
    THE DORSHEIMER CASE. Philip Dorsheimer and others v. The United States.
    
      On demurrer.
    
    
      A large amo unt of distilled spirits, and the distillery an d appurtenances where the same was manufactured, are seized at the instance of, and upon information furnished by, officers of the internal revenue service. Judicial proceedings are instituted to have the spirits declared forfeited. During the pendency of these suits, and before condemnation, the Commissioner of Inlei'nal Revenue, with the approval of the Secretary of the Treasury, compromises ike case, the owners of the property paying the amount of taxes due on ike spirits, and a specific sum as penalties. The Secretary of the Treasury divides the specific sum with the revenue officers, but retains the whole of the amount paid as taxes.
    
    The act 30th of June, 1864, section 44,13 Stat. L., p. 239, authorizes the Commissioner of Internal Revenue and the Secretary of the Treasury to “ compromise” all suits “ relating to internal 
      
      revenue. It is competent for them to make tlie payment of the taxes due to the United States upon property seized, and against which proceedings in rent have been instituted, a part of such compromise.
    The amount so received for duties, on such compromise, is not reserved as a forfeiture out of the property, but paid as a tax, and the informers are not entitled to participate in such sum.
    The Assistant SOLICITOR, for the defendants :
    The rights which these claimants acquired in the property seized was but an inchoate right. It was not a vested right except as against the owner of the property. In every case of this kind the forfeiture for certain purposes relates back to the commission of the offence. As between the violator of the law and all persons claiming as purchasers of the property and the government, the forfeiture attaches at the moment of the commission of the offence. The delictum does indeed ■divest the proprietary interest from the owner of the property so as to overreach the claims of subsequent purchasers; but it does not therefore follow that the share to which these claimants became entitled in virtue of their being informers vests in them eo instanti. Their title might never vest by reason of two contingencies: 1st. There may be remission after the seizure and before condemnation. 2d. There may be no condemnation. The happening of either of these contingencies would defeat the inchoate title which resulted from the seizure. In prize-cases it has been held that the vesting right does not take place until final judgment or sentence of condemnation.
    
      The Margaretla, 2 Gallis. B., 522; the Elsebe, 5 Bob. B., 155; the United States v. Morris, 10 Wheaton, p. 291.
    The claimants’ petition denies the power of the Secretary of the Treasury to compromise the suits commenced against Bhomberg & Co., or to remit the penalties incurred by them. It only remains, therefore, to demonstrate the existence of this power in the Secretary of the Treasury. The power of the Secretary of the Treasury to remit fines, penalties, and forfeitures, as well as to compromise suits instituted for the recovery of such fines, penalties, or forfeitures, is derived from two acts of Congress relating to these subjects :
    1st. From the act of March 3, 1797, section 1. (1 Stat. at Large, p. 506.)
    2d. By the 44th section of the act of Congress, approved June 30, 1864.
    By the first of these acts the application for remission could be made by any person “ interested ” in any goods, wares, or merchandise seized, and upon the receipt by the Secretary of the Treasury of the petition and evidence which had been submitted to the district judge,' he “ should thereupon have power to mitigate or remit such fine, forfeiture, or penalty, or to remove such disability, or any part thereof, if in his opinion the same shall have been incurred without wilful negligence or any intention of fraud” The claimants by their petition show that Sturges Sons had acquired an “ interest ” in the property seized by reason of the advances they had made before its seizure to Bhomberg & Co. They might, therefore, under this statute make the petition to the district judge for the remission of the fine or forfeiture. The Secretary of the Treasury in these cases acts, in a certain sense, judicially. ( United States v. Morris, 10 Wheaton, 285.)
    The court will therefore presume that all the antecedent facts which were necessary to give the Secretary of the Treasury jurisdiction to grant remission of any fines, penalty, or forfeiture, existed. These facts' are : 1st. That the person making the application for remission had an interest in the property seized; 2d. That petition had been made to the district judge setting forth the circumstances of the case ; 3d. That notice had been given to the person or persons interested in the fine, penalty, or forfeiture, and to the United States district attorney, of the time of hearing such petition. If the record transmitted to the Secretary of the Treasury by the district judge shows these facts, then the power of the Secretary of the Treasury to determine the question of “ wilful negligence or any intention of fraud ” in the party incurring the penalty or forfeiture becomes unquestioned. It is a question submitted to the sound discretion of the Secretary, and from his decision there is no appeal. Under this statute several cases have arisen which have been considered by the Supreme Court of the United States, and also in the several circuit courts of the United States. The conclusions which inay be gathered from these cases are :
    1st. That the Secretary of the Treasury, under the provisions of said statute, may remit any fine, penalty, forfeiture, or disability incurred in any manner specified in said act at any time before the rendition of a judgment or sentence of condemnation.
    2d. That the power of the .Secretary of the Treasury extends as well to the remission of that portion of the fine, penalty, or forfeiture which the law provides shall he paid to the informer, as to the portion of said fine, penalty, or forfeiture that would go to the United States.
    
      The United States v. Morris, 1 Paine’s C. C. B., 209 ; Samev. Lancaster, 4 Wash. C. C. B., 64; Morris v. United States, 10 Wheaton, 246; McLane v. Same, 6 Peters, 404; 3 Opinions of Attorneys General, 237.
    By the act of June 30, 1864, section 44, authority is given to the Secretary of the Treasury “ to compromise all suits relating to internal revenue." The suits which the Secretary of the Treasury “ compromised ” against the protests of these claimants resulted directly from an evasion of the revenue laws in regard to the payment of the internal revenue tax which he became liable to pay under the provisions of this act. The interests of other parties guiltless of any fraud had intervened before the seizure, and there was presented to the Secretary a legitimate matter for compromise. The object of the law was to secure and protect the interests of the government, and not to oppress the innocent. He protected those interests by securing to the government that which it had a right to have from those who were accused of violating the law. He was not called upon, nor was it his duty, to prosecute these violators of law any further than the in-, terests of the government required, and what those interests required he alone could judge. It would be strange indeed if the notion that the government must prosecute suits for the benefit of informers should find judicial sanction anywhere.
    Mr. M. Blair, Mr. F. A. Dick, and Mr. Dorsheimer, for the claimants :
    The petition is to recover the one-half of the proceeds of the several actions instituted by the United States against property. The actions were not in personam, hut in rem ; the articles seized were held as the property of the government by a title that was good, viz : that of the forfeiture; the facts that made out the forfeiture were confessed.
    The petitioners fully recognize as a principle of law that the Secretary of the Treasury may, under the act of 3d of March, 1797, entirely remit the forfeiture, and all the consequences thereof.
    In this case, however, they expressly charge that the forfeiture was not remitted. The petition says that the Secretary, under section 44 of the act of 1864, compromised with third parties, “ being in compromise of the suits for forfeiture;” and further, they show that the Secretary, in his report, professed to act under the law of 30th June, 1864, and its 44th section.
    Nor is it contended by the petitioners that the rights of informers become so vested as to be beyond this power of the Secretary to remit, before final sentence.
    
      All that is insisted upon here is, that the interests of the petitioners are identified with those of the government under the proceedings in rem, until and in the final termination thereof, whatever that may he; and that the law has not given any power to the Secretary of the Treasury to bargain for the exclusive advantage of the government in relation to the subject of forfeiture, or the proceedings in forfeiture, and that whatever bargain or arrangement he makes attaches on the rights of both, like that of the agent of co-partners.
    
      Van Ness v. Buel, 4 Wheat., 74; The United States v. Jones, 1 Wheat., 462, (3 Pet., Cond., 624;) Hoyt v. United Slates, 10 How., 109, 138; McLane v. United States, 6 Pet., 404, 426; the United States v. Heth, 3 Oranch, 399.
    By the preceding expressions of the Supreme Court, it appears to he the established construction of the revenue laws to regard in a favorable light the claims and rights of these officers of the government, who for it, as well as themselves, under its laws, perform public service ; and also to hold their inchoate claims to be property, to the full extent that the rights of the government are property, subject only to be entirely given up, or modified, by the acts of the Secretary of the Treasury, under the laws; but not independent of or outside of the provisions of the law, in such case specifically provided.
    The discretionary power conferred by the act on the Secretary is not subject to review; but whether the act done is an exercise of such discretionary power, within the meaning of the law, is necessarily a judicial question. Otherwise the Secretary, and not the' courts, would finally expound the law.
    
      Decatur v. Paulding, 14 Pet., 497, 515; Lytle v. Arkansas, 9 How., 314, 333.
    The 44th section of the act of 30th June, 1864, contains no power to remit forfeitures; it merely authorizes the Commissioner of the Int ernal Revenue subject to regulations to be prescribed by the Secretary of the Treasury, to compromise all suits relating to internal revenue.
    The power to remit forfeitures is, as stated by defendant’s solicitor, found in the act of 3d March, 1797. (1 Stat., 506, continued in forcey 2 Stat., 7; 1 Brightly’s Dig., 280.)
    What proceedings are within this law, and in what form the parties and the Secretary must act, have been settled by decisions of the courts.
    In the case of The Margaretla, 2 G-allison R., 515, an information in rem was filed for the forfeiture of goods. Pending the proceedings the claimants applied to the Secretary of the Treasury for a remission of the forfeiture, and he gave them a formal paper to that effect, but the court, by Story, justice, declared it not to be within the law.
    Where the Secretary recites that the remission is granted by virtue of a special authority, given by a special statute, he cannot be presumed to have acted under any general authority granted by any general statute.
    Under the act of 1797, it must appear “ on the face of the yardon that, in the opinion of the Secretary, there has been no wilful negligence or intention of fraud, and such, indeed, has been the uniform practice under the statute.”
    The court further states, that the Secretary can act only on the statement of facts judicially found by the district judge; and that the judge can act only on competent evidence; and that the province of the Secretary is to act exclusively on the facts thus found by the judge.
    In the case at bar, as it does not appear affirmatively that the right of the government has been remitted, and as the facts stated in the petition show the contrary, it becomes important to ascertain what is the legal nature of the settlement made.
    Several cases have been decided by the courts, wherein were determined the rights of collectors claiming a share of forfeitures, on a settlement for a part of the value of the property, and in which it became necessary to settle the character of their interest in the proceeds of such settlement.
    
      McUane v. The United States, 6 Pet., 404, is the leading case on this subject and is cited with approval in Hoyt v. The United States, 10 How, 109, 138.
    It may throw some light upon the nature of the interest of the parties concerned in the property in question, and its proceeds, to consider the precise operation and effect of the law on the title to the property.
    First, the forfeiture occurs immediately upon the happening of the cause — that is, the commission of the fraud. Second, it works a transfer of title. Third, the goods forfeited are regarded as themselves guilty of the cause which transfers the title in them.
    
      Caldwell v. The United States, 8 How., 36G ; The United States v. Bags of Coffee, 8 Cranch, 398 ; The United States v. Brig Mars, 8 Cranch, 417.
    These decisions were upon statutory language substantially the same as that of the 68th section of the act of 1864.
    
      The Palmyra, 12 Wheat., 1, says: “ In contemplation of the common law the offender’s right was not divested xmtil the conviction.
    
      But tills doctrine was never applied to seizures and forfeitures created by the statute in rem, cognizable on the revenue side of the exchequer.”
    This is cited in United, States v. Brig Maleic Adhel, '2 How., 210 ■ The cases already cited of The Margaretta, 2 Gall., 515, and Daveis’s Bep., 343, and The United StatesY. Morris, 1 Paine C. C., 209; and also The United, States v. Morris, 10 Wheat., 246, show that the jurisdiction of.the Secretary of the Treasury must be so exercised and stated as to show affirmatively that it existed.
    There is no warrant of remission of the Secretary, in form as set out in McLane v. The United States. 6 Pet., at p. 408, and in The Mar-garetta, 2 Gall., 515, nor in any other form.
    The defendant, in the language of Stephen on PL, (p. 175,) by his demurring, “ admits that he has no ground for denial or traverse.”
    He cannot, therefore, urge here, even by way of argument, that the forfeiture was remitted, for the very basis of the petitioner’s claim, as stated, is an express contradiction thereof.
    Moreover, the presumption relied upon in the defendant’s argument is founded on the supposed judicial or quasi judicial act of the Secretary. If there was any such act it can be proven only by the record, and the proof of a record lies in itself, and not in a presumption.
    The facts and the proceedings had in the-Department of the Treas-iiry demonstrate that the money received was so much reserved out-of the pending and unsettled claims of the government, to pay which the government had in its possession $199,132 in addition to the distillery and appurtenances at Dubuque, and the bonds of the parties which had been taken, and its right to still assert its forfeiture against the 1,900 barrels that had been released, which forfeiture Commissioner Orton took the position, at the time of the settlement, had not been remitted.
    The points which we have endeavored to establish are these:
    I. That the act of 30th June, 1864, gave a joint and common interest in the benefits of the forfeitures to the government- and the special agents whose services it authorized.
    II. That under the proceedings in rem, the rights of both parties attached to the property seized at the time of commission of the offence, and that in contemplation of law the rem seized was - guilty and forfeited, and the title thereof converted from the manufacturer to the government, one-half for its own benefit, one-half for the petitioners.
    III. That no remission of the title or rights thus existing ever was made under the act of 1797.
    IY. That the compromise made was a settlement, actual and professing to be, of the claims and proceedings of the United States for the forfeiture of the property seized for the non-payment of taxes; and that in such settlement the United States was bargaining away the petitioners’ rights as well as its own, and that the money received was in payment of the rights as they existed under the law, and not otherwise ; and by mere operation of law the petitioners become entitled to the one-half of the fruits of the compromise.
    Mr. Dorsheimer replied for the claimant.
   Casey, C. J.,

delivered the opinion of the court :

This case comes before us on a demurrer, which admits the facts as stated in the petition of the claimants, but alleges they are not sufficient in law to maintain their action. We need not, therefore, recite them.

The solicitor contends, in support of the demurrer, that the compromise of the suit by the Commissioner of Internal Revenue, under the direction of the Secretary of the Treasury, as set forth in the claimants’ petition, is binding upon them, and conclusive of their rights in the premises. That the act of 30th of June, 1864, § 44, which conferred upon the Secretary and Commissioner the right to compromise all suits relating to internal revenue, is broad enough in its provisions and scope to embrace this case. That until the actual receipt of the money, and while proceedings remain in fieri, the Secretary and Commissioner may interpose their authority and defeat the forfeiture by remitting the penalty or compromising the suit.

The claimants’ counsel contend that when the property was seized for violation of the excise law it was no longer liable for tax as such, but subject to forfeiture only; and, therefore, whatever sum was obtained by the remission of the forfeiture, or compromise of the suit, could only be so much reserved over out of the forfeiture as a penalty, and not as a tax.

If these sums were really penalties or forfeitures, and not taxes, it is admitted the claimants are entitled to share equally in their amount with the government. The internal revenue law gives one moiety of these to the informer. If, on the other hand, the amount in dispute was received by the government as taxes due from the party whose property was seized, and the officers had a right to so compromise the suit, then the claimants have no right to participate in the amount representing such taxes or duties.

The claimants rely on the ruling of the Supreme Court of the United States in tbe case of McLane v. The United States, 6 Pet, 404, as decisive of this controversy. That case arose out of the seizure of a cargo of goods imported into the United States in violation of the non-intercourse laws, about the month of April, 1812. They were libelled, and a decree of condemnation passed. Congress then, on the 29th of July, 1813, authorized the Secretary of the Treasury to remit the forfeiture on payment of the duties which would have been payable by law on such goods, &c., if legally imported after the 1st of July, 1812. An act of Congress of that date had rendered such goods liable to a double duty. The Secretary of the Treasury, proceeding under this special act, remitted the forfeiture upon the conditions prescribed therein. The money was paid into court, where the forfeiture had been declared, and the collector, Mr. McLane, claimed a moiety, and prayed that it might be decreed to him. His prayer was refused, and he appealed to the Supreme Court of the United States.

Mr. Justice Story, after reciting the leading facts of the case, states

the questions presented in the following concise and lucid manner:

“ The question then arises, in what light the reservation and payment of the double duties, as conditions upon which the remission is granted, are to be considered % Are the double duties to be deemed mere payment of lawful duties or are they to be deemed a part of the forfeiture reserved out of the proceeds of the cargo 1 If the latter be the true construction, then the collector is entitled to a moiety; if the former, he is barred of all claim.”

The claim of the collector was sustained on the ground that the goods when imported and seized were not liable to duties at all, they were simply subject to forfeiture. And the object of the act of 1813, authorizing the Secretary to remit on payment of double duties, was a mere means of determining the extent to which the forfeiture should be enforced. The goods not having been subject to any impost or tax, it could not be retained as a duty, but must be regarded as a forfeiture. The government in that case admitted the right of the collector to participate in one-half the sum received, regarding the single duty as a tax and the residue as forfeiture. But the court held the entire proceeds to be a forfeiture, and decided that the collector was entitled to a moiety of the whole sum.

. Now the claimants maintain that after this property was seized and libelled it was no longer subject to tax ; that the only way in which the government could get any sum out of it in lieu of the taxes, the payment of which had been evaded by the manufacturer, was by a decree of condemnation and sale, or by reserving so much out of it, on releasing the property or compromising the suit, by way of forfeiture; that from the time of seizure till the close of the case the interests of the government and the informer are identical and mutual, and they are entitled to share alike in all that may be obtained out of the property seized, whether by compulsion or compromise. They admit the power of the Secretary to remit the forfeiture, but say it must be an entire remission. He may not remit the part to which the informer is entitled, and retain the government’s share or any part of it.

The right of an informer in the property seized is an inchoate right, and which, under our system of revenue laws, is liable at any time before the receipt of the money to be defeated by the intervention of the discretionary powers vested by law in the officers of the Treasury Department.

In tlie case of The United States v. Morris, 10 Wheaton, there had been judgment on the forfeiture, a decree of condemnation, and also judgment on the bond given by the claimant for the release of the property, a part of the money paid and distributed, a fieri facias levied on the goods of the defendants for the residue, and a venditioni exponas in the hands of the marshal to sell the same. At this juncture an application was made to the Secretary of the Treasury, who remitted the forfeiture, and his right and power to do so were the questions discussed and decided by the court.

Mr. Justice Thompson, in delivering the unauimotts judgment of the court, says :

“ It is not denied that custom-house officers have an inchoate interest upon the seizure, and it is admitted that this may be defeated at any time before condemnation. But if this is not the limitation put upon the authority to remit by the act giving the power, it is difficult to discover any solid ground upon which such limitation can be assumed. If the interest of the custom-house officers before condemnation is conditional and subject to the power of remission, the judgment of condemnation can have no other effect than to fix and determine that interest as against the claimant. Those officers, although they may be considered parties in interest, are not parties on the record; and it cannot with propriety be said that they have vested rights in the sense in which the law considers such rights. Their interest still continues conditional, and the condemnation only ascertains and determines the fact on which the right is consummated should no remission take place.” And on page 291, speaking of the statute which gives the Secretary of the Treasury, the power of remission in cases of forfeiture, lie says: “ Blit the plain and obvious interpretation is, that thé right does not become fixed until the receipt of the money by the collector.”

The object of the law is doubtless to secure the payment of the tax and not to produce forfeitures. The wide discretion vested in the officers is intended to assist them in collecting the duties and taxes, and to compel parties to deal justly by the government. The 48th section of the act of June 30, 1864, 13 Stat., 240, enacts “ That all goods, wares, merchandise, articles, or objects on which duties are imposed by the provisions of law, which shall be found in the possession or custody, or within the control, of any person or persons for the purpose of being sold or removed by such person or persons in fraud of the internal revenue laws, or with desigfi to avoid the payment of duties, may be seized by any collector or deputy collector who shall have reason to believe that the same are possessed, had, or held for the purpose or design aforesaid, and the same shall be forfeited to the United States.” The 41st sec., 13 Stat, 239, provides, “ and where not otherwise or differently provided for, one moiety thereof shall be to the United States and the other moiety thereof to the use of the person, to he ascertained by the judgment of the court, who shall first inform of the cause, matter or thing whereby any such fine, penalty, or forfeiture was incurred.” The 179th sec., 305, makes it the duty of the several collectors of internal revenue, within their respective districts, to prosecute for the recovery of fines, penalties, and forfeitures imposed by the act, and that all such sums may be sued for and recovered in the name of the United States in any appropriate form of action before any circuit or district court of the United States for the district within which the fine, penalty, or forfeiture may have been incurred, or any other court of competent jurisdiction. And where not otherwise provided for, “ one moiety shall be to the use of the person who, if a collector or deputy collector, shall first inform of the cause, matter, or thing whereby any such fine, penalty, or forfeiture shall have been incurred, and the other moiety to the use of the United States.”

The 44th section of the act, 13 Stat., 239 and 240, enacts, “ that the Commissioner of Internal Revenue, subject to regulations prescribed by the Secretary of the Treasury, shall be, and is" hereby, authorized, on appeal to him made, to remit, refund, and pay back all duties erroneously or illegally assessed or collected, and all duties that shall appear to be unjustly assessed, or excessive in amount, or in any manner wrongfully collected, and also repay to collectors or deputy coh lectors the full amount of such sums of money as shall or may he recovered against' them, or any of them, in any court, for any internal duties or licenses collected by them, with the costs and expenses of suit, and all damages and costs recovered against assessors, assistant assessors, collectors, deputy collectors, and inspectors in any suit which shall be brought against them, or any of them, by reason of anything that shall or may be done in the due performance of their official duties ; and also compromise such suits and all others relating to internal revenue.”

The 1st section of the act of 3d March, 1797, 1 Stat., 506, it is admitted, confers full power upon the Secretary of the Treasury to remit any forfeiture incurred in cases like the present. But the act requires that the application for the remission shall be Inade to the judge of the district where the forfeiture accrued, who, upon notice to the district attorney, and the person claiming the forfeiture, &c., hears the application in a summary manner, and reports the facts to the Secretary of the Treasury ; the latter, if satisfied that the penalty or forfeiture was incurred without any wilful negligence or intention of fraud, may mitigate or remit it, or any part of it. This act can have no bearing on the present case, because the mode prescribed was not pursued, and without that he could not proceed under it.

The case depends, therefore, entirely and squarely upon the construction to be given to the provision in the 44th section of the act of 30th of June, 1864, authorizing the Commissioner of Internal Revenue, subject to regulations prescribed by the Secretary of the Treasury, to compromise all suits relating to internal revenue.

The statutory interest of an informer or prosecutor in a penalty or forfeiture under the revenue laws is only an inchoate and a contingent interest, and never vested and indefeasible until the money is actually received by him. This is the understanding and tacit agreement under which he enters upon the prosecution of the case. His individual interest must yield to the general policy and convenience of the government; the only limitation upon this is, that he shall be admitted to share, equally with the government, in the penalty or forfeiture recovered or reserved, in the final disposition of the case. Such are the results of the cases settled by the highest judicial authority, the Supreme Court of the United States. This, then, narrows the question in our case down to the simple inquiry whether the sum of one hundred and ninety-five thousand one hundred and two dollars, purporting to have been received on this compromise in payment of taxes due on the liquor manufactured, was really received as a tax or as a forfeiture. And this again depends upon the right and power of the officers under that 44th section. They intended to receive it as a tax, and if they had a right to do so, if they might lawfully claim the payment of the tax out of the property seized, or from the manufacturer or party claiming the property, then it is clear it was a tax and not a forfeiture.

We think that Congress, in conferring this authority to compromise all suits, intended that the officers charged with the supervision of the assessm ;nt and collection of the internal revenue, and the enforcement of the law imposing it, should possess the fullest power and widest discretion. Instead, therefore, of the act enumerating and specifying the particular things which they might do, and to which their authority in that event would necessarily have been limited, they confer a power and right of control as broad and as extensive as the subject itself. It was of course apparent to Congress that in the workings of such complicated and vast machinery as that necessary for the assessment and collection of the internal duties imposed by the act of 1864, no human sagacity or foresight could provide beforehand for the adjustment of the innumerable difficulties that would arise in any other way than in the most general terms. And while they were imposing on the Secretary of the Treasury and the Commissioner of Internal Revenue a most onerous duty, they intended to confer all the power necessary to perform it efficiently. It was apparent that much litigation would necessarily arise; that multitudes of suits, embracing every variety of judicial controversy, must ensue. That the subject-matter and complexion of this litigation would be as diversified in its aspects and character, in its facts and principles, as the endless variety and almost infinite number of objects and human transactions upon which the law was made to operate. To specify, to enumerate powers and functions applicable to such a subject, was simply impossible. The only thing that could be done to meet such exigencies as must arise was to confer the power in the broadest and most general terms. This, we apprehend, was the intention when Congress conferred the power to compromise all suits relating to internal revenue.

Compromise is defined to be “ an agreement between two or more persons, who, to avoid a lawsuit, amicably settle their differences on such terms as they can agree upon.” — (1 Bouv. L. Diet., 109.) Lexicographers define it in the same way. Webster says compromise is "an amicable agreement between parties in controversy to settle their differences by mutual concessions.” To compromise ; “ To adjust and settle a difference by mutual agreement, with concessions of claims by tbe parties — to agree, to accord.”

The suit compromised related to internal revenue. It grew directly out of, and was founded upon, the internal revenue law, and was a part of the machinery devised to enforce compliance with its provisions, as well as to punish for disobedience of its mandates. We have no doubt the power conferred embraced the right to compromise the suit in question, and being a matter of discretion vested by law in public officers, it is not re-examinable here. For a corrupt exercise of the power vested in them the officers would be liable to removal or impeachment. But no review of their action or appeal from their decision is given to any other tribunal. Therefore, whether it was a wise and judicious settlement, whether in accordance with sound policy, and for the best interests of the service, are questions which do not arise in the case. They, having made the compromise, and received a large sum in payment of the taxes admitted to be due, are the informers entitled to a share of those taxes 1 Does the seizure of the property and the pending suit for the forfeiture constitute such a partnership that the government must divide with them this sum paid to it expressly as taxes 1 The law confers upon them one-half of the forfeiture — no part of the taxes — yet if a party comes voluntarily forward after seizure and pays the taxes, the government could surely receive them ; suppose that occurs — they are paid over into the treasury of the United States. The suit for the forfeiture is till pending. The subsequent payment of the taxes does not condone the offence and operate as a release of the property; but the officers, at some subsequent period, agree to compromise with the owner upon the payment of a certain penalty, in lieu of the forfeiture, and restore to him the property. Does the act of compromise relate back to the receipt of the taxes, and make that a reservation out of the forfeiture which was in fact and in law, when made, a payment of taxes, and so regarded by the owner and the officers of the law 1 In such case the officers could receive the taxes — they were due as such, and if offered to be paid they could not be justified in refusing to receive them. But the receipt of those taxes does not take away or abridge their right to compromise the pending suit. That remains intact. And so far as that suit is concerned, their power over it is plenary and complete. They may reserve one dollar, or one hundred thousand, as a forfeiture or pefialty. But whatever they reserve as such they must divide it with the informer. But that which is voluntarily paid to them as taxes goes into the public treasury, and the informer has neither lot nor part in the amount.

Between this case and McLane v. The United States, 6 Peters, 404, there is a marked and wide, distinction. In that case the goods never were liable to any tax or duty. They were subject to forfeiture, and to that alone. The United States' could receive nothing from the owner or out of the property as a tax, for neither the one nor the other owed any such. They had been brought into the country in violation of an act of Congress forbidding it, and rendering them liable to seizure and forfeiture; nothing else. His honor Mr. Justice Story states this as one of the grounds upon which the case rested :

“ In point of law, no duties, as such, can legally accrue upon the importation of prohibited goods. They are not entitled to entry at the custom-house, or to be bonded. They are ipso facto forfeited by the mere act of importation. The ‘ Good Friend,’ then, having arrived in April, 1812, long before the double duties were laid, and her cargo being prohibited from importation, it is impossible, in a legal sense, to sustain the argument that the importation could be deemed innocent, and the government entitled to duties as upon a lawful importation. It was entitled to the whole property by way of forfeiture, and to nothing by way of duties.”

Thus it will be seen that this whole case proceeds upon the ground that these goods never had been liable to any tax or duty; not, as contended for by the claimants in this ease, that by the seizure they only became amenable to forfeiture ; and that fact took away the right of the government to insist upon the payment of the tax. If that cargo had been liable to duties, and their amount had been paid to the Secretary of the Treasury, as a condition without which he would not entertain the application, I do not doubt the decision would have been different, and his right to do so sustained; nor would the collector have been entitled to participate in their amount. The seizure of this property at the instance of the claimants did not release the owner from the payment of the duties. It did not absolve him from liability to punishment for his attempted fraud upon the revenue and evasion of the taxes. They remained a lien, by the express provisions of the 55th section of the act of 1864, upon the distillery, the lot of land upon which it was situated, and all its appurtenances. These were subject to distraint and sale. They were seized and held by the government at the time of this compromise. The property thus held exceeded in value the amount of taxes received in that compromise, provided we include in our estimate the seventy-five thousand gallons of whiskey which the United States had, manufactured out of the material on hand.

It would appear to me as a most lame and impotent conclusion, that with this vast power of remitting forfeitures under the act of 1797, and the still larger authority of compromise conferred by the act of 1864, Congress should have denied to the officers of the revenue the power of compelling the owner or party claiming the property to do simple justice to the United States by exacting as a condition precedent the payment of the taxes' due.

Take a case under the act of 1797. The goods seized were legally subject to a duty of 40 per cent. Upon a proper case presented, the Secretary is of opinion that the forfeiture was incurred without any wilful negligence, or any intention to defraud. But the goods were liable to a duty of forty per cent, of their value. So much is fairly and legitimately due to the United States. No punishment ought to be inflicted on the owner, because the mistake was neither wilful nor fraudulent; yet the government ought to be paid the duties legally and fairly due. According to the theory of the claimants, if the officer receives the taxes, the, informer is entitled to half of them; and the only way, therefore, they can get what is due the government is to make the owner pay eighty per cent. Either he is to be punished for an offence of ■ which he is not guilty, or the government must lose one-half of what is admitted to be its just dues, for the benefit of the informer. But the law expressly says the Secretary may cause the prosecution for the recovery of the forfeiture “ to cease and be discontinued upon such terms and conditions as he may deem reasonable and just.” A payment of a tax or duty due from the applicant upon the very goods would be a most reasonable and just condition. And if he can do so under this act, he can under the 44th section of the act of 1864; for the very power to make compromises must, ex vi termini, imply the right to fix, arrange, and agree to the terms and conditions of the settlement or adjustment of the suit. Looking, then, to the whole purpose and scope of these enactments, and regarding them as a part of a great revenue scheme, which can only be made effectual by vesting the largest power and broadest discretion in the principal officers intrusted with the administration and execution of the system, we think the power claimed and exercised in this case in making the compromise was fairly within the meaning and purview of the law ; that the Commissioner and Secretary had a right to compromise this as a suit relating to internal revenue; that in agreeing to such compromise-they had the right, and it was their duty, to require as a condition of it that the taxes due the government on the property seized should be paid; that such sum was paid and received as taxes, and not as a sum reserved out of the forfeiture. And being taxes pure and simple, the claimants have no right to any part or portion of them ; hut that their right is limited to one-half the penalties or forfeiture reserved by the compromise as such. As upon the face of the petition the claimants have shown no cause of action, the demurrer is sustained and the petition is dismissed.

Nott, J.,

dissenting.

From the statements made in the petition, I think these three controlling facts appear:

1st. The seizures were made and the proceedings in rem were instituted by the government upon information given exclusively by the claimants, and the claimants did first inform the officers making the seizure and instituting the proceedings, “ of the cause, matter, or thing whereby the forfeiture of the property aforesaid was incurred,” and they were "the first to discover and ascertain that said Joseph A. Rhomberg ” “ was engaged in the fraudulent practices ” of which he confessed himself to be guilty.

2d. The property seized for forfeiture and relinquished in the compromise and settlement was worth the sum of $350,000.

3d. The government received in settlement and compromise of the seizures and proceedings instituted on the information of the claimants, the sum of $220,102, and such sum of $220,102 was received exclusively from, and as the direct consequence of the said seizures and proceedings, and was entirely the consideration of the said compromise.

In the case of McLane v. The United States, 6 Peters, 426, Mr. Justice Story sets forth the law of seizures and forfeitures as it existed then, and is admitted still to exist, thus :

“ The duty of the collector in superintending the collection of the revenue, and in making seizures for supposed violations of law is oner ous and full of perplexity. If he seizes any goods it is at his own peril, and he is condemnable in damages and costs if it shall turn out, upon the final adjudication, that there was no probable cause for seizure. As a just reward for his diligence, and a compensation for his risks, at once to stimulate his vigilance and secure his activity, the laws of the United States have awarded to him a large share of the proceeds of the forfeiture. But his right by the seizure is but inchoate; and although the forfeiture may have been justly incurred, yet the government has reserved to itself the right to release it, either in whole or in part, until the proceeds have been actually received for distribution ; and in that event and to that extent it displaces the right of the collector.” “But whatever is reserved by the government out of the forfeiture is reserved as well for the seizing officer as for itself and is distributable accordingly.”

The case of McLane differs from the case at bar in this : The vessel and cargo “were forfeited for a violation of the non-intercourse acts.” But the act of 2d January, 1813, allowed the Secretary of the Treasury to remit the forfeiture on the “payment of the duties which would have been payable by law on syich goods, fyc., if legally imported.” The Secretary accordingly remitted the forfeiture “ upon payment of the double duties imposed, by the act of the 1st July, 1812.” Upon these facts the Supreme Court held that “ without question these acts of Congress were directory and mandatory to the Secretary,” but that, nevertheless, “in point of law, no duties, as such, can legally accrue upon the importation of prohibited goods,” and that “ the double duties are referred to [by the act] as a mere mode of ascertaining the amount intended to be reserved out of the forfeiture ; and not as a declaration on the part of the government that they were to be received as legal duties upon a legal importation.” The case, therefore, turned upon the construction of the act of 1813, and is not a case absolutely in point. If the. Supreme Court had been of the opinion that Congress intended the double duties to be reserved “ as such,” and not by way of forfeiture, they would have doubtless given effect to the statute, and held that it changed the existing law respecting the share of the collector. But although the case is not a case absolutely in point, it nevertheless involved a construction of the act of 1.797, and called forth a clear and unequivocal declaration of the rights of persons making seizures under the laws of the United States, and a positive judicial annunciation of the policy of the government toward such persons, which is that “ whatever is reserved by the government out of the forfeiture is reserved as well for the seizing officer as for itself.”

The case at bar does not involve a construction of the act of 1813, or of any similar act, but does come within the general principle an-nunciated by the Supreme Court, and does show that the acts of the collector and his associate officers were of a kind that entitles him to the benefits of the liberal and unvarying policy which has been pursued by the government toward its officers, and to the remuneration which the government has always accorded, through Congress, through its executive department, and through its judiciary, to those whose acts it has adopted, and through whose labors it has succeeded. These acts arc set forth clearly in the report of the Secretary of the Treasury to Congress, February 5, 1866, which is made by reference a part of the petition. The Commissioner of Internal Revenue says, (report, January 25, 1866:)

“Early in April, 1865, it was discovered that large quantities of distilled spirits were passing through Buffalo, shipped from some point or points west, to Hew York city, under circumstances which induced the belief that the law was being in some way evaded. The attention of Collector Dorsheimer and Assessor Presbrey, of the thirtieth district of Hew York, was called to the matter, and after examination they deemed it their duty to proceed to New York city to make the necessary investigation and ascertain the facts in the case.

“On the 17th of April Messrs. Dorsheimer and Presbrey reported from New York that they had found in the hands of A. L. Rowe & Co. 112 barrels, and in those of A. B. Warner 56 barrels; that a lot had also been found in possession of David Dows & Co., and 176 barrels on the dock. They added that all this property had been seized by Collector Dorsheimer, and, under the advice of the United States district attorney, passed over to the United States marshal. A large quantity was stated by them to be still on the way between Buffalo and New York, which would be seized upon its arrival.

“ Messrs. Dorsheimer and Presbrey expressed the opinion that a fraud had been committed, but that it would require a thorough investigation at Dubuque, and advised that some one be sent there at once.

“ Nr, Presbrey tvas thereupon directed by telegraph to proceed to Dubuque and to make the necessary investigation. * *

u On the 24th of April, Collector Dorsheimer seized at Buffalo 11 barrels of alcohol. * .* * * * *

“ April 28, Mr. Presbrey reported that he had obtained satisfactory evidence of the fraud; that the deputy collector had seized the distillery with its appurtenances; about 50,000 bushels of shelled corn,” &c.

These facts show that the collector and his associates embarked time, money, and ultimate risk in the seizure, and that they did so on the faith of the general policy of the United States, to which, as I think, the 179th section of the internal revenue act conforms, and of which it is intended to be in furtherance. The petition then shows that the distiller confessed his guilt, and that the owners paid to the government for the relinquishment of this very property, and the discontinuance of the proceedings instituted for its forfeiture, the sum of $220,102, but that the government did not divide this sum with the claimants, and, on the contrary, appropriated all but $12,500 to its exclusive use. This division was based on what was termed a “ compromise ” of the suit or proceedings, wherein $195,102 were said to be received as taxes on a part of the property relinquished, and $25,000 as forfeiture reserved of the same property. The remainder of the property, it may be noted, was released because it had been illegally seized, being liable to distraint and not to forfeiture.

If this disposition can be made of the avails of the proceedings in rem, based upon the collector’s seizures and information, it is, I feel warranted in saying, the first case in the history of our revenue laws where perfect good faith has not been kept with the officers making the seizures; and where the government has received a greater share of the proceeds or result of the seizure than the party who instituted it, and at whose risk and through whose diligence it was prosecuted. That such a distribution must rest on something more substantial than the Secretary’s calling the moneys which he has retained by one name instead of another, is not disputed ; but neither the reasons advanced nor the authorities cited afford, in my j udgment, a sufficient ground to sustain the doctrine contended for; and I am compelled, therefore, to dissent from the conclusion of the court.

The case of the United States v. Morris, 10 Wheat., 246, is cited by the defendants. It decides nothing more than this : that the authority to remit the forfeiture is not limited to the period before condemnation or judgment, but that ‘‘ the authority to remit is limited only by the payment of the money to the collector for distribution.” So Mr. Justice Thompson also says : “ If the government refuse to adopt his [the informer’s] acts, or waive the forfeiture, there is an end to his claim; he cannot proceed to enforce that which the government repudiates.” Whence I infer that the Supreme Court believed that if the government did adopt his acts, and did not waive the forfeiture, nor repudiate his proceedings, but, on the contrary, reaped a great and direct benefit from them, that then and in such a case the informer would be entitled to recover his share of that which the government received by and through the adoption of his acts, and the proceedings upon his information.

In the case now at bar, there was an action instituted by the government upon and as the direct consequence of the collector’s proceedings. Whether that action was prosecuted to judgment and the money was paid for distribution upon the judgment, or whether it was ended by compromise and the money was paid for distribution under the com promise, I deem to be immaterial. Whether that action was rightfully brought and the government might have recovered ultimately if it had proceeded, or whether it was brought wrongfully and the defendants, to be rid of it, paid their money voluntarily and foolishly, I also deem to be immaterial. The only question for me to consider, in my opinion, is whether the money received was the fruit of the action. The petition very clearly shows that it was. No other action or proceeding was pending- against Rhomberg to which the compromise could be extended ; no other information had been given which could be deemed the basis, in whole or in part, for that action. Through the proceedings of the collector the government received a large sum; without the' proceedings of the collector it would have received nothing. The money was the avails of the action, and the action was to enforce the forfeiture. If any further circumstance were needed to establish this, it is found in the fact that the suit was not discontinued first and the taxes paid afterward ; nor were the taxes paid voluntarily and the suit discontinued afterward; but the money paid was exacted by the suit, and by it alone, and the consideration which the government gave for this money so paid was not a receipt for taxes, but a relinquishment of the property which was held for forfeiture. ■

It was thought by the Secretary of the Treasury that the government had a lien upon the property for its unpaid taxes. That might be so ; yet it is most certain that the action in the district court was never instituted to enforce that .lien. That was an action in which the government and the collector were jointly and equally interested, brought to recover property which the law declared forfeited for the fraud confessed of the manufacturer. Whatever was received through and in consideration of its discontinuance was received for the use and benefit of the parties jointly interested, and was to be divided and apportioned as the law determines the extent of their respective interests. If the suit had been discontinued, and the agreed forfeiture paid, and the property given up to the defendants, and if the government had then proceeded with knowledge acquired through the informer’s discoveries to enforce its lien for taxes by another proceeding, then it might be held correctly that the informer’s rights were gone. But when the government never trusted the defendant for an hour, nor gave up possession of the property until the money was paid, but used the suit brought on the claimant’s information as its only engine for coercing payment, how can we call that a payment of taxes which was in fact a consideration given for the discontinuance of a suit and the surrender of property seized, and subject, or supposed to be subject, to forfeiture 1

It is also thought by a majority of my brethren that the power given to the Commissioner, by the 44th section, “ to compromise all suits relating to internal revenue,” gave to him a new power over the rights of the collector, and an authority to distribute the proceeds of the suit in a manner different from that which the law had previously determined. This word “ compromise” has a common and well known signification, and always imports a mutual concession ; but it must be, as-I think, a concession between the parties to the “ suit.”

Now here we have a proceeding in which the government is the plaintiff, and the owner of certain property is the defendant. The “ compromise ” referred to is a settlement between these parties, and not between the plaintiff and third persons, strangers to the record. The statute speaks of a “ compromise ” of the “ suit ” and not of a right or claim growing out of the seizure, and relating solely to one who is no party to the “ suit.” It was no concern of Rhomberg what was to be done with the money which he paid to be clear of his own wrongful acts. All that he was interested in was in recovering back the property against which the suit was brought. There could be no compromise where there was no controversy. As between the claimants and the government there was no controversy, for they were interested only in the forfeiture or its avails ; and as to them, the law determined how they should be apportioned. To extend the signification of this word, so far as to infer from it a power in the Secretary to compromise more than the “ suit,” and an authority to reapportion the avails in a manner different from that which the law had already done, or which a court might do, if the proceeding went to judgment, seems to me to be carrying the meaning of the word beyond the bounds of fair construction, and beyond the intent and policy of the law.

There is, as I understand the facts, no doubt but that the claimants would have been entitled to the moiety of this sum of $195,102, if the Secretary had not called it by the name of taxes. All that there was of the compromise was that the owners paid $220,102, and received back their property, worth $350,000, with a discontinuance of the suit. As to the imaginary parts of which this sum of $220,102 was composed, it rested entirely within the breast of the Secretary to say what they should be. He had indeed determined within his own mind that the compromise should consist in his receiving a sum equal to the taxes on a part of the'property, and another sum, fixed arbitrarily, which he called the forfeiture. If, after the money had been paid, bad reconsidered his determination, and called the $195,102 forfeiture instead of taxes, the claimants would have been entitled to one-half of this, and the defendant in the other suit would have been neither injured nor affected; and if, on the contrary, he had reconsidered his determination, and called the $25,000 taxes on some other portion of the property relinquished, the claimants would have been entitled to nothing, and the defendant in the other suit would have been neither benefited nor affected. Wow the plain English of this is, that the Secretary had not only a power to compromise the suit, but an absolute right of distribution over the proceeds. The record indicates, and I understand the fact to be, that no express or stipulated compromise was ever entered into between the government and the owners, which provided for or affected the distribution of the moneys received. A bond was indeed given upon the release of the property for the costs, taxes, and $25,000 in lieu of penalties ; but the $25,000 in lieu of penalties was not to be paid as a separate and distinct sum; and on the contrary, the bond was conditioned for the payment of three in-stalments, “ $50,000 in one month, and the balance in two equal payments — one-half in three months, and the other in five months.” This was equivalent to the payment of a sum in gross, andmade the $195,102, called taxes, as completely a part of the sum “reserved iy the government out of the forfeiture ” as the $25,000 called “ in lieu of penalty and “whatever is reserved by the government out of the forfeiture,” says the Supreme Court, “ is reserved as well for the seizing officer as for itself ” — (McLane v. The United States, p. 426.)

The conclusions to which I have come are these:

1. The sum of $220,102 was, in the language of .the Supreme Court, “ a gross sum ” reserved by the government “ out of the forfeiture as a condition of the remission,” (6 Peters, 427 ;) and calling it money received for taxes could not alter its character, nor impair the collector’s rights.

2. The government and the collector were in effect partners in the enterprise ; the government had a controlling right to abandon the ad: venture, but had no right to remit its partner’s share and retain its own, nor to apply, upon an individual indebtedness, moneys received through the joint enterprise.

3. The 44th section of the internal revenue act 30th June, 1864, authorized the Commissioner of Internal Eevenue to compromise with the owners of the forfeited property, but did not authorize him to com-, promise with the collector. The moneys received from such a compromise, and in consideration of a release of the forfeited property, were, in legal effect, moneys reserved from the forfeiture and the fruit of an action, in which the collector was jointly and equally interested with the government.

4. The acts of the collector in the case at bar came within the geneial policy of the United States; which is, that whenever the government adopts the acts of the informer, and proceeds upon his discoveries and to his risk, it will share equally with him whatever may be received through his proceedings; which policy lias never been departed from since the establishment of this government, and has been clearly indicated by its statutes, and solemnly and repeatedly pronounced by its highest judicial tribunal.  