[271]

[272]

UNITED STATES, Piff. in Err.,

v.

JOHN D. SANBORN.

JOHN D. SANBORN, Piff. in Err.,

v.

UNITED STATES.

United States (ctober 15, 1883, to recover
from John D. San.orn the sum of $7,334,
on account of moneys alleged to have been
received by him from the government with-
out authority of law and without right there-
to, with interest on that sum from August
16, 1873. A jury was waived by the written
stipulation of the parties and the case was
tried by the court, which made a special
finding of facts and of law.

(See S. C. Reporter's ed. 271-286.)
Recovering moneys paid-interest, when with-
held-laches-costs, what recoverable by govern-approved May 8, 1872, making appropri-

ment.

1. Where a contract was made by the Secretary of
the Treasury, under Act of May 8, 1872, to pay a
person a percentage for assisting the officers of
the government in recovering moneys due from
one therein named to the government for taxes,
and the Secretary afterwards paid such person
the agreed percentage on the collection of such
tax, induced by his representation that the col-
lection was made by him, the government may
recover back the money so paid, if such repre-
sentation was false, and if the person receiving
the same performed no services in the matter, and
the person paying the taxes had made no effort to
evade their payment.

It was provided by an Act of Congress,
ations for the legislative, executive and ju-
dicial expenses of the government for the
fiscal year ending June 30, 1873, that "the
Secretary of the Treasury shall have power
to employ not more than three persons to
assist the proper officers of the government
in discovering and collecting any money be-
longing to the United States, whenever the
same shall be withheld by any person or
corporation, upon such terms and conditions
as he shall deem best for the interests of the
United States; but no compensation shall be
paid to such persons except out of the money
and property so secured; and no person shall
2. Where interest is recoverable not as a part of be employed under the provisions of this
the contract, but by way of damages, if the plain-clause who shall not have fully set forth in
tiff has been guilty of laches in unreasonably de-a written statement, under oath, addressed to
laying the prosecution of his claim, it may be
properly withheld.
8. The same rule applies to the government when
it has long delayed an assertion of its rights, with-
out reason or excuse for the delay, especially
when it does not appear that the defendant has
earned interest upon the money improperly re-
ceived by him.

4. The United States is entitled, as costs, on recov-
ery against a defendant, to the sums paid for
actual and necessary expenses of clerks of a de-
partment, in going to and returning from and in
attending the court, by direction of the govern-
ment, as witnesses in its behalf.

6. No auditing of such expenses is required; they
are to be taxed as costs.

[Nos. 224, 225.]

Argued Mar. 21, 1890. Decided Apr. 28, 1890.

ERROR to the Circuit Court of the
United States for the District of Massachu.
setts to review a judgment in favor of the
United States in an action to recover moneys
wrongfully received by defendant from the
government. Reversed, with directions to enter
judgment for the principal sum with interest
from the commencement of the action, and for
costs as indicated in the opinion.

The facts are stated in the opinion.
Messrs. Benj. F. Butler and O. D. Bar-
rett for Sanborn.

Mr. Alphonso Hart, Solicitor of Internal
Revenue, for the United States.

Mr. Justice Harlan delivered the opinion

of the court:

These are writs of error from the same judgment. The action was brought by the

NOTE.-When money wrongfully and illegally exacted may be recovered back. See note to Bank of As to action to recover back duties paid under protest, see note to Greely v. Thompson, 13: 398.

U. S. v. Bank of Washington, 8: 299.

As to interest, when recoverable as damages or on money, see note to Sneed v. Wister, 5: 717.

the Secretary of the Treasury, the character
of the claim out of which he proposes to re-
cover, or assist in recovering, moneys for the
United States, the laws by the violation of
which the same have been withheld, and the
name of the person, firm or corporation hav-
ing thus withheld such moneys.' 17 Stat.
69, chap. 140.

"

On the 15th day of July, 1872, Sanborn [273] sent to the Secretary of the Treasury a communication, verified by his oath, submitting a statement under the above Act, and proposing to recover, or assist in recovering, moneys due the United States for evasions of, and frauds upon, the laws for the collection of internal revenue tax on spirituous and fermented liquors, as well in making false returns of the amounts manufactured as in evading the payment of taxes upon those returadi, td t allowed, in the form of a percentage, such amount from the collections as in the judgment of the Secretary was fit and meet.

This letter was followed by a written contract between Sanborn and the acting Secretary of the Treasury under date of August 13, 1872, in which it was agreed that the former might proceed to collect the taxes so alleged to be due to the United States by the persons named; that legal proceedings in the premises should be conducted by the proper United States attorneys, the written consent of the Secretary of the Treasury being first obtained; that no settlement of such claims should be made except under the provisions of section 10 of the Act of March 3, 1863; that the costs and expenses incurred by him in investigating and prosecuting said claims, of every nature, should be borne by him, and no part thereof paid out of the portion retained by the United States; that whenever required by the Secretary he should make a full report in writing of his acts and proceedings under the contract; that the

[274]

money collected, either by legal proceedings
or "by settlement as compromise," should
be placed to the credit of the Secretary of
the Treasury, and out of the same there
should be paid to Sanborn, in full for his
services and for all the costs and expenses of
collection, a sum equal to 50 per cent of the
gross amount collected and received, which
should be paid to him as fast as collected
and placed to the credit of the Secretary of
the Treasury, the balance to be paid into the
Treasury of the United States; and that the
contract might be revoked at any time at the
pleasure of the Secretary.

On the 25th of October, 1872, Sanborn sent
to the Secretary another letter, accompanied
by a statement verified by his oath, asking
that his employment be extended and made to
relate to claims against the persons whose
names were set forth in a schedule annexed to
his letter, for moneys illegally withheld by
them from the government. "I desire, also,"
he said, "to state that the foregoing claims,
out of which I propose to recover, or assist
in recovering, moneys for the United States,
arise under the taxes imposed upon legacies
and successions and income under the Act of
July 30, 1864, and subsequent amendatory
Acts, providing for the collection of taxes
for internal revenue. And I further request
that the foregoing cases may be brought
under my contract with the Secretary of the
Treasury, bearing date August 13, 1872."
In the statement referred to in that letter
is the following:

"District Waldenham
James A.
Burtis... John E. Wool."
Pursuant to this request, the acting Secre-
tary of the Treasury on the 30th of October,
1872, entered into another contract with San-
born, containing, among other provisions,
the following:

The Secretary, under date of February 3, 1873, issued a paper addressed "To supervisors and collectors of internal revenue, in which he requested them to assist Sanborn "in the examination of official records in reference to such cases of alleged violation of the Internal Revenue Laws as he may ask for your co-operation," stating that he was acting under his appointment, and "may need some information from the offices of collectors and assessors for the purpose of verifying his claims." Subsequently, on the 15th of October, 1873, the Secretary issued a similar circular, and asked supervisors and collectors to render Sanborn such assistance as he required.

General John E. Wool died at Troy, New York, November 10, 1869, leaving a large estate, Mrs. Wool surviving him. His will having been duly probated on the 8th of February, 1870, letters testamentary were is sued to John A. Griswold and Asher R. Morgan. Subsequently, October 31, 1872, Griswold died leaving Morgan as sole executor. Mrs. Wool died May 7, 1873.

On the first day of August, 1873, Morgan delivered to Lucien Hawley, a supervisor of internal revenue, in payment of taxes due from the estate of Wool, his draft, as executor, upon the United States Trust Company of New York, payable to the order of the Secretary of the Treasury, for the sum of $14,668. Hawley delivered it to Sanborn on or about its date, and on the 3d of August, 1873, the latter inclosed it to the Secretary of the Treasury, in a letter of which the following is a copy: "Referring to the contract made by me with the Hon. George S. Boutwell, late Secretary of the Treasury, bearing date August 13, 1872, and as amended by the agreement October 30, 1872, I have the honor to report that Asher R. Morgan, executor of the estate of General John E. Wool, deceased, late of Troy, N. Y., and one of the parties named in my schedule accompanying said contract, has paid to me the sum of $14,668, being the full amount of taxes due the government by him arising [276] from the legal assessment on legacies and successions of said trust, and which has never before been paid. I herewith inclose said sum and respectfully request that one half of the same shall be paid into the Treasury to the credit of the Secretary of the Treasury, and that the remaining half thereof shall be paid to me in accordance with the terms of my said contract. Please transmit receipt to Mr. Morgan, No. 7 Beekman Street, New York."

"Whereas John D. Sanborn, of the City of Boston, has fully set forth in a written statement signed by him, under oath, and has filed the same in the office of the Secretary of the Treasury, wherein he proposes to recover, or assist the proper officers of the government in recovering, for the United States from the following persons, to wit: John E. Wool estate, large sum of money, that is to say, the sum of fifty thousand dollars, which the said Sanborn claims to be due to the United States, as and for internal revenue taxes which have been withheld by said persons, under and by force of the Act of June 30, 1864, and other Acts amendatory thereof, imposing taxes upon legacies, successions and incomes; it is here- The Secretary of the Treasury on the 9th by agreed by and between W. A. Richardson, of August, 1873, indorsed this draft to the acting Secretary of the Treasury, of the first order of the Treasurer of the United States, part, and the said John D. Sanborn, of the and directed the latter to deposit it to the second part, that the contract or agreement special credit of the Secretary on account of entered into by and between the said parties, moneys received and paid under the first secbearing date August 13, 1872, relating to tion of the Legislative, Executive and Juthe proposed recovery of certain moneys al- dicial Appropriation Act, approved May 8, leged to be due to the United States, is here- 1872. The draft, having been indorsed by by extended and enlarged, so as to embrace the treasurer of the United States to the as[275] and relate to the persons herein specifically sistant treasurer of the United States at New enumerated; and all the provisions, condi-York, was paid by the United States Trust tions and terms of the said contract of August Company, and the proceeds were placed to 13, 1872, shall be held to apply to and control the special credit of the Secretary of the this agreement."

Treasury.

[277]

him. What are the facts, disclosed by the
finding of the court below, which justify
this conclusion?

On the 16th of August, 1873, the Secretary | fendant insists that they were collected under
delivered to Sanborn a draft on the Treasurer a valid contract between him and the Secre-
of the United States for $16,001.34, on ac-tary of the Treasury. If we assume, for the
count of moneys collected in various cases purposes of this case, that such contract was
specifel in his contract, and of that sum, in all respects valid, and was broad enough
the above $7,334 was on account of collections to embrace the collection of legacy taxes
from the estate of General Wool. That draft from Wool's estate, whether due upon the
on its face directed the treasurer to charge its death of the testator or upon the death of the
amount to the Secretary's special deposit ac- widow, nevertheless, the judgment below,
count of moneys received and paid under the so far as it recognized the right of the United
first section of the Legislative, Executive States to recover the amount paid to the de-
and Judicial Appropriation Act, approved fendant out of the sums received from that
May 8, 1872. Under date of August 16, 1873, estate, must be affirmed. It must be affirmed
the Secretary inclosed to Morgan a writing, because the payment was made in the belief,
acknowledging "the receipt, through John superinduced by Sanborn's representations to
D. Sanborn, special agent, of the sum of the Secretary of the Treasury, that the col-
fourteen thousand six hundred and sixty-lection from Wool's estate was made by
eight dollars ($14,668), being the amount of
taxes on legacies and successions due the
government from the estate of the late Gen-
eral John E. Wool, of Troy, N. Y." It was
found as a fact that the United States has
never refunded any part of the sum collected
from the estate of General Wool; that no
demand to have the same refunded has ever
been made; and that the taxes were paid
without protest. And it was found, as mat-
ter of law, that the United States was entitled
to recover the said sum of $7,334, with in-
terest at the rate of six per cent per annum
from August 16, 1873, to the date when
judgment should be entered. Judgment was
accordingly entered August 14, 1886, in favor
of the United States against the defendant
for the sum of $13,052.08 damages, and for
its costs, which, under the order of the court,
were taxed at $83.30.

As by section 125 of the Act of June 30, 1864, amended by that of July 13, 1866 (14 Stat. 140, chap. 184) a legacy tax was due and payable whenever the party interested was entitled to the enjoyment of the legacy, or to the beneficial interest in the profits accruing therefrom, there was some discussion at the bar in respect to the time when the legacies in question vested in possession and enjoyment; whether immediately upon the death of the testator, as claimed by the defendant, or at the death of the widow, as claimed by the government. The Solicitor of Internal Revenue contends that although the tax was not collectible until Mrs. Wool died, liability therefor arose immediately upon the death of the testator, and that such liability was not discharged, but was saved, by the Act of July 14, 1870, abrogating all legacy taxes. 16 Stat. 256. He also contends that these taxes, not being payable until Mrs. Wool died, were not, within the meaning of the Act of May 8, 1872, under which this contract of October 30, 1872, with Sanborn purports to have been made, "withheld" from the United States at the time that contract was made. On this last ground he questions the authority of the Secretary of the Treasury to have allowed Sanborn any part of the sum collected from Wool's estate on account of legacies.

Within a few weeks after the death of the widow, Morgan-upon his own motion, without having known Sanborn, and without having the matter brought to his attention by Sanborn, or by anyone representing himwrote to the Secretary of the Treasury asking that the question of a succession and legacy tax from the estate of General Wool be referred to some person having authority to pass upon his liability to pay it.

This was followed by a communication, under date of the 12th of July, 1873, by the commissioner of internal revenue, addressed to Collector Masters, in which the former said: "T. J. Cram, of 1817 De Lancey Place, Philadelphia, Pennsylvania, writes: MajorGeneral Wool, U. S. A., died November 10, 1869 (in Troy, N. Y., his residence), leaving legacies of $4,000 each to my wife and myself. But there was a condition in the will forbidding his executors from paying any legacies until after the death of his wife.

Mrs. Wool died 6th May last. The executor proposes to retain from the legacies U. S. tax of 6 per cent on payment 18th inst. of the legacies, etc. There is nothing in the statements above to show that the said legacies are not subject to tax, but the same would appear to be liable, as indicated in Circular 86. (See p. 30, Series 6, No. 1.)"

At the date of General Wool's death Masters was collector of internal revenue, his district including the City of Troy. He and his deputy knew of his death at or about the time it occurred, and knew that he left a large estate. They also knew what were the provisions of his will and talked together, both before and after Mrs. Wool died, in reference to the claim that a legacy_tax would be due after her death. Prior to July 31, 1873, Morgan received from the Secretary of the Treasury a letter referring all questions relating to these taxes to Lucien Haw. ley, supervisor of internal revenue, with whom he had several conversations upon this subject. The collector, Masters, under date of July 31, 1873, addressed a letter to Morgan, as executor, in which he said: "No It is unnecessary in the present case to ex- return has been made to me of the legacies amine any of these questions; for both of and distributive shares of the estate of the the parties to the present suit insist that these late General John E. Wool, of whose will I taxes were, when collected, legally due from am informed you are the only surviving exWool's estate to the government. The de-ecutor who has qualified as such. Inclosed

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herewith is the 'collector's notice for legacy | competent authority of the question of his
and succession taxes' and the proper form liability. As soon as it was determined ad-
upon which to make a return of all the leg-versely to him he paid the taxes through the
acies and distributive shares arising from officer to whom the matter was referred by
personal property, etc., being in your charge the Secretary, and not to Sanborn, of whom
and trust as executor as aforesaid. Please he had no knowledge.
make a return to me at your earliest conven-
ience of all such legacies and distributive
shares or successions, and all other facts and
information as required by law to be made
by you as executor." In that letter he en-
closed a collector's notice for legacy and
succession taxes and the proper blank upon
which to make the required return.

It is stated in the finding that about one month after the death of Mrs. Wool the defendant called on Hawley "for aid in the matter of collecting the tax due from the estate of said John E. Wool."

The suggestion that Sanborn was entitled to fifty per cent of all collections from the persons named in his contract, by whomsoever, or in whatever mode, such collections were made, is wholly inadmissible. The contract, upon its face, contemplated, as a condition of his receiving compensation, that he should do something of a substantial character in collecting the taxes alleged to be withheld.

We are of opinion that the payment of the
$7,334 to the defendant was due to a misap-
prehension, upon the part of the Secretary
of the Treasury, as to the nature of his serv-
ices-a misapprehension resulting from his

amount so paid ought, in equity and good
conscience, to be returned to the United States.

In view of the findings, which, upon this
writ of error, we must assume to be true, it
is clear that the representation of the defend-representations to that officer-and that the
ant to the Secretary of the Treasury, in his
letter of August 31, 1873, that the executor
of Wool had paid to him the sum of $14,668,
for taxes due the government on legacies and
successions, was not in accordance with the
facts. The draft covering the taxes was de-
livered by the executor of Wool to Hawley,
a supervisor of internal revenue, who, in-
stead of sending it directly to the Secretary
of the Treasury, as he might properly have
done, and as, perhaps, he ought to have done,
delivered it to Sanborn, who-so far as the
record shows-performed no services in this
business, except to call upon Hawley about
[[280] one month after the death of Mrs. Wool and
ask his aid in the matter of collecting the
taxes claimed from Wool's estate.

But we are of opinion that the court be-
low erred in allowing interest for any time
prior to the institution of this action. More
than ten years elapsed after the payment to
Sanborn before his right to retain the money
was questioned by suit or otherwise. When
the facts disclosed by the evidence were first
discovered by the officers of the government
whose duty it was to institute legal proceed-
ings against the defendant, does not appear.
It is entirely consistent with the record that
the long delay which occurred is without
excuse. In Redfield v. Ystalyfera Iron Co.,
110 U. S. 174 [28: 109], the question was
whether the plaintiff was entitled, under the
It is, however, contended that the court circumstances of that case, to recover interest,
below erred in excluding certain evidence the action being against a collector to re-
offered by the defendant, which would have cover damages for an illegal exaction of cus-
disclosed more fully the nature of the serv-toms dues. The court, after observing that
ices rendered. It is only necessary to say
upon this point that the evidence so offered
and excluded relates to efforts made by Haw-
ley and his employés to secure the payment
of the taxes claimed from Wool's estate.
That evidence, if admitted, would have
strengthened the case for the government, for
it tended to show that what Hawley did was
done under his own responsibility and duty
as an officer, and not in aid of Sanborn under
his contract for the collection of taxes from
Wool's estate. The defendant, it is true,
communicated to the Secretary of the Treas-
ury, in October, 1872, the fact that the gov-
ernment had a claim against that estate for
taxes. But that fact was known long before
that time to the collector of the district in
which the testator resided at his death, who
intended to enforce the rights of the govern-
ment when the widow died. The defendant
is not shown to have performed any services
whatever in the matter, except to request
the aid of Supervisor Hawley. That, how
ever, did not justify him in representing to
the Secretary of the Treasury that he had
collected those taxes from Wool's estate.
In fact, there was no effort upon the part of
the executor to evade payment of them. He
brought the matter himself to the attention
of the Secretary, and sought a decision by

interest is recoverable as of right, when re-
served expressly in the contract, or when
implied by the nature of the promise, said:
"But where interest is recoverable not as a
part of the contract, but by way of damages,
if the plaintiff has been guilty of laches in
unreasonably delaying the prosecution of his
claim, it may be properly withheld." We
think that the same rule should be applied
against the government when in a case like
the present one it has long delayed an asser-
tion of its rights, without showing some
reason or excuse for the delay, especially
when it does not appear that the defendant
has earned interest upon the money improp-
erly received by him.

The writ of error on behalf of the govern-
ment presents a question of costs that must
be determined. After judgment was ordered
in the court below for the United States,
its attorney submitted a bill of costs, which
included, among other items, duly certified,
the sums paid for the actual and necessary
expenses of four clerks, two in the War De-
partment and two in the internal revenue
office at Washington, in going to and return-
ing from Boston, and in attending the court
there, by direction of the government, as wit-
nesses in its behalf. These sums amounted
to $212.20. The defendant objected to any

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[282]

[283]

"Sec. 850. When any clerk or other officer of the United States is sent away from his place of business as a witness for the government, his necessary penses, stated in items and sworn to, in going, returning and attendance on the court, shall be audited and paid; but no milage or other compensation in addition to his salary shall in any case be allowed."

"Sec. 983. The bill of fees of the clerk, marshal and attorney, and the amount paid printers and witnesses, and lawful fees for exemplifications and copies of papers necessarily obtained for use on trials in cases where by law costs are recoverable in favor of the prevailing party, shall be taxed by a judge or clerk of the court, and be included in and form a portion of a judgment or decree against the losing party. Such taxed bills shall be filed with the papers in the cause."

allowance whatever in the taxation for costs
for the traveling or other expenses of wit-
ness in the employment of the United
States. The question having been submitted
to the court, this objection was sustained.
United States v. Sanborn, 28 Fed. Rep. 299.
The whole subject of fees in the courts of
the United States is regulated by chapter 16,
title Judiciary, of the Revised Statutes. By
section 823 it is provided that the fees al- "Sec. 855. In cases where the United States
lowed in that chapter and no other "compen-are parties, the marshal shall, on the order
sation" shall be taxed and allowed in the of the court, to be entered on its minutes,
courts of the United States, to the officers pay to the jurors and witnesses all fees to
therein named and to witnesses, except in which they appear by such order to be en-
cases otherwise expressly provided by law; titled, which sum shall be allowed him at
leaving attorneys, solicitors and proctors to the treasury in his accounts."
charge and receive from their clients, other
than the government, such reasonable com-
pensation for their services, in addition to
the taxable costs, as may be in accordance
with general usage in their respective States,
or as may be agreed upon between the two
parties. Sections 824 to 827, inclusive, re-
late to the fees of attorneys, solicitors and
proctors, and section 828 to the fees of clerks.
Section 829 allows a marshal two per centum
"for disbursing money to jurors and wit-
nesses and for other expenses," and provides
that "in all cases where milage is allowed Upon full consideration of all the provis- [284]
to the marshal he may elect to receive the ions of the Statute, and in view of the settled
same or his actual traveling expenses to be practice in different circuits, we are all of
proved on his oath to the satisfaction of the opinion that the court below erred in holding
court." Section 846 provides: "The accounts that the word "audit" in section 850 means
of the district attorneys, clerks, marshals that the necessary expenses of the witnesses,
and commissioners of circuit courts shall be therein provided, are to be audited by the
examined and certified by the district judge proper executive department or officer, and
of the district for which they are appointed that nothing was to be taxed for the travel
before they are presented to the accounting or attendance of the clerks named in the
officers of the Treasury Department for set-government's bill of costs. The word
tlement. They shall then be subject to re-
vision upon their merits by said accounting
officers, as in case of other public accounts:
Provided, That no accounts of fees or costs
paid to any witness or juror, upon the order
of any judge or commissioner, shall be so
re-examined as to charge any marshal for an
erroneous taxation of such fees or costs."
Other sections of the Statute bearing more or
less upon the question before us are as fol-
lows, under the head of Witnesses' Fees:

"Sec. 848. For every day's attendance in court, or before any officer pursuant to law, one dollar and fifty cents and five cents a mile for going from his place of residence to the place of trial or hearing, and five cents a mile for returning. When a witness is subpenaed in more than one cause between the same parties, at the same court, only one travel fee and one per diem compensation shall be allowed for attendance. Both shall be taxed in the case first disposed of, after which the per diem attendance fee alone shall be taxed in the other cases in the order in which they are disposed of. When a witness is detained in prison for want of security for his appearance, he shall be entitled, in addition to his subsistence, to a compensation of one dollar a day.

"Sec. 849. No other officer of the United States courts, in any State or Territory, or in the District of Columbia, shall be entitled to witness fees for attending before any court or commissioner where he is officiating.

audit," in that section, does not necessarily imply that these expenses must be audited, in the first instance, by an executive department or officer. The bill for such expenses is unlike the ordinary claim for per diem and milage. The Statute fixes the amount to be allowed for attendance and milage to witnesses entitled to claim therefor, and no auditing in respect to such claims is required; whereas, the items that enter into the account of a clerk or other officer, sent away from his place of business as a witness for the government, for his necessary expenses "in going, returning and attendance on the court," cannot well be known to the court or its clerk, and must be furnished by the witness himself. Those items are to be examined, looked over and adjusted; in other words, they must be audited. The auditing contemplated by section 850 must be done, primarily, in the court in which the case is pending, and where it can be best determined what expenses have been necessarily incurred by the witness. This construction of the section is supported by section 983, which provides that the amount paid, that is, properly paid, to witnesses, shall be taxed by a judge or clerk of the court, and be included in and form a portion of the judgment or decree against the losing party; by section 855, providing that in cases where the United States are parties the marshal shall, on the order of the court, to be entered in its minutes, pay to the witnesses all fees to which