McGowan v. Parish
Headline: Court allows appeal and affirms that private contracts creating liens on money owed by the United States are void under federal law, limiting attorneys’ and claim buyers’ ability to seize government claim payments.
Holding:
- Blocks private liens or transfers on U.S. claims without strict formalities
- Limits attorneys’ ability to claim contingent fees before government payment
- Supreme Court review available for similar federal-statute disputes
Summary
Background
An estate (the executrix of Joseph W. Parish) recovered a large judgment against the United States. Two attorneys who said they had contracts with Parish sued in a Washington, D.C. court claiming a lien or right to one-tenth of the recovery for legal services. The parties entered an interlocutory consent decree that dissolved a restraining order and led to $41,000 being deposited with a trustee while the court decided whether the attorneys were owed anything.
Reasoning
The core question was whether private contracts or liens on money the United States owes are valid under the federal statute now cited as Rev. Stat. § 3477. The trial court treated the consent decree as waiving some defenses and decided the case on the basis of reasonable value for services, ultimately finding the attorneys had lost rights by inaction. The court below reversed, holding the contracts repugnant to § 3477 and absolutely void and also finding no lien because other attorneys had obtained the judgment. The Supreme Court granted review, reasoning that § 3477 is a law of general application and that the case properly raised the construction of a federal statute.
Real world impact
As presented here, the ruling means that private transfers, assignments, powers of attorney, or contractual liens on claims against the United States are subject to strict statutory formalities and may be void if those formalities are not met. The Supreme Court allowed appeal and required a $3,000 bond, signaling that the high court will review how § 3477 applies to agreements over government claim payments. The case affects parties seeking to claim or transfer portions of government payments under private agreements.
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