
    Frank M. Green v. The United States.
    
      On the Proofs.
    
    
      In June, 1874, the claimant calls on the Commissioner of Internal Revenue and states that he has information against certain railroad corporations which have fraudulently withheld taxes. The Commissioner replies that for the information he xoill allow, under his circular 31si July, 1873, ten per cent, of all moneys collected. The claimant gires the information, hut the Commissioner’s successor in office, instead o/$8,705, ten per cent, of the moneys collected, allows $5,000, which is approved hy the Secretary and accepted hy the claimant.
    
    I.Under the Aet 6th June, 1872 (17 Stat. L., 230, 256, § 39, ch. 315), which says “ The Commissioner of Internal Revenue, with the approval ofsthe Secretary of the Treasury, is hereby authorized to pay," &c., “for detecting," & a., “persons guilty of violating the internal-revenue laws," the Commissioner cannot bind the government by a promise to pay unless his promise has the approval of the Secretary.
    II.If a person gave information to the Commissioner of Internal Revenue under his circular 31st July, 1873, the circular expressed the contract between him and the government, and not the conversation between him and the Commissioner.
    III.If an express agreement be entered into by the Commissioner of Internal Revenue on the one side and an informer on the other, after which the Commissioner goes out of office, and his successor pays the informer what he thinks his services are worth, in ignorance of the express agreement, the latter is bound to assert it at the time of payment. Accepting the amount allowed in silence will conclude him.
    
      The Reporters’ statement of the case:
    The following are the facts of this case as found by the court: I. On the 31st of July, 1873, the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, issued the following circular:
    [Circular No. 99 — Revised.]
    
      “Concerning rewards for information leading to the detection and punishment of persons violating internal-revenue laws.
    
    “ Treasury Department, “ Opeice or Internal Revenue, 1873. Depaetment No. 107. Internal Revenue. “ Washington, July 31, 1873.
    “ Under and by virtue of the provisions of the thirty-ninth seetion of an act entitled ‘An act to reduce duties on imports and to reduce internal taxes, and for other purposes,’ approved June 6,1872, which authorize the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, to pay such sums as may in his judgment be deemed necessary, not exceeding one hundred thousand dollars, for detecting and bringing to trial and punishment persons guilty bf violating the internal-revenue laws, or conniving at violations of the same, in cases where such expenses are not otherwise provided for by law, I do hereby, with the approval of the Secretary of the Treasury, offer tor information given by persons other than officers of internal revenue, that shall lead to the detection and punishment of persons guilty of violating the internal-revenue laws, or conniving at the same, whether such punishment be by fine or other'pecuniary muict or penalty, or by forfeiture of property, such reward as the Commissioner of Internal Revenue may deem suitable, but in no case exceeding ten per centum of the net amount of the fines, penalties, forfeitures, and taxes which, by reason of said information, shall be recovered by suit or otherwise and actually paid to the United States, or of any sum which shall be accepted in compromise by the Commissioner of Internal Revenue and received by the United States; such rewards to be paid in cases which are settled in court, upon the duly-authenticated certificate of the United States district attorney having charge of the case or cases, that the person claiming is the person who furnished the information which led. to the detection and punishment of the violations of law for which the recovery was had, and upon such other and additional proofs as the Commissioner may require.
    “ In cases in which property seized, being of the appraised value of five hundred dollars or less, is disposed of by the collector under the provisions of section 63 of the Act of July 13, 1866, as amended, the certificate of the collector to that fact will be received, and also to the fact that the person claiming the reward is the person who furnished the information leading to such forfeiture.-
    “ The rewards hereby offered must be understood to be limited in their aggregate to the sum appropriated therefor, as above stated,
    “ This offer will apply to cáses in which the information has been or shall be given on or after the sixteenth day of July, 1873.
    “B. J. Sweet,
    
      “Acting Commissioner.
    
    “Approved:
    
      “ Vs. A. RICHARDSON,
    
      “Secretary of the TreajsnryP
    
    II. In the early part of June, 1874, the claimant called on J. W. Douglass, Commissioner of Internal Revenue, and stated to Mm that he had information in his possession against certain railroad companies, which had fraudulently withheld taxes due and owing to the government; and he asked said Commissioner what compensation would be given for the recovery upon such moneys as should be collected in case the claimant turned over and gave such information to the Internal Eevenue Bureau. Mr. Douglass replied: Put in your information, and I will pay you ten per cent, under my circular upon all moneys , collected on account of such information.” The claimant stated that that proposition was satisfactory, and that the information would be prepared and furnished at an early day. This interview lasted only a few minutes. The claimant did not mention what railroad companies had withheld taxes; nor did he state what amount of taxes he was going to recover; nor did he ask Mr. Douglass what circular he referred to when he used the words “ under my circular”; nor did he ask to see a copy of it; nor did Mr. Douglass ask what railroads the claimant referred to, nor what amount was to be collected; nor did the claimant urge anything as a reason why the Commissioner should depart from the general terms of the circular, and waive his right and power to determine the value of the information after the work was accomplished, and make a specific contract with the claimant.
    III. On the 25th of June, 1874, the claimant addressed to the said J. W. Douglass the following letter:
    “509 7th Street,
    “ Washington, I). 0., June 25th, 1874.
    “Hon. J. W. Douglass,
    “ Commissioner Int. Rev.:
    
    
      " Sir : I desire, under “ Circular No. 99, Eevised, concerning rewards for information leading to the detection and punishment of persons violating internal-revenue laws,” dated Treasury Department, Office of Internal Eevenue, Washington, July 31,1873, to give information of the violation by the following railroad companies of section 122, Act of June 30,1864, as amended July 13, 1866, and of section 15, Act of July 14, 1870, and I herewith enclose you statements of the material, facts in each case, showing indebtedness as follows, to wit:
    From St. Louis, Kansas City and Northern (formerly North Missouri). $21, 000 00
    Burlington, Cedar Eapids & Minnesota. ' 6,914 17
    Milwaukee and St. Paul (not including 1870).. 283,584 06
    Kansas Pacific. 47,194 43
    
      Chicago, Bock Island & Pacific. 211,371 66
    Chicago and Alton. 241,810 30
    Pacific B. B. Co., of Missouri. 125,453 13
    Indianapolis, Cincinnati & Lafayette. 19, 292 61
    Marietta and Cincinnati.... 11,025 00
    St. Louis and Iron Mouii tain . 13,772 70
    Western Union.:... 51,165 13
    Columbus and Hocking Valley. 10,186 25
    Terre Haute and Indianapolis. 29,890 90
    Making in all.■. $1,076,263 61
    “ I made the first discovery of these deficiencies and violations of law, and give this information for the purpose of having the above taxes, with any fines, penalties, anti forfeitures for which the companies are liable, collected, and of obtaining the reward referred .to in the above-mentioned circular.
    “ Very respectfully,
    “ Frank M. Green.”
    IV. In consequence of the information given by the claimant in said letter, and as a result of subsequent investigation, the Milwaukee and Saint Paul Bailroad Company paid into theTreasury of the United States the sum of $87,050.23; and thereafter the Commissioner of Internal Bevenue made the following de- ' cisión as to the amount to be paid to the claimant as informer; and his decision was approved by the Secretary of the Treasury:
    “Treasury Department,
    “Oeeice oe Internal Bevenue,
    “ Washington, Jarmary áth, 1877.
    
      " In re claim of Frank M. Green and John D. Sanborn to a reward in the case of the Milwaukee and St. Paid Bailroad Co., 1st district of Wisconsin; amount claimed, $8,705.02.
    “The evidence in this case shows that the tax was recovered upon information filed by claimant, Frank M. Green. Claimant John D. Sanborn contests Green’s right to the reward upon the ground that. Green acted as Sanborn’s agent in giving the information to the government.
    “ Sanborn alleges that the Milwaukee and St. Paul Bailroad Co. was contained in his late contract with the Secretary of the Treasury; that Green became possessed of his knowledge during the continuance of said contract and while he was acting as agent for Sanborn in the recovery of taxes due the government; that having obtained such information in the capacity of agent, he was not entitled to use it at any time on his own behalf, and if so used, that Sanborn as principal would have the right to corue forward and claim the reward. The contract in question having been rescinded, Sanborn was informed by the then Commissioner that the list of persons and corporations contained in said contract would not be taken as information, and that if he wished to avail himself of the offer of reward under Circular 99 be would be required to give information in all cases where he desired to make claim. Under this state of the case Green gave the information concerning the Milwaukee and St. Paul Eailroad Co. yhich to the recovery of the taxes, and the claim of Sanborn is based upon the idea that Green was his agent, and that the information in question should inure to his (Sanborn’s) benefit. The evidence in the case in respect to the question of agency is conflicting and the burden of proof would be upon Sanborn.
    “Aside from this I hold that it is not the province of the Commissioner of Internal Eeveuue to go into the question of principal and agent in a case of this kind, but it is his duty to make such award as is proper to be made iu this case to the person who furnished, the information that led to the recovery of the money. The evidence shows clearly that Green is that person, and upon that ground I decide that he is entitled to the reward. The claim for reward is $8,705.02. I fix the reward, however, at the sum of $5;000, following the legislative precedent limiting rewards of this character to a maximum of $5,000.'
    “Green B. EatjM,
    “ Commissioner. ’’
    The following is a copy of the indorsement on the foregoing decision of the Commissioner of Internal Eevender
    “Jan. 27,1877.
    “ Upon hearing the parties by their counsel orally and by briefs, I find that said Sanborn did nothing within the intent of Sec. 3463 E. S., entitling him to reward ‘for detecting and bringing to trial and punishment’ the railroad named as ‘ guilt3 of violating the internal-revenue laws,’ but that said Green is entitled to the reward for such service, and the allowance by the Commissioner of $5,000 should be approved.
    “I-I. F. French,
    
      "Ass’t Secretary.
    
    “Approved: "
    “Lot M. Morrill,
    “ Secretary.
    
    “Jan/29, 1877.»
    V. In pursuance of the said decision of the Commissioner and Secretary, the claimant was paid the sum of $5,000, under an account adjusted by the Fifth Auditor of the Treasury, and admitted and certified by the First Comptroller, as “for the reward offered by the Comm’r of Iut. Rev. under circular No. 99, revised, dated July 31,1873, case of the Milwaukee and St. Paul R. R. Go.” It does uot appear that the claimant, at the time said payment was made, or before, objected that the reward allowed was insufficient, or that he was legally entitled to more; or that he in any way referred to the alleged conversation with the Commissioner.
    
      Mr. George G-. Alelen for the claimant: .
    The right to “pay” carries with it and necessarily involves the incidental right to contract for payment. That such contracts, either for a definite sum or for an indefinite percentage, are fully authorized is now well settled. (Williams’s Case, 12 O. 01s. R., 192; Briggs’s Case, 15 O. Gis. R.) And if a contract can be made for a definite sum, as in the former case, of course it can be made for a definite percentage, as in this case.
    
      Mr. R. A. Orbison (with whom was the Assistant Attorney-General) for the defendants:
    The claim presented to the Commissioner was for $8,705.02, but he only allowed $5,000. This action was approved by the Secretary, and was therefore a disallowance by him of the $3,705.02 which is claimed in this case. The claim having been disallowed by the Commissioner of Internal Revenue and the Secretary of the Treasury, who under the act Congress were to fix the allowance to be made claimant, cannot be allowed nowandthepetition shouldbedismissed. (Tiivsv. United States, 16 O. Cls. R., 276.)
    Even if the Commissioner had agreed in the early part of June, 1S74, to give the claimant ten per cent, upon the amounts collected, on account of information given by him, this agreement can have no weight, for the claimant at the time he gave the information expressly stated that he did so for the purpose of obtaining the reward referred to in Circular 99, revised, which circular provided for “ such reward as the Commissioner of Internal Revenue may deem suitable”. This letter giving the information must therefore be treated as containing the terms of the contract, and if any previous verbal agreement had been made it should be treated as having merged in the written contract made June 25, 1874, which stated the terms upon which the information was communicated. Where a written agreement is made by parties, all previous conversations and verbal agreements are merged therein. (Dean v. Mason, 4 Conn., 42S; Purklmrst v. Cortland, 1 Johns. Oh., 274.)
   Drake, Ch. J.,

delivered the opinion of the court:

By the 39th section of the Act of June 6, 1872, “ to reduce duties on imports, and to reduce internal taxes, and for other pur- ' poses” (17 Stat. L.,230, 256, ch. 315), it was enacted as follows:

“The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, is hereby authorized to pay such sums, not exceeding in the aggregate the amount appropriated therefor, as may, ip his judgment, be deemed necessary for detecting and bringing to trial and punishment persons guilty of violating the internal-revenue laws, or conniving at the same,_ in cases where such‘'expenses are not otherwise provided for by law; and for this purpose there is hereby appropriated $100,000, or so much thereof as may be necessary, out of any money in the Treasury not otherwise appropriated.”

Under the authority of this provision the Commissioner of • Internal Revenue, on the 31st of July, 1873, issued the circular set out at large in the finding of facts, the portion of which material to this case is in these words:

“I do hereby, with the approval of the Secretary of the Treasury, offer for information given by persons other than officers of internal revenue, that shall lead to the detection and punishment of persons guilty of violating the internal-revenue laws, * * * such reward as the Commissioner of Internal Revenue may deem suitable, but in no case exceeding ten per centum of the net amount of the fines, penalties,'forfeitures, and taxes, which, by reason of said information, shall be recovered by suit or otherwise and actually paid to the United States, or of any sum which shall be accepted in compromise by the Commissioner of Internal Revenue, aud received by the United States. * * * The rewards hereby offered must be understood to be limited in their aggregate to the sums appropriated therefor, as above stated.”

In June, 1874, the claimant called on the Commissioner of Internal Revenue, and stated that he had information in his possession against certain railroad companies which had fraudulently withheld taxes due to the government, and asked the Commissioner what compensation would be given for the recovery upon such moneys as should be collected, in case the claimant gave such information to the Internal Revenue Bureau. The Commissioner replied: “Put in your information, and I will pay you ten per cent, under my circular upon all moneys collected on account of suck information.” Tke claimant stated that that proposition ivas satisfactory, and that the information would be prepared and furnished at an early day. This was all that passed between the parties at the interview.

The claimant furnished information to the Commissioner against thirteen different railroad companies, one of which was the Milwaukee and Saint Paul Railroad; from which, through that information, was recovered the sum of $87,050.23.

The claimant claimed before the Commissioner of Internal Revenue ten per cent, on that sum, $8,705.02, as due to him as informer. That officer, however — a different person from him with whom the foregoing interview was had — fixed the reward at $5,000; which ivas approved by the Secretary of the Treasury ; and that amount was paid to the claimant, and he received it, so far as appears, without objection to its sufficiency, without any claim that he was legally entitled to more, and without any mention by him of the Commissioner’s predecessor having agreed to give him ten per cent. He now sues to recover $3,785.02, the unpaid remainder of the ten per cent., basing his right of recovery solely on the above conversation between him and the Commissioner; and he avers in his petition that that officer “then and there in explicit and unqualified terms' promised to pay or allow him a reward equal to ten per centum of all that should be recovered under and by virtue-of his information.”

We are unable to discover any merit in this claim.

In the first place, assuming — what we by no means admit— that the Commissioner made the alleged promise in “explicit and unqualified terms,” the promise could impose no obligation on the government unless it vas approved by the Secretary of the Treasury. The act in question says: “ The Commissioner of Internal Revenue, icith the approval of the Secretary of the Treasury, is hereby authorized to pay.” If the Commissioner could not pay without that approval, clearly he could not, without it, bind the government by a promise to pay.

In the next place, the contract of the government was expressed in the circular, which held out to informers sueh reward as the Commissioner of Internal Revenue may deem suitable,” not exceeding ten per cent. Whoever, under this circular, gave information entitling him to a reward, gave it under a legal obligation to know and understand that his right was subject to these three conditions1. That the Commissioner should find that he had given information entitling him to the reward; 2. That the Commissioner should, in the first instance, declare what he deemed a suitable reward; and, 3. That the Secretary of the Treasury should approve the Commissioner’s judgment and action on both those points before the latter could lawfully pay the reward. That was the contract offered by the government in the circular, and it was accepted and agreed to by the claimant when he gave the information which earned the reward. He thereby agreed to take, in reward, whatever sum the Commissioner might “ deem suitable” and the Secretary should approve; and he has no legal right to anything more.

And finally, without a-word of objection or complaint, and without any reference to the alleged conversation, he received payment of the amount awarded him. As the Commissioner who made the award was a different person from him who held that conversation, it was incumbent on the claimant to make that matter known to him, if he wished to get the ten per cent, which he says was promised him. But while he claimed that rate of compensation, he was silent as to the antecedent promise, and, so far as appears, remained so for more than four years; when he broke his silence by bringing this suit. It would have beeu well had he never broken it; for not only was there no lawful promise to him, such as.he alleges, but, by his keeping silence at a time ivhen, if ever, he ought to have spoken, and by his unobjectingly receiving payment of what was awarded him, he effectually barred his own way to a recovery of any more here.

The claimant’s petition is dismissed.  