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to an actual not to a prospective claim, and until the claim had been ascertained according to the terms of the statute it could not be said that the State was remiss in bringing action. Clearly, the statute of limitations could not begin to run from the date of the act of Congress of 1850, because. the Secretary of the Interior did not set aside the lands, as he was directed to do, and the suitor should not be prejudiced by the negligence of that officer. Again, the statute could not run from the date of the act of 1855, because the amount of money due to the State because of wrongful sales of lands by the United States was to be determined by the Commissioner of the General Land Office; and, in so far as the present case is concerned, it was only in 1885 that he found the amount to be due for which suit was instituted. Within thirteen months after the determination of this amount the State of Louisiana began its suit in the Court of Claims, and was thus well within the six years during which it could have taken action.

taxes

cannot be

Finally, the court took up and disposed in summary fashion of the contention Unpaid that the unpaid portion of the direct tax imposed by the act of Congress on August 5, 1861, should be set off against the two demands of Louisiana, of which the court pleaded had jurisdiction, and which were found to be actually due.

The reason for this was very plain and very simple, for the act of Congress in question imposed an annual direct tax of twenty million dollars upon the United States, and apportioned it to the several States of the Union, directing that the tax should be assessed and laid on the value of all lands and lots of ground, with their improvements and dwelling houses'. That is to say, an annual tax of twenty millions was imposed and the share of each State was ascertained; but the proportion, differing in each instance, was not levied upon the States, but indicated the amount which should be levied upon the owners of the land situated within each of the States. It was further provided in the act that the amount of the taxes assessed should be and remain a lien upon all lands and other real estate of the individuals who may be assessed for the same during two years after the time it shall annually become due and payable '.1

It is true, as pointed out by the learned Justice, that the States were authorized by the act to assume the amounts apportioned to them respectively and to collect the amount of their quota from their inhabitants. Louisiana did not avail itself of this right, and the debt created by the act was a debt of the individuals within the State, not of the State itself; and without robbing Peter to pay Paul, the unpaid portion of the tax of the people of Louisiana, amounting to $71,385.83, could not be set off against a debt of the United States due the State of Louisiana as such. The judgement of the court below was therefore affirmed, and for the first time in the history of the United States the Supreme Court of the United States assumed jurisdiction in the case of a suit of a State against the United States, and held the United States liable as a State or an individual would have been under like circumstances.2

1 United States v. State of Louisiana (123 U.S. 32, 38).

2 United States v. Alabama. United States v. Mississippi. Appeals from the Court of Claims. Mr. Justice Field: The questions presented in these cases are covered by the decision in the case of The United States v. The State of Louisiana; and, in conformity with it, the judgments in them must be affirmed. So ordered.' (123 U.S. 39, 437).

as a setoff.

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First case

of suit by

a State against

the United States.

Claim of

for the

of the sale of lands.

27. United States v. State of Louisiana.
(127 U.S. 182) 1888.

The next case to be considered is likewise that of Louisiana against the United Louisiana States, entitled United States v. Louisiana (127 U.S. 182), decided in 1887, and the proceeds cause of action, like that of the previous case, arose out of the claim to five per cent. on the sales of lands of the United States under the act of Congress of February 20, 1811; and the second claim, as in the previous case, arose out of the act of September 28, 1850, and of the act of March 2, 1855, by virtue whereof the proceeds of the lands sold to the detriment of the States should be credited to them upon approval of the amount involved by the Commissioner of the General Land Office.

Claim of United States to set off the interest due on State bonds.

The cause of action of the State of Louisiana against the United States is thus stated by Mr. Justice Blatchford, speaking for the Supreme Court, and delivering its unanimous opinion:

The State alleged, in its petitions in the Court of Claims, (for there were two suits, which were consolidated,) that the moneys due to it under the act of 1811, instead of being paid over to it by the United States, had been unlawfully credited upon certain bonds alleged to have been issued by the State, and claimed to be held by the United States as an investment of certain Indian Trust funds; that, as to the acts of 1850 and 1855, moneys were due to the State thereunder, which had been legally ascertained and certified, but, instead of being paid over to the State, had been credited on bonds of the same kind; and that the sums referred to as being ascertained and found due to the State were trust funds, to be devoted to specific purposes, under the provisions of the acts granting them to the State.

The United States, in addition to a general traverse, put in a special plea of set-off, alleging that the State was indebted to the United States in the amount of interest which had accrued on bonds issued by the State and held by the United States.1

From a judgement for $43,572.71 in favour of Louisiana the United States appealed to the Supreme Court, and the case on appeal turned upon the facts and principles of law applicable to them. The question of jurisdiction had already been settled in the previous case of United States v. Louisiana (123 U.S. 32), and the acts of Congress interpreted upon which the present case was based, and the method of ascertaining the nature and the amount of the indebtedness determined. It is, as it were, a different phase of the same case, in which other facts were invoked to bar the liability of the United States.

It appeared that in 1884 there was due from the United States, under the heading of the five per cent. fund, to the State of Louisiana the sum of $36,439.69, and under the acts of Congress of 1850 and 1855, concerning the sale of the swamp lands, there was in 1887 due Louisiana from the United States the sum of $7,133.02, making, in all, $43,572.71. If the matter had stopped here there would have been no controversy, as the United States admitted these sums to be due and the right to recover debts of Distinc- this kind had been established in a previous case. But there was here a defence on the part of the United States of an entirely different character, inasmuch as the United States attempted and succeeded in setting off against its admitted indebtedness to the State a claim as creditor against the State, not the citizens and inhabitants thereof, as in the other case. The United States owned coupon bonds issued by

tion between

this and

the pre

vious case.

tions

Louisiana amounting to $37,000.00, payable in 1894, known as the Indian Trust bonds, on which the interest from May 1, 1874, to November 1, 1887, was due and outstanding, and amounted to $31,080.00. Inasmuch as the principal of the Indian Trust bonds was payable in 1894 this phase of the question may be eliminated, as the debt was not due in 1887, when the suit was brought. The interest, however, was, and the United States maintained that it should be set off against the two sums amounting to $43,572.71, claimed by the State of Louisiana to be due from the United States. In addition, the illustrious defendant claimed that a part of the sum Statute derived from the five per cent. fund, amounting to $13,602.71, should be deducted of limitafrom the amount otherwise due to the State, inasmuch as that item, credited on the pleaded books of the Treasury Department on May 18, 1879, was not put into suit until by United February 1, 1887, that is to say, until more than six years after it had been accredited to Louisiana, and that it was therefore barred by the statute of limitations requiring suits of this character to be brought within six years. The contention of the United States, therefore, was that this item should be struck from the account of the United States with Louisiana, reducing it to $29,970.00. It was further insisted that this amount was more than covered by the set-off of $31,080.00, the interest due and unpaid on the Indian Trust bonds issued by Louisiana and held by the United States.

States.

ment of the

Claims in favour of

Louisi

The Court of Claims rejected both contentions of the United States, holding that Judgethe two items arising from the five per cent. fund and the sale of swamp lands were trust moneys, to be held and set aside for special purposes, at first by the United States Court of and by the State after the transfer to it; that the trust had not been disavowed or annulled by Congress and that it was the duty of the executive officers of the United States in charge of the funds to deliver them to the State as a succeeding trustee; that ana. the interest arising from the Indian Trust bonds could not properly be set off against the sums of money accruing to the State because of the Acts of Congress of 1811, 1850, and 1855; and that the item of $13,602.71 was not barred by the statute of limitations.

If the holding of the Court of Claims was correct, that the acts of Congress created Question a trust and that the sums forming the trust were to be paid to the States to be used, of a trust and only used, in the performance of the trust, then the contention of the United States would fall of its own weight, that the interest of the Indian Trust bonds should be set off against the two sums of money forming a total of $43,572.71 held by the United States for the account of Louisiana.

earlier

This question was not a new one in the Supreme Court of the United States. It in the had been passed upon in Emigrant Co. v. County of Adams (100 U.S. 61), decided in light of 1879, and upon argument and re-argument the court held, per Mr. Justice Bradley, cases. that the act of Congress of 1850 did not create a trust, that the direction to appropriate funds as far as necessary' to the specific purpose for which they were given left the State free to exercise a large discretion as to the extent of the necessity. Again, this very question was considered in Mills County v. Railroad Companies (107 U.S. 557), decided in 1882, in which the Supreme Court affirmed its decision in the previous case, and from Mr. Justice Bradley's opinion on behalf of the court the following pertinent passage is quoted:

Upon further consideration of the whole subject, we are convinced that the suggestion then made, that the application of the proceeds of these lands to the purposes of the grant rests upon the good faith of the State, and that the State may

Decision of the

exercise its discretion as to the disposal of them, is the only correct view. It is a matter between two sovereign powers, and one which private parties cannot bring into discussion. Swamp and overflowed lands are of little value to the government of the United States, whose principal interest in them is to dispose of them for purposes of revenue; whereas, the state governments, being concerned in their settlement and improvement, in the opening up of roads and other public works through them, in the promotion of the public health by systems of drainage and embankment, are far more deeply interested in having the disposal and management of them. For these reasons, it was a wise measure on the part of Congress to cede these lands to the States in which they lay, subject to the disposal of their respective legislatures; and, although it is specially provided that the proceeds of such lands shall be applied, as far as necessary,' to their reclamation by means of levees and drains, this is a duty which was imposed upon and assumed by the States alone, when they accepted the grant; and whether faithfully performed or not is a question between the United States and the States; and is neither a trust following the lands nor a duty which private parties can enforce as against the State.1

The trust theory, like Banquo's ghost, died hard, for again, in the case of Hagar v. Reclamation District (111 U.S. 701, 713), decided a year later, the Supreme Court reaffirmed its views on this question, and as the result of long and deliberate consideration held, to quote the language of Mr. Justice Blatchford, that the appropriation of the proceeds of the sale of the lands rested solely in the good faith of the State; and that its discretion in disposing of them was not controlled by the condition mentioned in the act, as neither a contract nor a trust following the lands was thereby created'.2

Having thus disposed of the question of the trust and having thus held that the money in the possession of the United States was not impressed with the trust, so that it could only be devoted to a particular purpose, Mr Justice Blatchford considered the facts and the holding in the case of Louisiana v. United States, and thus concluded this portion of the case :

In accordance with the views of this court in the cases above cited, it must be held that the proceeds of the swamp lands are not subject to a property trust, either Supreme in the hands of the United States or in those of the State, in such sense that the claim of the United States upon the State for the overdue coupons on the Indian Trust bonds, involved in the present case, cannot be set-off against the claim of the State to the swamp-land fund.3

Court allows

the plea of a set

off

It will be noted that the act of Congress of 1850 was the only one of the acts construed by the Supreme Court in the cases referred to by Mr. Justice Blatchford. But the acts were of a like nature and for a kindred purpose, and if one did not create a trust none did; and the learned Justice so held on behalf of the court. He likewise and also held that, six years having elapsed since beginning suit, after the right had accrued the plea to the State of Louisiana to recover from the United States the item of $13,602.71 of the five per cent. fund, this portion of the claim was barred, with the result that the sum of $29,970 thus remaining was more than offset by the $31,080 for coupons which had fallen due on November 1, 1887, before the institution of the suit. The language of Mr. Justice Blatchford is so apt and enlightening, and is in addition the conclusion of the case, that it is here quoted for the benefit of the reader :

of limita

tion.

The same views apply to the provision as to the 5 per cent. fund, in the act of 1811, that it shall be applied to laying out and constructing public roads, and levees 1 United States v. State of Louisiana (127 U.S. 182, 189).

in the State,' as the legislature thereof may direct'; and as to both the 5 per cent. fund and the swamp-land fund, we are of opinion that neither of them is of such a character that the debt due to the United States by the State of Louisiana, for the overdue coupons on the Indian Trust bonds, cannot be set off against the fund which is in the hands of the United States. This being so, it follows that the limitation of § 1069 of the Revised Statutes is a bar against the recovery of the item of $13,602.71 of the 5 per cent. fund, credited May 8, 1879, and that the amount of the set-off of $31,080, for coupons falling due up to November 1, 1887, on the Indian Trust bonds, is a valid set-off against the remaining $29,970, and is more than sufficient to extinguish that item.1

ment in favour

The judgement of the Court of Claims was therefore reversed and the case was Judgeremanded to that court with a direction to enter judgement in favour of the United States.

of the United

methods

against

The two cases of Louisiana against the United States are interesting, as showing States. that the United States may be sued in the Court of Claims, either by a private person Earlier or by one of the United States. This was not always so. Before 1855 there was no of preCourt of Claims, and the only way that a person with a legal claim against the United senting States could obtain redress was by way of petition to the Congress, in accordance with claims the first amendment to the Constitution, reserving to the people the right' to petition the the Government for a redress of grievance'. In practice, however, the right was one in theory rather than in fact, for, although the claim might have been approved by a department of the Government, the appropriation for its payment had to be made by the Congress, and the Congress, therefore, was the judge of ultimate resort.

United

States.

Experience has shown, if indeed it were needed, that members of legislative bodies are too busy with law making, not to say with politics, to pass as judges upon claims involving disputed facts and complicated law and that committees of the Congress could not sit with the same poise and the same judgement and the same impartiality as judicial bodies. Easy claims were settled, difficult ones dragged on and through sheer weariness were paid to get them out of the way. Justice was done with a rough hand, if at all. Then again, claims against the United States were recommended by the Government to the Congress and met with the same fate; in some cases they were referred by special act to the district courts of the United States, in order to have the facts ascertained and the principle of law applied. But this method was unsatisfactory to the individual suitor, to the executive department, to the foreign state and to the Congress. Therefore, in 1855, an act was passed to Estabestablish a Court for the investigation of claims against the United States', appointing of the three judges to pass upon all claims founded upon any law of Congress or upon any Court of regulation of the executive department, or upon any contract, express or implied, Claims, 1855. with the Government of the United States, and all claims which may be referred to it by either House of Congress'. The jurisdiction was broad but not deep, and a provision of the act, requiring the entire record of the case to be submitted to the Congress, practically rendered the act nugatory, because at this time the decisions of the court were advisory and the Congress felt obliged to pass upon the claims as a court of review, in order to determine whether the decision was just in each case and whether the Congress should appropriate the amount required to satisfy the claim.

In 1863 the Court was enlarged by the addition of two members, one of whom 1 United States v. State of Louisiana (123 U.S. 32, 192).

lishment

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