
    THE STATE OF LOUISIANA v. THE UNITED STATES.
    [No. 15295.
    Decided May 2, 1887.]
    
      On the Proofs.
    
    Moneys accrue under the Levee and Swamp Land Acts and are credited to the State, hut the accounting officers set off a balance remaining unpaid by property holders in Louisiana under the Direct Tax Acts, 1861, 1862. This action is brought more than six years after the sale of the swamp lands belonging to the State.
    I. When the right of action depends upon a contingency, the statute of limitations will not begin to run until the contingency happen.
    II. Where a statute provides “that upon due proof by the authorized agent of the State before the Commissioner of the General Land Office” that swamp lands granted to the State have been sold by the Land Office “ the purchase money shall be paid over to the said State.” (Act 2d March, 1855, 10 Stat. L., p. 604, § 2.), the right of action is not complete until the Commissioner acts; therefore the statute of limitations does not begin to run until then.
    III. The purpose of the Direct Tax Acts, 1861, 1862 (12 Stat. L., p. 292), was not to impose an obligation upon a State to collect the tax (unless the State chose to assume it), but to apportion the sum total among citizens holding property in the several States, being an application of the theory that the power of the General Government operates in certain cases upon the individual citizen.
    IV. Where the citizens of a State neglected to pay their proportion of a general tax, the balance remaining unpaid cannot be set off against a debt due by the General Government to the State.
    V.In an action brought by a State against the General Government, the law of set- off is the same as if the controversy were between individuals.
    VI.A set-off in legal signification means the application of a valid demand in favor of the defendant and against the claimant in satisfaction or diminution of his claim.
    
      The Reporters'1 statement of tbe case :
    Tbe following are tbe facts of tbis case as found by tbe court.
    I. That tbe amount found by tbe Commissioner of tbe General Land Office June 30,1885, to be due tbe State of Louisiana from the United States on account of indemnity for swamp lands purchased by individuals within said State prior to March 3,1857, is $23,855.04. (9 Stat. L., 510; 10 id., 634; 11 id., 251.)
    II. That the amount found due the State of Louisiana from the United States on account of the 5 per cent, fund, accruing between July 1, 1882, and June 30, 1886, is $47,530.79. (2 Stat. L., 641.)
    III. Total amount found due said State on account of both funds, $71,385.83. •
    IY. That the First Comptroller of the Treasury, at different times previous to the filing of the petition in this suit, admitted and certified the sums aforesaid to be due to the said State on account of the 5 per cent, fund and the indemnity for swamp lands purchased by individuals within said State, but directed the said amounts to be credited bn an account which had been opened in the Treasury Department against said State charging it with the direct taxes assessed under the acts' of Congress of 1861 and 1862. The sums were credited as directed.
    Y. That no proof was adduced or filed before the Commission'er of the General Land Office, showing the swampy character of the lands sold to individuals, for which indemnity is asked, by the agent of the State of Louisiana, but the Commissioner resorted to the field-notes of the public surveys of the surveyor-general for such proof. This method of proving the swampy character of the lands had been resorted to by the Commissioner as early as 1850, and was adopted by him as proof of the swampy character of the land for which indemnity is asked in this case.
    
      Mr. Seber J. May (with whom was Mr. Assistant Attorney - General Howard) for the defendants:
    The defendants maintain that, as to the items making up the claim for indemnity for swamp lands, the court is without jurisdiction. The claim, as will no doubt be admitted, is founded upon a law of Congress. The petition was not filed within six years after the claim first accrued.
    The lands for which indemnity is claimed were sold in 1856^ and prior thereto, as shown by the proof.
    Inasmuch as the tracts of land were sold prior to the passage of the act of Congress approved March 3, 1857, by which the provisions of the act of March'2,1855, were extended, the claims, which are founded on these two statutes, did not accrue later than March 3, 1857.
    
      They are presented here as claims founded upon such laws, under section 1059, Revised Statutes. The petition was filed September 20, T886, nearly thirty years after such claims ac:' crued under the statutes, and more than thirty years after the sale of such lands.
    The claimant relies on the provisions of the statutes of 1855 and 1857 (supra) for its remedy to prosecute the claim in this court under section 1059, Revised Statutes. Such being the fact, there is nothing to exclude the claim from the provisions of section 1069, Revised Statutes. It does not, and could not, come within any of the exceptions mentioned in the proviso to the latter section. And, inasmuch as the court holds the question to be one of jurisdiction, and not of limitation, the war period cannot be deducted from the claimant’s lapsed time, even if it would be of any benefit to do it so. There are no exceptions to the limitation in this court other than such as are named in the proviso (supra).
    
    The practice has been in the office of the First Comptroller, instead of paying claims which have been adjusted in favor of States, to credit the sum due to the States upon unpaid balances of direct tax charged. Section 1766, Revised Statutes, provides “ that no money shall be paid to any person for his compensation who is in arrears to the United States, until he has accounted for and paid into the Treasury all sums for which he may be liable,” &c.
    It is also claimed that the right of the accounting officers of the Treasury Department to mate set-offs in such cases is well settled on general principles. Gratiot v. United States (15 Pet., 370); McKnight v. United States (98 U. S. R., 186); United States v. Union Pacific Railroad Company (91U. S. R., 79). In Bonnafon’s Case (14 C. Cls. R., 484) the syllabus states that “notwithstanding the absence of statutory authority, it was legal and proper for the accounting officers, in the course of settling ordinary accounts in the Treasury, to set off a debt due from the claimant against one due from the Government.” In Tag-gart’s Case (17 C. Cls. R., 3 22) the syllabus says that in such case “the accounting officers are required by law to set off the one indebtedness against the other, and certify only the balance.”
    First Comptroller Lawrence, in his decision in the Georgia Case, in which the same points seem to be involved as in this case,also refers to other decisions upon the general question of set-offs. (4 Lawrence, 354.)
    There is no question as to the right and duty of the accounting officers to make the set-off if the State is a debtor to the United States, as appears from the books of the Treasury Department. There has been a conflict of opinion among those who have been called upon to consider the question as to the liability of the States for direct tax where, as in the case of Louisiana, payment has never been assumed by the State as provided by section 53 of the act of Augusu 5,1861.
    
      Mr. J. L. Pugh,jr., and Mr. William. M. Marie for the claimant.
   Weldon, J.,

delivered the opinion of the court:

The State of Louisiana in September, 1886, filed a petition in this court, alleging against the United States two causes of action, the first founded on the statute of February 20, 1811, entitled “An act to enable the people of the Territory of Orleans to form a constitution and State government” (2 Stat. L., •641), the last section of which reads as follows:

“And be it further enacted, That 5 per cent, of the net proceeds of the sales of the lands of the United States after the '1st day of January shall be applied to laying out and constructing public roads and levees in the said State as the legislature thereof may designate.”

The second cause of action as alleged is founded on the act of September 28, 1850, entitled “ An aet to enable the State of Arkansas and other States to reclaim the swamp land within their limits (9 Stat. L., 519); and the further statute of March 2, 1855, entitled “An act for the relief of purchasers and locators of swamp ■amd overflowed land.” (10 Stat. L., 604.)

Under the first act it is alleged the defendants owe the petitioner the sum of $47,530.79, and .under the latter the sum of $23,855.04, aggregating the sum of $71,385.83.

To these claims the United States interpose, first, the statute ■of limitations as to the demand under the act of March 3,1855, and, second, a counter-claim as to the alleged right under both statutes.

The statute of limitations within which suits must be brought, of the character disclosed by the petition, prescribes a limitation of six years; and if prior to September 20,1880, the claimant’s cause of action was complete and consummate, then the objection is well taken, and as to the demand under the act of 1855, the petition must be dismissed. (Rev. Stat., § 1069.)

The statute of 1855 was passed to remunerate the States for land located by grants from the United States upon lands which, from their character as swamp and overflowed land, had become the property or right of the State under provisions of the act of September 28, 1850, commonly known as the “ Swamp Land Act;” and, to effectuate that policy, it is provided in the second section of said act of 1855:

“ That upon due proof, by the authorized agent of the State or States before the Commissioner of the General Land Office, that any of the land within the true intent and meaning of the act aforesaid had been sold by' the General Land Office, the purchase money shall be paid over to the said State or States.”

The question arises under the various acts, at what time did the claimant have a right to bring suit in this court under the law of our general jurisdiction? If the two acts, the one of September 20, 1850, and the one of March, 1855, made consummate its right, then long before the petition was filed the limitation had ceased, and the petitioner is now without remedy in the judicial department of the Government. If the right to sue was under said acts merely inchoate, and did not mature until the happening of a subsequent event, then the right to sue became perfect upon the happening of that event; and the limitation of six years commences from the date of the event. If, in the absence of any action upon the part of the Commissioner of the General Land Office, the claimant had brought suit, would not a plea embracing the facts contemplated by the second section of the act of 1855 be a good plea in bar ? If so, then the right of action was not complete under the acts of 1850 and 1855, unaided by the agency of the Commissioner of the General Land Office under the second section of the act of 1855.

When the right of action depends upon a contingency, the statute does not begin to run until the contingency happens. (Jones v. Lightfoot, 10 Ala., 17.) It is a general rule that the statute of limitations begins to run from the time when the right of action accrued. (Odlin v. Greenleaf, 3 N., 270; Hall v. Vandegrift, 3 Binn., 374; Withers v. Richardson, 5 T. B. Monr., 94.)

The cause of action legally stated b'y the petition, and sustained by the facts, in its unity, is composed of the rights of the claimant, originated by the act of 1850, recognized and enlarged by the act of 1850, and consummated by the agency of the Commissioner of the General Land Office under the second section of the last-named act.

But aside from the provisions and phraseology of the second section of the act of 1855, what are the rights of the claimant in relation to its cause of action for the recovery of the proceeds of the sale of lands sold in violation of the claimants right under the act of September 28, 1850 % The grant made in the act of 1850 was never revoked, but was recognized by the act of 1855 5 and the sales of lands by the United States after the passage of the law of 1850 was a sale by the grantor of the property of the grantee — a sale of the holder of the legal title in violation of the rights of the equitable owner$ so that the proceeds of the lands became, in the hands of the Government, a trust fund, and as such would be unaffected by the statute of limitations until there was a disavowal of the trust by the refusal of the trustee to recognize the rights of the ces-tui que trust.

The law of 1855 did not assume to revoke or invalidate any of the guarantees under the law of 1850, but simply to provide that the proceeds of the sale of swamp land should stand as the equitable representative of the land sold by the Government, in violation of the purposes of the act of 1850. It is not necessary to invoke the doctrine of trust to sustain the jurisdiction of the court, and we only refer to it as tending to strengthen the reason in favor of our jurisdiction. As will be seen by the findings, the act of the Land Commissioner, which under the law made the cause of action complete, did not occur beyond six years from the bringing of the suit; so that the cause of action accrued to the claimant within the limitation prescribed by section 1069. The statute of limitations as to the claim under the act of 1855 being disposed of, the claim, in its entirety, is submitted to the consideration of the court upon its merits as a legal demand against the Government. The affirmative right of the claimant to recover under both laws the sum of $71,385.S3 is not seriously disputed, and the controversy arises as to the payment of it by the application of the set-off or counter-claim.

Having examined the claim of the petitioner as to the objections urged by the defendants, we now consider the set off filed as a counter-claim against the petitioner. The Government officers insist that there is due the United States, under the Act August 5, 1861 (12 Stat. L., 292), commonly known as the Direct Tax Act,” a sufficient amount to discharge the liability of theUnited States to the claimant,because of the delinquency of the defendants in the payment of the proceeds under the various statutes herein stated. As against the set-off, it is urged that the fund represented by the amount due to the claimant is in the hands of the State of Louisiana, a trust fund to be used for a specific and definite purpose; and that whatever may be the legal liability of the State for the unpaid amount' of the direct tax, it is not a proper matter of set-off in this proceeding ; that the tax is not a legal liability on the part of the State, but a delinquency on the part of the citizens of the State of Louisiana; that Congress never intended that it should be a tax against the State unless voluntarily assumed by the State, and that under the Constitution it is not within the constitutional power of Congress to assess a tax against a State in its political and municipal capacity. We will consider some of the points made in the inverse order stated:

The power of Congress to pass a direct-tax act, and so apportion the tax as that in law it becomes an assessment against the State as a political department of the Government, involves a discussion as to the constitutional structure and mold of the Government, and might be very pertinent in this connection were it not for our conclusions as to the statute originating and recognizing the subject-matter of the counter-claim. Whatever may be said of the power of Congress in the abstract, it is sufficient in this case to hold that by the policy and purpose of the act of 1861 Congress intended to distribute to the State of Louisiana the sum of $385,886.67 as its share of the $20,000,000 levied by the act of 1861 to be collected from the citizens of the United States living in that portion of the United States known as the State of Louisiana. The assessment was made against and upon the property of citizens of the United States, and dealt with individuals, except as to the mere mode of distribution.

It was an application of that theory of constitutional law, which holds that the powers of the General Government operate with reference to the scheme of Federal authority, upon the individual citizen inhabiting the territory of the United States, as plainly indicated by the means it provided for the assessment and collection of the tax.

The fifty-third section of the act of 1861 provides for a condition upon which the claim of the Government is predicated in this case, clearly indicating that in the absence of such condition there would be no liability upon the part of the State. It is not pretended that the State of Louisiana, by any act of its legislature, or other authoritative power, either during or since the war, assumed the payment of its share of the $20,000,000 assessed under the act of 1861. The citizen failed to pay and the State failed to assume; so that in 1862, Congress had to pass the act of June 7,1862, providing a more efficient mode for the collection of tax in the insurrectionary States, of which Louisiana was one. The fact that section 53 provides for a set-óff between a State or Territory and the United States will not avail the defendants in their theory of construction, unless it is shown that the State had assumed the tax, because upon that assumption is based the right and power of deduction.

Although this is a controversy between States, the one general and the other local, the same rules of law apply, upon the subject and doctrine of set-off, that prevail in judicial controversies between citizens litigating'the most ordinary interests of life. The legal character of set-off is very aptly defined by the report of the Senate Judiciary Committee, in which it is said set-off “ means the application of a valid demand against the creditor in satisfaction or determination of his claim.” The claim in order to be a good set-off, must be between the same parties upon debts mutually due in the same character. This is the settled construction of the English statute which introduced into the law of England the doctrine of set-off, and it has been followed by American courts in all jurisdictions where the matter has been the subjectof judicial determination. (1 Chitty on Contracts, 1266.) .

Citizens owe allegiance and receive protection, and coincident with that obligation and right, they owe taxes when properly assessed on their property. States perform the functions of administration, and do not contribute to sustain theNational Government in the payment of taxes, unless they voluntarily assume the performance of that duty, by the consent and request of the national authority.

A case similar in legal substance to the one at bar arose with the State of Georgia in the execution of the act of 3d of March, 1879. In the sundry civil service bill of that year it was enacted that the State of Georgia should be reimbursed for expenses incurred in the suppression of the hostilities of the Creek, Seminole, and Cherokee Indians, in the years 1835,1836, 1837, and 1838.

At the time the State authorities sought to receive from the Government the indemnity provided by said act, there was on the books of the Treasury Department an unpaid balance under the Direct Tax Law of 1861, and the question was raised whether that unpaid balance could in law be set off against the amount to which the State of Georgia was entitled under the act of 1879. Upon the question of the liability of the State for an unpaid balance, under the act of 1861, in the absence of any assumption on the part of the State, we quote from the very able opinion of Mr. A. G. Porter, First Comptroller of the Treasury. Upon the fact that the State of Georgia never assumed the payment of the direct tax, he said:

“ If the sum apportioned is a debt owing by the State of Georgia as apolitical corporation, then it may be assumed that it ought to be so credited. If, however, it is a debt owing by the persons within that State, whose lands have been taxed, and not by the State itself, then the payment ought not to be withheld. * * * The privilege of the State to assume implies that the debt before the assumption was not its own. Before the adoption of the Constitution the person whose property was charged with the tax owed the tax to the State because the State imposed it, and levied and collected it. Since the adoption of that instrument the United States has imposed the tax, and has itself levied and collected it. The obligation of the citizen is therefore to the Union and not to the State, and he, and not the State, is the debtor.”

It is not necessary to cite further authorities to establish the character of the claim sought to be set off against the demand of the claimant, its origin under a statute having the provisions of the act of 1861; the legislation of Congress, providing means and directing the mode of collecting the tax, the right given to the States to assume the share allotted to each State, the act of 1862 providing for the collection of direct taxes in insurrec-tionary districts, are sufficient to indicate the legal character of the debt alleged in the set-off. The conclusion resulting from such reasoning is that the claimant recovers the sum of $71,385.83, and that the counter-claim be dismissed. Judgment will be entered for $71,385.83.  