#### DENT’S CASE. Warren R. Dent *v.*The United States.

*On the Proofs.*

*The claimant’s cotton is captured during the rebellion and sold by an agent of the Treasury Department. While the proceeds are still in the agent’s hands he is authorized by the Treasury Department to release one-fourth of them to a person claiming to have acted as informer and to have been instrumental in securing the capture. The informer agrees to indemnify the Government, and gives a bond with sureties by way of indemnity. One-fourth of the proceeds is then paid to him. The bond is never prosecuted, and the claimant seeles to recoves- the full amount of the proceeds after deducting the necessary and legal expenses.*

Where a Treasury agent, by authority of tlie Treasury Department, pays array a portion of the proceeds of captured property, whether rightfully or wrongfully, it diminishes the sura which goes into the Treasury to that extent, and reduces the amount for which judgment can be given. And though the person receiving the money indemnifies the Government against all claims, suits, and proceedings on account thereof, the indemnity does not pat the money constructively into the Treasury, nor does it authorize a judgment against the Government for the amount paid to him.

*The Reporters'*statement of tbe case:

The court found tbe following facts: ‘

In tbe month of February, 1864, in Jefferson County, Mississippi, tbe claimant was tbe owner of one hundred and one bales of cotton, which were then and there seized by a military force of the United States, known as the marine brigade, commanded by General Ellett, who was accompanied by one Sher-*475rarcl Clemens, under authority from John A. McDowell, assistant special agent of the Treasury Department at Vicks-burgh, Miss., to collect and secure for account of the Treasury Department all C. S. A. cotton and abandoned cotton, and othe” Government property that might fall into the hands of the said marine brigade. Seventy-five other bales of cotton were at the same time taken from the claimant, but they are not traced to the Treasury of the United States.

The one hundred and one bales of cotton so seized were, by rebaling, reduced to one hundred, and were sold as lot\V/ 36, by an agent of the Treasury Department, and realized the gross amount of $27,240.40; the expenses of transportation and sale of which were $4,142.91; leaving the net proceeds of the cotton $23,097.49. Of this sum there was released and paid to the said Sherrard Clemens, on the 30th day of July, 1864, by William P. Mellen, supervising special agent of the Treasury Department, at Cincinnati, Ohio, the sum of $5,173.59, for which the said Clemens executed and delivered to the said Mellen the following paper:

“ Received, Cincinnati, July 30,1864, from William P. Mellen, supervising special agent of the Treasury Department, five thousand one hundred seventy-three and Tsff®a dollars, being one-fourth of the net proeeds of the sale of one hundred bales of cotton marked and numbered \^/36, the same being in full for my services in collecting and delivering said cotton, as abandoned property, to the agent of the United States Treasury; and I hereby acquit and discharge the Government of the United States, the said William P. Mellen, and all others acting as agents of the Government, of and from all and every claim and demand which I now have, or may hereafter have, on account of anything done by the United States or any of its agents touching or concerning this cotton; and I do hereby agree to indemnify the United States, its agent or agents, against all claims, shits, or proceedings, of any kind whatsoever, on account of the acts of said agent or agents in relation to said cotton, or the payment to me of said sum of money.

“$5,173.59. SHERRARD CLEM EES.”

Besides this paper a bond, with sureties, was at the same *476time executed by said Clemens to the United States, by way of indemnity; but the terms of said bond do not appear.

This payment to said Clemens was authorized by the Treasury Department, and subsequently approved thereby. After it was made, the remainder of the proceeds of said cotton, amounting to $17,923.90, was paid into the Treasury of the United States.

*Mr. George Taylor*for the claimant:

This case presents some of the worst features connected with the collection of cotton during the rebellion. The testimony taken in the case shows beyond a doubt that one hundred and seventy-six bales of cotton were seized and carried away from the Holly Grove plantation, and that this cotton belonged to claimant. Clemens, cotton-operator — for we wish to use the mildest language — was carried about and aided in his operations by a fleet of vessels, sent South to aid in the suppression of the rebellion, and sustained at a large expense for that purpose; yet it was used by Clemens and his associates without legal authority and prostituted to the business of private plunder. Clemens speaks of receiving authority from Colonel McDowell, but he had no authority to give a permit for such purposes, under the law and the Treasury regulations. No one but the Secretary of the Treasury, acting for the President, could give such authority. No such authority is shown; nor can it be supposed that these distinguished officers either licensed or favored such transactions. The whole proceeding was a fraud upon the Government as well as the claimant. The cotton was neither captured nor abandoned; it was seized and taken by officers of the army, and the interposition of Clemens was wholly unnecessary.. There was no excuse for it; and giving him one-fourth of that portion which was reported cannot be justified.

He filed a *libel*— under what law-? Congress had especially provided for the disposition of all such property, and the *libel*was wholly unnecessary. In fact, there could be no such thing as a libel in the case. He seems to have confounded the case with a marine capture, and he established a prize court in the person of the Treasury agent, McDowell, to whom the *libel,*in the shape of false affidavits and fraudulent pretensions, was submitted for adjudication.

We hold that the amount paid to Clemens was paid in viola*477tion of law, and that the United States must pay us that amount and look to Clemens’s bond to be indemnified.

*Mr. Alexander Johnston*(with whom was the *Assistant Attorney-General)*for the defendants.

Drake, Ch. J.,

delivered the opinion of the court:

In this case one-fourth of the proceeds of the cotton captured was, while those proceeds were in the hands of the supervising special agent of the Treasury Department who had sold the cotton, paid to one Sherrard Clemens for his services in collecting' the cotton and delivering it to the agent of that Department.

The authority of the Department to cause such payment to be made is questioned; but we do not see that the question should be entertained. We can render judgment for the claimant for only such proceeds of his cotton as went into the Treasury. As held in *Bynum's Case,*decided at the present term, we will not assume the revision of the charges of the Treasury Department certified to us by that Department as having been actually paid out, but will pass upon the legality of charges made by the Department itself in its own favor, the effect of which is simply to keep so much money in the Treasury. We have, therefore, in ascertaining the net proceeds in this case, struck out of the charges $1,602.08 of custom-house fees and $801.04 of internal-revenue tax. But the amount paid to Clemens was a disbursement actually made; and whether rightfully or wrongfully made, it diminished by that much the sum which went into the Treasury, and to that extent reduced the amount for which we can give judgment in favor of the claimant.

The fact that Clemens, when he received the money, agreed “ to indemnify the United States, its agent or agents, against all claims, suits, or proceedings of any kind whatsoever, on account of the acts of said agent or agents in relation to said cotton, or the payment to him of said sum of money,” does not put the money, either actually or constructively, into the Treasury, and does not authorize a judgment against the United States for the amount paid him. The fact still remains that the money did not go into the Treasury; and we cannot, in a proceeding between Warren R. Dent and the United States, undertake to *478pass upon a transaction between tbe United States and Sherrard Clemens, in regard to which the latter has no opportunity to be heard, and which the former is not, by the claimant’s petition, required to explain or defend. Any other rule of action on the part of this court would open the way for the litigation here of every item of the charges certified by the Treasury Department in every case of this kind. We do not understand this to be the intent of the act under which these cases proceed.

Nott, J.,

concurring:

The proceeds of one hundred bales of cotton, as appears from the evidence in this case, came to the Treasury of the United States. It is not to be understood that the money reached the vaults of the Treasury in the city of Washington; but it is to be understood that the cotton was sold, the proceeds paid into the hands of a supervising special agent of the Treasury, and that while in his hands they were placed at the actual disposal of the Secretary of the Treasury, and were actually ' disposed of as he expressly directed they should be. *“*As *soon as the money reached the*Treasury,” to quote the words of the Supreme Court, “ *the right to prefer a claim attached.", (Anderson’s Ca*se, 7 C. Cls. R., pp. 125-6.) Therefore, at that moment when the money derived from the sale of the claimant’s property came under the immediate direction and control of the head of the Treasury, the claimant’s equitable rights became fixed, and the Government was invested with the character of a trustee, and assumed the responsibilities and liabilities of the trust. The claimant also, *eo instcmti,*acquired the character of a *cestui que trust,*and his right to prefer a claim to the money attached to the fund.

lb is now proposed by the Government that this court shall disarrange these legal relations of the parties as defined by the Supreme Court, and assign them to a subsequent time, when the amount of the proceeds had been reduced by the intentional and voluntary act of the Secretary of the Treasury. It is not proposed to show a subsequent loss suffered by the trust estate, such as would excuse á trustee from responding to the amount placed in his hands, but' simply to postpone the legal relations of the parties from a day on which the Supreme Court said they began to a subsequent day, when the liability which *479the law created would be lessened by the trustee’s own act. Since the Supreme Court has construed the statute as it has, it seems to me that this postponement of responsibility cannot be maintained.

But, in addition to the fact that all of the proceeds of the property reached the Treasury, it is apparent, I think, that in contemplation of law they are still there. A person claiming to be an informer sought one-half of the proceeds of the cotton after they had thus reached the Treasury. If they had been given away by the Secretary, the' title to them being in the claimant and not in the Government, it might be a question whether the Government would continue responsible a.s trustee, or an action lie against the Secretary for his unlawful act. But it appears in this case that they were not given away absolutely by the Secretary, and that the question of resulting liability on the part of the Government was considered and provided for. Before the proceeds were given up a sufficient “ bond of indemnity” was required from the informer, which he executed and gave. The bond has not been sent down from the Treasury Deparment in this case, but the form of it appears elsewhere, and we may infer that it was a bond executed by himself and two sureties under a penalty upon the following conditions: “That, if the said Sherrard Clemens shall now and at all times well and truly keep and save harmless and indemnify the United States, and any and all agents of the same, of and from all claims and demands, and all proceedings by suit or otherwise, on account of any matter or thing done by them or any of them concerning the said cotton or the proceeds thereof, and of and from all damages, actions, or proceedings of any kind which are now or may hereafter be instituted on account of said cotton, its seizure, detention, or sale, or the detention of the proceeds thereof, or the payment thereof, to the said Sherrard Clemens; and if, at any time hereafter, on its being made to appear that any statement on account of which the release of the said proceeds or the payment thereof to the said Sherrard Clemens has been granted or made are untrue, or that the right of property was not as stated in the application for such release or payment, and that said cotton was subject to forfeiture and confiscation, or in anywise to be sold or appropriated to the use of the United States, the said Sherrard Clemens shall return the said proceeds to the said William P. *480Mellen, supervising special agent as aforesaid, or to the Secretary of the Treasury, upon demand therefor, then this obligation to be void; but otherwise shall be and remain in full force and virtue.”

Now what is the position which the Government occupies here? It is clearly that of trustee, who, holding an indemnity for a portion of the trust estate which he has voluntarily disposed of, comes into court and asks to be relieved from all responsibility for his breach of the trust without being compelled to resort to the indemnity which he holds. I apprehend that there is no authority to maintain such a proposition; but that, on the contrary, the trustee will be held to make whole the estate to the *cestui qui trust*and then resort to his indemnity.

It is the declared intention of the law that the owner shall receive all of the proceeds of his property after the deduction of the “ *lawful expenses attending the disposition thereof;*” *(Abandoned or captured property Act,*12 Stat. L., p. 820, s. 3;) and the Supreme Court has declared that as to these proceeds the Government is a trustee on the one hand, *(Padelford’s Case,*7 C. Cls. R., p. 150,) and the title of the original owner is not divested on the other. *(Klein’s Case,*id., p. 243.) It follows necessarily that whatever these proceeds of the property may be, whatever form they may have assumed, however they may have been diminished or multiplied, they belong to the claimant and cannot possibly belong to the Government. If they have been invested in any form of securities, the securities inure to the benefit of the *cestui que trust;*if any interest has accumulated upon them it is a part of the proceeds and belongs *to*the owner of the property; the Government being but trustee, it is absolutely impossible for the Government to make anything out of the proceeds, or to derive any benefit from the trust beyond repayment of the *“ lawful expenses attending the disposition thereof.*” It follows that if any bond had been taken from the informer which would inure directly to the benefit of the claimant, and upon which he might maintain an action, that the decree ought to direct that it be given up and assigned to the claimant for prosecution. But the bond which Clemens, the informer, did give was one strictly of indemnity to the United States to save the Government harmless from a recovery by the true owner of the property; and as there is no pretense that *481Clemens or bis sureties are insolvent, and as the Government has. guarded itself against this very contingency, there is no reason why the court should take the informer, who had no right whatever to the property, under its protection and assure him the possession of proceeds to which he was never entitled, at the cost of the owner, whom the law has assured as to all of the proceeds *“after the deduction”*only of the “ *lawful expenses attending the disposition thereof.”*