Sanborn v. United States United States v. Sanborn

• Decision Date: 28 April 1890
• Citation: 135 U.S. 271,34 L.Ed. 112,10 S.Ct. 812
• Parties: SANBORN v. UNITED STATES. UNITED STATES v. SANBORN
• Court: U.S. Supreme Court

135 U.S. 271

10 S.Ct. 812

34 L.Ed. 112

SANBORN v. UNITED STATES.

UNITED STATES

v. SANBORN.

April 28, 1890.

Asst. Atty. Gen. Hart, for the United States.

B. F. Butler and O. D. Barrett, for Sanborn.

Mr. Justice HARLAN, after stating the facts in the foregoing language, delivered the opinion of the court.

These are writs of error from h e same judgment. The action was brought by the United States, October 15, 1883, to recover from John D. Sanborn the sum of $7,334, on account of moneys alleged to have been received by him from the government without authority of law, and without right thereto, with interest on that sum from August 16, 1873. A jury was waived by the written stipulation of the parties, and the case was tried by the court, which made a special finding of facts and of law.

It was provided by an act of congress approved May 8, 1872, making appropriations for the legislative, executive, and judicial expenses of the government for the fiscal year ending June 30, 1873, that 'the secretary of the treasury shall have power to employ not more than three persons to assist the proper officers of the government in discovering and collecting any money belonging to the United States, whenever the same shall be withheld by any person or corporation, upon such terms and conditions as he shall deem best for the interests of the United States; but no compensation shall be paid to such persons except out of the money and property so secured; and no person shall be employed under the provisions of this clause who shall not have fully set forth in a written statement, under oath, addressed to the secretary of the treasury, the character of the claim out of which he proposes to recover, or assist in recovering moneys for the United States, the laws by the violation of which the same have been withheld, and the name of the person, firm, or corporation having thus withheld such moneys.' 17 St. p. 69, c. 140.

On the 15th day of July, 1872, Sanborn sent to the secretary of the treasury a communication, verified by his oath, submitting a statement under the above act, and proposing to recover, or assist in recovering, moneys due the United States for evasions of, and frauds upon, the laws for the collection of internal revenue tax on spirituous and fermented liquors, as well in making false returns of the amounts manufactured as in evading the payment of taxes upon those returned; and asking to be allowed, in the form of a percentage, such amount from the collections as in the judgment of the secretary was fit and meet.

This letter was followed by a written contract between Sanborn and the acting secretary of the treasury under date of August 13, 1872, in which it was agreed that the former might proceed to collect the taxes so alleged to be due to the United States by the persons named; that legal proceedings in the premises should be conducted by the proper United States attorneys, the written consent of the secretary of the treasury being first obtained; that no settlement of such claims should be made except under the provisions of section 10 of the act of March 3, 1863; that the costs and expenses incurred by him in investigating and prosecuting said claims, of every nature, should be borne by him, and no part thereof paid out of the portion retained by the United States; that whenever required by the secretary he should make a full report in writing of his acts and proceedings under the contract; that the money collected, either by legal proceedings or 'by settlement as compromise,' should be placed to the credit of the secretary of the treasury, and out of the same there should be paid to Sanborn, in full for his services, and for all costs and expenses of collection, a sum equal to 50 per cent. of the gross amount collected and received, which should be paid to him as fast as collected, and placed to the credit of the secretary of the treasury, the balance to be paid into the treasury of the United States; and that the contract might be revoked at any time at the pleasure of the secretary.

On the 25th of October, 1872, Sanborn sent to the secretary another letter, accompanied by a statement verified by his oath asking that his employment be extended and made to relate to claims aganinst the persons whose names were set forth in a schedule annexed to his letter, for moneys il egally withheld by them from the government. 'I desire, also,' he said, 'to state that the foregoing claims, out of which I propose to recover, or assist in recovering, moneys for the United States, arise under the taxes imposed upon legacies and successions and income under the act of July 30, 1864, and subsequent amendatory acts, providing for the collection of taxes for internal revenue. And I further request that the foregoing cases may be brought under my contract with the secretary of the terasury, bearing date August 13, 1872.'

In the statement referred to in that letter is the following:

'District Waldenham. * * * James A. Burtis. * * * John E. Wool.'

Pursuant to this request, the acting secretary of the treasury on the 30th of October, 1872, entered into another contract with Sanborn, containing, among other provisions, the following:

'Whereas, John D. Sanborn, of the city of Boston, has fully set forth in a written statement signed by him, under oath, and has filed the same in the office of the secretary of the treasury, wherein he proposes to recover, or assist the proper officers of the government in recovering, for the United States, from the following persons, to-wit, * * * John E. Wool estate, * * * large sum of money, that is to say, the sum of fifty thousand dollars, which the said Sanborn claims to be due to the United States, as and for internal revenue taxes which have been withheld by said persons, under and by force of the act of June 30, 1864, and other acts amendatory thereof, imposing taxes upon legacies, successions, and incomes, it is hereby agreed by and between W. A. Richardson, acting secretary of the terasury, of the first part, and the said John D. Sanborn, of the second part, that the contract or agreement entered into by and between the said parties, bearing date August 13, 1872, relating to the proposed recovery of certain moneys alleged to be due to the United States, is hereby extended and enlarged, so as to embrace and relate to the persons herein specifically enumerated; and all the provisions, conditions, and terms of the said contract of August 13, 1872, shall be held to apply to and control this agreement.'

The secretaty, under date of February 3, 1873, issued a paper addressed 'to supervisors and collectors of internal revenue,' in which he requested them to assist Sanborn 'in the examination of official records in reference to such cases of alleged violation of the internal revenue laws as he may ask for your co-operation,' stating that he was acting under his appointment, and 'may need some information from the offices of collectors and assessors for the purpose of verifying his claims.' Subsequently, on the 15th of October, 1873, the secretary issued a similar circular, and asked supervisors and collectors to render Sanborn such assistance as he required.

General John E. Wool died at Troy, N. Y., November 10, 1869, leaving a large estate, Mrs. Wool surviving him. His will having been duly probated on the 8th of February, 1870, letters testamentary were issued to John A. Griswold and Asher R. Morgan. Subsequently, October 31, 1872, Griswold died, leaving Morgan as sole executor. Mrs. Wool died May 7, 1873.

On the 1st day of August, 1873, Morgan delivered to Lucien Hawley, a supervisor of internal revenue, in payment of taxes due from the estate of Wool, his draft, as executor, upon the United States Trust Company of New York, payable to the order of the secretary of the treasury, for the sum of $14,668. Hawley delivered it to Sanborn on or about its date, and on the 3d of August, 1873, the latter inclosed it to the secretary of the treasury, in a letter of which the following is a copy: 'Referring to the contract made by me with the Hon. George S. Boutwell, late secretary of the treasury, bearing date August 13, 1872, and as amended by the agreement, October 30, 1872, I have the honor to report that Asher R. Morgan, executor of the estate of General John E. Wool, deceased, late of Troy, N. Y., and one of the parties named in my sce dule accompanying said contract, has paid to me the sum of $14,668, being the full amount of taxes due the government by him arising from the legal assessment on legacies and successions of said trust, and which has never before been paid. I herewith inclose said sum, and respectfully request that one-half of the same shall be paid into the treasury to the credit of the secretary of the treasury, and that the remaining half thereof shall be paid to me in accordance with the terms of my said contract. Please transmit receipt to Mr. Morgan, No. 7 Beekman street, New York.'

The secretary of the treasury on the 9th of August, 1873, indorsed this draft to the order of the treasurer of the United States, and directed th latter to deposit it to the special credit of the secretary on account of moneys received and paid under the first section of the legislative, executive, and judicial appropriation act, approved May 8, 1872. The draft, having been indorsed by the treasurer of the United States to the assistant treasurer of the United States at New York, was paid by the United States Trust Company, and the proceeds were placed to the special credit of the secretary of the treasury.

On the 16th of August, 1873, the secretary delivered to Sanborn a draft on the treasurer of the United States for $16,001.34, on account of moneys collected in various cases specified in his contract, and of that sum the above $7,334 was on account of collections from the estate of General Wool. That draft on its face directed the treasurer to charge its amount to the...