Miltenberger v. Cooke

ERROR to the Supreme Court of Louisiana; the case being thus:

An act of August 6th, 1846, commonly known as the 'Independent Treasury Act,' thus enacts:

'SECTION 18. All duties, taxes,. . . debts, and sums of money accruing or becoming due to the United States,. . . shall be paid in gold or silver coin only, or in treasury notes.

'SECTION 19. Any receiving. . . officer or agent, who shall neglect, evade or violate the provisions. . . of the last preceding section of this act, shall by the Secretary of the Treasury be immediately reported to the President of the United States with the facts of such neglect, evasion, or violation, and also to Congress.'

Other sections of the act most carefully provide that no officers with whom money is deposited shall in any manner alter the condition of this money. They are not to use it, lend it, exchange it, deposit it with other persons or depositories except those described in the act. The sixteenth section of the act provides for exact entries of every official transaction of receipt, payment, or transfer, and provides that all irregular or unclean dealing with this public money shall be deemed a felony.

An act of July 13th, 1866, after enacting that subsequently to the 1st of August following 'there shall be paid. . . a tax of three cents per pound on cotton,' proceeds:

'And said tax shall be paid to the collector of internal revenue within and for the collection district in which said cotton shall have been produced, and before the same shall have been removed therefrom. And every collector to whom any tax upon cotton shall be paid shall mark the bales. . . upon which the tax shall have been paid in such manner as may clearly indicate the payment thereof, and shall give to the owner or other person having charge of such cotton a permit for the removal of the same, stating therein the amount and payment of the tax, the time and place of payment, and the weight and marks upon the bales. . . so that the same may be fully identified.'

These statutes being in force, Cooke, resident at Hazlehurst, Mississippi, some one hundred and fifty miles north of New Orleans, and collector of internal revenue for the district of Mississippi, in September, 1866-at which date, the rebellion having been suppressed only within about eighteen months, and the whole rural districts of Mississippi being still more or less in a disorganized and lawless condition, it was not desirable for either collectors in them or their deputies to have on hand large sums of money,-gave public notice in newspapers that the owners or holders of cotton in Mississippi might bring it to the usual shipping-places, adding that as the amount received for taxes on all this cotton would have to be deposited in New Orleans [which was the place of deposit for the Mississippi District], it would suit him and might afford facilities to shippers if he received the amount by draft of the shipper on the consignees in New Orleans, and that he would receive such drafts if the consignees would recognize them so as to make the amount available to him, the collector, at his place of deposit, New Orleans.

Thereupon, Caruthers & Co., residents at Osyka, in the interior of the State, and about half-way between Hazlehurst and New Orleans, having certain cotton which they wished to ship to Miltenberger & Co., their correspondents at New Orleans, wrote to these last:

'October 24th, 1866.

'Please to inform us whether it would suit you if we were to give a draft on you for the internal revenue tax; the collector here preferring the same to money.'

To this Miltenberger & Co., in two days after, replied:

'October 26th, 1866.

'We have no objection to your drafting to us in payment of the internal revenue tax on cotton shipped to us. Your drafts for same will, therefore, be duly honored.'

Hereupon Caruthers & Co., shipping cotton to Miltenberger & Co., at different times, did at or about these same times, draw on them to the order of Cooke, the deputy, some eight or ten drafts, most of them at sight, others at short date, for the taxes chargeable on it. These drafts were given to the deputy collector, he having seen the letter of Miltenberger & Co., promising to accept, &c.,-the bales were marked in the way that the above-quoted statute of 1866 required when the tax was paid, and a permit was given for the removal of the cotton to New Orleans. The collector charged himself with the tax as paid; reported it to the government as paid to him; and was charged with it by the government accordingly. His commissions were 5 per cent. on all amounts paid over. Caruthers & Co. shipped the cotton to Miltenberger & Co. at the city named, and advised them, as they drew the different drafts, of the fact that they had done so. All the drafts drawn were indorsed by the deputy collector, to whom they were given, to Cooke, the principal collector, and two of them went in at once and were paid; but either from the deputy's not sending them to his principal as he got them, or from the principal's not sending them on in regular course to New Orleans for collection, or from some other cause, six of them-drawn between October, 1866, and February, 1867-did not go in for payment till April of the latter year. Miltenberger & Co. then refused to pay, alleging that they now had no cotton belonging to Caruthers & Co., that the non-presentment of the drafts, in due course, had led them to suppose that Caruthers & Co. had themselves in some way taken them up, and that the account of the house had been settled upon that assumption.

Hereupon Cooke sued Miltenberger & Co. to recover on the drafts, and upon what was alleged to be an acceptance of them made in the letter of the said Miltenberger & Co., of October 26th, 1866.

Miltenberger & Co. set up as defence the matters already indicated, and more particularly:

That the laws of the United States did not authorize or permit the collectors of revenue to take or accept drafts for the payment of taxes, or any other thing, except the lawful money of the United States; but, on the contrary, particularly and explicitly prohibited the mode of collection set forth and described in the petition of the plaintiff, and that what had been done was a violation of the acts of Congress in this behalf.

The court below gave judgment for the plaintiff, and the defendants took this writ of error.

It was testified to by Cooke himself, on the trial of the case below, that while the Treasury Department had not 'sanctioned' what he had done, it authorized him 'to avail himself of exchange;' that he had collected, through drafts by shippers of cotton, on its consignees, nearly all the revenue of his district, $500,000 or more; that in the then condition of Mississippi he deemed it safer so to collect it than to collect it in any other way; and that the Treasury Department had left his account open to see whether he could get this money.

Messrs. J. A. and D. G. Campbell, for the plaintiff in error:

A collector of taxes charged with the duty of receiving gold or silver or treasury notes, or notes of the National banks, for the taxes imposed upon cotton, and upon the receipt of the amount, to enter the fact upon his books; stamp it upon the bales of cotton; declare it as a fact in the permit for the removal of the cotton from the district; and faithfully report it to the government,-neglects, evades, and violates his duty when he takes a draft on a commission merchant at a distance, upon a promise contained in a letter to a taxpayer, for the amount of the tax, and treats that draft as lawful money, and allows the removal of the cotton and facilitates its removal and sale by false stamps and false statements in his permits, and does not pay the taxes to the United States.

And the question is, whether a collector of the United States who neglects, evades, and violates his duty, can through the courts of the United States get the benefit of his neglect, evasion, and violation of duty, when he finds that they have failed to secure to him the benefits of compliance with, conformity to, and performance of duty?

The interest of the United States as declared in the acts of Congress is that the collecting, receiving, and disbursing officers of the United States shall know, that all the money which shall pass through their hands as public officers, belongs to the United States, and under no conditions or circumstances shall they presume to deal with it as if they had any sort of ownership, estate, or authority to make any other disposition of it than the law prescribes. The danger from persons in fiscal offices is their forgetfulness of this essential knowledge. The statutes permit no use of the government money, nor exertion of the powers for its collection, receipt or disbursement for any private object. A slight deviation from the austere and self-denying habit prescribed in the rule of the treasury is treated as an infamous offence, a felony. By the light of these statutes it is apparent that this collector's acts are reprobated acts. He has assumed to dispense with the fundamental principle of the acts of Congress relative to the currency in advance. He establishes commercial relations with mercantile partnerships, and the factors of country dealers, on behalf of the treasury of the United States. If he had farmed the revenues in his district from the government by contract, his control over the tax collections could not have been more decidedly that of an owner.

If Cooke had acted with motives the best, the most completely above suspicion, all these observations would apply. But it is not difficult to assign a motive for what was his confessedly irregular and illegal conduct. In the first place his commissions depended upon the amount of his collections and was not limited by a maximum; then there were incidental advantages, supposed to arise from a dispensation on his part, of the laws and the treasury regulations. We find that these drafts were not presented regularly or promptly.

Mr. O. D. Barret, contra

Mr. Justice SWAYNE delivered the opinion of the court.