
    John P. Taggart v. The United States.
    
      On the Proofs.
    
    
      The claimant is indebted to the government, which is indebted to one, White who is judgment debtor to the claimant. The claimant assigns to the government his judgment against White as collateral security. ' The accounting officers deduct from moneys due White sufficient to cancel the indebtedness of the claimant, |1,119.90, butrefuseto deduct the whole amount of his judgment, $2,000.
    I.Where a person is both debtor and creditor of the government in. any form, the accounting officers are required by law to set-off the one indebtedness against the other, and certify only the balance.
    II.The right of set-off where the government is both debtor and creditor is established and provided for by Revised Statutes, section 1706, and by the Act 3d March, 1875 (1 Supplmt. Rev. Stat., p. 185, ch. 149), but it exists independently of those enactments and is founded upon Revised Statutes, section 236.
    III.The duty of the accounting officers in the matter of set-off does not extend beyond the interests of the government.
    
      IY. No publio officer can. make the government either agent or trustee for the collection of private debts; nor enter into contracts relating to collateral securities for the' payment of debts; nor make the government liable for neglect to collect such collaterals.
    Y. Whore a debtor assigned to the government as collateral security for his debt of $1,119.90 a judgment for $2,000 against a third person to whom the government was indebted in a larger amount, the accounting officers were not bound to collect the whole amount of the judgment and pay the balance to the claimant,
    yi. When a judgment is assigned as a collateral security for a specified amount, and that amount is liquidated, the judgment reverts to the judgment creditor and needs no reassignment.
    
      The Reporters’ statement of the case:
    The following are the facts of this case as found by the court:
    I. On the 24th of October, 1874, the United States recovered judgment in a court in Utah Territory against John P. Taggart (the present claimant) for $2,262.05 debt, and $36.56 cost, which judgment bore interest at the rate of six per cent, per annum.
    IT. The following credits had been allowed to the judgment debtor thereon by the Treasury Department previous to the final settlement hereinafter set forth:
    October 24, 1874, balance due to him on final settlement of his accounts as assessor ofinternal revenue. $120 87
    May 10, 1876, cash paid by him. 1, 000 00
    October 30, 1876, cash paid by him.. 100 00
    January 10, 1879, bill for medicines, <&c., furnished at the Utah penitentiary for defendants. 416 00
    III. Some time prior to 1878 said Taggart turned over to the district attorney of the United States for the Territory of Utah, as collateral security for the payment of said judgment, three promissory notes made by Hugh White, each for the sum of $500, and the district attorney on the 10th of April, 1878, -recovered a judgment thereon against the said White in the name of Taggart for $1,854.17 debt, and $24.60 cost. This judgment was assigned by said Taggart to the United States as collateral security for the payment of the judgment against him stated in the second finding.
    IV. Said White was a contractor for carrying the mails of the United States, and there was due him from the United States as such contractor, on the 30th of December, 1878, the sum of $2,000, which sum the Sixth Auditor of the Treasury withheld to await the determination of the Secretary of the Treasui’y, or the accounting officers, as to whether the same or any part of it should be applied as a set-off to the judgment of Taggart against him, which had been thus assigued to the United States.
    Y. On the 10th of January, 1879, the accounting officers of the Treasury stated an account with said Taggart, charging him with the judgment recovered against him with interest on so much as had not been paid, and crediting him with the payments and allowances stated in the second finding, showing a balance due from him of $1,119.90.
    Thereupon, with the approval of the Secretary of the Treasury, the accounting officers set off that sum from the $2,000 due said White on his mail contracts, and applying it in satisfaction, to that extent, of the judgment of Taggart v. White, assigned to the defendants, allowed the same to said Taggart as a credit in final adjustment and discharge of the United States against him as stated in said account.
    This set-off and settlement left a balance of $880.10 of the $2,000 retained by the Sixth Auditor from said White’s account as mail contractor; and there was more than that sum still due and unsatisfied upon Taggart’s judgment against White, assigned as aforesaid. Taggart, by his counsel, appeared before the officers of the Treasury Department, and demanded that said balance of $880.10 be also set off and applied, in further satisfaction, to that extent, of his said judgment against White, and then paid over to him, the said Taggart. But the officers of the Treasury Department, refusing to make such application, allowed said balance to White, to whom it was subsequently paid, and who made no objection to that settlement.
    
      Mr. W. if. Smith for the claimant:
    In the case now under consideration White had a claim against the United States for carrying its mails. He was at the same time indebted to the United States in a sum greater than his claim. This indebtedness was evidenced by a judgment against him in the name of Taggart, for the use of the United States. That was, to all intents and purposes, a judgment in favor of the United States. It alone could control the judgment. It alone could enter satisfaction. (1 Oh. Plead., 10; Goodyear v. Bishop, 2 Fisher, 90; Goodyear v. Bishop, 4 Blateli., O. C.; Gaither v. Bank, 1 Pet., 37.)
    
      It received certain notes as collateral security. As between individuals the duty of a creditor who receives collateral securities is well settled. He holds them as trustee. He can do no act which will weaken or destroy the security. He can omit no act which is necessary to protect the fund. He holds the securities for the benefit of the debtor. (2 Leading Cases Eq., 274; 3 id., 554; JE¡x parte Mure, 2 Coxe, 63; Ooodloe v. Olay, 6 B. Mun., 236.)
    The same rule applies to the United States. The principle is well settled that when it engages in commercial business it assumes the same obligations and is subject to the same liabilities that an individual would be under the same state of facts.
    In doolce ei al. v. The United States (91U. S. B., 308), the Chief Justice, in delivering the opinion of the court, said: “Laches is not imputable to the government, in its character as sovereign, by those subject to its dominion. (United States v. Kilpatriclc, 9 Wheat., 735.; Gibbons v. United States, 8 Wall., 269.) Still a government may suffer loss through the hegligence of its officers. If it comes down from its position of sovereignty and enters the dominion of commerce it submits itself to the same laws that govern individuals there. Thus, if it becomes the holder of a bill of exchange it must use the same diligence to charge the drawers and endorsers that is required of individuals, and if it fails in this its claim upon the party is lost. (United States v. Barlcer, 12 Wheat., 559.)”
    The principle here declared requires the government to account for collateral securities just as an individual would be required to account. If it receives or gets under its control on the collateral more than sufficient to satisfy its own claim, it is bound to account for the surplus. There can be no doubt of the liability of an individual under like circumstances. The government will suffer no loss by the recovery of plaintiff in this case, for the reasonffhat White has sundry mail contracts now in force, under which it can protect itself by withholding a portion of the moneys accruing on said contracts.
    
      Mr. A. JD. Robinson (with whom was the Assistant Attorney-General) for the defendants:
    The claimant knew that the government had collected its claim. Instead of any application for pay he might have made, he should have asked for a reassignment of the judgment, and tben taken sucli steps as be could to secure bimself. He could not make tbe government bis collector. (See Meredith v. United, States, 13 Pet., 486.) Tbe statute of March 3, 1875 (18 Stat. L., 481), cit^d in claimant’s brief, was for tbe protection of tbe government, not for it to collect demands for other people.
    At tbe time of tbe payment of tbe money to White tbe government bad no demand against White, and White was not indebted to it either as principal or surety.
    Tbe money was not retained to satisfy tbe White judgment, but only that against claimant. Claimant bad, and still has, a perfect remedy.
    Tbe error of claimant is in assuming that because tbe government was once a trustee for an object already accomplished be can compel tbe government to continue in that capacity against its will, and for another object.
    After tbe judgment against Taggart was satisfied, tbe balance of tbe $2,000 was in tbe government just as other moneys tben in tbe bands of the government due White, and not differently.
   Bichardson, J.,

delivered tbe opinion of tbe court:

Tbe claimant, Taggart, being a judgment debtor to tbe United States, voluntarily assigned to tbe defendants, through tbe agency of a United States district attorney, as collateral . security therefor, a judgment for a larger'amount which be had recovered against one White, a mail contractor.

Tbe claimant made some payments on bis judgment, and on a final accounting January 10,1879, it was found by tbe accounting officers that tbe balance due from him was $1,119.90. At that time tbe defendants owed White, as mail contractor,, tbe sum of $2,000, which bad been held back and reserved to await tbe determination of tbe officers of tbe Treasury Department as to bow much of it, if any, should be set off and applied to tbe payment of tbe judgment thus held by them as collateral security for tbe claimant’s indebtedness.

Taggart’s judgment against White was for more than $2,000, and Taggart appeared before tbe accounting officers and claimed that they should apply tbe whole amount due White, in set-off and payment to that extent, on bis said judgment, retaining for tbe United States tbe sum of $1,119.90, which was tbe balance of bis indebtedness to tbe defendants, and paying over to him, the said Taggart, the remaining portion of the $2,000, to wit, $880.10, as collected for his use. This the accounting officers declined to do, holding that they could set off only so much of White’s credit toward 'payment of Taggart’s judgment against him as would satisfy the claim of the United States against Taggart, for which the White judgment was held as collateral, and that they could make no set-off for the benefit of Taggart beyond the interest of the United States therein. So they set off $1,119.90 from White’s credit of $2,000, applied it toward satisfaction of the judgment against him, and allowed the amount to the claimant, and thus settled and discharged the indebtedness of the claimant to the defendants; and the balance was paid to White.

The claimant now sues for the $880.10 which was paid to White. He urges that when he assigned his judgment- against White to the United States the latter was bound to collect the whole amount when, as lie alleges, the means off doing so was within the power of the public officers, by way of set-off out of money due from the defendants to White.

Where a person is both debtor and creditor of the United .States, in any form, the officers of the Treasury Department, in settling the accounts, not only have the power, but are required in the proper discharge of their duties, to set off the one indebtedness against the other, and to allow and certify for payment only the balance found due on one side or the other. Section 1736 oftlieBevised Statutes so provides, and special provisions on the subject, to meet the case of judgments recovered against the United States “ or other claim duly allowed by legal authority,” are made by the Act of March 3, 1875, ch. 149 (1 Supplmt. to B. S., p. 185). But the right of set-off in such cases exists independently of those special enactments, and is founded upon what is now section 236 of the Bevised Statutes, as follow's:

- “Sec. 236. All claims and demands whatever, by the United States or against them, and all accounts whatever in which the United States are concerned, either as debtors or creditors, shall be settled and adjusted in the Department of the Treasury.”

The duty of the accounting officers in matters of set-off has frequently been recognized by the courts. (McKnigWs Case, 13 C. Ols. B., 306, affirmed on appeal; Boomafon’s Case, 14 O. Cls. B., 489.) But it does not extend beyond the interest of the United States in the matters involved in the settlements. In the absence of statute authority, neither the accounting officers of the Treasury nor any other public officers can make the United States agents or trustees for the collection of private debts between citizens, nor make contracts in relation to the taking of security for the payment of debts due to the government, so as to bind the United States for any breach of the contract by neglect or otherwise.

It is not generally within the duty of public officers to take collateral security, and whenever they do so they are usually acting beyond the scope of their official authority, and the United States are not bound by their agreements. District attorneys and other officers, looking to the best interest of the government, do sometimes accept such security, without releasing the debtors or subjecting the United States to lability; and so far as the arrangements are consummated for the benefit of the government, they may be upheld, and the officers commended for their vigilance and zeal in the public service.

Whether or not the assignment of a debt in such cas.e vests a claim in the United States, which may be set-off against the demand of the debtor who is a creditor of the government, without his consent and against his objection, it is not necessary to express an opinion, since in this case the validity of the action of the accountiug officers, so far as they went, is not drawn m question; besides, it does not appear that White objected to the set-off which was effected, and it may perhaps be inferred that he assented to it. (Macauley’s Case, 11 C. Cls. E., 693; 1 Opin., 676.)

In the present case the claimant had no agreement with the district attorney or other public officer for the collection of his judgment against White. He merely voluntarily assigned the judgment to the defendants to secure his own indebtedness. It was to be used, of course, by the defendants officers, as circumstances would permit, for the benefit of the government. The accounting officers collected so much of it, by way of set-off, as would pay the claimant’s debt to the government. When they had done that their official duty was fully discharged. They could not retain White’s money in order to pay with it his debt to Taggart, in which the United States had no interest. In fact, when the accounting officers had set off sufficient from White’s credit to pay the debt of Taggart, the assignment of the latter of his judgment against White had no further force, and the balance of the judgment reverted to him, and needed no reassignment, it, indeed, anybody had authority to excute one. The purpose for which the assignment had been given was executed and fully consummated.

While under the circumstance (White not objecting) the accounting officers were fully justified in retaining the money of White and making the set off to the extent of the interest of the United States therein, we are of opinion that they were not bound to go any further and collect the balance of the claimant’s debts for his sole benefit. Had White voluntarily paid to the defendants his whole debt to Taggart, and the money had gone into the public Treasury, the defendants would no doubt be liable for the excess above what was due the United States as money had and received to his u$e. But that is not this case.

The accounting officers of the Treasury have done all that their official duty required in the matter. That they have not done more is no fault of the defendants. The United States have no money of the claimant in their Treasury, and have done him no damage. His petition must be dismissed.

Nott, J., was not present at the hearing of this case, and took no part in its decision.  