Case: MORRIS M. HILAND v. THE UNITED STATES
Abbreviation: Hiland v. United States
Decision Date: 1885-06-01
Docket Number: No. 14343
Citation: 20 Ct. Cl. 410
Volume: 20
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: MORRIS M. HILAND v. THE UNITED STATES.
Judges: Nott, J., did not sit at the trial of this case and took no part in the decision.
Pages: 410–416

Head Matter:
MORRIS M. HILAND v. THE UNITED STATES.
[No. 14343.
Decided June 1, 1885.]
On the Proofs.
A collector of internal revenue is suspended, and, against liis protest, the claimant is made acting collector. At tlie Treasury tlie accounts are continued in the name of the collector, and a deficiency of the acting collector is charged to the collector. Subsequently the collector, disclaiming liability for the claimant, effects a compromise. Tlie claimant now brings liis action for the compensation due him as acting collector, the amount of which has been covered into the Treasury, maintaining that his deficiency has been extinguished by the compromise.
I.An acting collector of internal revenue is liable for whatever public money he personally took and apiiropriated to his own use.
II.The liability of a public officer for money taken and apiiropriated is not discharged by the Treasury Department charging the loss to another officer. The liability of a public officer is neither created nor released by bookkeeping.
III. A compromise between a defaulting officer and the government will
not be construed so as to shield another officer not a party to it.
IV. An officer whoso indebtedness to the government is apparently covered by a compromiso to which he was not a party cannot adopt so much of it as releases him from liability and reject the part which releases the government from liability to him.
The Reporters’ statement of tbe case:
Tbe following are tbe facts as found by tbe court:
I. On December 10, 1872, one Isaac Taylor, then collector of internal revenue for tbe sixth district of Tennessee, was suspended as a defaulter, and tbe claimant, wbo bad up to that date been a' deputy under Taylor, was designated as acting'collector. He held this position until May 24, 1873. Upon tbe latter date the sixth revenue district of Tennessee was consolidated with another, and tbe office of collector for that district became extinct.
II. During tbe period from December 10, 1872, to May 24, 1873, while claimant was acting collector, tbe total amount of internal revenue collected by him was $13,761.57. Of this amount be turned into the Treasury $12,251.52, leaving a balance still due the government of $1,510.05.
HI. In addition to the collections reported by the claimant himself, as stated in finding ii, liis successor reported against him three other items, of the dates and amounts following :
August 6,1872, as deputy collector, $143.30; March 27,1873, $131; April 9, 1873, $300.
None of these amounts have ever been accounted for by the claimant.
IV. The claimant made monthly reports to the Commissioner of Internal llevóme of the collections and deposits, shown in finding ii, in his own name, as acting collector, but in the Treasury Department no account was opened with him. All his own returns, as well as those reported against him in finding iii; were carried into the account of the suspended collector. In this way the defalcation of the claimant did not appear upon the books of the Treasury against himself, but went to swell the deficiency of Collector Taylor.
V. Compromise of Taylor:
“ Washing-ton, D. O., March 15, 1881.
“ To the Hon. SECRETARY OE THE TREASURY oe the United Staies,
“Washington, D. G.:
“ Sir : I respectfully state that I was appointed collector of internal revenue for the Gth district of the State of Tennessee, and entered upon duty June 16th, 1871, and continued to discharge the duties of such office until the 10th day of December, 1872: I was then suspended by the supervisor of internal revenue. M. M. Hiland, a deputy and clerk in the office (but not the senior off’r deputy), was designated as acting collector,against my wish and earnest protest, believing, as I did, that he was unfitfor so responsible a position. He was subsequently arrested for embezzlement, but escaped from the officer. He proved to be a defaulter to the amount of $1,999.62, as shown by the records.
“ The balance against me as late collector, as shown by accounting officers of the Treasury Department, amounts to $12,878.79, made up from the following items:
Cash. $6,277 Ü6
Taxes unaccounted for. 6,285 23
Bonded goods. 866 50
12 878 79
“ The cash balance above stated embraces the $1,999.62 for which the said Hiland was a defaulter, which if deducted would leave a cash deficit against me of $4,277.44, which sum to wit, four thousand two hundred seventy-seven and-^- dollars, together with all costs of suit, I propose to pay, in compromise of said claim against me.
“ I am informed that there is a balance of about $1,200 standing to the credit of said Hiland on his compensation account, which the government can apply to the payment, as far as it will go, of the $ 1,999.02 for which he is a defaulter.
“The Hon. Secretary is requested to give this proposition a favorable consideration, upon grounds of equity, for the reason that I was summarily removed from office, and restrained from all access to or authority over the office records, and it is my firm belief that if I had been permitted to close up my own office affairs I could have closed my accounts with the government without any deficit remaining against me. In order to raise the money to pay the amount herein proposed it will bo necessary to mortgage my farm, which I will do, and deposit the money within thirty days, if my proposition is accepted, and so I beg you to give it the same consideration that you -would if the money was deposited with the proposition.
“ Very respectfully,
“Jesse Taylor,
“ Late Collector, 6th List. TewnP
This offer was referred to the Solicitor of the Treasury, who made the following report:
“Department oe Justice,
“ Office of the Solicitor of the Treasury,
11 Washington, L. C., June 28th, 1881.
“ Sir : I have the honor to enclose herewith an offer of Jesse Taylor, late collector of internal revenue, 6th Tennessee, to compromise the claim of the government against him by the payment of $4,277.44 and costs, which has been deposited as required by Treasury regulations. The amount of the offer has been increased to the sum of $5,000.
“He gave bond on the 12th of May, 1871, in a penalty of $100,000, with nineteen sureties. Upon settlement of his accounts he was found to be in default to the government in the sum of $23,840.92, and subsequent adjustments have reduced the balance to the sum of $12,878.79. Suit for the recovery of this sum and interest was commenced in the U. S. circuit court for the middle district of Tennessee, and is now pending.
“The amount claimed is made up of the following items, viz:
Cash. $6,277 06
Taxes unaccounted for... 6,235 ‘¿3
Tax on bonded goods... 366 50
12.878 7<>
* % * # # # #
“ I have carefully cousidered the legal difficulties that will attend the recovery of a portion of the cash balance of this claim, and I think, with the United States attorney, that they render a recovery for an item of $1,999.62 very doubtful. This part of the default occurred after Mr. Taylor was summarily ejected from the office, and during the incumbency of Deputy Collector Hiland, against whose appointment Mr. Taylor protested.
“ In view of this fact, and the recommendations of the United States attorney and Commissioner of Internal Eevenue, I recommend that the sum of $6,000 and all costs of suit be accepted, provided that all amounts due to either Mr. Taylor or Acting Collector Hiland on account of services rendered or expenses incurred be also covered into the Treasury on account of this balance.
“Respectfully, “K. Rayner,
“ /Solicitor of the Treasury.
“ Hon. William; Windom,
“ Secretary of the ■Treasury.”
The Secretary, in reply, under date of July 6,1881, after reviewing the facts, concluded as follows:
“ You state that you have carefully considered the legal difficulties alluded to, and in view of them, and the recommendations of the United States attorney and the Commissioner of Internal Revenue, you recommend that the sum of $6,000 and costs of suit be accepted, provided that all amounts due to either Mr. Taylor or Acting Collector Hiland on account of services rendered or expenses incurred be also covered into the Treasury on account of this balance, as recommended by the Commissioner of Internal Revenue.- In view of these recommendations, and especially of the probability arising from these statements that a jury would favor the defendant, I have decided to approve the settlement on the terms stated by you, and you are accordingly authorized to see that it be carried into effect.
“Very respectfully,
“William Windom,
“ Secretary.”
YI. Thereafter, to wit, October 28, 1881, the compensation and expenses of the claimant while acting as collector were settled by the First Auditor and found to be $1,261.02. This sum was admitted and certified by the First Comptroller as due to the claimant. Drafts for this amount were drawn in his favor, and were, November 7, 1881, deposited and “ covered into the Treasury on account of the balance ” against Ex-Collector Taylor, as provided in the compromise.
Mr. William E. Earle for the claimant:
Suit can be maintained upon drafts issued as these were, and retained by the First Comptroller and then turned into the Treasury. (Vide Nidi v. United States, 17 0. 01s. R, 39.) To warrant the Treasury officers in carrying these drafts to the credit of the third party they must have had some express authority from the payee.
Without mutuality of liability there could be no discount. This case does not come within the very plain, legal, and just rule of McKnight’s Case, in which Hart, the assignor, was surety on the bond of Grayson. (Vide 98 U. S. K., 186.)
When these drafts were covered into the Treasury under a settlement warrant to the credit of Jesse Taylor, the case stands just as if on that day plaintiff’s drafts had been paid at the Treasury to a third person, without the indorsement or authorization of the payee. (Vide Buffalo Bayou B. B. v. U. 8., 16 C. 01s. R., 239.)
Mr. E. H. Howe (with whom was the Assistant-Attorney - General) for the defendants.

Opinion:
Scofield, J.,
delivered the opinion of the court:
December 10, 1872, Jesse Taylor, collector of internal revenue for the sixth district of Tennessee, was suspended from office on account of a large defalcation appearing in his accounts. The claimant, one of his deputies, having been designated to perform the duties of the office during the suspension, acted as collector from that time until May 24, 1873.
During his term of service the claimant made regular reports in his own name, as acting collector, of the amounts collected and the amounts deposited by him to the credit of the government. The collections, as reported by himself, amounted to $13,761.57, and the deposits to $12,251.52, leaving him indebted to the government in the sum of $1,510.05.
The compensation due the claimant at that time, as subsequently ascertained by the accounting officers, amounted to $1,251.02.
Section 1766, Revised Statutes, provides that—
" No money shall be paid to any person for his compensation who is in arrears to the United States, until he has accounted for anti paid into tlie Treasury all sums for wbick he may be liable."
These facts and this law seem to make the case too plain for litigation. It has, however, become somewhat obscured by the mode of keeping the accounts in the Treasury Department and by the compromise made with Táylor, the suspended collector.
The claimant, as before stated, made all his reports in his own name, as acting collector, but the department, instead of opening an account with him, made the entries in the accouut of Taylor, as if he were still the acting officer.
When the successor to both Taylor and the claimant took possession of the office lie found and reported to the department several items of collection made by the latter officer, amounting in all to about $500, which the claimant had neglected to report. These items, although reported as against the claimant, were likewise entered in the account with Taylor.
The defalcation of Taylor, thus increased by that of the claimant, amounted to $12,878.79.
The accounts rested in this way until 1881, when Taylor offered to pay $5,000 and all costs in compromise. In making this offer he.pointed out the defalcation of the claimant, which had been charged in his account, as amounting to $1,999.62, and disclaimed his liability therefor. The compromise was finally accepted, " provided that all amounts due to Mr. Taylor or Acting Collector Hiland on account of services rendered or expenses incurred be also covered into the Treasury on account of this balance."
After this compromise the amount due claimant for services and expenses was ascertained, as above stated, to be $1,251.02. Drafts were made out for that amount, in the name of the claimant, and were then deposited and " covered into the Treasury on account of this balance," as provided in the compromise.
The claimant was liable to the government for all the public money which he personally took and appropriated to his own use. That liability was not discharged by the bookkeeping of the department. He reported in his own name, as acting collector, that he had retained $1,510.05 belonging to the government. The retention created the liability. Whether the matter was properly entered upon the Treasury books or not, he was none the less liable to account for it. For the amount re ported against him by his successor, when properly proved, he was equally liable. Itis true these defalcations were all charged in the account of Taylor, but liability is neither created nor released by bookkeeping.
If the $6,000 had been accepted in compromise of the whole defalcation, both of Taylor and the claimant, without condition, the government would have no further claim against either. But it was not so accepted. On the contrary, it was expressly " provided that all amounts due to Mr. Taylor or Acting Collector Hiland on account of services rendered or expenses incurred should be also covered into the Treasury on account of this balance."
To be sure, the claimant was nota party to that compromise, and is not bound by it now unless he chooses to accept it. He cannot, however, accept jt in part and reject it in part. He cannot accept so much of it as releases him from liability for his defalcation and reject the part which releases the government from liability for his compensation.
If he assents to the compromise, he thereby releases his claim for compensation. If be rejects it, he becomesliable to so much of the counter-claim as will be equal to the amount of his services and expenses. In either event his claim is extinguished, and his petition must be dismissed.
Nott, J., did not sit at the trial of this case and took no part in the decision.