When an entryman goes to the public land office for the purpose
of obtaining public land, and is told by the receiver that his
proofs cannot be filed or accepted unless and until he pays the
purchase price of the land, which he thereupon does, he makes such
payment to the receiver as a public officer of the United States,
and not to him as the agent of the entryman, and the payment is to
be regarded as one made to the government and as public money
within the meaning of the law and of any bond given for the
faithful discharge of the duties of his office by the receiver, and
for his honestly accounting for all public funds and property
coming into his hands.
This action is brought against Frederick W. Smith and the
sureties on his official bond as receiver of public moneys in the
Tucson Land District, in the Territory of Arizona. The bond was
dated March 7, 1888, and the condition therein was that
"if the said Frederick W. Smith shall at all times during his
holding and remaining in said office, carefully discharge the
duties thereof, and faithfully disburse all public moneys, and
honestly account, without fraud or delay, for
Page 170 U. S. 373
the same, and for all public funds and property which shall or
may come into his hands, then the above obligation to be void and
of no effect; otherwise, to remain in full force and virtue."
Smith was appointed receiver on the 28th of February, 1887, and
remained such receiver until the latter part of November, 1889,
when he was removed and Charles R. Drake was appointed his
successor, who assumed the duties of the office and took charge of
the books and papers on December 3, 1889. The government claimed
that the condition of the bond had been violated by the failure of
Smith to faithfully disburse all public moneys and to honestly
account for the same, and that he was indebted to the government by
reason thereof in various sums, amounting to over $19,000. During
the time of Smith's incumbency, there was either no register of the
land office in the Tucson district or the person occupying that
position was in such ill health as to be unable to attend to the
duties of the office. Smith was himself also in ill health during
1889. Owing to these facts, the business of the office ran largely
behind, and there were so many persons presenting their proofs and
making their payments to Receiver Smith before he was ready to pass
upon the sufficiency of such proofs, and before the register had
acted upon any of them, that a large sum of money thereby
accumulated in the hands of the receiver, amounting at the time he
was removed from office to about the sum of $40,000. Prior to the
time when the receiver was removed from office, in November, 1889,
no final action had been taken by him or the register in regard to
any of the applications involved in this record.
Before his removal, it had been the custom of the Land
Department not to permit the giving of any receipt by a receiver
for money paid him by an applicant for entry until such application
had been finally acted upon by the receiver and the register, and
then, if favorably decided, the custom was for the receiver to
charge himself in his account with the government with the amount
of the money which had already been paid him by the applicant. If
the application were not favorably acted upon, it was then the
custom of a receiver of
Page 170 U. S. 374
return the money to the applicant. This was authorized by the
government.
An agent of the government came to Tucson after the receiver's
removal, and, on examining his books, stated that the receiver did
not owe the government anything One of the sureties on the
receiver's bond had heard of the receipt of these moneys by Smith,
and had obtained from him $25,000, being part of the moneys which
Smith had received as above mentioned. While in possession of this
money, the surety saw the agent of the government, and inquired if
there were nay charges against the receiver, his principal, and
that he wanted to know so that he might use the money Smith had
paid him to repay the government any amount that might be found due
on an accounting, and he was told by the agent that Smith's
accounts were all right, and that he did not owe the government a
dollar. It is claimed that thereafter the $25,000 were refunded to
the entrymen who had made payments to Smith, until the amount was
exhausted.
In April, 1890, there was still a very large accumulation of
cases in the Tucson office where proofs had been made and filed
with Smith and moneys had been paid to him while receiver as the
purchase price of the lands desired and no final receipts had been
given by him or his successor. In this condition of affairs, the
Commissioner of the General Land Office wrote the following
letter.
"Letter M"
"Department of the Interior"
"General Land Office"
"Washington, D.C.
April 30, 1890"
"Register and Receiver, Tucson, Arizona"
"Sir: I enclose herewith a statement as taken from the records
of your office, showing the final proofs now in your office
awaiting examination on which the money in payment for the same was
paid to Fred. W. Smith, the late receiver, and was by him
appropriated to his own use and never accounted for to the United
States. You are instructed to examine all the final proofs now in
your office, as shown by the accompanying
Page 170 U. S. 375
list, and, if the same is found sufficient, you will request the
parties in interest to furnish an affidavit, properly attested,
showing that they did pay the money to Fred. W. Smith, and whether
the same was paid by draft or check. If the parties can furnish
certified copies of these drafts or checks from the cashier of the
bank showing the same, you will obtain these copies and allow the
entries as of date when proof and payment were made. You will refer
on the entry papers, and upon your records to this letter by
initial and date as your authority therefor. The receiver will
enter upon the books of his office under the account of Fred. W.
Smith, late receiver, the amount of purchase money received for
each class of entry. You will give to said entries a half number
corresponding to the time when said proof was accepted, and prepare
supplemental abstracts of the same, noting thereon, "Allowed by
letter
M' of April 30," and purchase money is to be charged to
Fred. W. Smith, the late receiver. You will then prepare an account
current, Form 4-105, thereof, and certify therein that the
transaction reported appears from the records of your office. The
receiver will send a duplicate receipt to the entrymen in
accordance with the instructions herein contained, noting on the
receipt, as his authority, this letter by initial and date, and,
after you have carefully examined all of these papers as instructed
in this letter, you will forward them to this office for future
consideration."
"The decision of this office heretofore has been against the
allowance of an entry where the money be payable to the receiver of
public moneys if the moneys were not properly accounted for or
deposited to the credit of the Treasurer of the United States; but,
as a matter of equity, in view of the general circular of this
office, which provides that proof without payment must in no case
be accepted or received by register and receiver, and in view of
the fact that entrymen had made their payments in accord with this
circular issued by this office, it is the opinion of this office
that the entries should be allowed. I am aware that the views
herein expressed are in conflict with the practice above referred
to, but my understanding of the law and convictions of equity are
so strong and
Page 170 U. S. 376
clear that, reluctant as I am to change the former practices, I
feel myself compelled to do so in this case. I therefore hold that
the moneys paid by entrymen to Frederick W. Smith, receiver, and
received by him in his official capacity as such, were public
moneys within the meaning and intent of the law, and the payment to
him was a payment to the government. The recourse of the United
States is under the official bond of Mr. Smith, and, as suit has
already been instituted for the recovery of the amount received by
him, the entries should be allowed without further delay."
"Very respectfully,"
"William Stone"
"
Assistant Commissioner"
Pursuant to the directions contained in the above letter, the
receiver, Mr. Drake, issued, in all cases where the proofs were
satisfactory, final receipts to the various entrymen who had made
applications for entry, and paid their money to Smith while he was
receiver, and the payments to Smith in such cases were recognized
as payments to the government.
Upon the trial of the action in the Arizona court, judgment for
nearly six thousand dollars was given for the United States for the
amount found to be due by the jury in cases where payments had been
made to Smith, and the final proofs had been favorably decided upon
by his successor. That judgment was affirmed by the supreme court
of the territory, and the defendants brought the case here for
review.
MR. JUSTICE PECKHAM, after stating the facts, delivered the
opinion of the Court.
The question to be determined in this case is whether, under the
circumstances above set forth, the moneys received by Receiver
Smith, and to recover which the action herein
Page 170 U. S. 377
was commenced, were public moneys within the meaning of the law
and the bond given by the receiver.
The moneys paid to the receiver were paid upon the making of
proofs by the entrymen under various statutes of the United States
providing for the sale of the public lands, such as the statute
relating to preemptions, Rev.Stat. §§ 2257-2288; the
statute relating to homesteads, Rev.Stat. §§ 2289-2317;
the statute relating to the sale of desert lands, Act of March 3,
1877, c. 107, 19 Stat. 377. In the course of the proceedings under
these acts and in the examination of the proofs submitted, various
questions of fact arise and are to be decided by the register and
receiver, who are to be satisfied of the existence of the necessary
facts mentioned in the statute and of the regularity and
sufficiency of the proofs. When so satisfied, the register issues
his certificate to that effect, and the receiver gives what is
known as a "final receipt," and upon the two papers the patent
finally issues. There must be the favorable action of both register
and receiver before the final papers issue, but such action need
not be simultaneous. The receiver may act at one time, and the
register at another, but both must act before the case is concluded
and the papers signed upon which the patent is subsequently issued.
Lytle v.
Arkansas, 9 How. 314;
Potter v. United
States, 107 U. S. 126.
The statutes are somewhat general in their provisions as to the
time of payment of the purchase price of the lands, merely
providing that the entries desired may be made upon satisfactory
proof being made to the register and receiver, and "upon paying to
the United States the minimum price of such land."
The statutes do not provide that the entryman shall not pay the
money before the final decision is made determining the sufficiency
of his proofs, but they simply provide that when the register and
receiver are so satisfied, and upon payment of the money, entry may
be made. The matter of the time of payment, so long as it is made
before the entry, is thus left for regulation by the department
having the matter in charge. Such regulations are made under §
161, Rev.Stat., permitting each head of a department to prescribe
regulations, not inconsistent
Page 170 U. S. 378
with law, for the government of his department and the conduct
of its officers and clerks, etc.
Acting under the authority of section 161, the General Land
Office provided by its general circular with regard to the time
when payment for public lands sold should be made, and directed
"that proofs without payment must in no case be accepted." This
regulation did not refer to "final" acceptance of proof, resulting
in a favorable decision upon the application. The statutes already
provided that it was only
upon payment that the entry
might be made. The regulation referred to the taking of the proofs
at all. It could only mean that no proof proffered by an entryman
should be received without payment of the purchase price of the
land which he desired to purchase. The probable purpose of the rule
was to prevent the unnecessary examination of proofs in cases where
they might be found to be satisfactory, and yet the purchase price
should not then be forthcoming. Whatever the reason, the direction
was plain and unambiguous, and it absolutely forbade the reception
of the proofs of the entryman unless at the same time he paid the
purchase price to the receiver for the lands which he proposed to
buy. Thus, the entryman could not make his proofs and leave them
with the receiver for him and the register subsequently to act upon
them unless the entryman, at the time of making his proofs and
leaving them for future examination and decision, paid the purchase
price for the lands. This regulation is not inconsistent with or in
violation of the statutes in regard to payment. As we have
observed, the payment must, by statute, be made before entry is
allowed, but the particular time is not stated. The regulation
above mentioned then comes in, the effect of which is to prevent
the acceptance of proof without payment, and the payment must
therefore be made when the proof is offered, and it may be some
time before it is favorably acted upon by both register and
receiver. Thus, under provision of law and pursuant to valid
requirements of the land office, the entryman is compelled to pay
his money at the time he proffers his proofs, and before final
action upon them is taken by the two public officers designated in
the statutes. When the entryman
Page 170 U. S. 379
goes to the public land office for the purpose of obtaining the
land he desires, and is told that his proofs cannot be filed or
accepted unless and until he pays the purchase price of the land,
which he thereupon does, he makes such payment to the receiver as a
public officer, acting in the line of his duty, and it is safe to
say that the entryman is without any thought or intention of paying
the money to such receiver as his own private agent, to be kept by
that agent in trust until the proofs are satisfactory, and to be
then paid by him to the government; nor are the circumstances of
that nature which would lead to the belief that, in making such
payment, the entryman is in fact trusting to the good faith and
integrity of the receiver as his agent, and that he does not regard
himself as dealing with a public officer of the government. The law
accords with the fact. How can it be said that the money which he
pays does not become public money upon such payment, when he pays
it pursuant to law as the purchase price of land which he desires
to buy, and the money is exacted from him by the government before
any final action is taken upon his application? What difference
does it make that the government comes under an obligation to repay
the money to the man in case the proofs are not finally accepted?
The money is nonetheless public money when paid to this public
official pursuant to law, and under the direction and by reason of
the regulations of the land office.
See King v. United
States, 99 U. S. 229.
As the party taking the money is a public officer, and as he
exacts the payment, and such exaction is in pursuance of a
regulation of the General Land Office, and is consistent with and
authorized by law, it seems to us that the money thus paid is
received by the receiver as public money and in his official
capacity, and he is neither in law nor in fact the agent of the
entryman. If the proofs are unsatisfactory and the money is
returned, it is returned by the receiver as a public officer and as
the agent of the government, and the money is returned by the
government through its agent.
The custom of the land office at the time in question not to
have such money appear in the accounts of the receiver
Page 170 U. S. 380
with the government until after the proofs had been passed upon
by both register and receiver and a final receipt given does not
affect the character of the money so paid. The receiver receives
the money as a public officer pursuant to the provisions of law.
While in the hands of the receiver, it remains public money,
received by him by virtue of his office, and the money belongs to
the government as between it and the receiver, although it may be
under obligations to return the same to the entryman in case his
proofs were rejected. When the government authorized the return of
the money by the receiver, in making such return, he acted as its
agent, and not as the agent of the entryman, and the payment was
not by the receiver in his personal capacity.
It is true that, on some occasions prior to the execution of
this bond, it had been decided by the Commissioner of the General
Land Office that, under the law, the money paid to a receiver by an
entryman before the final determination of his application and a
certificate given by the register was not public money, but was
paid by the entryman to the receiver as his own agent, and that,
until the proofs were favorably passed upon and a final receipt
given, the money in the hands of the receiver was at the risk of
the entryman. It was received by the receiver in his personal
capacity as a private individual, and, if not properly paid over,
recourse for the money must be had against the receiver personally
by the parties aggrieved. Such was the case of Matthiessen v. Ward,
6 L.D. 713. This rule was upheld by the Secretary of the
Interior.
The decision does not refer to the regulation made by the
department that no proof shall be accepted from the entryman
without payment of the money. This regulation is a most vital part
of the whole proceeding, and, instead of the money's not being
payable to the receiver until an entry had been allowed by the
register and a certificate given, the regulation of the department
distinctly provided that payment of the purchase price was to be
insisted upon as a condition precedent to the acceptance of proofs
at all. The decision of the department was not in any sense a
regulation under section
Page 170 U. S. 381
161 of the Revised Statutes, but was the opinion of the
secretary upon the law and regulations as they existed. Such
opinion is entitled to, and it receives, great respect and
consideration by this Court, but it is not binding upon us as a
valid regulation of the department, and cannot be so regarded.
We are unable, for the reasons already stated, to concur with
the opinion of the commissioner.
These distinctions between the acts of the receiver as an
alleged agent of the entryman in receiving the money prior to the
decision upon the sufficiency of the proofs, and the same receiver
as agent of the government in the keeping of public moneys, ought
not to be created by any refined reasoning. Fair protection of the
entryman in his dealings with the government ought to be given when
possible. There can be no doubt of the fact that the entryman has
no idea of any such distinction, nor can there be any doubt of the
fact that when he pays the money to the receiver, he supposes he is
paying it to the government through its public officer, and by
reason of provisions of law and the regulations of the
department.
Public money, in the sense of the law and as used in this bond,
is money which legally comes to the receiver by virtue of his
office, and as a public officer, and while carrying out the duties
of his office, and he cannot be permitted to say that it was not
public money when so received. Being public money, he is bound to
account.
Is there any alteration of this liability caused by his removal
from office before he has finally accounted for the moneys he
received on these various applications? We think not. The
applications are to be acted upon by the register and receiver --
that is, by those persons who at the time of such action hold these
offices. It is not a matter personal to the individual who receives
the money, and therefore when the person receiving the money is
removed from office before the proofs are finally acted upon by the
register and receiver, and action is subsequently had by the
receiver's successor in office, and the proofs are finally accepted
by such successor and by the register, the government is as much
bound by such acceptance as if it had been acknowledged by the
receiver who
Page 170 U. S. 382
received the money, and his obligation to account for the money
which he received still remains in full force, and is not altered
in the slightest degree by the fact of his removal from office. As
the agent of the government, he received it, and, upon the
acceptance of the proofs and final receipt, it becomes the duty of
the government to issue the patent, and the fact that its agent had
not paid the money over to it would constitute no defense to its
obligation to issue the patent when the proofs were found
satisfactory.
There may have been no breach of the bond at the time of his
removal from office, but the liability of the receiver to account
remained, and the bond continued in force until he had fully
accounted, and thus had fulfilled all the conditions of his bond.
His repayment to the entryman, after his removal, in case the proof
were rejected, would be an accounting
pro tanto to the
government, the repayment being authorized and recognized by it as
the fulfillment to that extent of the duty of the government to
make such repayment.
In this view, the liability of the defendant and his sureties
does not depend at all upon the letter written by the commissioner
and set forth in the above statement of facts. The letter simply
officially recognized the duty of the receiver who then occupied
the office to issue the final receipt when the officials were
satisfied with the proofs and the money had been theretofore paid
to Smith. Although, before the writing of the letter, the land
office had not recognized its obligation to issue patents under the
circumstances developed in this case, and had refused to issue them
unless it were again paid the money, that practice, as we have
said, did not alter the law and did not take away or affect the
obligation and liability of the government to issue the patent when
the proofs were found, satisfactory.
Setting the letter aside, the liability of the government
remains the same, the character of the money received by the
receiver remains the same, and the liability of himself and his
sureties is of the same nature and of the same degree without the
letter as with it. This, therefore, is no case of an alteration of
the law or of the obligations of the bond made subsequently
Page 170 U. S. 383
to the time of its execution, and we are not called upon to
discuss the question as to how far alterations of the regulations
or of the law may affect the continued obligation of the obligors
in a bond like this.
Substantially the same question that we have been discussing
arose in the case of
Meads v. United States, decided in
the Circuit Court of Appeals, Sixth Circuit, in July, 1897, and
reported in 81 F. 684. The case was heard before Circuit Judges
Taft and Lurton and District Judge Clark, and the conclusion
arrived at in that case is in accord with that which we have come
to herein.
There is no question of estoppel in the case. The surety had
possession of some $25,000 of the moneys collected by the receiver,
and, when the agent of the government said that the receiver did
not owe it a dollar, the surety repaid to the various entrymen the
amounts that they had paid as far as the money went. In doing so,
he lessened by that amount the liability of the sureties on the
bond, and there is no proof that any portion of the indebtedness
for which this judgment was recovered was represented in those
payments.
We think this case was correctly decided, and the judgment is
therefore
Affirmed.
