
    C. D. PENNEBAKER v. THE UNITED STATES.
    [No. 17856.
    Decided January 29, 1894.]
    
      On the defendants’ Demurrer.
    
    Attorneys in tlie Treasury Department prosecute a claim there and procure an award, which is not paid, hut is credited to the party on a debt owing from him to the Government. The attorney now-seeks to recover the percentage of the award established by Treasury regulations.
    I. The Treasury regulations concerning- attorneys practicing before the Department allow a .percentage “for Ike preparation and prosecution of claims and the collection and remittance” of the amounts paid. This does not extend to the adjustment of a claim which is not paid, but merely credited to the claimant on his indebtedness to the Government. (See Benjamin’s Case, post.)
    II. The regulation was not intended to secure an allowance to the attorney otherwise than by withholding money which otherwise would be paid to the claimant; and it can not control the statutory provision that “no money skallhe paid to any person for Ms compensation who is in arrears to the United States until he has accounted for and paid into the Treasury all sums for xohieh he may he liable.” (Rev. Stat., § 1766.)
    
      The Reporters’ statement of tbe case:
    Tbe substance of tbe petition demurred to is set forth in tbe opinion of tbe court.
    ilír. JE. O. Brandenburg (with whom was Mr. Assistant Attorney- General Dodge) for tbe demurrer.
    Tbe officers of tbe Treasury have held for a long period of time that where a claim against tbe United States has been presented to it for adjudeation and settlement, and an amount is found due in tbe branch of tbe Department before which it
    
      The whole claim is based upon the regulation, for it is that only which fixes the amount claimed to be due and for which suit is brought, as if upon a favorable decision. It needs but a cursory examination of the section quoted to see that it nowhere says that the attorney is entitled to a fee upon the allowance by the Auditor, but it does say “ for the preparation and prosecution of claims for and the collection and remittance of.” There is no “collection and remittance” on the certificate of the Auditor. The prosecution alone does not entitle one to the fee, but only the successful prosecution where there is a “ collection and remittance.” Until this has occurred, under no circum stances is a fee due. The fixing of a rate of fee by the Department and the issuance of a separate draft in the attorney’s favor is not an accommodation to the Department, but a matter of convenience and safety to the attorney, protecting him from unfair dealing on the part of the client. There is no law for it, nor does it exist as a matter of right, but it only exists by virtue of this regulation. The plaintiff in this suit can not accept one part of the regulation and reject another, but he is dependent upon the regulation as an entirety. Since this is the case, it is clear he has no claim or right of action, for the regulation provides that the rate of fije is only applicable where there is a “ collection and remittance,” and here there was neither.
    Since the fee is dependent upon this regulation, and, as we have seen, that permits a fee to be charged only where there is a '“'collection and remittance,” and as there is here neither/ the Government can in no way be said to be indebted to the plaintiff. •
    Nothing was ever due Phelps, on whose claim it is alleged a fee was earned. If any fee was earned by the plaintiff, tlxe services having been rendered to Phelps and not to the Government, redress, if any, is against him; and the Government was in no way indebted to the plaintiff in this suit and is nob liable, for the reason that the act of issuing a separate draft in the attorney’s favor in cases receiving favorable decision is not required by law, but merely an act' of accommodation to the attorney.
    
      Mr. O. JD. Pennebalcer opposed.
    It is manifest that the Second Comptroller did in fact “ find and certify” that there is due Phelps $IG0.26, and that action was final, and my right to the fee prescribed by the regulation attached instantly to the $460.26, and $33.02 became my property, and under the regulation that sum should have been sent me direct. Only such part of the fund as belonged to Phelps was subject to seizure on account of Phelps’s indebtedness.
    The regulation under which this suit is brought prescribes a certain attorney fee, and the promise is made that the fee due an attorney will be deducted from amount found due claimant and paid direct. Therefore, when a balance of $460.26 was found due by the Second Comptroller to Phelps, $33.02 thereof became instantly my individual property under the regulation, and should have been paid direct to me. As it was not so paid, the Government became indebted to plaintiff. It is contended that as there was no collection and remittance of money, no fee became due. No defendant can take advantage of his own wrong. There was no collection and remittance by me to Phelps because the defendants seized the fund, but the money was in fact actually collected from the Second Auditor and remitted to the Third Auditor. Again, there .is never in these cases an actual collection of money by an attorney and remittance thereof to a client. The warrant is sent to the paymaster, who issues two checks, one of which he sends the claimant and the other is sent to the attorney for his regulation fee. There was an actual collection and remittance of $460.26, and under the regulation my services entitled me to a fee of $33.02.
    In this case the warrant was actually issued and the money actually paid by transfer to the Third Auditor. My part of the money can not be used as a set-off on Phelps’s alleged indebtedness. This was a payment by credit on account.
    
      This is not Phelps’s suit. The legality of the seizure of the sum allowed Phelps is not at issue, although much might be said on that subject. That matter belongs to another suit; but it is questionable whether $100 bounty money and $210 extra pay, both gratuities, can be taken under section 1766, which authorizes seizure of the “compensation” due a “Governmentofficer” (Semple v. The United States, 24 O. Cls. B., 422), but clearly that part of the fund due the attorney was not subject to seizure.
    It was held by this court (Adams v. The United States, 1 O. Cls. B., 306) that where the regulations of the Treasury require the manufacturer to pay the tax and look to the purchaser for reimbursement, the Government is liable if it becomes the purchaser. This case is almost identical. Here the Government seizes the whole fund, but it could lawfully seize only that part which belonged to Phelps. Any proper “tax” due from the seized fund became instantly a liability of the defendants.
    Again, in O Grady v. The United States, 10 C. Ols. B., 134 (affirmed by Supreme Court), it was held that where a claim against the United States passes to judgment the Secretary of the Treasury can not deduct a tax due the United States. It is then too late to set up a set-off. In JE%’s ease (19 C. Cls. B., 666) the defendants further contend that the cost of collecting the award from the Government should be deducted.' Not allowed, because of express terms of the law.
    The United States cannot set-off against a firm consisting of three members a judgment against two of them. (Boehm, 20 C. Cls. B., 14.) When a claim against the United States passes to judgment, the Secretary of the Treasury can not deduct a tax due. (Affirmed by Supreme Court. O’Grady v. The United States, 10 C. Ols. B., 134.)
    When the regulations of the Treasury require the manufacturer to pay the tax and look to the jrarckaser for reimbursement, the Government is liable if it becomes the purchaser. (Adams v. The United States, 1 C. Cls. B., 306.)
    Even admitting that the sum allowed claimant ($460.26) was subject to the set-off for Phelps’s debt, I contend that my part of said allowance under the regulation in suit is not subject to set-off. (Amer. & Eng. Ency. of Law, Yol. xxii, 215 bottom note 1; Id.; p. 217, bottom note 1, 3d and 4th paragraphs.)
    These decisions make it clear that the only fund subject to set-off is the net amount due, and that proper charges for collection are not subject to set-off. I call especial attention to these cases, as they are on all fours with this case.
    Suppose this were an Indian depredation claim, and this court had given a judgment for $100 and $20 attorney’s fee. Would the attorney’s fee be subject to confiscation by the United States to set-off an indebtedness of the judgment creditor? No one would so contend. The case at bar is parallel. Here we have a judgment for $460.26, and the attorney’s fee under the regulation sued on became a part of the judgment, and $33.02 of the $406.26 became instantly the attorney’s money.
   Weldon, J.,

delivered the opinion of the court:

The petition alleges “that claimant is a citizen of the United States, residing in the city of Washington, in the District of Columbia, and that he is the surviving partner of the late firm of C. D. Pennebaker & Son, attorneys at law, formerly doing business in Washington City, and that as such he has a claim against the United States, arising as follows:

“ That the firm of O. D. Pennebaker & Son were regularly enrolled attorneys entitled to practice before the United States Treasury Department, and that in September, 1884, one Abner J. Phelps, of Cumberland County, Ky., employed said firm as his attorneys to prosecute his claim for back pay due him as quartermaster-sergeant, Twenty-fifth Ohio Volunteers, and captain and assistant quartermaster, U. S. Army. Such employment was accepted by the said firm, and the claim was filed in the office of the Second Auditor of the Treasury on September 20,1884, and its prosecution at once commenced by said firm.

“ That on June 21,1888, the said firm of C. D. Pennebaker & Son was dissolved by death of its senior member, the late Col. C. D. Pennebaker, and that thereafter the said claim was diligently prosecuted by your petitioner as the surviving partner of said firm, and that such prosecution of said claim continued until February 9,1892, when the claim was allowed by the accounting officers of the Treasury, and a balance found to be due claimant on the said claim of $460.26, which balance was transferred to claimant’s credit on the books of the Third Auditor’s office as a partial set-off to a charge of $941.27 standing against him on said books, and that no part of said balance has been paid except by transfer, as stated.

“ That by reason and on account of services as attorneys in the prosecution of said claim the firm of C. D. Pennebaker & Son became entitled, upon final adjudication thereof, to afee of $33.02, under the regulation of the Treasury Department governing such cases, but that payment of said fee has never been made.

“That your petitioner has made every effort to collect from the executive officers of the United States the fee due him a's aforesaid, and' that payment has been refused, and is still refused, because of a decision of the Second Comptroller of July 20,1891, as follows:

The fact that in the examination of the claim there have been found items of credit which must be transferred 'to the books of the Third Auditor’s office to reduce the amount due from the claimant to the United States does not authorize any allowance of fees to claimant’s attorneys. This case is similar to a case where the claim is dissallowed on the ground that the debits exceed the credits; and there being nothing due and payable from the United States to the claimant, there is no money from which fees can be paid.’

“Now, your petitioner saith that no assignment or transfer of this claim has been made, and that no payment thereon has ever been received, and that he is justly entitled to the amount of $3J.02 from the United States, against which no just credits or offsets exist, and that the refusal of the executive officers to pay him the sum herein claimed to be due is contrary to the regulation in such cases made and provided. Therefore your petitioner prays judgment against defendants for $33.02.” '

In the amended petition claimant alleges that the regulation of the Treasury Department upon which this suit is founded was issued April 25,1867, and is now in force and being applied daily, as follows:

“Treasury Department,

“Second Comptroller’s Oeeice,

“April 25,1867.

“ Upon consultation with the Auditors, whose work is subject to the revision of this office, the following has been adopted as the scale of fees to be allowed claim agents or attorneys for the collection of back pay, bounty, prize money, or other moneys due from the United States to persons who are or have been officers or enlisted men of the Army, Navy, or Marine Corps of the United States, or their heirs, except in cases of colored claimants, for the collection of whose claims the amount of fees is prescribed in section 2, act of July 26,1866, and joint resolution No. 25, approved March 29, 1867, viz:

“ For the preparation and prosecution of claims for and the collection and remittance of all sums not exceeding $200,10 per centum; for all sums exceeding $200 and less than $800, 10 per centum on the first $200 and 5 per centum,on the remainder thereof; and for all sums of $800 and upward, $50; and said fees shall include all expenses incident to the collection of said claims, except the expense of the necessary notarial or other acknowledgments, which shall be defrayed by the claimant; and any agent or attorney who shall charge, directly or indirectly, in any case, a greater sum for his services in preparing and prosecuting said claims, and collecting and remitting the amount due, shall be deemed guilty of malpractice, and, upon satisfactory evidence of the fact of such overcharge being presented to the Second, Third, or Fourth Auditor, or to the Second Comptroller, said agent or attorney shall be suspended from the further prosecution of claims of any kind in or through any or either of the above-named offices.

“ J. M. Brodi-iead,

Comptroller”

To the petition the defendants filed a demurrer, and we are called upon to determine whether, upon the facts alleged, the claimant has a right to recover. It is insisted by claimant that his alleged right is founded “ upon a regulation of an Executive Department,” within the meaning of the act of March 3, 1887, defining the jurisdiction of this court.

As against the right of recovery, the defendants’, counsel contends that, in order to recover on the regulation, it must appear that there has been “ a collection and- remittance,” that the prosecution alone does not entitle the attorney to a fee, but that the allowance is founded upon an amount due the party and a payment of that amount. By the allegation of the petition it appears that by and through the efforts of claimant there was an adjustment of the account between the client and the Government, and in that adjustment there was allowed a credit, because of the efforts of his counsel, of the sum of $400.26, which was carried to the credit of the client as a partial set-off to a charge of $947.27.

The regulation is as follows: “ For the preparation and prosecution of claims of and the collection and remittance of all sums not exceeding $200,10 per centum, for all sums exceeding $200 and less than $800,10 per centum on the first $200 and 5 per centum on the remainder thereof, etc.” It has been held by this court “that accounts and balances stated and certified by the accounting officers are neither conclusive nor prima facie. evidence of indebtedness of the Government, nor can an action be brought upon them.” (McKnight Case (13 C. Cls. R.,, 302; Howes & Co. v. United States (24 id., 85).

The petition, by its allegations, in effect concedes the justice of tbe charge against tbe client of $941.37, and tbe right of tbe defendants to credit tbe client with tbe allowance; but that it should have been diminished to tbe extent of the fee, to wit, the sum of $33.02. Tbe charge of $947.31 not being attacked by tbe allegation of tbe petition, it must be assumed to have been a proper charge; and, if so, then by section 1766, Devised Statutes it was tbe duty of tbe officers to credit tbe amounts ascertained by the accounting to be due tbe client on tbe indebtedness in another account of tbe party.

Tbe statute provides that u no money shall be paid to any person for bis compensation who is in arrears to tbe United States until be has accounted for and paid into tbe Treasury all sums for which be may be liable.” It is wholly immaterial, for tbe purposes of this proceeding, whether tbe credit was properly made of tbe whole amount of tbe sum of $400.26. That question cannot arise in this case nor upon this demurrer. Tbe regulation which is tbe basis of this action was intended to pay tbe attorney a certain percentage out of money allowed bis client, but was not intended that tbe United States should allow a per centum upon an adjustment of a claim where the balance was found due the United States and no payment in money was made to tbe client or attorney. Aside from any statutory direction, it has been held that it is tbe duty of tbe accounting officersof tbe Department to set-off a debt due claimant against one due tbe Government. (Bonnafon and Martins cases, 14 C. Cls. R., 484.) Demurrer sustained, with leave to amend by tbe first Monday of March.

Nott, J., did not sit in this case and took no part in tbe decision.  