U.S. Supreme Court
McKee v. Lamon, 159 U.S. 317 (1895)
McKee v. Lamon
Argued and submitted March 13-14, 1895
Decided October 21, 1895
159 U.S. 317.
Where money is placed in the hands of one person to be delivered to another, a trust arises in favor of the latter, which may be enforced by bill in equity, if not by action at law.
The acceptance of money with notice of its ultimate destination is sufficient to create a duty on the part of the bailee to devote it to the purpose intended by the bailor.
In enforcing such a trust, a court of equity may make such incidental orders as may be necessary for the proper distribution of the fund.
On the facts set forth in the headnote to Gilfillan v. McKee, just decided, it is in this suit further held,
(1) That when the Choctaws transferred the work from Black & Lamon to McKee, there was no intention on the part of anybody to ignore what had already been done.
(2) That Lamon, as representing the surviving partners of Black Lamon & Company, was entitled to recover the reasonable value of their services from the date of the assignment by McPherson to the date of the McKee contract.
These cases were argued in connection with Gifillan McKee and McPherson v. McKee, ante, 159 U. S. 303. This was the original bill therein referred to filed against McKee by Lamon and Flack, surviving partners, and was based upon the assignment of the original Cochrane contract for a compensation of thirty percent to Jeremiah S. Black and the substitution of Black in the place of Cochrane, as the attorney, counsel, and agent of the Choctaw Nation for the prosecution of their claim. This contract was entered into between McPherson, as the executor of Cochrane, and Jeremiah S. Black on the 8th of November, 1866, and was assented to by the delegates of the Choctaw Nation, whereby the right of Cochrane to receive the thirty percent became vested in Black. This assignment seems really to have been made for the benefit of Lamon, who raised and paid $25,000 of the $75,000, which it chanroblesvirtualawlibrary
was contemplated should be paid to Cochrane, in the verbal arrangements carried on between Lamon and Cochrane before his death. The bill, after setting forth the facts stated in the interpleader case, averred that on the dissolution of the firm of Black Lamon & Co., in 1872, Lamon succeeded to the interest of Black in the remainder of the thirty percent, after certain prior claims thereon should be paid.
The only averment of the performance of the Cochrane and Black contracts by the firm of Black Lamon & Co., or either member of such firm, was that
"they undertook the prosecution of said claim, and urged the same with great persistence before the committees of Congress, and did all in their power to bring about such legislation as the situation demanded, and they so continued so long as the firm of Black Lamon & Co. existed; that after some years, said Jeremiah S. Black, by reason of his failing strength and advanced life, was compelled to abandon the active work of his profession, and the said copartnership was for that reason dissolved, and the duty of prosecuting said claim devolved solely upon said Lamon."
The bill was subsequently amended in this particular by averring
"that said services were rendered and said advances were made with the full knowledge and consent, and at the special instance and request of the Choctaw Nation, with the agreement and understanding that the said plaintiffs were to receive, as compensation for said services, such sum as the same were reasonably worth, to be paid out of the money claimed as aforesaid, when paid by the United States, and that said agreement and understanding was independent of the said Cochrane contract and of the rights claimed by the plaintiffs under and by virtue of the said Cochrane contract."
A subsequent paragraph set up a lien upon the judgment rendered in favor of the Choctaws, and upon the amount due from the United States, and upon the thirty percent fund set apart by the Choctaw Nation for payment for services.
The amended bill further averred that, while the question of the payment of the claim was pending before Congress, McKee procured the passage of two acts of the Council of the Choctaw Nation, which acts were passed, as requested by chanroblesvirtualawlibrary
McKee, with the express understanding and agreement between McKee and the Choctaw Nation that he would
"pay to these complainants and others such sum or sums of money as they were justly entitled to receive for the services rendered and money expended by them in the prosecution of said claim, and with the further agreement that when said McKee should receive"
the money set apart by said acts, as aforesaid,
"that he, the said McKee, would hold the same in his possession in trust for the benefit of such persons, including these complainants, as might be entitled to some part thereof."
The prayer was that McKee be enjoined from collecting the thirty percent set apart for the payment of expenses; that a receiver be appointed to collect the same from the Treasury, and pay it out to the plaintiffs and such other persons as had a just and equitable claim thereto.
Upon filing this bill, an order was entered enjoining the defendant from receiving this money from the Treasury. McKee, however, disregarded this order -- no bond having been given as required by the rule of the court -- and drew from the Treasury $783,768.82, which was twenty-five percent of the whole judgment, five percent of the thirty percent having been paid to one Luce, who had taken Blunt's place in the contract. A rule was issued against McKee to show cause why he should not be punished for contempt in violating the restraining order of the court, but, it appearing that no bond had been filed, the motion was overruled and McKee was discharged. On the discharge of the rule, plaintiffs filed a petition based on the bill, answer, and affidavits and prayed for the appointment of a receiver. After full argument, the court ordered that McKee should pay into court the sum of $136,500, to be held subject to the order of the court. McKee refused to obey this order and absconded from the jurisdiction of the court. An appeal, however, was taken from the order, and the same was vacated and rescinded on December 3, 1889.
Subsequently, upon a hearing upon pleadings and proofs, a decree was rendered in favor of Ward H. Lamon against McKee as compensation for his services rendered and of his chanroblesvirtualawlibrary
disbursements and expenditures, for $35,000, with interest thereon at the rate of six percent, and so much of the bill as related to claim of Lamon and Black or either of them, as assignees of the so-called Cochrane contract, and as surviving partners of Black and Lamon, or Black Lamon & Co., was dismissed.
From this decree the plaintiffs Ward H. Lamon and Chauncy F. Black appealed to this Court.