Opinion of the Court.

having been permitted to remain in possession up to the time of the sale under the decree. The trustees in the mortgage claimed that these moneys should be applied in payment of the balance remaining unpaid on their mortgage bonds. This claim was denied. The court-following the previous case of Galveston Railroad v. Cowdrey, 11 Wall. 459-said: "It would have been competent for the court in limine, upon a proper showing, to appoint a receiver and clo he him with the duty of taking charge of the road and receiving its earnings, within such limit of time as it might see fit to prescribe. It might have done the same thing subsequently, during the progress of the suit. When the final decree was made, a receiver might have been appointed, and required to receive all the income and earnings until the sale was made and confirmed, and possession delivered over to the vendee. Nothing of this kind was done. There was simply a decree of sale. The decree was wholly silent as to the possession and earnings in the meantime. It follows that neither, during that period, was in any wise affected by the action of the court." Again: "It is clearly implied in these mortgages that the railroad company should hold possession and receive the earnings until the mortgagees should take possession, or the proper judicial authority should, interpose. Possession draws after it the right to receive and apply the income. Without this the road could not be operated, and no profit could be made.

If the mortgagees were not satisfied, they had the remedy in their own hands, and could, at any moment, invoke the aid of the law, or interpose themselves without it. They did neither."

In American Bridge Co. v. Heidlebach, 94 U. S. 798, 800, the mortgage included the rents, issues and profits of the mortgaged property, so far as it was necessary to keep it in repair, and pledged such rents, issues and profits to the payment of the interest on the mortgage bonds as it matured, and to the creation of a sinking fund for the redemption and payment of the principal. In the event of a continuous default for six months in meeting the interest, the trustees, upon the written request of the holders of one-half of the outstanding bonds, were authorized to take possession of the mortgaged

Opinion of the Court.

premises, and receive all rents and claims due and to become due to the company. In a contest between the trustees and a judgment creditor, as to which was entitled to certain moneys in the hands of the mortgagor, the decision was in favor of the creditor, the court saying: "In this case, upon the default which occurred, the mortgagees had the option to take personal possession of the mortgaged premises, or to file a bill. have a receiver appointed, and possession delivered to him. In either case, the income would thereafter have been theirs. Until one or the other was done, the mortgagor, as Lord Mansfield said in Chinnery v. Black, 3 Doug. 390, was 'owner to all the world, and entitled to all the profit made."

In Kountze v. Omaha Hotel Co., 107 U. S. 378, 392, it was held that a bond given on appeal with supersedeas, from a final decree of foreclosure and sale, did not cover rents and profits, or the use and detention of the property, pending the appeal. The court said that "in the case of a mortgage, the land is in the nature of a pledge; and it is only the land itself

the specific thing—which is pledged. The rents and profits are not pledged; they belong to the tenant in possession, whether the mortgagor or a third person claiming under him. . . The taking of the rents and profits prior to the sale does not injure the mortgagee, for the simple reason that they do not belong to him. But perception of rents and profits is the mortgagor's right until a final determination of the right to sell, and a sale made accordingly."

It is, of course, competent for the parties to provide, in the mortgage, for the payment of rents and profits to the mortgagee, while the mortgagor remains in possession. But when the mortgage contains no such provision, and even where the income is expressly pledged as security for the mortgage debt, with the right in the mortgagee to take possession upon the failure of the mortgagor to perform the conditions of the mortgage, the general rule is that the mortgagee is not entitled to the rents and profits of the mortgaged premises until he takes actual possession, or until possession is taken, in his behalf, by a receiver, Teal v. Walker, 111 U. S. 242; Grant v. Phanix Life Ins. Co., 121 U. S. 105, 117; or until, in proper

Opinion of the Court.

form, he demands and is refused possession. Dow v. Memphis Railroad Co., 124 U. S. 652, 654. See also Sage v. Memphis and Little Rock Railroad Co., 125 U. S. 361.

The principles announced in these cases are decisive against the claim of the Trust Company to the rents of the property represented by the two drafts delivered by the United States to Wilson. Bradley's deed pledged the property, not the rents accruing therefrom, as security for the payment of his notes. It is true, it provides, generally, that the mortgagor may remain in possession and receive rents and profits, until there is default upon his part. But the only effect of that provision was to open the way to compel him to submit to a sale and thereby lose possession. The deed did not give the mortgagee or the trustees the right, immediately upon such default, to take possession and appropriate the rents of the property. It only gave the trustees authority, when such default occurred, to sell upon short notice, and, in that way, oust the mortgagor, and suspend his right to further appropriate the income of the property. Even if the deed had expressly pledged the income as security for the debts named, the mortgagor, according to the doctrines of the cases cited, would have been entitled to the income, until, at least, possession was demanded under the deed; or until his possession was disturbed by a sale under the deed of trust or, in advance of a sale, by having a receiver appointed for the benefit of the mortgagee. As was said in Kountze v. Omaha Hotel Co., 107 U. S. 395, "courts of equity always have the power where the debtor is insolvent, and the mortgaged property is an insufficient security for the debt, and there is good cause to believe that it will be wasted or deterio rated in the hands of the mortgagor, as by cutting of timber, suffering dilapidation, etc., to take charge of the property, by means of a receiver, and preserve not only the corpus, but the rents and profits, for the satisfaction of the debt. When justice requires this course to be pursued, and it is resorted to by the mortgagee, it will give him ample protection."

In the present case, it appears that prior to the time fixed for the sale under Bradley's deed of trust, and before the Trust Company filed its cross-bill asking, among other things, for a

Opinion of the Court.

receiver of the rents of the mortgaged property, Bradley and Shepherd, with the consent of Shepherd's trustees, had pledged the rents of the property as security for Thompson's debts. As Bradley's deed of trust did not pledge the rents as security for his notes to the Trust Company, the pledge of such rents by himself and Shepherd, his assignee, for Thompson's benefit, did not violate any right secured to it; for, as we have shown. until a sale was had, pursuant to the deed of trust, and possession taken under such sale, it had no right, by the terms of the deed, to take the income of the trust property. So that. if a receiver had been appointed immediately upon the filing. October 25, 1877, of the cross-bill of the Trust Company, and if all the rents represented by the two drafts of $1800 and $3475 had been collected by the receiver, they would still, in virtue of the assignment of June 21, 1877, by Bradley and Shepherd, have belonged to Thompson, as between him and the Trust Company; unless, as contended, the transfer by Bradley to Shepherd of the lease to the United States, and their assignment for the benefit of Thompson, are absolutely void, for every purpose, and as to everybody, under the provisions of the statutes relating to the transfer and assignment of contracts with, or claims against, the United States.

It is insisted by the Trust Company that the transfer by Bradley to Shepherd of the lease of June 6, 1873, was void under § 3737 of the Revised Statutes, which provides: "No contract or order, or any interest therein, shall be transferred by the party to whom such contract or order is given to any other party, and any such transfer shall cause the annulment of the contract or order transferred so far as the United States are concerned. All rights of action, however, for any breach of such contract by the contracting parties are reserved to the United States."

This provision was brought forward from an act of Congress, approved July 17, 1862, entitled "An act to define the pay and emoluments of certain officers of the army, and for other purposes." 12 Stat. 594, 596. In the original act it immediately followed a section providing "that all contracts made for, or orders given for the purchase of goods or sup

Opinion of the Court.

plies by any department of the government, shall be promptly reported to Congress by the proper head of such department, if Congress shall at the time be in session, and if not in session, said reports shall be made at the commencement of the next ensuing session." We are of opinion that, whatever may be the scope and effect of § 3737, it does not embrace a lease of real estate to be used for public purposes, under which the lessor is not required to perform any service for the government, and has nothing to do, in respect to the lease, except to receive from time to time the rent agreed to be paid. The assignment of such a lease is not within the mischief which Congress intended to prevent. Although a lease, such as Bradley made, is a "contract," in the broadest sense of that word, we are not prepared to hold that it is of the class of contracts, the transfer of which or of any interest therein is prohibited by § 3737.

It is also contended that the assignment made on June 21, 1877, by Bradley and Shepherd is void under § 3477 of the Revised Statutes, which provides that "all transfers and assignments made of any claim upon the United States, or of any part of it 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 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."

This court has frequently had occasion to construe this section. United States v. Gillis, 95 U. S. 407; Erwin v. United States, 97 U. S. 392; Spofford v. Kirk, 97 U. S. 484; Goodman v. Niblack, 102 U. S. 556; Bailey v. United States, 109 U. S. 432; St. Paul &c. Railroad v. United States, 112 U. S. 733; Hobbs v. McLean, 117 U. S. 567. Undoubtedly, the lease made by Bradley to the United States created, in his favor what, in some sense, was a claim upon the United States" for each year's rent as it fell due. And, if the statute

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