Miltenberger v. Cooke - 85 U.S. 421 (1873)
U.S. Supreme Court
Miltenberger v. Cooke, 85 U.S. 18 Wall. 421 421 (1873)
Miltenberger v. Cooke
85 U.S. (18 Wall.) 421
1. When a collector of internal revenue in a rural district of Mississippi -- where, owing to the lawless condition in which the rebellion, then but recently suppressed, had left the region, it was not safe to have gold and silver in one's house -- in violation of the provisions of the Independent Treasury Act but with an apparently good motive -- openly and without indirection, and because he thought it more safe thus to act than to take gold and silver -- took in payment of taxes on cotton, accepted drafts drawn by the shippers of it on consignees of it in New Orleans (which was the place of deposit for taxes collected in Mississippi), afterwards (the drafts not being paid, and he having in his accounts with the government charged himself and been charged by it with the tax as if paid in gold and silver), sued the acceptors, the fact that in taking the drafts instead of gold and silver, he had acted in violation of the statutes of the United States does not so taint his act with illegality as that he cannot recover on them, the government not having repudiated his act nor called on the shipper to pay, but, on the contrary, leaving the account of the collector open to see if he could not himself get the amount from the acceptor of the drafts.
2. As between the parties, the collector's charging himself with the tax and reporting it to the government as paid would be payment by the collector of the tax.
3. Where a party authorized another to draw different drafts on him upon different consignments to be made, and this other made different consignments and drew different drafts, the party authorizing the drafts accepts them in advance, and should set aside and hold enough money from the proceeds of the consignments to pay them, come in for payment when they may. If after such promise to accept, drafts are drawn through a term beginning in October of one year and running into February of another (the drawee as the drafts are drawn being advised of the fact that the drafts have been drawn), it is no excuse when the drafts do come in, as, ex. gr., in the middle of April of the second year, for the drawee to say that from their not being presented in due course, he supposed that the drawer had taken them up, and that on this assumption he had closed accounts with him and paid over to him the balance found. He is bound to pay the drafts.
An act of August 6, 1846, [Footnote 1] 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 13, 1866, [Footnote 2] 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, someone 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 24, 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 26, 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 percent 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 endorsed 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 26, 1866.
Miltenberger & Co. set up as defense 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.