United States v. Shannon/Opinion of the Court

by Tom C. Clark

United States Supreme Court

342 U.S. 288

United States  v.  Shannon

 Argued: Nov. 27, 1951. --- Decided: Jan 14, 1952

This case brought here on writ of certiorari ^[1] tests the validity under the Anti-Assignment Act, R.S. § 3477, ^[2] of an assignment of a claim against the United States for property damage. In an effort to escape the prohibition of that Act, respondents joined their assignors, Mrs. Kathleen Boshamer et al., ^[3] as well as the United States as parties defendant. The District Court, holding the assignment to be 'of full force and effect,' entered judgment for respondents against the United States alone. The Court of Appeals affirmed, 4 Cir., 186 F.2d 430.

The Boshamers owned, in addition to adjoining land which they leased to the United States, two one-acre tracts of land not under lease on which were located two houses and a barn. During January and February, 1945, these buildings were damaged by soldiers of the United States. On April 30, 1946, the Boshamers agreed to sell the entire tract-including both the leased and unleased portions-to respondents Samuel and W. L. Shannon, and in that instrument agreed that 'after completion of the sale and after delivery of the deed, the sellers hereby release to the purchasers any claim, reparation, or other cause of action against the United States Government for any damage caused the property * * *.' ^[4]

Respondents brought the present action under the Federal Tort Claims Act, 28 U.S.C. (Supp. IV) § 1346(b), 28 U.S.C.A. § 1346(b). ^[5] In their complaint respondents alleged that the Boshamers 'have a cause of action against the United States of America and since they have assigned this cause of action to (respondents) for a valuable consideration and since they must prosecute this action in their own names they are equitably liable to (respondents) for the amount of any judgment that they may recover against the United States of America,' and further alleged that the Boshamers had 'refus(ed) to aid (respondents) in recovering the damages to which (respondents) and entitled.' ^[6] The Boshamers filed an answer stating that they had made the assignment but 'are without knowledge or information as to any damages done * * * and * * * have been unwilling to institute or prosecute a damage suit against their Government for something they have no knowledge of.' ^[7] At the trial respondents admitted that all of the damage had occurred before the claim had been assigned to them, and that they had known of the damage at the time of the assignment. The District Court, however, held the Anti-Assignment Act inapplicable on the ground that the joinder of the assignors prevented any possible prejudice to the Government, since '(t)he rights of all of the possible claimants and of the United States will be finally adjudicated in this one suit.' ^[8]

The Court of Appeals affirmed, believing that the assignment had resulted from a 'mutual mistake as to the law' (186 F.2d at page 433), and holding that: 'Relief is granted, not merely because (respondents) are assignees, nor even because the vendors have been made parties to the suit, but because of the mistake that led to the making of the assignment, which was a part of the consideration for the purchase price paid by (respondents) for the land conveyed to them. The relief is given to the assignees, not as a matter of law, but as a matter of equity because of the mistake involved and the hardship which would otherwise result.' 4 Cir., 186 F.2d 430, 434.

We cannot agree. In our view the judgment is based entirely on the assignment, which falls clearly within the ban of the Anti-Assignment Act. We have recently had occasion to review the Act's purposes. In United States v. Aetna Surety Co., 1949, 338 U.S. 366, 373, 70 S.Ct. 207, 211, 94 L.Ed. 171, we stated that '(i)ts primary purpose was undoubtedly to prevent persons of influence from buying up claims against the United States, which might then be improperly urged upon officers of the Government,' and that a second purpose was 'to prevent possible multiple payment of claims, to make unnecessary the investigation of alleged assignments, and to enable the Government to deal only with the original claimant.' Other courts have found yet another purpose of the statute, namely, to save to the United States 'defenses which it has to claims by an assignor by way of set-off, counter claim, etc., which might not be applicable to an assignee.' ^[9]

In the Aetna case, supra, this Court reaffirmed the principle that the statute does not apply to assignments by operation of law, as distinguished from voluntary assignments. There can be no doubt that in the present case the assignment was voluntary. The Boshamers were free to sell their land as well as their damage claim to whomever they pleased, or, had they chosen, they could have sold the land and the claim separately. The voluntary nature of the assignment is reflected in the fact that one of the respondents testified on cross-examination that he understood that he was 'buying a claim against the Government.' ^[10]

That an assignment is voluntary is not an end to the matter, however. In the ninety-nine-year history of the Anti-Assignment Act, this Court has recognized as exceptions to the broad sweep of the statute two types of voluntary assignments (aside from voluntary assignments made after a claim has been allowed): transfers by will, Erwin v. United States, 1878, 97 U.S. 392, 397, 24 L.Ed. 1065, and general assignments for the benefit of creditors, Goodman v. Niblack, 1881, 102 U.S. 556, 560-561, 26 L.Ed. 229. The first of these exceptions is justified by analogy to transfers by intestacy, which are exempt from the statute as being transfers by operation of law. It would be unwise to make a distinction for purposes of the Act between transfers which serve so much the same purposes as transfers by will and by intestacy. In similar fashion, the exception for voluntary assignments for the benefit of creditors has been justified by analogy to assignments in bankruptcy. See Goodman v. Niblack, supra. We find no such compelling analogies in the case at bar. On the contrary, this case presents a situation productive of the very evils which Congress intended to prevent. For example, the assignors knew of no damage and refused to bring suit, yet by their assignment the Government is forced to defend this suit through the courts and deal with persons who were strangers to the damage and are seeking to enforce a claim which their assignors have forsworn. One of Congress' basic purposes in passing the Act was 'that the government might not be harassed by multiplying the number of persons with whom it had to deal.' Hobbs v. McLean, 1886, 117 U.S. 567, 576, 6 S.Ct. 870, 874, 29 L.Ed. 940. See also United States v. Aetna Surety Co., supra.

Nor are we persuaded by the special considerations which the Court of Appeals thought were controlling here. To hold the Anti-Assignment Act inapplicable because an assignment has been executed under a 'mutual mistake of law' would require an inquiry into the state of mind of all parties to a challenged assignment, and would reward those who are ignorant of a statute which has been on the books for nearly a century. The all-inclusive language of the Act permits no such easy escape from its prohibition. In like manner, to hold the Act inapplicable because all possible claimants are before the court would be to draw a distinction on the basis of a purely fortuitous factor-whether an assignee, in his suit against the Government, can get personal service on his assignor. Even more important, this theory that an assignee can avoid the Act by joining his assignor as a party defendant or an unwilling party plaintiff, would not only subvert the purposes of the Act but flood the courts with litigation by permitting them to recognize assigned claims which the accounting officers of the Government would be obligated to reject. Since only a court can give the binding adjudication of the rights of all parties to the transaction-United States, assignor, and assignee-which it is claimed prevents any possible prejudice to the Government, the courts would be applying a laxer rule under the statute than would the accounting officers. Such was not the intention of Congress. See United States v. Gillis, 1877, 95 U.S. 407, 24 L.Ed. 503. We do not believe the Act can be by-passed by the use of any such procedural contrivance.

The Court of Appeals also felt that respondents' claim should be upheld because 'hardship' would otherwise result. If it were necessary only to balance equities in order to decide whether the Anti-Assignment Act applies-a view which this Court has many times repudiated-respondents would have little weight on their side of the scales. They paid the Boshamers $30 per acre for the land and buildings plus the claim; yet they admitted at the trial that land adjoining the Boshamer farm was worth $100 an acre or more, and that the Boshamer farm was one of the best in the county. Furthermore, we find here no 'unconscionable' conduct on the part of the government agents. They had no part in the making of the assignment upon which respondents rely, and in fact the first dealing between respondents and the Government agents occurred a least six weeks after that assignment had been executed.

The judgment is reversed.

Reversed.

Mr. Justice BLACK and Mr. Justice JACKSON dissent.

Mr. Justice DOUGLAS, dissenting.

Notes

1. 342 U.S. 808, 72 S.Ct. 27, 96 L.Ed. --.
2. 10 Stat. 170, as amended, 31 U.S.C. § 203, 31 U.S.C.A. § 203: 'All transfers and assignments made of any claim upon the United States, or of any part or share thereof, or interest therein, whether absolute or conditional, and whatever may be the consideration therefor, and all powers of attorney, orders, or other authorities for receiving payment of any such claim, or of any part or share, thereof, shall be absolutely null and void, unless they are freely made and executed in the presence of at least two attesting witnesses, after the allowance of such a claim, the ascertainment of the amount due, and the issuing of a warrant for the payment thereof. * * *'
3. Hereafter referred to as 'the Boshamers.'
4. R. 33.
5. Originally there were two cases, one under the Tucker Act, 28 U.S.C. (Supp. IV) § 1346(a)(2), 28 U.S.C.A. § 1346(a)(2), for damages to property under lease to the United States, and the second under the Tort Claims Act for damages to buildings on property not under lease. The District Court awarded respondents judgment for $2,050 in the first action and $975 in the second, and both judgments were affirmed by the Court of Appeals. The Tort Claims action alone is involved here.
6. R. 20.
7. R. 23.
8. R. 18.
9. Grace v. United States, D.C.1948, 76 F.Supp. 174, 175.
10. R. 13.