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Argument for the United States.
Where a trustee or bailee exchanges with himself the trust fund for other property or money of his own, the trust will attach to property taken in exchange, precisely as if the exehange had been made with a third person. Van Allen v. Amer. Nat. Bk., 52 N. Y. 15; Nat. Bk. v. Ins. Co., 104 U. S. 70.
The beneficiary has a right to elect to take a money judgment for such part of the assets which the person taking with notice may have dissipated, or to reject an improper investment and take a money judgment for the conversion, and to recover the profits of the trust fund. 17 A. & E. Enc. Law, 475; Oliver v. Piatt, 3 How. 333; May v. Claire, 11 Wall. 236.
Neither the contractors, nor Carter or Westcott kept any regular books showing the division of the profits of the contracts, such as would be kept in the conduct of a legitimate business, in which millions were divided between the parties interested. The proof of the facts has been supplied by the Government through their accounts with banks and brokers and other documentary evidence. When therefore the system of the division of the profits between Carter, Greene and Gaynor month by month for a series of years is established, every doubt and difficulty bearing on the question as to whether any particular piece of property in Carter's possession constitutes an investment of the profits of the contracts, should be resolved against him. Rubber Company v. Goodyear, 9 Wall.. 788-803.
After the Government closed the taking of evidence in its behalf, Carter undertook by his own testimony to set up a claim as to the origin of his alleged title to a large part of the securities in controversy wholly different from the claim he had set up in his sworn answer filed Feb. 1, 1902. It is impossible if his last position be true, that he did not know the facts when he filed his answer. He will not be allowed to change his position under such circumstances. Henderson v. Louisville & Nashville R. R., 123 U. S. 64; The Santissima
Argument for the United States.
Trinidad, 7 Wheat, 339. Much less can such a right of Carter to the securities be sustained under a variance of the proof, where that offered is totally inconsistent with his answer not amended. Garland v. Davis, 4 How. 131, 148; Boone v. Chiles, 10 Pet. 178, 179.
If a party attempis to impose upon this court by knowingly or fraudulently claiming as his own, property belonging in part to others, he shall not be entitled to restitution of that portion which he may ultimately establish as his own. The Dos-llermanos, 5 Wheat. 76, 96.
On the direct appeal of the United States from allowance of fees to defendants, counsel, etc, the government contends, besides the errors assigned as to the exorbitant character of the allowances to defendants' counsel, that defendants did not perform the stipulation under which it is claimed the allowances were made.
The Government had already tied up in the hands of receivers on auxiliary bills in other districts some $288,346.92 of the assets in controversy, and rules for contempt of court were pending in the present suit in the Northern District of Illinois against I. Stanton Carter, the brother, and Lorenzo D. Carter, the uncle of Oberlin M. Carter, for failure to turn over the assets described in the bill when the stipulation of Nov. 6, 1901,was entered into.
By paragraph “2” of that stipulation the brother and uncle were required forthwith, to turn over to the receiver all the assets claimed by complainant in its bill as being a part of the trust funds, which were or might be in the possession, power, custody or control of the said defendants. By paragraph "4" the brother and uncle were required to file forthwith or simultaneously with the delivery of the assets to the receiver, answers disclaiming all personal interest in the assets in controversy. By paragraph “9” the allowance of attorneys' fees to defendants' counsel out of the fund to be turned over was made conditional upon the delivery of substantially all the assets referred to in paragraph "2.” The
delivery to the receiver referred to in paragraph “9” was not simply the delivery in paragraph “2” but the delivery accompanied by the disclaimer of all personal interest in all the assets claimed and described in the bill, which by paragraph “4” the defendants were to forthwith file. The consideration to the Government was to get the assets at once into the hands of a receiver, and to relieve itself from the trouble, difficulties and expense of forcing the assets out of the hands of the brother and uncle, and to eliminate from the case any claims they might individually set up. The brother and uncle did not forthwith deliver $23,000, Kentucky Central bonds claimed and described in the bill, but in their answers did admit their possession and retention, and did set up personal claims or liens thereon for alleged salaries due them by Carter. The Government was therefore forced to conduct a long litigation before the master and the courts, until it overcame these personal claims set up by the brother and uncle and forced the delivery of the bonds, and finally obtained deficiency judgments against the brother and uncle for assets not even yet turned over. It is contended therefore that the defendants' counsel were not entitled to the allowances by reason of the failure of the Carters to perform that part of the stipulation upon which the right to the allowances were predicated.
Mr. J. B. Foraker, with whom Mr. John B. Daish was on the brief, for appellants in No. 552; appellees in No. 551:
The United States is not entitled to a deficiency decree for any amount under the pleadings and the record in the ase.
The theory of the complainant's case is that certain property and securities being in the possession of the defendants, and the property and securities having been purchased with the fruits of fraud practiced upon the complainant, it is entitled to said property and securities. Such is the basis of the complainant's claim and the specific prayer for relief is in harmony therewith.
The specific prayer must be in consonance with the case made in the bill; and the relief grantable under the general prayer must be in harmony with the facts in the bill and such as the proof will justify. Equity Rule XXI, 410 U. S.
In many classes of cases in equity the general prayer will permit the granting of relief other than that specifically prayed for, but only that relief which is in harmony with the theory of the case. See English v. Foxhall, 2 Pet. 595; Hobson v. McArthur, 16 Pet. 182, 195; Street's Fed. Eq. Prac., 88 247, 252. And see United States v. E. C. Knight Co., 156 U. S. 1.
In cases alleging fraud, however, if proof of fraud be wanting, the complainant is not entitled to substituted relief. Eyre v. Potter, 15 How. 42.
Even in cases where the general prayer is sufficient, the special relief prayed at the bar must essentially depend upon the proper frame and structure of the bill. Story, Eq. Plead., $ 38; Cooper Eq. Pl. 14; Jones v. Parishes of Montgomery, etc., 3 Swanst. 208; Lehal v. Miller, 2 Ves. 209; Lord Walpole v. Lord Orford, 3 Ves. 416; Hiern v. Mill, 13 Ves. 119; 3 Wooddes Lect. 55, p. 372; Walker v. Devereaux, 4 Paige, 229; Scudder v. Young, 25 Maine, 153.
The theory of this case is the same as one for the recovery of an ancient silver altar claimed as treasure trove; for a cabinet of family jewels; for a picture or statue of a particular artist; and for other objects of a like kind. See Adams' Eq., p. 91, and Mitf., 117; Duke of Somerset v. Cookson, 3 P. W. 389; Earl of Macclesfield v. Davis, 3 Ves. & B. 16; Wood v. Rowcliffe, 3 Hare, 304.
The claim in the bill is modified by the stipulation of November 6, 1901, and particularly by paragraphs “2” and "9" thereof. The former provides for turning over of assets which have "not heretofore been bona fide disposed of,” the latter for turning over “substantially all” of the Paul, Westcott and Bragg securities, not heretofore "bona fine paid out or pledged.”
Prior to the stipulation of November 6, 1901, the claim of the complainant was the specific property, real and personal, above set forth.
By virtue of the stipulation, the claim of the Government was reduced by the amounts bona fide disposed of.
The decree must conform to the prayers of the bill. Phipps v. Sedgwick, 95 U. S. 3; Clark v. Beecher, 154 U. S. 631; Hayward v. Eliot National Bank, 96 U. S. 611.
In the present case, the decree did not. conform to the prayers of the bill, as it awarded to the complainant relief other than that prayed for, either specifically or generally, to wit, money other than that claimed by means of deficiency, money decrees against L. D. Carter for $7,577.04 and against I. S. Carter for $18,204.18.
The bill herein sought to have decreed to the complainant certain property and securities in specie, and the prayers asked for such relief. Story, Eq. Pl., § 8, 42a and 426; Hardin v. Boyd, 113 U. S. 756, citing Terry v. Rosewell, 32 Arkansas, 492; Colton v. Ross, 2 Paige, 396; Lloyd v. Brewster, 4 Paige, 540; Lingen v. Henderson, 1 Bland, 252; Murphy v. Clark, 1 Sm. & M. 236. The prayer for alternative relief may be by amendment. Hubbard v. Urton, 67 Fed. Rep. 419.
Having elected to pursue the property and securities in specie the Government cannot now claim any other thing than the property and securities.
The decree must conform to the pleadings; the relief granted must always be in conformity with the case made in the pleadings. Simms v. Guthrie, 9 Cranch, 19; Crockett v. Lee, 7 Wheat. 523; Carneal v. Banks, 10 Wheat. 181; Harding v. Handy, 11 Wheat. 103.
Complainant cannot ask for relief by relying on the general prayer. The theory of the case is that the United States was defrauded by means of a conspiracy, and the principle, that if one fails to make out a case for the special relief relief can be secured under the general prayer does not apply to cases alleging fraud. Brittan v. Brewster, 2 Fed. Rep. 160;