MR. JUSTICE SHIRAS delivered the opinion of the court.
This was an action of assumpsit brought by John Stewart against Benjamin H. Barnes, executor of William H. Barnes, deceased, late collector of internal revenue, to recover the sum of $250.40, alleged to have been unlawfully collected from the plaintiff as internal revenue taxes on distilled spirits, with interest from June 26, 1869. The action was commenced in the Court of Common Pleas of Bucks County, Pennsylvania, on April 25, 1887, and was thence removed by the defendant, by certiorari, into the Circuit Court of the United States for the Eastern District of Pennsylvania, where the declaration was filed and proceedings were had which resulted in a verdict and judgment for the defendant. From that judgment the plaintiff sued out a writ of error.
In his bill of particulars the plaintiff alleged that on June 26, 1869, he drew out certain distilled spirits which had been placed in a United States bonded warehouse prior to July 20, 1868, and that upon the withdrawal thereof he was required by the collector to pay taxes on fractions of gallons as though they were whole gallons, amounting to $8.62, and also the sum of $241.78, as taxes on spirits which had been lost by leakage, evaporation, etc.; that those amounts were unlawfully exacted, and that he paid the same under protest.
The defence made by the defendant is set out in the record, as follows:
"And now, to wit, the fourth day of April, 1889, the court, on motion of John R. Read, Esq., United States attorney, grant leave to amend the plea filed in the above case by filing an additional plea as follows, to wit:
Although the language quoted seems to indicate that there was another plea filed, no other plea appears in the record; neither does it appear that there was a replication. The record shows that a jury was sworn "to try the issue joined."
The purpose of this plea was evidently to invoke the operation of those acts of Congress which relate to the presentation of claims for alleged illegal exaction of taxes to the Commissioner of Internal Revenue, and which lay down the conditions upon which alone the government permits a recovery by suit of amounts so exacted.
The provisions of the statutory law which bear directly upon the present case are section 19 of the act of July 15, 1866, c. 184, 14 Stat. 93, 152, and section 44 of the act of June 6, 1872, c. 315, which appears in the Revised Statutes as section 3227. Under either of those acts before an action could be maintained in any court an appeal must first have been made to the Commissioner. In the act of 1866 there was no limitation of the time within which such an appeal was to be made. The act of 1872 required that it should be made within two years from the time the cause of action accrued. Under the earlier act, if such appeal had been made, still no action could be maintained in any court unless a decision should have been made upon the claim by the Commissioner, in which event the suit must have been brought within six months from the time of the decision, or within the same period after the act took effect. Under the later act, if the Commissioner delayed his decision for more than six months, the claimant was not compelled to await it, but might have sued within six months next following the six months of the Commissioner's delay, or one year from the time of appeal; but if the claimant had allowed that period to terminate without instituting
It was shown on the trial that, as to the sum of $241.78, the defendant had duly appealed to the Commissioner of Internal Revenue, that the claim was rejected, and that the suit was brought within the required time after such decision; but nothing appears in the bill of exceptions to show that an appeal was made concerning the amount of $8.62 of the claim.
Though the effect of the plea was to confess the plaintiff's cause of action, as to the exaction of the alleged amounts of money from him and as to the payment of the same under protest, see Gale v. Capern, 1 Ad. & El. 102, nevertheless, to prove the exaction the plaintiff introduced as a witness in his behalf a deputy collector, John F. Cline, who testified that the sums of money mentioned in the bill of particulars had been paid by the plaintiff to the collector of internal revenue for the first district of Pennsylvania; that the spirits were bonded prior to July 20, 1868, and that the sum of $8.62 had been paid upon fractions of gallons taxed as whole gallons, and the sum of $241.78 upon spirits lost by leakage, etc. The defendant admitted that certain official regulations promulgated by the Commissioner of Internal Revenue prior to and upon April 22, 1869, which were offered in evidence by the plaintiff, provided that the taxes on distilled spirits placed in bonded warehouses before July 20, 1868, should be exacted, upon the withdrawal of the spirits, only upon the actual quantity thereof so withdrawn. No evidence was introduced to show the nature of the protest made, but it was unnecessary to prove more than that the payment was made "under protest," which was admitted by the plea. Wright v. Blakeslee, 101 U.S. 174.
The defence made on the trial consisted of the introduction of evidence tending to show that the plaintiff had received from the government under the provisions of an act of Congress approved July 26, 1886, c. 783, 24 Stat. 853, the sum of $241.78, for which his attorney, T.W. Neill, gave a receipt to the Commissioner of Internal Revenue. The act is entitled
"Whereas from the time bonded warehouses were first established until April fourteenth, eighteen hundred and sixty-nine, the law has been uniformly construed and administered to allow for loss by leakage on spirits distilled prior to July twentieth, eighteen hundred and sixty-eight, while in warehouse; and whereas it was the uniform practice and in accordance with the rules and regulations of the Commissioner of Internal Revenue, approved by the secretary, to collect internal revenue taxes upon only so much of the spirits distilled prior to July twentieth, eighteen hundred and sixty-eight, as were actually withdrawn from warehouse, under which established regulations large quantities of spirits were bought and sold while in bond; and whereas in a few exceptional cases taxes were also collected on that portion of such spirits which were lost by leakage while remaining in warehouse: therefore,
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury be, and he is hereby, required to pay, out of any money in the treasury not otherwise appropriated, to the following-named persons in the city of Philadelphia, Pennsylvania, or their legal representatives, such amounts as shall be shown to the satisfaction of the Commissioner of Internal Revenue to have been paid by them as tax on distilled spirits in excess of the quantity withdrawn from warehouse: Provided, That the amount paid to each shall not exceed the sum herein stated — that is to say:" [Here follows a list in which appears the sum of $241.78 opposite the name of John Stewart.]
The receipt was as follows:
"Original receipt for draft in payment of claims for refunding:
"Received of the honorable Commissioner of Internal Revenue the sum of two hundred and forty-one dollars and seventy-eight cents ($241.78) on account of my claim, No. 10,073, for taxes improperly paid by me.
As nothing else of present importance appears in the record, the position of the plaintiff, after all the evidence had been offered, seems to have been this: The merit of his claim was established, as was also his right to prosecute the suit for $241.78 of his claim. No evidence had been introduced, nor admissions made, with regard to his right to sue for $8.62 of his demand, and as to that sum he was not entitled to seek relief. He had admitted the receipt by him from the Commissioner of Internal Revenue of $241.78 on account of his claim. The plaintiff's position being thus, the court directed a verdict in favor of the defendant. This action of the court was excepted to by the plaintiff, and is assigned by him as error.
The plaintiff now contends that, although he has accepted from the government the sum named, this fact should not affect his right to recover in the action, since he had a right to apply the money, and did apply it, so far as it was adequate, to the payment of interest on his claim, and was entitled to maintain an action for the principal and the balance of the interest. These views, however, of the purpose of the payment and the character in which it was received, are not sustained by the facts shown on the trial. The plaintiff admitted that he had received the sum of $241.78 on account of his claim for taxes improperly paid by him; the amount received was the same as the amount of the claim; the manner of the exaction indicated in the act of Congress is the same as that set out in the bill of particulars, and there is nothing upon which to base an inference that this payment from the government was related to any other transaction than the one in question. The act of Congress, then, furnishes the best evidence of the purpose and the character of the payment, and from it we are to learn whether the payment was of the principal
It is apparent, therefore, that the principal, as such, has been received by the plaintiff, and hence, to treat the action as having any object at all, we must regard it as an action for interest alone. Whether, in the circumstances of this case, an action for interest can be maintained, is the only question to be determined. In deciding this we shall not find it necessary to consider in what respect these suits against collectors may differ from other actions, but shall assume, for the purposes of this opinion, that they are governed by the same rules.
Where money is retained by one man against the declared will of another who is entitled to receive it, and who is thus deprived of its use, the rule of courts in ordinary cases is, in suits brought for the recovery of the money, to allow interest as compensation to the creditors for such loss. Interest in such cases is considered as damages, and does not form the basis of the action, but is an incident to the recovery of the principal debt. The right of action is the right to compel the payment of the money which is being retained. When he who has this right commences an action for its enforcement, he at the same time acquires a subordinate right, incident to the relief which he may obtain, to demand and receive interest. If, however, the principal sum has been paid, so that, as to it, an action brought cannot be maintained, the opportunity to acquire a right to damages is lost.
This principle is well illustrated by an early case, Moore v. Fuller, 2 Jones (Law,) 205, decided by the Supreme Court of North Carolina. That was an action of debt on a bond. The
To the same effect is the case of Tillotson v. Preston, 3 Johns. 229. This was an action of assumpsit for money had and received. In addition to the general issue, there was a plea of payment of the sums mentioned in the declaration. To this plea of payment the plaintiff demurred especially, alleging for one ground of demurrer that the plea did not allege that the defendant had paid to the plaintiff the interest. The court said: "The demurrer is not well taken. If the plaintiff has accepted the principal, he cannot afterwards bring an action for the interest."
Other cases announcing the same principle are to be found in the books, but the rule seems to be founded in reason, and hardly to need the support of precedent.
In a case where a demand of damages constitutes the very ground of the action, it would seem that the rule would be different. If, for instance, in covenant on the part of the
Treating the action of assumpsit as of such extensive scope, the object sought would not only be permitted, but required to be considered if it were desired to ascertain the real nature of a case. In this case the bill of particulars shows that the object sought is a liquidated sum of money, with interest. The evidence introduced with the acquiescence of the plaintiff, and his own admission, furnished proof that the liquidated sum has been paid. It thus appears that the action is not one sounding in damages, but that the damages, or interest, is demanded simply in respect of the detention of the principal.
Perhaps it might not unreasonably be argued that the payment by the government, and the acceptance of the money by the plaintiff, without a demand of interest, constituted a complete settlement of his claim, irrespective of the operation of the principle which we have been examining. But however this may be, it is evident from what has been said that the plaintiff has parted with his right of action by accepting the money which was withheld from him, and has at the same time given up his right to sue for the incidental damages. Therefore the court below was right in directing a verdict for the defendant, and the judgment of that court is