
    William J. Landram v. the United States.
    
      On the Proofs.
    
    
      JECemcbn, a deputy collector of internal revenue, brings Ms action to recover Ms :salary, but the court decides that there is no privity between him and the ■government. The collector who appointed him now brings his action to recover the salary. The defendants concede that the collector was authorized by the Treasury to appoint a deputy, and that the service was rendered, but aver that the deputy was at the same time acting as distillery surveyor and cannot receive dual pay.
    
    I.The traditions and usages of the government recognize the policy and propriety of employing, when necessary, the same person at the same time in two distinct capacities.
    II.The aim of general legislation respecting salaries is to gauge the work so as to give full emifloyment to the man, and to measure the pay according to the work.
    III. In construing statutes restraining the executive from giving dual or extra compensation, courts have aimed to carry out the legislative intent hy giving them sufficient flexibility not to injure the public service, and sufficient rigidity to prevent executive ohuse.
    IV. A deputy collector of internal revenue, not being an employé of the government (i. e. not in privity with it so as to he able to maintain an action for his pay), does not come within the provisions of the Eevised Statatutes, § 1763, 1764, prohibiting officers and em-ployés of the government from receiving dual or extra compensation.
    V.If the pay of a person in the public service is not fixed by ‘ ‘ law or regulations,” but is sx>ecially fixed by the order or instruction of the Sectary of the Treasury, the person is- not within the prohibition of Eevised Statutes, § 1765.
    
      VI.A “regulation" affects a class or classes of officers; an “instruction" is a direction to govern tiie conduct of tiie particular officer to whom it is addressed.
    VII.The statutes which authorize the Secretary of the Treasury to issue regulations and give instructions recognize the inherent distinction that the former are general and the latter special, § 251.
    VIII.The power and duties of deputy collectors of internal revenue examined and stated.
    IX.The Secretary of the Treasury may prescribe the compensation to be allowed to deputy collectors of internal revenue and to distillery surveyors either by regulations or instructions.
    X.The appointments issued by the Commissioner of Internal Revenue to distillery surveyors, though they practically had the same executive operation as “regulations," were not regulations but “instructions," and consequently do not bring the case of a distillery surveyor within the statutory prohibition against dual or extra compensation, Rev. Stat. $ 1765. 
    
    
      The Reporters' statement of tbe case:
    The following are the facts of this case as found by the court:
    I. The claimant was the collector of internal revenue of the eighth district of Kentucky from May 1,1873, to June 30,1876.
    II. On the 20th May, 1873,' on the claimant’s application, the Commissioner of Internal .Revenue designated William Herndon as the claimant’s assistant in the survey of distilleries, at a compensation of $5 a day when actually employed. Hern-don rendered service as such assistant for 198 days between August 1, 1873, and March 31, 1875, and was paid therefor by the United States the sum of $990.
    III. From May 20,1873, to August 31,1875, the assistants, for the purpose of aiding the collectors of internal revenue to make surveys of distilleries for the purpose of estimating and determining iheir true spirit-producing capacity for a day of twenty-four hours were uniformly compensated by the United States at the rate of $5 per diem, with traveling expenses (except in Utah and Washington Territories and the third district of California, where it was $7), which rate was fixed by the Commissioner for all cases, and notice of the designation and rate of compensation was given in each case by filling out and sending to the party a printed blank form used for that purpose. The following is a copy of that blank form and is the form that was used in Herndon’s case:
    “Treasury Department,
    “Oeeioe oe'Internal Revenue,
    “ Washington,-, 187-.
    “Sir: I hereby designate you as a competent and skillful person to aid the collector of the-district of--in making survey or resurvey of distilleries, as required by section 3264 of the Revised Statutes of the United States.
    “For the. time employed in this service, you will be paid at the rate of --($-) dollars per pay, in addition to your just and necessary traveling expenses.
    “You will notify me at once if you accept the proposed employment.
    “Very respectfully,
    a_
    “ Commissioner.
    
    “To-, Esq.,
    IY. On the 31st July, 1874, the claimant was officially informed that the' Secretary of the Treasury had granted to the collector of the eighth district of Kentucky a special allowance of $8,550 for the fiscal year ending June 30,1875, in lieu of the salary and commission prescribed by law, and to be applied—
    * # # • * # #■ *
    “Two deputies, $1,200 each. $2,400”
    ######*
    Y. On the 24th of June, 1875, a grant of $9,125 was made by the Secretary of the Treasury to the collector of said district, for similar purposes, for the fiscal year ending June 30,1876, to be applied, among other things, for “two deputies, at $1,200 each, $2,400.”
    YI. Under such authority the claimant appointed said Hern-don such a deputy, at $1,200 a year, and in each case reported the same at once to the Commissioner of Internal Revenue, and the said Herndon acted continuously as such deputy from August 1, 1873, up to and beyond June 30,1876.
    YU. From July 1, 1873, to March 31,1875, the claimant received the said further allowance of $1,200 per annum, and accounted for it as paid to said Herndon. In subsequent settlement of the claimant’s accounts as collector, the First Comptroller deducted from the amount of the Secretary’s allowance to tbe collector tlie sum of $990, and withheld the same to reimburse the' United States for the amount paid to Herndon for services as distillery surveyor. The following letter from the Commissioner of Internal Eevenue was the first notice that he received of the reasons for withholding said sum:
    “Treasury Department,
    “Office op Internal Eevenue,
    “ Washington, Septfr 15th, 1875.
    “ Sir : It appears that William Herndon, deputy collector in your district, has charged and received pay at the rate of $5.00 per day for services rendered as distillery surveyor, while at the same time he was being paid by you a regular salary as deputy collector.
    “The Comptroller has decided that employees of the government cannot draw pay for services in two different capacities at the same time. The amount thus erroneously paid to Mr. Herndon is one thousand and fifteen dollars, as appears in the subjoined copy of the office records. This amount should be refunded by him, and you are requested so to inform him, and to take the necessary steps to have the above amount repaid into the Treasury.
    1873. Aug. 20
    Sept. 85
    Oct. 50'
    Nov’r. 30
    Dee’r.25
    210
    85 1874. Jan’y
    75 Feb .
    70 M’ch .
    15 April
    35 July..
    50 Aug.
    125 Sept.
    95 Oct..
    00 Nov.
    70 Dec .
    680
    1875. Jan.. 45
    M’ch. 55
    April. 25
    125
    
      recapitulation.
    1873 .:... 210
    1874. 680
    1875 . 125
    Total... 1/015
    “Respectful ly,
    “D. D. PRATT, Commissioner.
    
    “W, J. Landram, Esq.,
    
      “Collector 8th Dist., Lancaster, Ky.
    
    “ The amount so paid to said Herndon was $990, instead of $1,015, as stated in said letter.”
    VIII. Herndon was a good officer, and employed in the two capacities because of Ms fitness for eacli. During the period of Ms employment as deputy he was almost continuously engaged in the performance of the duties of that position. He was required to canvass his division, consisting of four mountainous counties, and while so canvassing and getting returns, and performing the various duties of a deputy he would make surveys of distilleries. He was also frequently sent out of his division to make surveys, and on each such trip he was required to perform duty as a deputy in such other portions of the district.
    
      Mr. George L. Douglass for the claimant:
    If the collector is in any sense a trustee for the benefit of Ms deputies, it is equally true that the government has long and successfully resisted any responsibility for the proper application of the trust funds, and is in good conscience estopped from now setting up a defense based upon a contrary doctrine.
    This disallowance was made in view of section 1765 Revised Statutes.
    The section prohibits, under certain specified conditions, the receipt of “ extra allowance,” &c.
    It is evident that the words “No officer * * * or person * * shall receive” should be read “No officer * * * or person * * * shall receive from the United States.” But it has been expressly decided by this court that deputy collectors did not receive pay from the United States. (Hern-don’s Case.) Unless the court is willing to reverse its decision in that respect, we are bound to assume that Herndon was in receipt of only one compensation from tbe United States (to wit, bis compensation as surveyor), and therefore that the case is not within the prohibition of section 1765.
    The prohibition is also limited to cases in which the party is'. in receipt of “ salary, pay, or emoluments, fixed by law or regulations.” Herndon’s pay as deputy was not “fixed” by any law; and it was not, and could not have been, fixed by any “regulations.” It was in the discretion of the collector. The Secretary could and did regulate the collector’s allowance; but any regulation on the subject of pay of deputies would have been in excess of his jurisdiction, and, legally, null and void.
    The pay of distillery surveyors is in the discretion of the Commissioner of Internal Revenue, and is fixed by a special letter in each individual case, no regulation on the subject having ever been issued. Unless, therefore, the special letter-to Herndon was a “regulation,” his case is upon this ground also exempted from section 1765.
    If, however, Herndon’s pay as surveyor should be deemed to have been “fixed by regulations,” and waiving the point of his total disconnection as deputy with the defendants, then the case is concluded by the doctrine laid down in Converse v. The United States, 21 How., 470, and in Collins v. The United States,. 15 C. Cls. R.
    
      Mr. Assistant Attorney-General Simons (with whom was Mr. George C. Wing) for the defendants:
    The substantial issue is whether Herndon, between June 30, 1873, and September 1,1875, could lawfully receive compensation as Landram’s deputy. This depends on the applicability of section 1765 Revised Statutes to the case. So much thereof as can bear on it is as follows: “No * * * person whose salary, pay, or emoluments are fixed by law or regulations shall receive any additional pay, extra allowance, or compensation * * * for any other service or duty whatever, unless the same is authorized by law, and the appropriation therefor explicitly states that it is for such additional pay, extra allowance, or compensation.”
    Whether this is applicable to the case of Herndon is the question. As assistant to the collector there can be no doubt that he was a person who received from the defendants pay for-certain, service or duty in a position or employment created by law. His pay was not fixed by statute as to amount, but it was declared that the surveys in which such persons should be designated to assist were to be made at the expense of the United States, and amounts were annually appropriated for the compensation and expenses of surveyors.
    The remaining question is, could Herndon then receive additional compensation for any other service except under the prescribed condition?
    The objection is urged that he did not receive pay as deputy from the United States, and reference is made to the decision in his case. (15 C. Cls. R., 446.)
    ' It was there decided that by force of the statute his compensation was to be paid by the collector, and that he could not recover it from the United States; nor does it matter that the collector, instead of paying him out of his own pocket, obtains the special allowance for the pay of a deputy from the * Secretary of the Treasury. If Landram. used it to pay Hern-don, it no more created a privity between the latter and the defendants than there would be between a newspaper publisher or stationer who should publish advertisements for or supply stationery and blank books to the collector and defendants. If the statute, however, had declared that charges for advertising and stationery should be allowed not exceeding a certain amount, and the collector should pay from public funds intrusted to him a greater amount, can it be doubted that the United States could recover the excess so unlawfully obtained from the receiver? No privity of contract is required to sustain such an action. The funds unlawfully disbursed can be followed then into the hands of Herndon, and the collector is liable as well for his breach of trust. There is nothing therefore in the decision in Herndon’s Case which would interfere with the right to recover the additional compensation here involved.
    To argue under the circumstances that Herndon did not receive his deputy pay from the United States because it came to him'through an allowance to the collector is to stick in the bark. It was public money intrustéd to the collector to be disbursed in accordance with law, to a deputy, which Hern-don received. He knew it was such, because he gave receipts therefor to be used, and which were used, as vouchers in settlement of tbe collector’s accounts; and tbe petition in bis suit proceeds on that basis. Tbe statute under consideration did not preclude bim from receiving from tbe collector sucb funds as the collector could lawfully pay bim (which were, however, none other than bis personal funds); but it prohibited bim from receiving additional compensation for other service in public money, not merely directly, as tbe claimant’s argument would have it, but “ in. any form whatever.” Unless it can be maintained that tbe allowance became when it reached tbe collector bis personal funds, for tbe manner of disbursement of which be was not responsible to defendants, both be and Herndon were by law incompetent to bold tbe relation of eollector and deputy so as to charge tbe trust fund; and are alike responsible for what was done. Tbe Comptroller’s view of this matter should also be considered in this connection.
    Finally, it is to be considered whether tbe condition of tbe statute, requiring authority of law and an explicit appropriation, can be met in tbe case. What that means has been settled, in Converse’s Case more especially (21 How., 463), to be that tbe compensation must be fixed by law, and not left to be determined in tbe discretion of an executive officer. (See also Simsbury’s Case, 1 C. Cls. B., 123; 8 Wall., 33; United States v. Shoemalcer, 7 Wall., 338.) As no statute prescribes tbe compensation of deputies, or even appropriated money for that purpose, but tbe matter under tbe proviso before mentioned was a matter purely of executive discretion, tbe point seems conclusively determined against tbe claimant.
    Tbe defense, however, does not rest wholly on tbe effect of this statute, for it has been observed that tbe allowance was subject to tbe express condition that satisfactory vouchers should be furnished. If a fact deemed by tbe Secretary material, sucb as that some other business was carried on at tbe same time, was not disclosed or falsely reported, it would seem to be a sufficient ground to disallow tbe charge for sucb service when tbe truth was discovered, without regard to tbe question of violation of tbe statute; and especially would this be true after notice to tbe parties of dissatisfaction. If Herndon and tbe claimant chose to go on, knowing that tbe allowance was stopped, they did it at their own risk. A fortiori, if they violated tbe statute which governed tbe allowance, they cannot complain that it was terminated in consequence of their own conduct-.
   Dayis, J.,

delivered the opinion of the court:

In Herndon’s Case (15 C. Cls. R., 446), decided at the last term, it appeared that Landram, tlie present claimant, an internal-revenue collector, being authorized by the Secretary of the Treasury to employ a deputy at $1,200 a year, appointed Herndon a deputy at that salary; that Herndon was at the same-time acting as distillery surveyor with a per diem pay of $5 while employed, and expenses; and that the Comptroller had refused to allow double pay to Herndon, and had, in. settling Landram’s accounts, deducted from the allowance of $1,200 the sums paid Herndon as distillery surveyor. In that case the court held that there was no privity of contract between Herndon and the United States, and that he could not recover. Landram now brings this suit to recover the same sum, and it is admitted that if he recovers the money will go to Herndon.

The Attorney-General meets the claim here in the present, form, as the Comptroller met it at the Treasury, by setting up the statutes in regard to dual pay. He also puts forward a counter-claim, which, as he disregarded- it in his brief, and virtually abandoned it in his argument, it is unnecessary to consider further.

The traditions and usages of the United States recognize the policy and propriety of employing, when necessary, the same person at the same time in two distinct capacities. Not to mention other familiar cases, there are the prominent examples of the diplomatic mission of Mr. Jay, to England, under President Washington, while he was still Chief Justice of the United States; of the mission of Mr. Gallatin, to London and Peters-burg, to negotiate a peace, while Secretary of the Treasury under President Madison; and of Mr. Justice Nelson sitting as a member of the commission which concluded the treaty of Washington under President Grant.

On the other hand, it is the undoubted aim of general legislation respecting salaries to gauge the work so as to give full employment to the capacities of the man likely to be appointed to do it, and to measure the pay according to the work.

In construing statutes restraining the executive from giving dual or extra compensation, courts have aimed to carry out the legislative intent, by giving them sufficient flexibility not to injure tbe jiublic service and sufficient rigidity to prevent executive abuse.

A portion of the payments to Herndon as distillery surveyor were made prior to the date when the Revised Statutes took effect; the remainder after that time. For the purposes of this opinion we shall treat the Revised Statutes as codifying and containing the previous statutory provisions in this respect, and shall refer only to the codification. •

The provisions in the Revised Statutes are found in sections 1763,1764, and 1765. Section 1763 relates to the discharge of the duties of an office by a person holding another office. In Herndon’s Case we held that, as deputy collector, he was not an employe of the government, for the payment of whose services the United States were liable to him. If not an employé he certainly was not an officer; and therefore Landram is not now seeking compensation for discharging the duties of another office, and section 1763 does not apply to this case.

Section 1764 relates to allowances or compensation to officers or clerks in a department for the discharge of duties belonging to other officers or clerks in a department; also to allowances or compensation to officers or clerks for extra services. Hern-don was not an officer, or a clerk in a department, and therefore the first portion of section 1764 is not applicable. As to the second, it may be inferred from the context that the clerks who are forbidden by this section to receive compensation for extra services are the clerks in the executive departments — that large class of clerks who are specially recognized by statute, and whose compensation and duties are specially marked out. (Rev. Stat., §§ 158-183.) The Revised Statutes contain provisions relating to clerks of courts, to clerks of Congressional committees, to clerks of the House of Representatives, to executive clerks, to Admiral’s clerks, to consular clerks, and to customhouse clerks; but as the work “ clerk” is us9d in section 1764, it is evidently the intent of Congress to confine it to departmental clerks. Neither Landram nor Herndon was a clerk of this class.

The Attorney-General mainly relies upon the provisions of section 1765, which are as follows:

“No officer in any branch of the public service, or any other person whose salary, pay, or emoluments are fixed by law or regulations, shall receive any additional pay, extra allowance, or compensation in any form whatever, unless the same is authorized by law, and the appropriation therefor explicitly states that it is for such additional pay, extra allowance, or compensation.”

Landram was undoubtedly an officer in a branch of the public service, with a salary fixed by law. (Rev. Stat., § 3145.) But it is equally true that the extra allowance now in dispute is authorized by. law, and that the provision for such extra allowances (ib.), taken in connection with the appropriation for salaries and expenses of collectors (18 Stat. L., 93, 352), explicitly states that the appropriations are for the extra allowance. This is denied, but on insufficient ground. When. Congress authorized the Secretary of the Treasury to make such allowances from time to time to collectors as might be reasonable or seem just for certain purposes, it parted with its own discretion to fix the amount of the appropriations for those purposes and conferred it upon the Secretary. To hold that after the exercise of the power by the Secretary he had no authority to pay the allowances, for want of a fixed appropriation, would defeat the will of Congress. If, therefore, this claim is to be-treated as Landram’s claim only, and if the Comptroller has no power to go behind the voucher which Landram brings to the Treasury, and to inquire whether hisemployé, who received the money as deputy collector, had a right to receive it in that capacity, it would seem that Landram is entitled to judgment.

This brings us to the real issue in this case, viz, whether Herndon could lawfully take pay for his services in the two capacities. If he could, the Treasury must take his voucher as Landram’s warrant for the payment, and Landram is entitled to recover the sum withheld.

It is to be observed, in the first place, that there is no element of turpitude or concealment or fraud in this case. It is found that Herndon was a good officer, who was employed in the two capacities because of his fitness for each, and that the Commissioner of Internal Eevenue was duly informed of his .appointment in each case when it was made. That officer does not appear to have made any objection to it until the payments allowed and paid to Herndon as distillery surveyor amounted to $990. Even then he did not doubt the propriety of the appointment, but objected only “ because the Comptroller had decided that employés of the government cannot draw pay for two services at the same time.”

Section 1765 of tlie Revised Statutes relates, in tbe first place,, to any officer in any branch of tbe public service. But Herndon was not an officer, and therefore this provision does not affect him. In tbe next place, it relates to any other person-whose salary, pay, or emolument is fixed by law or regulation. Tliis must mean any other person in any branch of the public-service whose salary, pay, or emolument is fixed by law or regulation. If it has not that meaning, then the word other’' has no signification, and is improperly interpolated in the statute.

At the last term of court we held that Herndon, while acting-as deputy collector, was not an employé in a sense to make a privity of contract between him and the government.. But it does not necessarily follow that he was not a person in a branch of the public service. He was empowered with the like authority in every respect to collect the taxes levied or assessed within the portion of the district assigned to him which is by law vested in the collector himself.” (Rev. Stat., § 3148.) Among these powers were the right to summon parties liable to special taxes to produce their books, and to have an attachment in case of failure to obey it (§§ 3173, 3174, 3175); the right to enter the premises of persons who have taxable property and neglect or refuse to make returns (§ 3176); the right to collect taxes and give receipts for the same (§ 3183); the right to levy upon property for the payment of taxes (§ 3188); the right to sell property levied upon (§ 3190), and the right to seize and sell real estate (§3L96). It cannot be maintained that a person charged with such extensive powers was not in public employment, although not employed directly by the United States, and was not in a branch of the public service.

Being in the public service, he was disqualified from receiving dual compensation, if he was receiving in either capacity a pay or emolument fixed by law, or by regulation. There is no-pretense that either pay was fixed by law. „Was either fixed by regulation %

Section 3145 of the Revised Statutes, which confers upon the Secretary of the Treasury the power to make the allowances in question, does not indicate how they are to be made. Section 161 confers upon the heads of departments the general power to make regulations for the government of the departments, not inconsistent with law. Section 251, which empowers the Secretary of the Treasury to issue regulations for the government of collectors, makes a distinction between “instructions” and regulations.” This distinction is inherent in the nature of the two things. An instruction is a direction to govern the conduct of the particular officer to whom it is addressed. A regulation affects a class or classes of officers. It was open to the Secretary of the Treasury to prescribe the allowances to collectors or the payment of distillery surveyors in the form of a regulation or in the form of an instruction. In the former case it would have brought them within the terms of section 1765; in the latter case they would have been outside of those terms.

It appears by the findings that the allowances in each case to Herndon, as deputy collector, were specially fixed, and were in fact different at different times. This is inconsistent with the nature of a regulation having the character and force of law.

A somewhat different course was taken in fixing his compensation as distillery surveyor. It appears that during the period between May 1, 1873, and August 31, 1875, a uniform rate for the payment of such services prevailed, viz, $5 per diem, when actually employed, with traveling expenses, for all districts except in three specified cases, of which Landram’s district was not one; that that rate was fixed by the Commissioner for all cases 5 and that it was the uniform habit of the department to notify appointees of their appointment and compensation by a letter, of which a blank form is given in the findings. .

In form this was not a regulation issued by or under authority of the head of a department, and having the'force and effect of law, when not inconsistent with provisions of law; and yet it had practically the same executive operation as a regulation. On examining the statute there appears to have been a reason for adopting this course.

The necessity of surveying a distillery could arise only on the establishment of “a new distillery, or the increase of the capacity of an old one, and when the work was once done it was done forever, as to the subject of tlie particular survey. The work of gauger was a continuing work, so long as the still should be in operation; and so was the work of a collector and of a deputy collector. Hence, while the statute made provision for continuing work and continuing pay in the case of gaugers and collectors and their deputies, it made provision for a special survey in each •case on receipt of notice that any person wishes to commence the business of distilling” (17 Stat. L., 239; Bev. Stat., § 3264), and it provided that this was to be done at the expense of the United States, with the aid of an assistant designated for the purpose [i. e., for the purpose of each survey] by the Commissioner of Internal Bevenue.” (Ib.) In framing his directions for the execution of this power, the Commissioner may have thought that the most competent, and in other respects, also, the best persons for the purpose of settling the capacity of the still were those who were to be subsequently employed in measuring it or collecting the revenue from it; and he may have purposely shaped his instructions so as, on the one hand, to produce uniformity of pay, and, on the other, to avoid the force of the statute forbidding dual compensation. For he may have reasoned that it would not be just to require a man who received one measure of compensation for the performance of one set of duties to perform other duties of an arduous character without additional pay; and on the other hand he may have found practical difficulties in securing the faithful performance of those other duties by independent parties for the sum he was willing to allow. Whatever may have induced him, the Commissioner issued his directions to distillery surveyors in the form of instructions, and not in the form of regulations, and .thus took those cases out of the technical operation of the provisions codified in section 1765 of the Bevised Statutes.

If this conclusion is correct, it follows that Herndon, having performed the services required of him as distillery surveyor, was entitled to the compensation allowed for them ; and that having performed his duties as deputy collector, he was entitled to the compensation allowed for that; and that there is no provision of law which forbids the dual compensation for the double work. The claimant, Landram, is, therefore, entitled to recover the amount improperly withheld.

The judgment of the court is that the claimant recover the sum of $990, and that the counter-claim be dismissed.

Hunt, J., was absent, by reason of illness, when this case was tried and took no part in the decision.  