United States v. MacMillan, 209 F. 266

209 F. 266 | N.D. Ill. | 1913

GEIGER, District Judge

(after stating the facts as above). From the declarations and pleas we may summarize that the funds, which we may term the “principal” received by the clerks and deposited in the banks and whereon the interest was earned, may be classified into: (a) Moneys deposited by litigants with the clerk subject to be disbursed to himself or to others as occasion may demand in the course of the litigation; (b) fees and emoluments earned by the clerk and paid to himself out of such last above specified deposits—and, as -to such earned fees and emoluments, a semiannual account was rendered, the account being charged to himself, and against the same was credited the office expense, the compensation retainable ($3,500 per annum) and the surplus- remaining, which latter was always paid to the government.

To put it in another way, the interest moneys in question arose from bank deposits which were constituted from two sources: First, moneys deposited by litigants who, until such moneys were actually covered into fees payable by them, retained the beneficial interest or ownership therein; and, secondly, the fees and emoluments, before a surplus was ascertained and paid over.

What is the character or status, as between the government, the clerk, and the litigant, of the moneys received, upon which, when deposited in the banks, the interest moneys arose, as stated? Are they public moneys whereof the clerk is trustee for the plaintiff government? This.is the fundamental question whose answer, if affirmative, will sustain, if negative, will overrule, the demurrers.

Exhaustive historical reviews of legislation respecting fees of clerks of the federal courts are found in United States v. Hill, 120 U. S. 169, 7 Sup. Ct. 510, 30 L. Ed. 627, United States v. Hill, 123 U. S. 681, 8 Sup. Ct. 308, 31 L. Ed. 275, and United States v. Mason, 218 U. S. 517, 31 Sup. Ct. 28, 54 L. Ed. 1133; and, in considering the question now presented, no purpose will be served by repetition thereof. It will suffice to note that, prior to 1841, clerks were under no obligation to render any .account of fees or emoluments to the government. They retained all revenues so coming to their hands. But in that and subsequent years the legislation having the effect of limiting their earnings was inaugurated and continued. The cases cited, and others, deal with the intent embodied in such legislation, and, as will be seen, are persuasive in determining the status or character of the moneys or revenues which now come, as prior to such legislation came, into clerks’ hands in the discharge of official duties.

It will be assumed that the plaintiff seeks recovery of the interest money in its own right; that the failure to account for and pay it to the government is assigned as a breach by the respective clerks of an official obligation to be discharged by them to the plaintiff; that while, as seen from the statement of facts, the defendant clerks have assumed obligations toward litigants respecting the disbursement of deposited moneys and the return to such litigants of any unexpended portion, no breach of any such obligation is assigned as a basis for institution of suit by the government on behalf of others; in other words, the plaintiff seeks recovery of the interest moneys “as the property of the-United States.” So, too, it will be assumed that, if the revenues coming to the hands of the clerks are in truth public moneys, the property of the government, then any interest earned'thereon, no matter when or how, rightfully follows the principal or corpus, as an incident or increment, in no event subject to personal appropriation by. the custodian of the principal.

[1] Considering first the interest money as arising upon a fund in part constituted from deposits made by litigants to be drawn against by the clerk for payment of fees as they accrue, certainly neither the clerk nor the government has any interest in such deposits, prior to proper appropriation for the uses intended, except to hold them. Even admitting for the time being that the fees when actually earned and paid are then public funds, the deposit made by a litigant to secure such payment is in no proper sense a fund in or over which the government has obtained the slightest proprietary interest or power of disposition. That interest and right is retained by the litigant, save only as he has surrendered it to the clerk to exercise by drawing against it in the defrayal of fees as and when, under the law, they ac-‘ crue and are chargeable against the litigant. While the transaction in making the deposit under the rule may not technically be a bailment, the clerk, in the nature of things, stands as a sort of insurer for the return to the litigant of the deposit or such part thereof as shall not have been earned as fees either by himself or others for whose benefit it is made. Certainly the deposit is not made for the benefit of the gqvernment. The clerk, under the law, is required to account for fees earned whether they are paid or not; and the rule does not impress such deposit with the character of public moneys or revenues; but is a mere regulation' for the protection of the clerk, to guaranty to him in advance, and as an administrative cpnvenience in the discharge of-his duties of and in the payment of moneys primarily receivable by him as his compensation. As indicated, if these court rules for deposits were not in force, it would rest with the clerk to insist upon payment of each fee as it is earned, in advance. If he failed to collect, but accounted for it as earned, the loss is his. His failure actually to collect the. money from the litigant, while it might so result in loss to him, would not, if he accounted for it to the government, be a breach of any condition of his bond. So long, therefore, as the moneys deposited by the litigant retain their status as a security deposit, the gov-eminent has and can have no claim to any increment thereof by way of interest.

[2] Coming now to the character or status of the other constituent of the fund upon which the interest money in question arose—the moneys earned by the clerk as official fees and emoluments and which, pending the semiannual accounting and return were deposited in the banks. While it is true that in Bean v. Patterson, 110 U. S. 401, 4 Sup. Ct. 23, 28 L. Ed. 190, the Supreme Court, upon an application for leave to docket an appeal, ruled that, under an act substantially like that governing district court clerks, the clerk of the Supreme Court could demand payment of certain fees in advance; and declared that:

“As the law now stands, the fees and emoluments of the office (clerk of Supreme Court) belong to. the government, subject only to the payment of the annual salary of the clerk, necessary clerk hire, and incidental expenses, and the clerk is the collecting agent for the government;”

—and while the Circuit Court of Appeals for the First Circuit, in United States v. Mason, 129 Fed. 742, 64 C. C. A. 270, adopted this expression in considering certain items of a clerk’s account as constituting a “necessary expense” of his office; nevertheless, the question respecting the character or status of funds in the hands of, a district court clerk prior to his semiannual accounting was directly presented in the recent case of United States v. Mason, 218 U. S. 517, 31 Sup. Ct. 28, 54 L. Ed. 1133, supra; and the ruling therein is, in my judgment, decisive of the present cases. It involved the validity of an indictment charging a clerk of a District Court with embezzling funds in his hands; and required answer to the concrete question whether, before a surplus of moneys in the clerk’s hands was ascertained and required to be paid over, the funds received by him were public moneys of the United States. A negative answer is given, based, as the court says, upon consideration of the “history of his (the clerk’s) relation to these moneys and of the statutes which specifically define his rights and duties.” Mr. Justice Hughes quotes the language found in United States v. Hill, supra:

“The clerk of a court of the United States collects his taxable ‘compensation,’ not as the revenue of the United States, but as the fees and emolu- ' ments of his office, with the obligation on his part to account to the United States for all he gets over a certain sum which is fixed by law. This obligation does not grow out of any ‘revenue law,’ properly so called, but out of a statute governing an officer of a court of the United States.”

And proceeds:

“But, for the reasons we have stated, even the duty to pay the surplus shown by the return or audit is not governed by the statutes relating to embezzlement, which have been referred to in support of these counts. The amount with which the clerk is chargeable upon his accounting is not the ‘public money’ or ‘the money or property 'of the United States’ within the meaning of their provisions. The fees and emoluments are not received by the clerk as moneys or property belonging to the United States, but as the amount allowed to him for his compensation and office expenses under the statutes defining his rights and duties, and, with respect to the amount payable when the return is made, the clerk is not trustee, but debtor. Any other view must ignore not only the practical construction which the statutes governing the office have received, but their clear intent.”

[3] This language, it seems to me, leaves nothing further to be considered except the suggestion made by plaintiff that the interest moneys, being received upon funds which came to and were in the clerk’s hands by yirtue of his office, should be considered and accounted for as emoluments. What test is afforded in determining whether a.sum of money received by an official is an emolument of his office? Certainly this: That the official do some act or perform some service pursuant to the obligation or sanction of his office to or for the benefit of the one paying the money charged to be an emolument; that the one paying the money has the right to exact from the official the rendition of the service, and the official has the right to exact the money return —under official obligation or sanction of the particular office to which the emolument is claimed to attach. To put it in another way: The payment moves to the official in consideration of the rendition by him of some official act or service; the official does the act or renders the service by virtue of his office. The official character of the act is his warrant for exacting the payment.

Now, while it is true that the incumbency of the office of clerk by an individual, his receipt of moneys for fees, emoluments, or deposits by litigants, and the deposit thereof by the clerk in banks, all concur in furnishing or creating the occasion through which he receives interest on the funds in the bank, yet he is not required, therefore cannot and does not deposit the funds in the bank upon an interest-paying basis by virtue of his official obligation; nor can or does he exact the interest from the banks under the sanction of official right or duty. Therefore such interest is not and cannot be an emolument.

In this connection it is further urged by the government that, until the semiannual return is made, the moneys received by the clerk for fees, court costs, etc., belong “to the office of the clerk and not his individual property.” It is not possible that the “office” of clerk can be treated as an entity, apart from the government or the clerk, having a proprietary interest or title in or to the funds. If the contention be that, because the moneys are paid to and received by the clerk by virtue of his office and not individually, therefore they are not his individual property, the reply is aptly stated by Mr. Justice Hughes in the Mason Case:

“There has thus been established a distinct system with respect to the fees and emoluments of the clerks. Its features are to be explained by the history of the clerk’s office and the requirements of its convenient administration. It is urged that the fees and emoluments are attached to the office, and are received in an official capacity. The consideration, however, does not aid the prosecution, for they were attached to the office before the statute of 1841, when they belonged to the clerk' without any duty * * * to account for if * if {hem.”

This last observation suggests the query if, prior to the passage of these statutes, the clerk had deposited in the bank all moneys received by him as clerk and had received interest on his daily credit balance, could it reasonably be claimed that such interest money was an emolument of his office? It is my judgment, that, whatever effect these various statutes may have, they do not have the effect of transforming into fees and emoluments, payments which, prior to their passage, were not fees and emoluments received for the discharge of official duties. They furnish no new tests for determining the character of funds received by the clerk. Nothing demonstrates this more clearly than United States v. Hill, supra, and the amendment to the'statute which ensued the rendition of that decision. There, a clerk of the District Court, by direction of the judge, rendered services by way of assistance in naturalization proceedings—the preparation of cases for hearing, examination of witnesses, and the like—for which he collected compensation from the applicants. It was sought to compel him to account for the moneys thus received; but, as the duties were held not to pertain to the office of clerk, he was not obliged to include them in his return. 'A law subsequently enacted by Congress declared such compensation subject to be accounted for as other fees and emoluments—doubtless to avoid the effect of the ruling referred to.

The conclusion to be drawn from the Mason Case would therefore appear to be: That the statutes which have been passed since 1841 do not abolish, but on the contrary were and are intended fully to recognize and continue in force, the pre-existing system of compensating clerks of courts by means of fees and- emoluments collected from persons who as litigants or otherwise are recipients of their official services; that the fundamental purpose of these statutes is (1) to place a limitation upon the aggregate amount of compensation which may be received by clerks through such system; (2) to impose upon the clerks the obligation to pay to the government—of which they are officials— the excess beyond such limitation; (3) to provide the manner and means, semiannually, of reducing such obligation to concrete terms, by requiring returns, accounting and the like; and (4) the manner and means of securing performance by the clerks of the statutory obligation to pay the excess, if and when ascertained. This conclusion, and no other, is reconcilable with the Supreme Court’s view that the clerk is not a trustee, but a debtor, of the government. Of course, when a clerk has breached his obligation with respect to holding and properly disbursing moneys deposited by litigants, the power of the government as obligee in the bond given by the clerk, to sue on behalf of and vindicate the litigant’s rights, cannot be denied. United States v. Abeel, 174 Fed. 12, 98 C. C. A. 50. That does not impress the amount sought to be recovered with the character of public revenues. The bond is given to secure the faithful discharge of the official’s duties, whatever they may be and to whomever they may be owing; and the fact the government is obligee therein is of no importance save as a participation by it to make secure and effective the “distinct system” of having the features noted, viz., compensation of the clerk, not out out of public revenues, but by fees from litigants, with the obligation on the clerk to pay to the government the excess over a specified amount.

The conclusion is that the demurrers must be overruled, and orders may be entered accordingly, in each of the nine cases.