treasury “has approved said proposition of compromise, and settlement for the amount tendered, but is without authority to carry the same into- effect by a conveyance to the parties in interest,” that the preliminary steps required by sections 409 and 3469 had been taken, which authorized the executive department to release and discharge all liability upon the “claims,” and to “end the litigation resulting therefrom,” although that department was not vested, under the existing law, with power to perform the conditions as to revesting the title to the real estate. However that may be, Congress ratified the compromise as made, upon the conditions accepted by the Secretary of the Treasury, and.itself revested the title. The moment the act was passed, the government having received the money on the conditions stated, all.the "claims” of the United States, and the rights acquired by them in the suits to enforce them, were ipso facto, unconditionally, released and discharged. The act stripped the government of all right to claim or hold anything against any «one, on account of the suits, or the transactions from which they resulted, except the sum of money it accepted, and further put upon it the duty of restoring to those from whom it had recovered them all the rights acquired in the litigation. The state of affairs described by the act, and the provisions it made to meet the situation, demonstrate that the purpose of the lawmakers was simply to enable the Secretary of the Treasury “to carry the proposition of settlement into effect,” and that the act is wholly without purpose to alter, modify, or change a single term of the- compromise as "approved” by him. Congress designed, and did nothing more than to make good, the Secretary’s acceptance of the proposition. If the effect of the compromise of the “claims” be only to relieve the several persons in whom the act vests the titles to the several parcels of real estate, Beebe’s and ITensliaw's other property, if any, would still be bound, and could be pursued in the hands of their heirs, and that, too, in the teeth of the contract made by the act and the acceptance of the money, whereby the government settled and compromised its claims, and ended “the litigation resulting therefrom.”

The terms of the “proposition of settlement" leave no room to doubt what the “claims" of the United States were, which were to he settled and compromised, and as to which the “litigation resulting therefrom” was to be “ended.” These claims, to use the language of the statute, were the asserted right “to enforce the title of the United States to the real estate so purchased and to secure possession thereof, and an accounting for the rentals thereof, many of which suits are still pending.”There can he no doubt that the suit on the bond was a part of the compromised “litigation resulting” from the attempt to enforce these claims of the United States against Beebe and Henshaw. It was an effort to get “an accounting for the rentals” of a portion of the property which the government had acquired. The bond was given to secure a judgment for the “rentals” which the government recovered against Beebe, growing out of the “litigation resulting” from its efforts to collect the amount of the defalcations of Widmer, Dustan, and Davis, and it was exacted in a suit “involving” one of the parcels of property mentioned in the act. This suit was one of the suits, “many of which arc still pending,” at the time of the passage of the act, and formed part of the litigation which the government agreed to have “dismissed, settled and ended.” If Beebe had lived and been sued upon this bond, the government certainly could not contend after the acceptance of the offer of compromise and settlement upon the conditions on which it was made, and the payment of $25,000 thereunder, that Beebe was still liable to account for the rentals which this bond was given to secure. If judgment went against the sureties, Beebe’s estate would be liable over to them, and thus compelled to pay a liability from which the government has discharged him. Any defense which is available to this principal is available to the sureties. The United States cannot release the principal from liability and still charge the sureties upon the bond given to secure that discharged liability. It is therefore immaterial whether these sureties were “parties in interest” who made the payment to the government, or whether they arc named in the act among’ the persons to whom the government relinquishes its right and title.

Apart from these considerations, the seventh section of the act shows very clearly that it did not intend to confine the effect of the settlement to the individuals to whom the government released its title to the real estate, or to exclude all other persons who had become involved in the litigation from the operation and effect of the release of Beebe and Henshaw. Explicit directions as to what should be done to make the settlement effective as to the persons named in the act, concerning “the respective properties herein mentioned,” are given in the sixth section. If Congress had intended to dismiss suits only between the parties named in the enacting clauses of the act, the seventh section would have been unnecessary. The seventh section distinguishes between suits pending between the United States and the “parties herein named,” and suits “involving the property” described, and directs the solicitor of the treasury to have both classes of suits “dismissed, settled and ended.” It was careful to make the same distinction as to satisfaction of judgments of record. It directs not only the satisfactión of judgments in favor of the United States against the “parties herein named,” but goes further and directs satisfaction of judgments, though not against the “parties herein named,” if rendered in a suit “involving said property.” It also commands the solicitor of the treasury to take such further action as may be proper “to carry said proposition of settlement into effect.” One of the judgments remaining unsatisfied at the time of the passage of the act was a judgment the United States recovered against Beebe for the Dexter avenue property, 'and $500 damages for rent. That judgment was rendered against one of the parties to the suits “named herein,” and that suit was one “involving the property herein described.” Undoubtedly, Congress intended that satisfaction should be entered of that judgment “in order to carry said proposition of settlement into effect.” The bond in suit was given to secure the fruits of that judgment. The failure to pa)r this judgment is assigned as one of the breaches of the bond now in suit. It would be a singularly narrow and unjust construction of the terms of the compromise and settlement to hold that, although it required the solicitor of the treasury to enter satisfaction of that judgment, and to end and dismiss pending suits to enforce the claims of the government against Beebe, yet that, nevertheless, the United States could maintain suit against Beebe’s bondsmen, and compel them to pay the judgment for rents.

The law favors compromises and settlement of disputed property and pecuniary rights, as well where the government is a party as where the litigation is solely between private individuals. When propositions of compromise of such disputes are made to the government and accepted by it, the courts will apply the same rules for ascertaining their meaning" as govern in construing like contracts between man and man. An act conveying, as part of the terms of compromise and settlement, upon a valuable consideration, property the United States acquired in litigation with parties, falls neither within the letter nor the reason of the rule which requires grants of franchises or special privileges to be construed most strongly in favor of the grantor and most strictly against the grantee. The court is of opinion that the compromise and settlement made with the Secretary of the Treasury, which Congress ratified and directed to be carried into effect, satisfied, discharged, and released all claims of the United States “to enforce the title of the United States to the real estate so purchased, or to secure the possession thereof, or an accounting for the rentals thereof,” and ended the “litigation resulting therefrom,” and therefore operated a full discharge and release to these defendants from all liability upon the bond in suit. This conclusion renders it unnecessary to consider the defenses set up by Scott’s executrix against the revivor of the suit.

Judgment will therefore be rendered for the defendants.