When a collector is continued in office for more than one term,
but gives different sureties, the liability of the sureties is to
be estimated just as if a new person had been appointed to fill the
second term.
When the accounts of a collector are returned to the Treasury
quarterly, and the date of the commencement and expiration of his
term of office is on some intermediate day between the beginning
and end of the quarter, a restatement and Treasury transcript of
his account up to the end of his term is legal evidence in a suit
against the sureties.
Such a restatement does not falsify the general accounts, but
arranges the items of debits and credits so as to exhibit the
transactions of the collector during the four years for which the
sureties were responsible.
The amount charged to the collector at the commencement of his
second term is only
prima facie evidence against the
sureties.
But payments into the Treasury of moneys accruing and received
in the second term should not be applied to the extinguishment of a
balance apparently due at the end of the first term. Payments made
in the subsequent term, of moneys received on duty bonds, or
otherwise, which remained charged to the collector as of the
preceding official term, should be so applied.
The settlement of quarterly accounts at the Treasury, running on
in a continued series, is not conclusive. The officers of the
Treasury cannot, by any exercise of their discretion, enlarge or
restrict the obligation of the collector's bond. Much less can
they, by the mere fact of keeping an account current in which
debits and credits are entered as they occur, and without any
express appropriation of payments, affect the rights of
sureties.
Page 42 U. S. 251
This case came up from the circuit court for the Southern
District of New York under a certificate of division in opinion
between the judges of that court upon the two following points:
1. Whether the transcript from the books and proceedings of the
Treasury, given in evidence on the part of the United States to
show the indebtedness of Swartwout on 28 March, 1834, on which day
the second term of office of said Swartwout expired, was in this
case competent and legal evidence for that purpose.
2. Whether the payments made by said Samuel Swartwout
subsequently to the said 28 March, 1834, should be applied to the
discharge of his indebtedness existing on said 28 March, 1834, or
accruing during his second term of office, or whether such payments
should be applied to the discharge of his indebtedness accruing
after that time.
The facts in the case were as follows:
Swartwout was appointed collector at the port of New York on 1
May, 1829; but his proceedings during this, his first term, have
nothing to do with the present case.
On 29 March, 1830, his second term commenced, and he was
appointed for four years.
On 22 June, 1830, he gave a bond for the faithful performance of
his duties in the mode prescribed by law, with several sureties,
one of whom was Henry Eckford, whose executors are parties to this
suit. The penalty of the bond was $150,000, and the condition ran
thus:
"Now therefore if the said Samuel Swartwout hath truly and
faithfully executed and discharged and shall continue truly and
faithfully to execute and discharge all the duties of the said
office according to law, then the above obligation to be void and
of none effect; otherwise it shall abide and remain in full force
and virtue."
Quarterly accounts were rendered to the Treasury Department
according to law, but they continued to be made out, as they had
been during his temporary appointment, running from 1 January to 31
March, from 1 April to 30 June, and so on. In these quarterly
accounts were stated the various sums received by him on account of
the government and also the payments which he had made on behalf of
the United States, although it often happened that the covering
warrants
Page 42 U. S. 252
from the Treasury, the final vouchers for such payments, were
not received in time to be returned with said quarterly accounts,
in which case they were thrown into the next quarter, when the
proper credits were given.
Swartwout's third term of office commenced on 29 March, 1834,
and the bond which he gave contained a condition similar to the one
which has been recited, but Henry Eckford was not one of his
sureties. The time, therefore, covered by Eckford was from 28
March, 1830, to 28 March, 1834, inclusive of the latter day.
In his accounts for 1834, Swartwout continued to make them up
for the quarters of the year, as he had done, and his account for
the first quarter was brought up to, and ends on, 31 March. No
account was filed by him ending on 28 March. The one ending on the
31st shows a large balance of "cash on hand."
In adjusting this account, the auditor began with charging
Swartwout with the balance as it stood against him in the preceding
account, then charged him with all the moneys which he had received
in that quarter. Having given him credit for various sums paid into
the Treasury and paid to individuals under proper authority, he
strikes a balance in favor of the United States, which is stated to
consist of bonds uncollected, not due, bonds in suit, general bonds
for spirits, wines &c., and cash on hand.
In adjusting the account for the ensuing quarter, ending on 30
June, 1834, the auditor brought forward the entire balance standing
against Swartwout in the last account, and then proceeded to charge
and credit him as before.
In April, 1839, these accounts were restated by order of the
first comptroller so as to make the first account end on 28 March,
1834, instead of the 31st. The restatement begins on 28 March,
1830, and runs through the whole four years of Eckford's
suretyship, ending on 28 March, 1834, and shows a balance of cash
due to the United States, of $486,455.24. A certified copy of this
paper is the transcript mentioned in the certificate of division of
opinion in the court below.
Page 42 U. S. 257
MR. JUSTICE McLEAN delivered the opinion of the Court.
This action was commenced in the Circuit Court for the Southern
District of New York, against the sureties of Swartwout, late
collector of the customs at that city.
Swartwout was appointed collector by the President, 1 May, 1829,
and continued to serve under such appointment until 28 March
ensuing. On 29 March, 1830, his nomination was sanctioned by the
Senate, and he continued to serve in the office of collector four
years. On 29 March, 1834, he was again appointed by the President
and Senate for the term of four years.
Under each of the above appointments he gave bond and security,
which, after reciting his appointment of collector &c.,
provided:
"Now therefore, if the said Samuel Swartwout, hath truly and
faithfully executed and discharged, and shall continue truly and
faithfully to discharge, all the duties of the said office
according to law, then"
&c.
The bond on which this suit was brought is dated 22 June,
1830.
A transcript of the accounts of Swartwout from the commencement
to the termination of his service as collector was given in
evidence, and also a transcript which purports to state the
responsibilities arising under the second term of his service.
At the commencement of his second term, a large balance was
charged against him arising under the previous term, and at the
commencement of the third term, a balance was charged as arising
under the second term.
In the course of the trial the two following points were raised
on which the judges were opposed in opinion, and the questions were
certified to this Court.
"1. Whether the said transcript from the books and proceedings
of the Treasury, given in evidence, on the part of the United
Page 42 U. S. 258
States, to show the indebtment of said Swartwout on 28 March,
1834, on which day the second term of office of said Swartwout
expired, was in this case competent and legal evidence for that
purpose."
"2. Whether the payments made by said Samuel Swartwout
subsequently to the said 28 March, 1834, should be applied to the
discharge of his indebtment existing on the said 28 March, 1834, or
accruing during his said second term of office, or whether such
payments should be applied to the discharge of his indebtment
accruing after that time."
By the Act of 2 March, 1799, collectors of the customs are
required
"once in every three months, or oftener if directed, to transmit
their accounts for settlement to the officer or officers whose duty
it shall be to make such settlement."
From the transcripts in this case and the deposition of the late
comptroller it appears that until after 1838, the accounts of
collectors of the customs were kept at the Treasury in one
continued series of debits and credits, without regard to the terms
of the appointments or the different sureties involved.
By the Act of May 15, 1820, the term of appointment of
collectors of the customs and other officers named was limited to
four years. Prior to that act, such appointments were made without
any limitation as to time except the pleasure of the President.
The 2d section of the Act of 3 March, 1797, provides that
"In every case of delinquency where suit has been or shall be
instituted, a transcript from the books and proceedings of the
Treasury, certified by the register and authenticated under the
seal of the department, shall be admitted as evidence,"
&c. By the 11th section of the Act of 3 March, 1817, the
auditors of the War and Navy departments were authorized to certify
accounts the same as the register.
Before the points certified are examined, we will consider the
principles involved in the case.
Under the act of 1820, collectors can only be appointed for four
years. At the end of this term, the office becomes vacant, and must
be filled by a new appointment. And each collector is required to
give bond and security on entering upon the duties of his
appointment in such sum as shall be designated.
Page 42 U. S. 259
That the collector is responsible for all moneys received by him
and not accounted for, without reference to the official terms he
may have served or to any bonds he may have executed, is undoubted.
But this is not the case with his sureties. They are responsible
only for the faithful performance of his duties, for the term of
his appointment. The condition of the bond is that he hath
performed his duties faithfully and that he shall continue to
perform them. But this condition does not extend to his
delinquencies under any other appointment.
The bond in question is dated 22 June, 1830, and relates to 29
March preceding, at which time the term of the collector commenced,
and its obligation extends to 29 March, 1834. That the sureties are
not bound beyond this period is too clear for controversy. As
regards their liability, it is the same as if Swartwout had served
only the term covered by their bond. For the faithful performance
of his duties under the executive appointment, which preceded the
above term, Swartwout gave bond and security, and also, under the
new appointment for four years, which he served from 29 March,
1834. So far as the sureties are concerned, these terms are as
separate and distinct as if a different individual had filled each
one of them.
The extent of the obligation of the sureties being stated, we
are brought to the inquiry
"whether the transcript, given in evidence on the part of the
United States to show the indebtment of Swartwout, on 28 March,
1834, was legal evidence."
The transcript is certified in the form required by the act of
Congress. In the argument, no objection was stated as to the mode
of its authentication. But the restatement of the account by the
Treasury officers, showing the liabilities incurred by the
collector during the term for which the defendants are bound as
sureties, is objected to.
The collector is also a disbursing officer. He is charged with
the bonds taken for duties, and is credited for sums paid into the
Treasury and also for drawbacks and other disbursements incident to
his office or which have been made under the order of the Treasury
Department. But from the continuous mode of keeping his accounts,
without regard to the terms he may have served, the defalcation
within anyone term does not appear.
Page 42 U. S. 260
At the commencement of each term, an amount is charged against
the collector, but it may be composed of bonds in suit, not due,
and deposited specially, as is found by the items first charged in
the general transcript, amounting to more than eleven millions of
dollars. The balance charged, therefore, at the commencement of any
quarter or term does not show that the collector is in default. He
may, indeed, stand charged with money actually paid into the
Treasury by him, but for which he has received no credit, as what
is called a covering warrant has not been issued. Until this shall
be done, the credit cannot, by the usage of the department, be
given.
To meet the necessary disbursements, a sufficient sum of money
should always be under the control of the collector. And it is
understood to be the usage of the collector, under the sanction of
the department, to retain such sum.
From this it appears that the general transcript affords no
sufficient data on which to charge the sureties for any term of
office where, as in the present case, the same person has served as
collector several terms.
It is contended that the duties of the Treasury officers charged
with the settlement of these accounts are in their nature judicial,
and that when an account is once settled, it is conclusive on the
government, and can only be opened for correction by a suit in
court. That in the present case, as credits were given in the
account current, which more than paid the moneys received within
the four years under examination, the sureties must stand
discharged of all liability. And that although these payments were
in part made from moneys received after the expiration of the above
term, the credit must stand as entered.
If this be a sound argument, by the mode of keeping these
accounts in the Treasury Department, all sureties of collectors,
except those for the last term, are discharged. And it is supposed
that this construction would impose no hardship or injustice on the
last securities; that, as the bond binds them for the past as well
as the future conduct of the collector, they must inquire what
amount is charged against him at the commencement of the term for
which they are bound.
Now the retrospective obligation of the bond is as much limited
by the term of the new appointment as the prospective. And in
Page 42 U. S. 261
this view it would be as logical and just to hold that the
sureties are liable for defalcations after the expiration of the
term as for those which occurred before its commencement. There is
no such condition in the instrument. It recites the new
appointment, and, by consequence, limits the obligation to the term
of office fixed by law.
The rule as to the appropriation of payments by debtor or
creditor in the ordinary transactions of business is earnestly
relied on as applicable to the present case. And all the leading
authorities on this subject are referred to. In the case of
Devaynes v. Noble, 1 Mer. 606, the doctrine which governs
the application of payments was elaborately considered. But the
applicability of this doctrine is not admitted. We think the rule
established by this Court in the case of
United
States v. January & Patterson, 7 Cranch 572, is
the true one. In that case the Court said:
"The debtor has the option, if he think fit to exercise it, and
may direct the application of any particular payment at the time of
making it. If he neglects to make the application, the creditor may
make it; if he also neglects to apply the payment, the law will
make the application."
But the Court adds
"A majority of the Court is of opinion that the rule adopted in
ordinary cases is not applicable to a case where different sureties
under distinct obligations are interested."
The Treasury officers are the agents of the law. It regulates
their duties, as it does the duties and rights of the collector and
his sureties. The officers of the Treasury cannot, by any exercise
of their discretion, enlarge or restrict the obligation of the
collector's bond. Much less can they, by the mere fact of keeping
an account current in which debits and credits are entered as they
occur and without any express appropriation of payments, affect the
rights of sureties. The collector is a mere agent or trustee of the
government. He holds the money he receives in trust, and is bound
to pay it over to the government as the law requires. And in the
faithful performance of this trust the sureties have a direct
interest, and their rights cannot be disregarded. It is true, as
argued, if the collector shall misapply the public funds, his
sureties are responsible. But that is not the question under
consideration. The collector does not misapply the funds in his
hands, but pays them over to the government, without any
special
Page 42 U. S. 262
direction as to their application. Can the Treasury officers
say, under such circumstances, that the funds currently received
and paid over shall be appropriated in discharge of a defalcation
which occurred long before the sureties were bound for the
collector, and by such appropriation hold the sureties liable for
the amount? The statement of the case is the best refutation of the
argument. It is so unjust to the sureties, and so directly in
conflict with the law and its policy, that it requires but little
consideration.
If the collector be in default for a preceding term, it is the
duty of the Treasury Department to require payment from him and his
sureties for that term. To pay such defalcation out of accruing
receipts during a subsequent term, even with the assent of the
collector, would be a fraud upon the sureties for such term. The
money in the hands of the collector is not his money. Without a
violation of his duty, he cannot appropriate it as such. He pays it
over in the performance of his duty -- the duty which the sureties
have undertaken that he shall faithfully perform. And shall the
sureties not be exonerated? The collector has done all that they
stipulated he should do. How then can they be made responsible? It
is contended that their responsibility arises not from the default
of the collector, but from the appropriation of his payments by the
Treasury. This, at least, is the fair result of the doctrine
advanced. For if such appropriation is properly made by the
Treasury in payment of a defalcation of the collector before the
commencement of the current term, it must follow that the sureties
for such term are responsible for the amount thus paid.
The government must show the amount of the defalcation of the
collector during the term for which the defendants were sureties,
to charge them, and this is not done on the face of the general
transcript. It is necessary, therefore, to have a restatement of
the account for this purpose. This restatement does not falsify the
general account, but arranges the items of debits and credits so as
to exhibit the transactions of the collector during the four years
in question. Whether this be done by depositions or in the form of
a transcript may not be material.
We think that the transcript or restatement of the account, as
explained by the depositions, was competent evidence to the
jury.
Page 42 U. S. 263
This statement, as appears from the deposition of Tarbutt, is
defective in not giving all the credits to which the collector was
entitled; but as it relates to the matter in controversy, it is
evidence. The jury will determine what effect is shall have.
The amount charged to the collector at the commencement of the
term is only
prima facie evidence against the sureties. If
they can show by circumstances or otherwise that the balance
charged in whole or in part had been misapplied by the collector
prior to the new appointment, they are not liable for the sum so
misapplied. If the sum charged consists of duty bonds, the
defendants may show that the bonds were never paid. These remarks
apply to the sureties under every new appointment of the collector,
and to the balance charged against him.
On 29 March, 1834, a new official term of Swartwout commenced,
and new securities were given. On that day a large apparent balance
was due to the government by him. Now the inquiry should be of what
did that balance consist? Did it arise from a misapplication of the
public money during the preceding term? If so, the sureties of the
preceding term are liable for the amount thus misapplied. But if
there was no misapplication of the public money by the collector,
and he paid over to the government or its order all the moneys he
received during the official term for which the defendants were his
sureties, however such payments may have been appropriated by the
Treasury, the sureties are discharged.
In answer to the question "whether the payments made by the
collector subsequently to 28 March, 1834, should be appropriated in
discharge of his indebtment on that day" we say that so far as such
payments were made of moneys accruing and received in the
subsequent term, they should not be so applied. But so far as
payments were made in the subsequent term of moneys received on
duty bonds or otherwise, which remained charged to the collector,
as of the preceding official term, such payments should be
appropriated in discharge of the indebtment of the collector for
that term. The sureties are only responsible for a misapplication
of the public money during the four years preceding 29 March, 1834.
And of course the extent of this responsibility must be shown by
the government. As before remarked, the Court considers the
official terms as distinct and
Page 42 U. S. 264
separate, in regard to the sureties, as if different persons had
served in the three terms specified; that the legal
responsibilities of the sureties are not and cannot be affected by
any action of the Treasury Department. If liable, the sureties are
made so by their contract, and the government, being a party to
that contract, cannot, without the consent of the defendants,
change its legal or equitable effect.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Southern
District of New York, and on the points and questions on which the
judges of the said circuit court were opposed in opinion, and which
were certified to this Court for its opinion, agreeably to the act
of Congress in such case made and provided, and was argued by
counsel. On consideration whereof it is the opinion of this
Court,
1st, that the transcript from the books and proceedings of the
Treasury, given in evidence on the part of the United States, to
show the indebtedness of Samuel Swartwout on 28 March, 1834, on
which day the second term of office of said Swartwout expired, was
in this case competent and legal evidence.
2d, that the payments made by said Samuel Swartwout subsequently
to the said 28 March, 1834, should be appropriated in discharge of
his indebtedness on that day, so far as said payments were made, in
the subsequent term, of moneys received on duty bonds or otherwise,
which remained charged to the collector as of the preceding
official term, but not where such payments were made of moneys
accruing and received in the subsequent term.
Whereupon it is now here ordered and adjudged by this Court,
that it be so certified to the said circuit court.