Direct Tax-Set-Off of Indebtedness of State.

sioners were to make a written report to the Secretary of the Treasury, who was to cause the same to be examined by the proper accounting officers of the Treasury, and the said officers were to audit the said accounts as in ordinary cases. As a result of the examination and auditing of the expeĥditures claimed by the State of Indiana under these two acts, a large amount of money, aggregating several millions of dollars, was paid in various warrants to governors of Indiana, and by them deposited in the treasury of the State. The confusion necessarily incident to the immense number of transactions under examination in the accounting offices of the Treasury Department led to a duplication of vouchers and to clerical errors, the result of which was that $46,123.01 was paid to the governors of Indiana and by them deposited in the treasury of the State of Indiana to which the State of Indiana was not properly entitled by such adjustments. The error arose from mistakes in adding columns and in the duplication of vouchers. The State of Indiana therefore has in its possession something more than $46,000 belonging to the United States. It was paid by mistake, and if the two parties were individuals, the State of Indiana would be liable in an action of assumpsit for the money belonging to the United States thus had and received to the use of Indiana. There is no doubt about the legality and equity of a set-off founded on such a debt.

The agent of the State of Indiana and the governor of that State maintain that there is still a large amount of money, aggregating something more than $1,000,000, due to Indiana from the United States under the acts of 1861 and 1867. These claims have been examined at the Treasury Department and either disallowed or suspended for more evidence.

Such as were suspended have been pending for more than twenty years, with no new evidence furnished. The suspended and rejected claims are not before you or me for adjudication, and you can not, in discharging your duty to secure by way of set-off any debt due the United States, have regard to any claims against the United States which are neither liquidated, adjusted, nor allowed by the proper accounting officers of the Treasury. I do not find it anywhere denied that there was not an error of overpayment to the State of

Tonnage Dues-Commissioner of Navigation-The President. Indiana as decided by the Third Auditor and the Second Comptroller. The error was discovered in 1886, and was at once called to the attention of the governor of Indiana. The correctness of the claim then made by the accounting officers has never been disputed.

Much reliance has been put by the gentlemen representing Indiana upon an opinion rendered by the present AttorneyGeneral in the matter of a set-off against the claim of the State of Vermont under this same direct tax act. That case has no application here. There the question was whether certain arms furnished to the soldiers of the State of Vermont to resist an invasion by Confederate forces assembled on the Canadian border were properly chargeable against the State as a debt to the United States under the old militia law of 1808. It was held that they were not so charge. able, because they were furnished for a national purpose, i. e., of resisting a national invasion, exactly as arms were furnished to volunteers from other States. Here the debt set-off is a simple overpayment of money into the treasury of the State of Indiana, and its validity can not be disputed.

I have the honor to advise that you continue to withhold from the amount to be paid under the direct tax act a suffi cient amount of money to meet the indebtedness found due by the Third Auditor and the Second Comptroller from the State of Indiana to the United States. If the State of Indiana is dissatisfied with this decision, she has recourse to the Court of Claims to enforce there the payment of the full amount allowed to be due her under the direct tax act of 1891.

Very respectfully,

WM. H. TAFT,

Acting Attorney-General in this Case.

The SECRETARY OF THE TREASURY.

TONNAGE DUES-COMMISSIONER OF NAVIGATION-THE PRES

IDENT.

The President is not clothed with anthority to reverse the decision of the Commissioner of Navigation so as to adjust the claims of Sweden and Norway for the return of tonnage dues alleged to have been erroneously exacted. Any application for relief should be addressed to the legislative branch of the Government.

Tonnage Dues - Commissioner of Navigation-The President.

DEPARTMENT OF JUSTICE,

March 23, 1892.

SIR: By documents transmitted the 12th instant I am called upon for an opinion as to whether it is now within the scope of the authority of the Executive to determine and adjust the claim presented by Sweden and Norway, under the shipping acts of 1884 and 1886, construed with the treaty of 1827, for a return of such tonnage dues as are alleged to have been erroneously exacted since said acts went into effect, and for a reduced rate of tonnage duty.

By article 8 of the treaty of July 4, 1827, concluded between the United States and Sweden and Norway (Treaties and Conventions, 1061), it is agreed that (with an exception which is not applicable here) neither party shall "impose upon the navigation between their respective territories, in the vessels of either, any tonnage or other duties of any kind or denomination which shall be higher or other than those which shall be imposed on every other navigation."

In 1828 the Government of the United Kingdom sought to impose tonnage taxes upon vessels classified by geograph ical tests, placing lower charges on those coming from the ports of Europe than on those coming from ports of the United States.

Upon the demand of this country, and after diplomatic discussion, it was held that it was the purpose of article 8 (to use the words then employed by Mr. Clay) "to restrain either party from demanding higher or other tonnage duties from the vessels of the other than those which should be imposed on every other navigation;" and the excess theretofore exacted from the United States was refunded to her.

The act of June 26, 1884 (23 Stat., 53), relates principally to the merchant marine and the foreign carrying trade of the United States, and consists mainly of amendments to the shipping sections of the Revised Statutes.

Section 14 of the act is in effect amendatory of section 4219, Revised Statutes, and section 11 of the act of June 19, 1886 (24 Stat., 79), amends said section 14.

That portion of amended section 14 presented by this inquiry imposes the 3-15 cent rate per ton of tonnage duty upon all vessels entered in any port of the United States from any foreign port or place in North America, Central

Tonnage Dues-Commissioner of Navigation-The President. America, or the coast of South America bordering on the Caribbean Sea, or from certain specified islands and the 6-30 cent rate upon all vessels entered from other foreign ports.

Section 3, of the Bureau of Navigation act of July 5, 1884 (23 Stat., 118), so far as applicable, provides, as to the Commissioner of Navigation, that:

"On all questions of interpretation growing out of the execution of the laws relating to * * the collection of tonnage tax, and to the refund of such tax, decision shall be final.”

his

It was held by Mr. Attorney-General Garland, in an opinion bearing date June 12, 1885 (18 Opin., 197), that the decision of this officer is final "as to all claims for refunds of the tonnage tax."

The opinion which I had the honor to submit to the Secretary of the Treasury, under date of September 26, 1890 (19 Opin., 661), was based upon an inquiry which assumed the authority of the Commissioner to decide the legality of the tonnage tax there in question, and the rule as laid down in the opinion of June 12, 1885, was followed:

The circuit court of the United States for the district of Oregon in August, 1890, in Laidlaw v. Abraham (43 Fed. Rep., 297), considered the effect of the Commissioner's deci sion under this clause, and held that it did not take from an unsuccessful appellant the right to bring an action in the courts to review the decision.

The court says that at first blush it may appear that one paying an illegal tax loses his right to redress in the courts after an adverse decision by the Commissioner, and adds: "But, on reflection, I am satisfied that the word 'final' is used in this connection with reference to the Department, of which the Commissioner is generally a subordinate part.

"In my judgment, the purpose of the provision is to relieve the head of the Department from the labor of reviewing the action of the Commissioner in these matters * * *” No other decisions upon the question involved have come under my notice.

Notwithstanding the treaty of 1827 and the construction put upon it in 1828, the giving of due weight to the act of July 5, 1881, and to the foregoing decisions appears to pre5687-VOL 20-24

Tonnage Dues -Commissioner of Navigation-The President.

clude the Secretary of the Treasury from repaying tonnage dues already exacted in those cases where the Commissioner of Navigation decides that they should not be refunded.

An application now of the rule adopted in 1828 will give the lower rate to vessels coming to the United States from the United Kingdom.

And the rule thus applied will at the same time tax our own ships sailing between our ports and those of Sweden and Norway at the 6-30 cent rate, while these foreign ships plying between the same ports will come into our ports at the 3-15 cent rate.

It is improbable that Congress intended to give more advantageous rates to the United Kingdom than to any other European nation, and it is quite as improbable that a purpose existed of imposing a lighter tonnage tax upon these foreign ships than upon our own vessels.

While the case presented here has a connection with the treaty of 1827, it bears the color of a claim. It is a claim for a refund of tonnage dues exacted in accordance with the laws applied to all other European nations, and seeks the establishment of a rule that will hereafter give special rates to the United Kingdom.

In this connection, and somewhat to test the purpose of Congress, thought may be given to the confusion which may arise in our relations with many nations in consequence of the "most favored nation" clause which so many treaties contain, if the rule upon which this claim rests shall be established.

In 1887 there was submitted to and passed upon by the Commissioner of Navigation, the claim of the United Kingdom for the same rate of tonnage duty upon the vessels of that Kingdom sailing from its ports to those of the United States as is given by section 14 to vessels plying between the ports of this country and those of the countries and islands included in the first clause of said section.

Under date of June 20, 1887, the Commissioner decided against this claim for a refund of tonnage dues paid at the 6-30 cent rate, and decided that the vessels of the United Kingdom, coming from the ports thereof, are not entitled to enter our ports at the 3-15 cent rate.

It can not well be denied that this determination is fairly