October 15, 1880, the president of the paving commission transmitted to the Secretary of the Treasury the final voucher of that date, being an account stated against the United States in favor of the corporation, showing a balance due the latter of $20,191.50. After the injunction in the District, the commission gave a duplicate voucher to the receivers.

The resolution of the trustees or directors of the corporation, of December 30, 1876, (ante, 264,) is as follows:

"Resolved, That the President be, and he is hereby, authorized to as sign the equity of the company in the ten per cent. retained by the Government of the United States, after completion of Washington contract, to secure the loan of $25,000 made to the company this day by Libby, Bartlett & Kimball."

The assignment thus authorized was made by the president of the corporation; it is attested by only one witness, is without the corporate seal, and is not acknowledged before any officer. The assignment of May 11, 1877, is signed by the president of the company under the corporate seal, without any witness, and is not acknowledged before any officer. The instrument of substitution of July 14, 1877, is signed by Libby, Bartlett & Kimball severally, without any witness or acknowledgment before an officer. The power of attorney, &c., of June 19, 1877, is signed by the president of the corporation, without the corporate seal; it is attested by H. H. Porter, secretary, and William H. Libby, (of Libby, Bartlett & Kimball,) and is not acknowledged before any officer.

The question, What disposition should be made of the bonds? was elaborately argued orally and in writing before the First Comptroller by Hon. Samuel Shellabarger and Hon. Jeremiah M. Wilson, for Safford & Co., and by John W. Ross and Mills Dean, who also submitted a printed brief, for Baldwin and Wright.

Shellabarger and Wilson presented points and authorities as follow:

I. The proceedings in the court of this District, so far as they relate to non-resident defendants not served with process, in no way bind or affect them. This applies to and includes Libby, Bartlett & Kimball and James O. Safford & Co.

1. Under the Constitution and judiciary act of 1789, no person could be sued, in cases like this, except he could be served in the District. (Conkling's Practice, 157 and 158, and cases cited.)

2. The act of 1839, Feb. 28, (5 Stats., 321, sec. 1,) so far changed this as that one defendant being found in the district, a suit at law or in equity may proceed against the party or parties "found," but "the judgment or decree rendered therein shall not conclude or prejudice the other party not regularly served with process."

3. Section 8 of act of 3d March, 1875, (18 Stats., 472,) is the legislation now in force; and this act only suffers a non-resident to be affected

or bound by a decree when the proceeding is one "to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien or cloud upon the title to real or personal property within the district where the suit is brought."

"Claim to," &c., in this act means a specific interest or property in the thing, existing before the action, and which the action is authorized to enforce.

4. Hence the injunction, &c., in this court has no manner of force as against Libby, Bartlett & Kimball, or against James O. Safford & Co. II. But even if Safford & Co. and Libby, Bartlett & Kimball were in court, yet no action of the court can affect their right, as between the executive of the United States and themselves.

1. The pavement act (19 Stats., 92) expressly makes the 10 per cent. a "retained fund" in the hands of the United States, a mere "additional security" for a designated thing, and compels the investment thereof in United States bonds and requires their "interest" to be paid to the "contractor." The effect of this is to make the legal relation of the United States to these bonds that of a holder of specific chattels (bonds) belonging to a citizen, as collateral security. That is, the United States is a trustee merely; and, after performance of the act secured by the collateral, the obligation of the United States to deliver the collateral to the owner (contractor or his agent) is made a "perfect" or absolute statutory obligation of the executive.

2. This being so, it brings the case precisely within the decision of the Attorney-General of 11th July, 1879, and of the exactly equivalent decision of the First Comptroller in Hall's Tennessee case, page 15, Decisions of First Comptroller Lawrence.*

3. It being expressly admitted by Baldwin & Wright, by the fact that they have failed to sue either the United States or any officer thereof, that the United States cannot be enjoined or restrained as to the delivery of these bonds, it inevitably results from this that so neither can the correlative act of the citizen in receiving them from the United States be at all interfered with by the courts.

(a.) If the citizen may be forever prohibited from taking from the United States the bonds, then the correlative act of the executive of delivering them to him is, literally and forever, rendered a legal impossibility, and the execution of the laws is rendered impossible.

(b.) If it can be done in this case by the courts, then it can be done in every case. This is an extreme case. It is thus extreme because (1) there is no possible doubt or danger as to the Government being safe in delivering them to the contractor's attorney, since a receipt is tendered by the contractor, by the first assignee and donee of the borrower, and by the substituted donee, (Jas. O. Safford & Co.) (2.) It is not even hinted that Baldwin & Wright will not have a perfect remedy against Safford & Co., as perfectly responsible parties, if it should turn out that Baldwin & Co. have the best right in law to these bonds. (3.) The statute makes it the plain duty of the executive to deliver the bonds to the contractor or his duly appointed agent.

Hence if, in this case, you must wait until the courts tell the United States whom it shall deliver these bonds to, then no case can be conceived wherein the Government can be suffered to go on with the execution of the laws, should the courts undertake to take charge of such execution.

*Draft case, ante, 11-24.

III. The authorities thoroughly establish that wherever money or property is due from a Government to a citizen, there the court cannot, by garnishment, attachment, or injunction, prevent the citizen from receiving or the Government from delivering the thing so owing. And these authorities show the absurdity of the position that though the Government cannot be enjoined from paying, yet the citizen can be enjoined from receiving.

IV. So, too, the authorities are direct and conclusive that neither the State nor the Federal courts can enjoin the citizen from transacting, with his Government, any business which the laws, as administrable by the executive, authorize or require him to transact, whether the transaction be the receipt of his dues under a contract or any other thing. 1. The cases bearing on this in its general aspects are as follows: 11 How., 272; 17 How., 284; Ib., 225; 4 Wall., 522; 5 Wall., 563; 7 Wall., 352; 9 Wall., 298–312.

2. The authorities on this exact proposition are: 1 Op., 681; Ib., 684; 6 Op., 226; 11 Op., 118; 4 How., 20; 2 Cr. Cir. Ct. R., 544; 3 Pet., 292; and the opinion of Attorney-General of July 11, 1879, and of First Comptroller above cited.

V. That this corporation is not extinct is shown by the fact that Baldwin & Wright sue it as alive, and by the fact that it cannot be collaterally attacked as defunct, and can only be dissolved by the judgment of a court. (Angell & Ames on Corp., 10 ed., sec. 777, and note; 4 Otto, 308; 24 How., 283.)

VI. The New York statute does not prohibit an officer of an insolvent corporation, or one owing for more than one year matured debts, from making to it a loan, and taking by assignment collateral security. The act only applies to assignments to "pay debts." But this is not material, because the assignees were, in this case, not stockholders or officers, when the resolution of board, authorizing the assignment to secure the $25,000 loan, was passed, nor when the loan was agreed to be made.

Ross & Dean, for Baldwin & Wright:

FIRST. This final voucher represents an amount due the paving corporation for work done under the contract. No rights vested in the company by the statute. Its claim inured wholly by virtue of the contract, which required certain work to be done by June 1, 1877, and certain other work after May 19, 1880. To secure the faithful execution of the deferred work in 1880, the contract stated that at date of acceptance the contractor would be entitled to nine-tenths of the contract price, and that the other tenth shall be "retained," as provided in the act of Congress, &c. Neither the law nor the contract fixed any date at which the one-tenth should become payable.

When the pavement was accepted, May 19, 1877, the company had no vested right to the one-tenth. Its rights were contingent: 1. Upon the work lasting three years. 2. Upon its repairing defective places during the three years. 3. Upon its restoring the surface to the original thickness after the three years had expired.

Until that stipulated thickness of surface should be restored, the contract would still be open and unperformed, and, until the whole pavement should be approved and accepted after the expiration of three years, no right accrued even to the company to make a demand for payment. Its rights would not become the subject of transfer until

the work should be performed and a Treasury draft should issue upon the amount finally certified by the commission. (U. S. vs. Gillis, 95 U. S. Rep., 412; Spofford vs. Kirk, 97 Id., 488.)

SECOND. The papers relied on as passing title from the company to Libby, Bartlett & Kimball, bear date December 30, 1876; May 11, 1877; and June 19, 1877, respectively. If, on any of these dates, the company's claim had been allowed, its amount ascertained, and a warrant had issued for the payment thereof, none of said papers could be operative under section 3477 of the Revised Statutes.

That of December 30 names no definite amount, has only one witness, and was not acknowledged before any officer. Corporate seals are required to all instruments which are sealed instruments, when executed by individuals or natural persons. (Field on Corporations, sec. 284.)

An assignment is a specialty, and must be under seal. There is no seal of the corporation attached in this instance.

The paper dated May 11, 1877, was not witnessed by even one witness, and was not acknowledged before any officer.

The paper dated June 19, 1877, completes the list of attempted transfers from the company to Libby, Bartlett & Kimball. It purports to be a power of attorney. The only witness is Libby, one of the grantees of the power, who was clearly incapacitated to prove a paper to which he was a party. And it was not acknowledged before any officer.

No document having been executed to Libby, Bartlett & Kimball, which, under the law and rules of the Treasury, could pass title to them, of course they could not confer title on any one else. And if they had title, their power of attorney of date July 14, 1877, to Safford & Co., was inoperative, not having been acknowledged before any officer, and not being witnessed by even one person.

The resolution and receipt of August 12, 1880, could not, under the law, pass title to the proceeds of this voucher. The claim had not been allowed, nor its amount ascertained. The amount named in the "receipt" does not correspond with the voucher. No warrant had issued. The title, being in the company, could not pass, except in the mode prescribed by law. Connected with the action of August 12, was neither attestation nor acknowledgment.

THIRD. The Grahamite Company existed only by virtue of the general incorporation laws of the State of New York. The statute of that State (vol. 2, Rev. Stats. N. Y., p. 399) renders null and void all transfers and assignments made in contemplation of the insolvency of the company to any person whatsoever. A suit on its notes for $10,000 has been and is still pending against the company in this District since October 16, 1876. Another suit for over $38,000 was begun against it here April 27, 1877: Having received warrants from the commission for over $112,000 up to December 30, 1876, owing Baldwin & Wright then over $19,000, without the ability to pay, how could it have been other than insolvent if it could not proceed without borrowing $25,000 from two of its directors, and could furnish no other collateral than what it hoped to earn three years thereafter? Both suits were pending at the date of each successive attempted transfer of 1877, and in addition it owed Baldwin & Wright over $30,000 when the transfers of May 11 and June 19 were made. If reliance be placed on the action taken August 12, 1880, as the transfer, the record shows that at that date an execution for more than $22,000 had been returned unsatisfied;

the $10,000 Wood & Co. suit was pending; a sworn bill in equity, alleging insolvency, had been filed, and receivers had been appointed by a court having jurisdiction.

FOURTH. The same section of the New York Revised Statutes, vol. 2, page 399, renders null and void any transfer of corporate property or choses in action to any director or stockholder, directly or indirectly, for the payment of any debt, after the company shall have refused the payment of any of its notes or other evidences of debt. The proofs of such refusal are referred to under the preceding division, and show that the company could not make such transfer at any time from October 16, 1876, to the present time.

The only questions are, Were Libby & Bartlett stockholders or directors, and was the fund attempted to be assigned to them in payment of any debt? They became stockholders prior to December 30, 1876, else they would not have been eligible to be elected directors December 30, 1876, as shown by the record. That Libby continued to act is shown by his resignation, on file, of date December 26, 1878. Bartlett's letter to Hon. A. G. Porter, January 30, 1879, describes him as director. The affidavits of Davies and De Smedt show the same facts as to 1876-'77 and 1879. The records of the meeting of August 12, 1880, certify that both were then members of the board, but at that meeting only three directors were present. If the object or result of that meeting was to finally consummate an invalid transfer of the assets of a corporation then certainly insolvent, what was the situation? The man Libby was one of the requisite three who were trying to transfer the only chose in action the company had in payment of the company's debt towhom? Not Safford & Co., for the Grahamite Company never contracted with or borrowed from them. The resolution of the board, on file, states the assignment to have been made "to secure the loan of $25,000 made to the company this day by Libby, Bartlett & Kimball." The company knew no other creditors, as shown by its records, both of that date and of August 12, 1880. Libby, director, makes the quorum to transfer to Libby, creditor, to Bartlett, director and creditor, and Kimball.

"A director cannot have any personal interest in a contract between his company and a third person." (36 Ind., 60; 4 How., 503; 30 Barb., 553; 16 Md., 456; 60 Ill., 138; Field on Corporations, sec. 397, and page 429.)

FIFTH. On and prior to August 12, 1880, an order of the supreme court of this District was in force enjoining the company, Libby, Bartlett & Kimball, and Safford & Co., their agents, attorneys, and assignees, from collecting or receiving the proceeds of this final voucher; and receivers had qualified, under an order of the court, at the suit of the unpaid sub-contractors, to hold said proceeds subject to the order of the court. The company was in court by service on its president, and by appearance of counsel, and certified copies of the order served on Libby, Bartlett & Kimball, and Safford & Co.

By an order of the Supreme Judicial Court of Massachusetts, dated September 25, 1880, Safford & Co. were enjoined from collecting by themselves or attorney, and from assigning.

State courts may rightfully prohibit citizens within their jurisdiction from prosecuting claims to property outside the limits of the State. (High on Injunctions, sec. 60, and note 1 to sec. 57; Massie vs. Watts, 6 Cranch, 148, and cases there cited; Dehon vs. Foster, 4 Allen, 545; Great Falls vs. Wooster, 23 N. H., 470.)