Case Name: HENRY M. WAYNE, Administrator, v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1891-04-13
Citations: 26 Ct. Cl. 274
Docket Number: No. 16610
Parties: HENRY M. WAYNE, Administrator, v. THE UNITED STATES.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 26
Pages: 274–290

Head Matter:
HENRY M. WAYNE, Administrator, v. THE UNITED STATES.
[No. 16610.
Decided April 13, 1891.]
On the Proofs.
The income tax is deducted for several years from judicial salaries. In 1873 this is deemed unconstitutional, and the amounts withheld are refunded by the Treasury. The draft for Mr. Justice Wayne is stolen before delivery. After three years the amount is credited to the account of “ outstanding liabilities.” In 1888 his administrator demands payment, which is refused, and the amount is credited bach: to the appropriation “for refunding taxes illegally collected,”
I. The statute of limitations can not be set up against money credited to the claimant in the appropriation account of ‘ ‘ outstanding liabilities.” Such money is held as a trust fund, payable on demand, without limit of time. Rev. Stat., 307, 308.
II. The nonprodnction of a Treasury draft is sufficiently accounted for by proof that it was stolen and has not been heard of for more than seventeen years.
III. In such a case it is not necessary for the claimant to give a bond of indemnity.
IY. The statute of limitations does not run against a trust fund until the trustee disavows the trust.
Y. If a claim for “refunding taxes illegally collected” is brought before the Commissioner of Internal Revenues by a statement frpm the Comptroller within the time prescribed by law, and he attaches to it a regular printed blank and acts upon it, it is a sufficient presentation to confer jurisdiction upon him.
The Reporters' statement of the case:
The following are the facts of this case as found by the court:
I. An account was examined and adjusted by the Fifth Auditor November 25,1873, in favor of said James M. Wayne for $1,128.97, and for four other persons for different amounts, and was transmitted for decision of the Comptroller of the Treasury. On the 29th of November, 1873, the Comptroller admitted and certified to the Register a balance (which included the above amount to said Wayne) as due and payable for refunding taxes erroneously assessed and collected, as per Auditor’s report.
II. December 8,1873, a Treasury warrant was issued, duly signed by the Secretary of the Treasury and countersigned by the First Comptroller, as required by law, directing the Treasurer to pay said sum of $1,128.97. The Treasurer drew a draft for said sum, payable to the estate of said Wayne or order, signed the same, and, with four others, sent them to the office of the Commissioner of Internal Revenue to be mailed to the persons entitled to receive them. Before being mailed they were all stolen from said office and have never been heard of since.
III. Soon after ssid draft had for three years or more remained outstanding, unsatisfied and unpaid, it was deposited by the Treasurer and covered into the Treasury by warrant and carried to the credit of the estate of said Wayne and into an appropriation account denominated “ outstanding liabilities,” pursuant to the provisions of Revised Statutes, section 306.
IY. Early in 1888 Mary J. Wayne, the sole surviving executrix, since deceased, of said James M. Wayne, made demand for payment of said sum standing to the credit of her testator’s estate on the books of the Treasury among “ outstanding lia bilities.” The claim was referred to the Commissioner of Internal Kevenue, who recommended payment. The recommendation of the Commissioner was then referred by the Secretary of the Treasury to the First Comptroller “ for consideration and recommendation.” ■ On the 24th of April, 1888, the First Comptroller disallowed the claim and recommended that the matter be referred to the First Auditor for statement of an account in the name of the payee of the draft, payable from “ outstanding liabilities,” the amount to be paid to the Treasurer, to be deposited to the credit of the appropriation for “ refunding taxes illegally collected” on account of erroneous allowances made in favor of the payee of said draft.
V. The account allowed as stated in finding I, and upon which Treasury warrant was issued and the draft drawn as stated in finding n, was after and upon the following proceedings:
VI. James M. Wayne was an associate justice of the Supreme Court of the United States from September 1, 1862, to June 30,1867. Pursuant to the Acts of July 1, 1862, § 86 (12 Stat. L., 472); act of June 30, 1864, § 123 (13 Stat. L., 285), and the amendments of July. 4, 1864 (13 Stat. L., 417), and 14 Stat. L., 139, 480, there was deducted from the salary of said justice the sum of $1,128.97 income tax, from September 1, 1862, to June 30, 1867. On the 30th of April, 1872, a statement was made out in the Comptroller’s office showing the amount so withheld from Mr. Justice Wayne’s salary, and was attached to a blank form of application for refund of taxes improperly paid. This was examined and allowed in the office of the Commissioner of Internal Revenue June 7, 1873, and under a rule of the Department it was sent to the Secretary of the Treasury for his examination and approval. On October 19,1873, it was returned to the Commissioner indorsed by the Secretary of the Treasury “refunding approved.” November 20, 1873, a schedule of claims (including that of Mr. Justice Wayne) for refunding of taxes was made out formally in the office of the Commissioner of Internal Revenue, who on that day certified “ that the foregoing claims for refunding of taxes erroneously assessed and paid have been examined and allowed.” It does not appear that any formal written application for refund of said tax was ever filed in the office of the Commissioner of Internal Revenue by Mr. Justice Wayne.
Mr. F. D. McKinney for tbe claimant:
1. If this claim was properly presented and allowed in the first instance is it now barred by the statute of limitations 1 (Kev. Stat., § 1069.)
The fund established by section 306 bears upon it the imprint of a “trust fund.”
The statute declares in terms that moneys carried to the account “ outstanding liabilities” shall beheld as a permanent appropriation for the liquidation of the debt previously declared to be due whenever proper demand for the payment thereof shall be made. Under such circumstances no laches will bar a tardy claimant, and so it is submitted with confidence that this claim was not barred in 1888 at the date of the demand of payment thereof.
If it was not barred then, it was not barred at the date the petition was filed in this court. (Finn v. United States, 123 U. S. B., 227.)
2. The allowance by the Commissioner of Internal Revenue of a claim for the refund of taxes illegally collected is held to be equivalent to an account stated between private parties, which is good until impeached for fraud or mistake.
There is no charge of fraud herein, and the suggestion of irregularity is unsupported by evidence and rebutted by the presumptions.
The basis of the claim in this court is the award by the Commissioner of Internal Revenue; back of that in this instance we can not go.
3. The action of Comptroller Durham in seeking to set aside the balances certified by his predecessor was illegal and should be held to be void.
By the Revised Statutes, section 191, it is provided that the Balances certified by the Comptrollers “shall be conclusive upon the executive branch of the Government, and subject to revision only by Congress or the proper courts.”
In direct opposition to such prohibition Comptroller- Durham has sought not only to revise the balance certified by his predecessor, but has endeavored to entirely obliterate it.
“The rule that a final decision upon a knowledge of all the facts made by an officer authorized to decide upon claims against the Government is not liable to be reopened and re viewed by his successor in office unless the decision is founded on mistakes in matters of fact arising from errors in calculation or the absence of material testimony afterwards discovered or produced is well established. ” (14 Opin. Atty. Gen., 276.)
Attorney-General Taney’s opinion in Thorp’s Case (2 Opin., 264) has frequently been cited on the subject with approval by this court, as has also Attorney-General Black’s concise statement of the law in 9 Opinions, 314.
In the Banli of the Metropolis Case (15 Pet., 123) the Supreme Court of the United States established the rule that the—
‘‘Eight in an incumbent of reviewing a predecessor’s decisions extends only to mistakes in matters of fact arising from errors in calculation and to cases of rejected claims in which material testimony is afterwards discovered and produced. ”
The subject-matter of this claim had been once adjudicated, and the balance found due had been certified by the officers authorized by law to perform such duties. No “ mistakes of fact arising from errors in calculation ” have been shown to exist. No new testimony has been produced which was not before the Commissioner of Internal Eevenue when he made his allowance and within the contemplation of the former First Comptroller when he certified the balance of $1,138.97 for payment.
Unless such mistakes of fact are shown to exist or new and material evidence is produced this case can not be held to be an exception to the well-settled principles of, law applicable thereto.
4. The salaries of the Federal justices and judges are not within the purview of the statutes under which the accountiug officers assumed to act in withholding the amount claimed.
An income tax is an excise or duty imposed by a statute of the United States relating to internal revenue. (Pacific Ins. Co. v. Soule, 7 Wall., 434.)
Congress is prohibited by the Constitution from diminishing the salaries to be paid to the justices of the Supreme Court during th eir terms of office, and the imposition of such an income tax “ directly operated as a diminution of the compensation of the officer. ” (13 Opin. Atty. Gen., 161.)
Mr. Felix Brannigan (with whom was Mr. Assistant Attorney-General Cotton) for the defendants:
This court is without jurisdiction of the claim.
In taking this position we admit the contention of the other side, that the action of the Commissioner of Internal Revenue in the-matter “ carries with it the presumption that every legal prerequisite has been complied with; ” but at the same time we hold that his proceedings may be impeached for want of jurisdiction or other error apparent on the record thereof. Kaufman v. United States, 11 C. Ols. R., 659; United States v. Kaufman, 96 U. S., 567$ Sybrandt et al. v. United States, 19 C. Cls. R., 461; Stotesbury v. United States, 23 O. Ols. R. 285.
(I) 1. During the income tax period the compensation of the associate justices of the Supreme Court was an annual salary of $6,000 each (Act of March 3,1855, § 1, 10 Stat. L., 655.) Congress regularly appropriated each year the moneys to pay that salary, and the disbursing officer who was charged with the duty of paying it promptly paid the same to each of the justices, less the amount of the income tax which the statutes required him to withhold and pay into the Treasury as internal taxes. If any right ever accrued to recover the money so withheld as for unpaid salary, that right accrued at the end of each fiscal year within which any part of the salary was withheld. If a right had accrued to have the money refunded as income tax, a claim therefor should have been made not later than June 6,1873.
Besides this objection, the act of June 6,1872, barred all existing. “ claims ” for taxes erroneously assessed or collected from the refunding power of the Commissioner of Internal Revenue, unless they should be presented to him on or before June 6,1873. It is not pretended that Mr. Justice Wayne ever made or “ presented” any “ claim” to the Commissioner of Internal Revenue, or to any other executive officer, for the recovery of the money so withheld from his salary; nor is it pretended that his executrix or other representive made any claim in the matter until the year 1888.
Mr. Justice Story, delivering the opinion of the Supreme Court in Prigg v. The Gommomeealth of Pennsylvania (16 Pet., 615), defines the word “ claim ” as follows:
“It is, in a just juridical sense, a demand of some matter as of right made by one person upon another, to do or to forbear to do some act or thing as a matter of duty.”
There can be no “ claim” without a claimant, no “ appeal ” without an appellant. (Burdett v. United States, 12 C. Ols. B., 5G5.)
The validity and importance of the regulations which prescribe the form and mode of making refunding claims have been fully recognized by this court in Stotesbury v. The United States (23 O. Ols. B., 285), and prior thereto in Sybrmdt et al. v. The United States (19 O. Ols. B., 4G1).
An appeal for a refund must be made to the Commissioner of Internal Bevenue in due time and form, else the right to recover is barred. (Cheatham v. United States, 93U. S. E., 85; Braun v. Sauerwein, 10 Wall., 218; 1G Opin. Atty. Gen., 642.)
2. A suit on an “ award ” for internal-revenue taxes erroneously collected is a suit for the recovery of taxes erroneously collected. An action ex contractu “ on the award”is the only form of action for the recovery of such taxes of which this court has jurisdiction. Itis obvious, therefore, that this or any other form of action is within the prohibition of section 3226 of the Bevised Statutes:
“ No suit shall be maintained in any court for the recovery of any internal tax * * * until appeal shall have been duly made to the Commissioner of Internal Bevenue, according to the •provisions of law in that regard and the regulations of the Secretary of the Treasury established in pursuance thereof, and a decision of the Commissioner has been had therein.” * * *
The part of the section above quoted is certainly applicable to the Court of Claims. It applies to all courts, State and Federal. (Hubbard v. Collector, .12 Wall., 1,15.)
If it were necessary for the defense, we would insist, if there had been a valid award in the matter, that under the provision of section 2227 the time for bringing an action thereon here was limited to “ one year after” the Commissioner’s “decision” on the claim, but it certainly was limited to six years. (Bev. Stat., 10G9.)
3. It would be anomalous legislation that restrained all courts from exercising jurisdiction in suits for the recovery of internal taxes, unless appeals had been made therefor to the Commissioner of Internal Bevenue within the time and in the mode prescribed therein, and which at the same time gave power to that officer to make refunds in the absence of an appeal.
There is no such anomaly in the statute. Sections 3226, 3227, 3228 expressly require an actual claim to be made to the Commissioner; and section 3220, which confers on him the power to act on refunding claims, makes Ms action subject to the proper regulations of the Secretary of the Treasury.
4. The Supreme Court have said in the case of United Staten v. Arredondo (6 Pet., 709), that “the power to hear and determine a cause is jurisdiction; it is ‘coram judice,’ whenever a cause is presented which brings this power into action.”
To the same effect the case of Mordeoai et al. v. Lindsay et al. (19 How., 199).
5. The Commissioner of Internal Revenue could no more make an award in a matter not before him than upon rights already barred by law from his jurisdiction. Whether a claim is before the Commissioner within the time and in the form which brings his refunding power into action is a question of jurisdiction; and, as said by this court in the Davis Case (17 C. Cls. R., 300):
“ÍTlie facts which give him jurisdiction must affirmatively appear, or his proceedings will be held illegal and void.”
And see the Banlc of Greenoastle Case (15 C. Cls. R., 225), as explained by conclusion No. 1 in Neitzey v. United States (17 C. Cls. R., 129). The Savings Banlc Case, 104 Ú. S. R., 728; 16 C. C. R., 335.
6. There can be no question of the'soundness of this doctrine, for it is well settled in respect to even judicial that—
(1) A court of limited jurisdiction or a court acting under special powers has only the jurisdiction expressly delegated to it.
(2) The acts of a tribunal beyond its powers are null and void and of no effect whatever.
(3) When the cause of action is not within the jurisdiction granted by law to the tribunal, it will dismiss the suit at any time upon the defect being brought to its notice.
(4) When the tribunal has no jurisdiction of the matter before it, a judgment rendered therein is null and void.
In Sheppard v. Graves (14 How., 510) the rules of jurisdiction are stated in the opinion of the court.
7. What would be said of the jurisdiction of any court to render judgment, as on the merits, in a case where there was no plaintiff and no pleadings'?
There can be no suit, civil or criminal, without parties and subject-matter. (Shults v. Moore, 1 McLean, 522.)
The Commissioner of Internal Bevenue was without power to make the refund, and hence his action in the matter was ultra vires null and void. We hold that regulations “ established in pursuance of law” can not be waived or modified for the benefit of any person except by law, or by some other regulation “ established pursuant to law.”
8. No award was made, because “ void things are as no things; as a void award is said to*be no award.” (22 Yin. Abr., 13, pi. 17; Ex nihilo nihil fit; Root v. Stuyvesant, 18 Wend., 301; Coster v. Lorillard, 14 Wend., 364; Mearle v. Greenbanlc, 1 Yesey, sr., 298; Sheddon v. Goodrich, 8 Yesey, 497.)
As no valid award was made by the Commissioner, it necessarily follows that the action of the Secretary of the Treasury and the accounting officers in the matter — the statement of an account and certification of a balance due, the granting of the warrant and draft to pay the same, and the crediting of the amount of the draft in the outstanding liabilities account, were all null and void proceedings, and that no action can be maintained thereon in this court.
(II) 1. The Commissioner of Internal Iievenue had no power to determine the question as to whether the laws which levied the income tax on the salaries of the United States judges were or were not unconstitutional. It was the duty of the executive department to obey the statutes, and leave that question to the judiciary or to Congress, where it belonged. When the Commissioner undertook to determine the limits of the taxing power of Congress as a constitutional question, he attempted to exercise one of the highest judicial powers.

Opinion:
Per Davis, J.:
" Executive officers are, properly, most careful to act within specific delegated powers given them by statute or regulations antecedent to action, and we have occasion constantly to see and commend the jealous regard these officers exhibit for the literal commands of the statutes, and their great care in the protection of the revenue." (Crain v. United States, 25 C. Cls. R., 221.)
The President himself can not control a statute nor dispense with its execution. (State of Mississippi v. Johnson, 4 Wall., 475; Kendall v. United States, 12 Pet., 525.)
"Even courts will not pronounce a law unconstitutional unless its opposition to the Constitution be clear and plain." (Fletcher v. Peck, 6 Cr., 87, 128. Dartmouth College v. Woodward, 4 Wheat., 625.) (Livingston v. Moore, 7 Pet., 537; Falconer v. Campell, 2 McLean, 195.)
2. If there were no other grounds of defense in this suit, we would urge that the alleged award was invalid and void on the ground that the income taxon judicial salaries was levied by a law of Congress, which was binding on the executive branch of the Government until the judicial branch should authoritatively decide against its own liability to the tax.
(Ill) Judicial salaries are not exempt from fair and equal taxation.
The provisions of the eighty-eighth section of the Act of July 1, .1862, which first levied the income tax on salaries, were reenacted three times in substantially the same terms — except as to the rates of exemption and tax: once by the Thirty-eighth Congress (13 Stats., 285) and twice by the Thirty-ninth Congress (14 Stat., 138, 480). The levy included the salaries of all officials in the three departments of the Government — the legislative, the executive and the judiciary; yet during all the years, in which it was in force (1862 to 1870) no public protest or objection, based upon the Constitution, was made against its collection by any justice or judge, or by any official or employe of either department; and certainly no legal proceedings were had to test the constitutionality of the thrice-repeated legislation.
These Congresses passed no law reducing the fixed compensation of Senators or Eepresentatives, or diminishing the salaries of the President and the judges. The full amount of all compensation and salaries was regularly appropriated. The tax was calculated on the full amount of compensation so fixed by law. There was no other mode of calculating it; hence, prima facie, there was no diminution of salaries or compensation, and none in fact, unless sharing the common burden of taxation imposed for the defense and general welfare of all the people under the Government of the United States was a diminution. If there be any exemption of a judicial salary from taxation it must apply as well to other indirect or direct or capitation taxes, because, when the whole income is a salary, the effect upon it of a tax is the same — its purchasing power is diminished under either form of taxation.
The purchasing power of judicial salaries was very much diminished in 1862-18G7 by the payment thereof in Treasury notes; but as that diminution was only a part of the common burden of the period, it was never supposed to be an unconstitutional payment to the judges. (Matter of N. O. Draining Company, 11 La. Ann.) (Philadelphia Association, etc., v. Wood, 39 Pa. St., 83.)
The power of Congress " to lay and .collect taxes, duties, imposts, and excises" is coextensive with the territory of the United States. (Loughborough v. Blake, 5 Wheat., 317; The Cherokee Tobacco, 11 Wall., 616.)
This power, like all others vested in Congress, is complete in itself. It may be exercised to its utmost extent. It acknowledges no limitation other than those prescribed in the Constitution. (Gibbons v. Ogden, 9 Wheat., 199; Pacific Insurance Company v. Soulé, 7 Wall., 446.)
Congress may designate the subject of the tax, prescribe the basis for the rate, and the mode of payment, as it may deem proper, and "No power of supervision or control is lodged in either of the other departments of the Government." (Pacific Insurance Company v. Soulé, 7 Wall., 443; Veazie Bank v. Fenno, 8 Wall., 533.)
The case of the Collector v. Day (11 Wall., 113) recognizes another limit on this taxing power, but it has no application to the question involved here.
No better illustration of the true intention of the United States constitutional safeguards set around the compensation of the President and the judges can anywhere be found than in Article xm of the constitution of the Commonwealth of Massachusetts.
To adopt its language, we would say that the intention was:
"To provide for 1 permanent and honorable salaries,' so that these high officials ' should not have their attention necessarily diverted by their private concerns from acting with freedom for the benefit of the public;' and so that they 1 should maintain the dignity of the United States in the character of Chief Magistrate and justices of the Supreme Court.'"
Mr. Justice Bradley, in recording his dissent in the case of Collector v. Day, made the following language his text:
" I dissent from the opinion of the court in the case because it seems to me that the General Government has the same power of taxing the income of officers of the State governments as it has of taxing that of its own officers."
It did not enter into his mind that the income tax levied on his own salary was an attempt on the part of Congress to encroach upon the independence of the Federal judiciary. Every justice on the Supreme Bench was familiar with the history and object of the constitutional provision which declared that their compensation " shall not be diminished during their continuance in officeand also with the views of the Supreme Court of Pennsylvania, expressed in the opinion delivered in the case of Commonwealth ex rel. Hepburn v. Mann (5 W. & S., 103), and the Supreme Court of Louisiana in the like case of New Orleans v. Lea (14 La. Ann., 197).
In these cases the principles stated rest upon the independence of the judiciary department, and the care which should be exercised to enable it to defend itself against encroachments upon its independence by the two other departments of the Government, especially the legislative.
In the Louisiana case the court decided that the city of New Orleans could not .tax the salary of a justice of the supreme court of the State, because of constitutional provisions construed according to the doctrine of Chief Justice Marshal in McCulloch v. Maryland, " that the power to tax involves the power to destroy; " which we submit can have no application to equal and general taxation clearly intended to support and not to destroy the Government. These State court opinions evince a nervous apprehensiveness in drawing the line between taxation and the independence of the judiciary.
The framers of our Constitution intended to maintain the independence of the judges by making their salaries secure from all improper legislation —from such legislation as might operate as an attempt to retard them in the administration of their high offices. In securing fixed judicial compensation it was not intended to exempt the judges from all civic duty, or from a fair share of the public burdens which are borne by all taxpayers.
As to the personal protest of Chief Justice Taney, cited in the brief on the other side, which was addressed to the Secretary of the Treasury, we submit that it was not addressed to the proper department of the Government, and hence that it can have no weight here, especially as all the justices continuously thereafter submitted to the tax without taking any steps to have the constitutional question determined by appropriate legislation, or by a court of competent jurisdiction, at the suit of one of the justices or one of the circuit or district judges.
2. Any construction of the Constitution which would exempt judicial salaries from equal taxation would certainly also exempt them from the laws which made such salaries payable in Treasury notes, and with much stronger reason.
The law under which the tax was levied recognized that some incomes would be in coins and others in paper currency. (14 Stat. L., 147; Trebilcock v. Wilson et ux., 12 Wall., 687, 676; Lane County, Oregon (7 Wall., 71); Bronson v. Rodes (id., 229); The Emilie Souder (17 Wall., 666.)
Nor could it be shown that the law prohibited the payment of these salaries in coin, because, as said by Chief Justice Chase, delivering the opinion of the Supreme Court, at the December term, 1868, in Bronson v. Rodes:
" It must be observed that the laws for the coinage of gold and silver have never been repealed or modified. They remain on the statute book in full force. And the emission of gold and silver coins from the mint continues, the actual coinage during the last fiscal year having exceeded, according to the report of the Director of the Mint, nineteen million dollars.
"Nor have the provision of law which make these coins a legal tender in all payments been repealed or modified."
Whether th e payment of these salaries in paper money during the income-tax period actually diminished the compensation of the judges, as it had been ascertained by law on March 3,1855, can perhaps be discovered by the language of the same opinion in the opening paragraph:
"It is not pretended that any real payment or satisfaction of an obligation to pay fifteen hundred and seven coined dollars can be made by the tender of paper money [United States legal-tender notes] worth in the market only six hundred and seventy coined dollars."
If paying judicial salaries in legal tender-notes of the current value of $2.25 to $1 in coin was not a violation of the con stitutional provision which secures judicial compensation from being diminished, we fail to see how a general income tax of from 3 to 5 per cent, could be obnoxious to that provision.
(IY) As to the second phase of the case, looking at the matter as a demand for unpaid salary.
In this view of the case the First Auditor and First Comptroller, as accounting officers of the Treasury, had alone the power to receive and settle a claim for the unpaid salary. They were not at the time of the demand, nor are they now, embarrassed by kny statute of limitation in respect to such a claim.
(1) There may be a question as to whether these officers can lawfully state and certify an account for the unpaid part of a salary in the absence of a demand therefor by the creditor.
(2) But this is not the case at bar. The account was stated and certified by the Fifth Auditor and the First Comptroller of the Treasury for a sum of money admitted by them to be due, and payable from the appropriation for refunding iuternalrevenue taxes, and a warrant and draft were issued against that appropriation. If it should be contended that the account stated by the Fifth Auditor ought to be regarded as an adjustment for an unpaid balance of salary, we submit that such action was not within his statutory powers, because the First Auditor alone had j urisdiction to state a j udicial salary account. (Rev. Stat., 277.)
Without the preliminary action of the First Auditor the First Comptroller had no jurisdiction to certify a balance due and payable from a judiciary appropriation. Hence, if for the moment we regard the matter as an abortive settlement of a judge's salary account, it is obvious that the draft and warrant granted for the payment of the balance found due were inadvertently issued, and that, as no money was actually paid out of the Treasury, the error has been corrected by covering back the money drawn by that warrant into the appropriation from which it had been erroneously taken. Hence, in fact, as well as in contemplation of law, no amount of any draft issued for an unpaid balance of decedent's salary as a justice of the Supreme Court was ever carried to the credit of the payee into the "outstanding liability account" provided in sections 306 and 307 of the Revised Statutes.
^3) This, therefore, is not a case of prima facie liability arising upon an award, nor a case of prima facie liability arising on the issue of a Treasury draft for the payment of a stated and certified salary account, nor a case arising on the refusal of the First Comptroller in the year 1888 to abide by the decision of his predecessor in office and to comply with the provisions of sections 306-308 of the Revised Statutes in respect to the amount represented by the unpaid draft.
On the contrary, it is a case resting upon impeached, unauthorized, and mistaken action on the part of the Commissioner of Internal Revenue, upon which no liability on the part of the defendant can be implied.
Richardson, Ch. J.,
delivered the opinion of the court: '
The claim in this case is founded on the following facts:
A draft had been issued by the Treasurer, in December, 1873, in favor of the claimant's testator, for $1,128.97, and had been sent to the Commissioner of Internal Revenue, to be mailed to him. While there it was stolen, with other drafts, and has never since been heard from. After three years had expired, the draft remaining unpaid, the amount was deposited by the Treasurer, covered into the Treasury by warrant, and carried to the credit of the claimant's testator in the appropriation account of u outstanding liabilities-" (Rev. Stat., § 306.)
So it remained until the early part of 1888, when the testator's then executrix made a formal demand for the amount. On the 24th of April of that year the First Comptroller disallowed the claim, and recommended that the matter be referred to the First Auditor tor the statement of an account in the name of the payee of the draft, payable from outstanding liabilities and to be paid to the Treasurer for deposit to the credit of the appropriation " for refunding taxes illegally collected " on account of erroneous allowance made in favor of the payee of said draft. This was accordingly done.
The defendants set up several defenses. First, the statue of limitation. In our opinion this defense can not prevail. Money carried to the appropriation account of " outstanding liabilities" is held in the nature of a trust fund awaiting demand of the parties to whose credit it stands. Revised Statutes, § 307, makes a permanent appropriation for the redemption and payment of all such outstanding and unpaid drafts, and § 308 provides for their payment when presented, without limit of time.
In Waddell's Case (25 C. Cls. R., 323, 328) we held as to stale claims that "there is much indebtedness of the United States which no lapse of time in making application for payment renders stale, such as interest on registered bonds and other balances stated in favor of parties on the books of the Treasury Department, as to which the only proof to be made is the identity of the claimant or of his right to represent the record creditors."
We now hold that the statute of limitation does not run against outstanding liabilities so entered in the books of the Treasury Department for which there is a permanent appropriation and other provisions by Revised Statutes, § 306, 307, 308, until the outstanding drafts, etc., are presented, or demand is made without the draft and its nonproduction is properly accounted for. The case can not be distinguished in principle from that of Taylor (104 U. S. R., 216) affirming the judgment of this court (14 C. Cls. R., 339).
The nonproduction of the draft is sufficiently accounted for by proof of its having been stolen more than seventeen years ago and never since heard from. In such a case it is not necessary to give a bond of indemnity, as is usual in suits on lost negotiable instruments, and the defendants have asked for none.
The statue of limitation does not run against a fund held in trust until the trustee disavows the trust. When, on demand by the claimant's predecessor, in 1888, the Comptroller of that year not only refused payment, but, overruling the previous action of Ms predecessors of more than ten years' standing, ordered the money tobe withdrawn from the account of outstanding liabilities and carried to another account, and that was done, this was a disavowal of the trust, and the statute might begin to run from that date, but not before. This suit was commenced within six years from that time.
Another defense is that the original allowance or award by the Commissioner of Internal Revenue was void, because the claim was not presented to him in a formal manner on a blank prescribed by the Secretary of the Treasury, within the time limited by the act (now Rev. Stat., § 3228).
The findings show that when, on the 7th June, 1873, the very next day after the limitation had expired, the Commissioner made his award conditionally on the approval of the Secretary of tbe Treasury, he had before him a statemeut from the Comptroller, dated April 30,1872, which was more than a year within the statute period of limitatiou, and that he attached it to a regular printed blank. In the opinion of the court this was a sufficient presentation of the claim within the meaning of the statute and the regulations, accepted as it was by the Commissioner. Yalid claims can not be defeated by irregularities of the executive officers in mere matter of form. The printed blanks prescribed by the Secretary of the Treasury did not exactly and aptly apply to such a case as the one before the Commissioner, and he accepted the informal statement made out by the Comptroller as sufficient. The Secretary of the Treasury approved the allowance on that presentation of the claim, both accounting officers of the Treasury at that time passed it in the same way, and a warrant for its payment was drawn by the Secretary. This action on the part of four high executive officers, including the head of the Department, waived such informality and rendered the allowance valid.
Another defense is set up, that the application of the income tax to the salaries of Federal judges was not erroneous, and that the deductions from such salaries were not illegal. In view of the opinion of the Attorney-General in 1869 (13 Opin., 131) and of the protest of Chief Justice Taney, on file in the Supreme Court and read in the trial of the case, as well as the actual refund to all the judges except those in like condition of Mr. Justice Wayne, and the general acquiescence of the profession in that view of the law, we shall not at this late date enter upon the consideration of that question.
Judgment will be entered for claimant for the amount demanded in his petition.