MILLER and SWAYNE, JJ., dissented in this case. THIS was a bill in equity, filed in the Circuit Court for the District of Columbia, by S. Spain, guardian of Mrs. McRae, a lunatic, against the administrator of the late James Hamilton, of South Carolina and Texas, extensively known as 'General James Hamilton,' and against Corcoran and Riggs, Hill, and others; the said bill claiming priority in the distribution of a fund in the Treasury of the United States, originally belonging to Hamilton, and arising by the assumption of the United States, in September, 1850, of certain debts of the Republic of Texas, which fund, or the source of it rather, Hamilton, having become embarrassed and insolvent, had assigned in divers ways and to various extents to different persons, parties plaintiff and defendant in this suit.
The opinion of the court was delivered by: The case in its outlines as proved, or by agreements made in the case admitted, was essentially this: the leading facts being derived from the stating part of the opinion of the learned Justice (wayne, J.) who delivered the judgment of the court.
The Republic of Texas, prior to its annexation to the United States, had issued a large number of bonds, which were due, unpaid, and the subject of speculation and purchase in different parts of the Union. Hamilton, who held a considerable amount of the bonds, had become familiar with the affairs of Texas, and especially with all that related to its debts, and was anticipating that if that republic was annexed to the United States, those debts would all be paid. He became, accordingly, an active and energetic advocate of annexation. The trustees of the Bank of the United States also owned a large amount of the bonds. But these had been pledged, in a greatly depreciated state, to a certain Wetmore, one of the defendants, as security for a loan which he had made to the bank. If, however, the bonds should be paid, enough would be obtained to pay the debt due by the bank to Wetmore, and leave a large surplus remaining. And Hamilton, being already the agent of some of the bondholders, and desirous to have the agency for others, applied to the trustees of the bank to represent them. On the 16th of October, 1845, the trustees accordingly wrote Hamilton a letter, in which, adverting to his knowledge of the fact that they had 'now only a contingent, resulting interest in the bonds, dependent upon the payment by us of the amount for which they are now held by Mr. Wetmore in pledge,' they say as follows:
'If you will devote your best efforts to securing the recognition and payment of said claims, and your effort shall be successful, then we agree to allow you a commission of 10 per cent. on whatever sum or amount of our claim, through your instrumentality, shall be recognized and paid over to us, over and above the amount for which the said bonds are pledged. The limitation of time during which this agreement on our part can with certainty be continued is only to the 20th of March next ensuing; but we are willing, with the concurrence of Mr. Wetmore, or in case we should then or sooner obtain the entire control of those bonds and securities now in his hands, to extend the said time to two years from this date.'
The 20th of March, the first limitation, passed without the recognition by Texas of its bonds, and without the payment of the debt due by the bank to Wetmore. Of course Wetmore's legal right to retain the Texas bonds was continued, and Hamilton was left without any claim upon the bank for commission or compensation under the agreement.
On the 16th September, 1850, however, the trustees wrote to Wetmore a letter, reciting that Hamilton had rendered his services, as he had agreed, 'so far as in his power, without however realizing the money;' and then referring to an act of Congress recently passed for the payment, in part, of the Texas bonds, among which the trustees had been 'informed by General Hamilton, are the bonds held by them,' the letter goes on as follows:
'The trustees, at the particular request of General Hamilton, have instructed me to say to you, if they should not have previously redeemed the bonds, that upon the final adjustment and payment of the said bonds first above mentioned, either by the Treasury of the United States, in the manner provided for in said act of Congress on otherwise, to the satisfaction of the said trustees, pursuant to their said agreement with General Hamilton, you will be pleased to hold, subject to the order of General James Hamilton, one-tenth of any sum over and above the amount of your claim against the said bonds.'
This claim of Wetmore, originally 50,000 sterling, had, at the date of this letter, been reduced by payments from the bank to $55,493.24, with interest from December 9th, 1842.
Upon the bottom of this letter of 16th September, 1850, Wetmore, on presentation of the same to him, wrote as follows:
'In conformity with the above order, I will, when received by me, pay over to James Hamilton, or to his order, the tenth of the money or stock that may be received either at Austin, Texas, or at Washington, D. C., on the above certificates, subject, however, to the conditions of the above order, and to a lien I hold by assignment for $2500, which sum I loaned General Hamilton in August last, with interest.
Between the dates of the letters to Hamilton and that to Wetmore–that is to say, on the 12th February, 1850,–Hamilton, who, as former trustee of Mrs. McRae already mentioned, had become indebted to her estate, and was now under arrest for the debt, executed a paper to her succeeding trustee or committee, Spain, the complainant, which purported to secure this debt. It 'transferred, assigned and made over' to Spain, committee, &c.,
'All my right and claim for any commission or compensation for services rendered or to be rendered by me to any and every other person and body corporate in the prosecution of any claim or claims for any and every such person and body corporate on the government of Texas, subject to any previous assignment thereof.'
As illustrating the special temper and character of Hamilton, referred to by the court and indicated in the record, it may be mentioned that his debt to Mrs. McRae had arisen from a misappropriation of the funds of her estate in his hands as trustee. 'Consulting,' as his answer said, 'the suggestions rather of a sanguine temperament than the admonitions of experience,' he had invested about $50,000 of her property 'in one of the finest and most promising sugar estates in Texas, supposed to be an investment surpassed by none in the United States;' which, in the end, however, the answer proceeded to state, 'yielded more sap than sugar,' and being sold on first incumbrances, did not bring enough to pay them.
When Hamilton proposed to give the transfer, he made no mention of any Texas bondholders whom he represented, nor did he state that the bonds of the bank were held in pledge by Wetmore; nor did Spain–or rather the person who was acting for him (the arrangement having been made by a third party in his behalf),–make the least inquiry, so far as appeared, from Hamilton, as to any of these things, nor was notice ever given to the bank about it. It did not appear that Spain knew anything about it until long after.
This was the claim for which priority on the fund was asserted by the bill filed. The opposing claims were as follows:
1. A claim of Wetmore, himself, to the extent of $2500, for money which, by an agreed statement in the case, it was conceded that he had lent to Hamilton on the 30th August, 1850, being the debt referred to in the paper mentioned ante, p. 607, signed by him at the bottom of the letter from the trustees to him of 16th September, 1850, and for which, as he there states, he had taken an assignment at the time.
2. A claim of Corcoran & Riggs, of Washington. Hamilton needing money in that city had applied to these persons, bankers there, for $25,000. They advanced the sum to him on the 21st September, 1850, taking an order from him on Wetmore for $30,000, 'to be paid out of the first moneys received after your claims shall have been satisfied;' which order Corcoran & Riggs immediately transmitted to Wetmore, who, on the 24th of the same month, 'accepted' it.
3. A claim by the estate of one Hill, made partly under an original claim, and partly by subrogation to the rights of James Robb & Co. As far back as 1848, Hamilton, reciting that the trustees of the Bank of the United States had agreed to pay him a commission of 10 per cent. on somewhere about a million of dollars, &c., assigned one-half of 'all his interest and property in the commission,' in trust for Hill, a creditor and friend. In regard to this, it did not appear that notice had been given to any one, and the history of the whole transaction, Hill being dead, was not very clear. The claim, so far as it arose from substitution to a claim of James Robb & Co., was plainer, and thus: Hamilton owing Robb a large sum, made, on the 30th April, 1851, a transfer of the 'order' of 16th September, 1850, by the trustees of the bank on Wetmore, and by him accepted; the order being subject, as was stated in the transfer, to the claim of Wetmore, himself, for $2500, and to that of Corcoran & Riggs for $30,000. Robb wrote immediately to Wetmore, saying to him:
'We have taken an assignment from General James Hamilton of his residuary interest in an order, &c., of the Bank of the United States, addressed to you, dated September 16th, 1850. Be pleased to make a note of this assignment, a notarial copy of which we will send to you, and hold the claim subject to our order, or that of W. Hoge & Co.'This letter and the notarial copy were received by Wetmore, who at once acknowledged their receipt to W. Hoge & Co. The history of the substitution of Hill is told by the following letter, which was duly received and preserved by Wetmore.
NEW ORLEANS, 28th May, 1853.
MY DEAR SIR: Having confided in Gen'l Hamilton's promises until our patience became exhausted with their continued violation, we commenced suit, and obtained judgment and seizure against sundry securities pledged, including the residuary interest on the Texas claim you hold, after the payment of the advances made by yourself and Mr. Corcoran. Mr. H. R. W. Hill, of this city, who is a large creditor of General Hamilton, in order to secure the margin of securities covered by our judgment and seizure, has arranged to ...