
    J. A. Bonnafon v. The United States. Emory E. Norton, assignee, v. The Same.
    
      On the Proofs.
    
    
      The claimant, Bonnafon, recovers judgment for the proceeds in the Treasury of 15 hales of cotton wrongfully retained hy a Treasury agent in New Orleans, June, 1865, out of 62 hales brought in hy the claimant. The 47 hales released to him were liable to a tax of $2 a pound, hut it had not been assessed, and in the former suit was not pleaded as a set-off. On the judgment being presented for payment, the Secretary of the Treasury requires the claimant to allow the tax as a set-off, a/nd to execute a release of the judgment upon payment of the balance. The claimant now brings his action upon the judgment to recover such balance. In another case (Norton’s) the Secretary does not require the claima/nt to allow the tax, and no release is given by him, but the amount of the tax is deducted. He noto • brings his action on the judgment, and the defendants plead the tax as a set-off.
    
    I.Notwithstanding the absence of statutory authority, it was legal and proper for the accounting officers, in the course of settling ordinary accounts in the Treasury, to set off a debt duo from the claimant against one due from the government.
    II.By the Act 3d March, 1875 (18 Stat. L., 481) it is made the duty of the Secretary of the Treasury to withhold payment of so much of any judgment or claim against the government as the judgment creditor or claimant may be indebted to the government; and the act specifies the course of proceedings in such cases, and provides ample means for testing, in a court of law, the validity of any such set-off or cross-demand.
    III.Where a judgment creditor of the government elects to allow a cross- ' demand or set-off asserted hy the Secretary of the Treasury in the manner provided hy the Act 3d March, 1875 (18 Stat. L., 481), he cannot afterward maintain an action oil his judgment for the balance so set off.
    IY. Where the government,, as defendant, has sought to use anindependent demand against the claimant hy way of set-off, the Secretary of the Treasury cannot afterward use it to reduce a judgment recovered hy the claimant; hut where the government did not set up in the suit its independent cross-demand, the Secretary may assert it as a set-off against the judgment in the manner provided by the Act 3d March, 1875 (18 Stat. L., 481). In the former case his action would he an unconstitutional assumption of judicial power; in the latter, constitutional and legal.
    
      Y. The cotton tax imposed "by the Aot 7th March, 1864 (13 Stat. L., 16), constitutes., though not assessed, an independent cause of action, which may he used by way of set-off or counter claim in an action brought by the owner of the cotton on a judgment recovered by him-against the government remaining unsatisfied.
    VI. A set-off maintained by the government in a suit, though not bearing interest, relates baclr to the time when the claimant’s interest-bearing cause of action was presented to' the Treasury Department for payment, and stops interest thereon from that date_pro tanto.
    
    VII. The government cannot recover interest on a cotton tax in the absenco of statutory authority therefor, if the tax was not assessed and no demand was made for its payment.
    
      The Exporters’ statement of the case: ■
    The following are the facts as found by the court in Bonna-fon’s Case:
    I. On the 17th of April, 1876, the claimant, upon findings of fact and conclusions of law set forth in the petition, recovered judgment in the Court of Claims against the United States for the sum of $2,066.10, being the net proceeds in the Treasury of fifteen bales of cotton wrongfully retained by a Treasury purchasing agent in New Orleans, June 27,1865, and sold by him, out of sixty-two bales owned and brought in by the claimant from insurrectionary districts, and received by said agent, the remaining forty-seven bales having been returned to the claimant.
    II. A certified and attested transcript of said judgment was presented for payment to the Secretary of the Treasury May 23, 1876. Thereafter an appeal was duly taken by the defendants, and upon a hearing thereof said judgment was affirmed by the Supreme Court, and a mandate of affirmation was filed in this court February 6,1878.
    III. The duty of two cents a pound, to which said forty-seven bales of cotton was liable under the provisions of the Act March 7,1864, ch. 20 (13 Stat. L., 16), on their arrival at New Orleans from insurrectionary districts,, amounted to $376, but was never assessed, as provided by section 5 of' said act, and the same was not pleaded, filed, or set up as a defense or set-off in the action in which said judgment was recovered.
    IY. The Secretary of the Treasury, February 26, 1876, in transmitting to Congress estimates for deficiencies for the fiscal year 1878 and prior years, stated the amount of said judgment $2,006.10, and the amount of $376 claimed as a set-off on account of internal-revenue tax. By tlie Deficiency appropriation Act June 14,1878, ch. 191 (20 Stat. L., 116), Congress appropriated the full amount of $2,066.20, with such sum as might be necessary for the payment of interest thereon.
    Y. Thereafter the claimant made application for the payment of said judgment, but the Secretary of the Treasury claimed the right to set oft' said amount demanded as duty on said cotton, and required the claimant to allow said set-off, and to execute a release of said judgment upon the payment of the balance due, with interest, $1,866.05. The claimant thereupon, by his duly-authorized attorney, executed the release required in the following form, and received. said last-named sum of money in satisfaction of said judgment June 26,1878:
    “Whereas J. A. Bonnafon, by the judgment of the Court of Claims, recovered judgment against the United States, on the 17th day of April, 1876, for the sum of two thousand and sixty-six dollars and ten cents ($2,066.10); and whereas an act of Congress approved June 14th, 1878, appropriated for the payment of said judgment the said sum of $2,066.10; and whereas the Secretary of the Treasury, under the provisions of the act of Congress, chapter 149, acts of 1875, approved March 3d, 1875, claims the right to set-off and deduct from the sum aforesaid the sum of three hundred and seventy-six dollars, due from said Bonnafon to the United States for internal-revenue tax unpaid upon the cotton, the right to recover the proceeds of of which was the basis of the action upon which the above judgment was founded:
    “Now, therefore, I, Edward Janin, attorney of record and in fact of said Bonnafon, and thereto fully authorized and empowered by him, in consideration of the present payment by the United States of the sum of one thousand six hundred and ninety dollars and ten cents ($1,690.10), part of said judgment, which is hereby accepted of in full payment thereof, do hereby remit and release to the United States the sum of three hundred and seventy-six dollars, part of said judgment, and of the sum appropriated by Congress for the payment thereof; .the sum so remitted to be in full satisfaction and discharge of the sum claimed by the Secretary to be due as internal-revenue tax as aforesaid.
    “ J. A. BONNAFON,
    “By EDWARD JANIN,
    
      “Attorney in ÉactJ
    
    
      The following are the facts as found by the court in Norton’s Case:
    ' I. On the 17th of April, 1876, the claimant, upon the findings of fact and conclusions of law set forth in the petition, recovered judgment in the Court of Claims against the United States for the sum of $3,208.66, being money wrongfully exacted by and paid to the Treasury purchasing agent in New Orlearis June 13, 1865, for the release to said De Bow & Co. of 125 bales of cotton owned and brought there by them from insurrectionary districts, and sold or transferred to said agent under color of the Act July 2, 1864 (13 Stat. L., 375), said agent having paid said money into the Treasury.
    II. A certified and attested transcript of said judgment was presented for payment to the Secretary of the Treasury May 18, 1876. Thereafter an appeal was taken by the defendants, and upon a hearing thereof said judgment was affirmed by the Supreme Court, and a mandate of affirmation was filed in this court February 4,1878.
    III. The duty of two cents a pound to which said cotton was liable under the provisions of the Act March 7, 1864, ch. 20 (13 Stat., L., 16), on its arrival at New Orleans from insurrectionary districts, amounted to $1,000, but was never assessed as provided by section 5 of said act, and the same was not pl eaded, filed, or set up as a defense or set-off in the action in which said judgment was recovered.
    IV. The Secretary of the Treasury, February 26, 1878, in transmitting to Congress estimates for deficiencies for the fiscal year 1878 and prior years, stated the amount of said judgment and the amount of $1,000 set-off’ claimed by the United States on account of internal-revenue tax. By the Deficiency appropriation Act June 14,1878, ch. 191 (20 Stat. L., 116), Congress appropriated for said judgment $2,208.66, with such sum as might be necessary for the payment of interest thereon.
    V. On the 6th of July, 1878, the claimant was paid said sum of $2,208.66, with interest thereon from the time of filing said transcript, amounting in all to $2,440.12, but has never been paid the balance due on said judgment, and the Secretary of the Treasury, without jmoceeding or taking any steps under the provisions of the Act March 3, 1875, ch. 149 (18 Stat. L., 481), refused to pay the same.
    
      
      Mr. Edward Jamn for the claimant:
    If Congress is to be allowed to intermeddle with a judgment of this court, without the judgment creditor being allowed to have redress by a new judgment, then the judgments of this court are but the recommendations of a commission, and the Supreme Court cannot take jurisdiction of appeals from it. But if a new judgment can be obtained, then the action of Congress is an attempt of a debtor to escape full payment. If Congress should refuse to make an appropriation to pay the new judgment, then the claimant would merely be put into the position of any other judgment-creditor whose debtor has hidden away his assets. The judgment would stand unimpaired and the dignity of this court and the Supreme Coiut would remain unassailed. (1$. & M. (J. Brown y. United States, G C. Cls. B., 171; O’ Grady’s Oase, 8 id., 451,10 id., 134, and 22 Wall., G41; Gordon’s Case, 2 Wall., 5G1, and 7 C. Gis. B., 1; United States v. Anderson, 9 Wall., Go; United States v. Klein, 13 Wall., 128.)
    ilí-r. John S. Blair (with whom was the Assistant Attorney-General) for the defendants:
    The court is asked to pates upon the validity of the reasons which influenced Congress in withholding part of the judgment. This, I contend, is as much beyond the jurisdiction of the court as an inquiry into the reasons for any action or inaction on the part of Congress. *
    The cases of O’Grady (10 C. Cls. B., 134; 20 Wall., G41) and Brown (6 O. Cls. B., 171) are cited by counsel for claimant, but there is a marked distinction between them and the present proceeding. In each of those, as in the present case, the second action was brought under the statute creating the court and conferring upon it jurisdiction of all claims founded upon any contract, express or implied (see Broten, G C. Cls. B., 177, per Nott, J.), but in each of those (1) the former judgment had been under the captured and abandoned property act, while in the present case the former judgment was under the same statute which is invoked in this proceeding.
    (2) In those cases there was a permanent appropriation from which the former judgments should have been paid by the Secretary of the Treasury (sec. 3, Act Mareh 12, 1863, 12 Stat. L., 820). In this there has been no appropriation except that contained in the deficiency bill for the fiscal year of 1877-’78.
    (3) In those cases it was the Secretary of the Treasury who was derelict; in this it is Congress.
    (4) In the case of O’G-rady the claimant received the money subject to the condition that the rights of all parties in respect to the tax should be reserved and remain subject to the decision of the Supreme Court without prejudice. (10 C. Cls. B., 143.)
   UichardsoN, J.,

delivered the opinion of the court:

These two cases were heard and submitted together. Each is founded on a previous judgment rendered by this court, which has been paid in part, and the balance of which the Secretary of the Treasury declines to pay for the reasons set forth in the findings, to Avhicli we shall refer hereafter in this opinion. It has been determined by this court and by the Supreme Court that actions on such judgments may be maintained. (Brown's Case, 6 C. Cls. R., 171; O’Grady’s Case, 8 id., 451, affirmed on appeal, 22 Wall., 641, and 10 C. Cls. R., 134.)

The questions of law now raised involve, in the first place, the right of the officers of the Treasury Department to set off: against a judgment of this court a debt or claim in favor of the United States against the judgment creditor.. From an early day the accounting officers have been accustomed, in the course of settling ordinary accounts in the Treasury Department, to set off one debt against another when a claimant is both debtor and creditor, and that practice has been sustained by judicial determination as legal and proper, without any express statute on the subj ect. (Gratiot v. United States, 15 Pet., 370; McKnight's Case, 13 C. Cls. R., 306, affirmed on appeal, 98 U. S., 179, and 14 C. Cls. R., .),

On the 3d of March, 1875, by act of that date, ch. 149 (18 Stat. L., 4S1), Congress made special provisions requiring the Secretary of the Treasury to withhold payment of so much of any judgment or other claim allowed by legal authority against the United States as the claimant or judgment creditor shall be indebted to the government in any .manner, whether as principal or surety. The act points out specifically the course of proceedings in such cases, requiring the duty of making the set-off to be performed by the Secretary of the Treasury, instead of by the Comptrollers or accounting officers, wbo state accounts and certify balances which, the Secretary even cannot change (Rev. Stat., § 191), and who are the officers by whom set-offs are made in other cases.

The Secretary must inform the judgment creditor of the amount of debt claimed against him, that he may make his election whether he consents to the set-off, accepts the balance, and will discharge his judgment, or denies the indebtedness and refuses to consent thereto. In the former case, it becomes a voluntary settlement upon the execution of the proper discharges contemplated by the act, and whether or not the claim set up by the Secretary is a legal and valid debt which could be enforced at. law becomes immaterial, since the debtor has waived his right to have it tested by proceedings in court, and he is estopped from setting up any further claim on his judgment. In the latter case, if the judgment creditor denies the indebtedness, and refuses to consent to the set-off, he may have the matter of his liability tried in a suit at common law. The Secretary is required to withhold, not only the amount of the debt claimed, but also such further amount as in his opinion will be sufficient to cover all legal charges and costs in prosecuting the debt to final judgment, to pay the balance to the creditor, and to cause legal proceedings to be immediately commenced to enforce the claim set up against him and to be prosecuted to final judgment with all reasonable dispatch. If, in such action, judgment is recovered against the United States, the claimant becomes entitled to the balance of his original judgment withheld from him and six per cent, interest thereon.

Thus ample provisions are made to test in a court of law the validity of any demand claimed under this act to be a set-off to a judgment recovered against the United States, and the claimant has his option to avail himself thereof or to make a settlement and discharge his judgment. But he cannot enter into a settlement, mislead the Secretary into paying more than he otherwise would pay, execute a discharge, and then come into court to set aside the settlement and recover the balance. It needs no citation of authority to show that such a course is not warranted by any principle of law or justice.

In Bonnafon’s Case the claimant elected to take the balance found due him by the Secretary of the Treasury over and above the set-off claimed, and executed a discharge of his judgment,- and he must now be held to his settlement.

It was argued at tlie'trial that tbe claim, set-off in this case should have been presented as a defense to the former action in This court. It was for a duty or tax due from the claimant on account of cotton owned by him and brought from districts in insurrection into a loyal port or place in 1865, during the rebellion. It was claimed as an independent debt against him, and could not have been enforced in the former action as a reduction in the amount of the claim sued on; but, in order to have been availed of, it must have been hied as a set-off or counter claim under the provisions of Revised Statutes, §§ 1059, 1061. (Roman & Olivier’s Case, 11 C. Cls. id., 762; lie Bow’s Case, id., 672, affirmed on appeal, 13 id., 526.) If it had been so hied, the decision of this court thereon in that action would have been final and conclusive, if not appealed from or when affirmed by the Supreme Court. Parties can have their day in court but once, and judgments of courts are conclusive between them on ail matters determined thereby.

' It was because this duty or tax was an independent claim against the judgment creditor, and had not been adjudicated upon by a court of law, that the Secretary was authorized to set it off againsttlie judgment. The actof 1875, chapter 149, doesnot confer upon the Secretary of the Treasury the power to review thedecrees and judgments of established courts of justice. Such a power would be in conflict with the fundamental principles of the whole judiciary .system. It would confer upon the Secretary of the Treasury, an executive officer of the government, judicial power, contrary to article 3, section 1, of the Constitution, which provides that “the judicial power of the United States shall be vested in one Supreme Court and in such inferior courts as Congress may from time to time ordain and establish.” (O’Grady’s Case, 22 Wall., 641, and 10 C. Cls. R., 134.)

The Secretary in this case acted within his legal and constitutional authority, and did not undertake to review the judgment of the Court of Claims, but he set off against it an independent debt due from the judgment creditor; and his action must be sustained, and the petition of the claimant, Bonnafon, must be dismissed.

The case of Norton, assignee, presents some different questions. Tlie 'Secretary had a claim in' set-off for a duty or tax on cotton, owned and brought from insurrectionary districts dor-ing die rebellion by the parties of whose estate in bankruptcy the claimant is assignee, amounting to 1,000, but did not proceed under the act of 1875, chapter 149, as he did in Bonnafon’s Case. Instead of that, he reported to Congress the amount of the judgment and the amount of set-off claimed by him. Congress appropriated for the balance, and that was paid, but no discharge was executed by the claimant. The defendants now file the same claim here as a set-off or counter claim; and this they may do under the provisions of the statute (Rev. Stat., §§ 1059, 1061.) It is no valid objection to such a course that the debt was not set up in defense to the former action on which this judgment is founded, since the validity of the claim was in no way involved in that case. In O’Grady’s Case (22 Wall., 641, and 10 C. Cls. R., 134), upon a judgment of this court there was no set-off or counterclaim filed. The defense was that the amount which the claimant recovered in the former action was too large by the amount of the tax or duty on the same cotton the proceeds of which were sued for, and which might have been deducted therefrom if it had been set up by the defendants before judgment was rendered against them. The Secretary of the Treasury undertook to make the deduction after judgment, and the Supreme Court held, as this court did, that, the Secretary had no authority to review the proceedings of a judicial tribunal.

In the present case the defendants have filed a set-off or counterclaim, and it remains to be determined whether it is a valid debt or obligation against the claimant.

The duty or tax accrued under the provisions- of the Act March 7, 1864, ch. 20 (13 Stat. L., 16), and although it was never assessed, as it might have been under the fifth section of the act, it was, nevertheles, due and owing from the estate represented by the claimant, and might have been enforced by an action at law, according to the decision of the Supremo Court in the case of The Dollar Savings Bank v. United States (19 Wall., 227).

The claimant urges that in any event he is entitled to recover interest on the balance of his judgment from the time of filing a copy with the Secretary of the Treasury until the time the set-off was made at the Treasury Department or is allowed by the court, but in our opinion the set-off relates back to the time of presentation of a copy of the judgment to the Secretary of the Treasury, when it became the duty of the department to state the account between the claimant and the United States and to determine the balance due, and that it stopped interest from running thereafter on so much of the judgment-recovered. The claimant was entitled to no interest unless on such settlement a balance was found to be due him, and then only upon the amount of the balance stated. As .he lost nothing by the delay of the public officers in settling the account and making the set-off in technical form on the books of the Treasury Department, so he ought not to gain anything thereby. The findings show that on a full settlement of accounts between the parties there never was due the claimant the balance for which this action is brought, and therefore there is nothing on which interest can be computed. (Rev. Stat., §§ 191, 236, Act March 3, 1875, ch. 149; McKnight’s Case, 13 C. Cls. R., 306, affirmed on appeal, 98 U. S., 179; Waterman on Set-off, § 663.)

The defendants also claim interest on their counterclaim from the time it accrued as a duty or tax upon the cotton; but that cannot be allowed in the absence of any statute authority therefor, since the tax had not been assessed and no demand had been made for its payment.

The judgment of the court in Norton’s Case is, therefore, that the defendants’ counter claim be allowed to the extent of |1;000, to be set off against the balance of the claimant’s judgment sued upon, and that as to the remainder of the respective claims the petition and counter claim be dismissed.

Drake, Ch. J., was absent when this case was heard and took no part in the decision.  