US SUPREME COURT DECISIONS

Commissions for drawing bills of exchange were not usually allowed to permanent pursers in the navy, and on 10 November, 1826, commissions for such services to commanders of squadrons and officers of any grade were expressly abolished.

A custom cannot be set up against a settled rule, nor can it ever be binding unless it be ancient, reasonable, generally known, and certain.

There are two books for the government of the officers of the navy, usually known as the "Blue Book" and the "Red Book." The "Red Book," although later in date, did not repeal the "Blue Book," except in some few specified particulars.

The duty of paying mechanics and laborers at the navy yards was imposed, by the Blue Book, upon pursers who were stationed there. It was made a part of their official duty. As this was not repealed by the Red Book, no commission can be allowed to a purser for performing this service.

The question whether or not these acts were parts of the official duty of pursers was one of law to be decided by the court, and not of fact to be left to the jury.

Losses alleged to have been sustained by a purser in consequence of an order by the commodore forbidding certain sales of slops cannot be set off in a suit by the United States upon the purser's bond.

The statute of March 3, 1797, which allows setoffs, has for its object the settlement between the parties of their mutual accounts or debts. But wrongs or torts done, and any unliquidated damages claimed have never been permitted as a setoff.

It appears also that the government is not responsible for a wrong committed by one officer upon another. The party injured has other modes of redress than setting off the damages as a defense, when sued upon his bond by the United States. chanrobles.com-red

Page 49 U. S. 84

This was a suit brought by the United States against Buchanan, who was a purser in the navy, to recover a balance of $11,535.50, alleged to be due by him. It was brought upon three several bonds, which had been executed by him on 28 February, 1836, 24 November, 1830, and 24 February, 1834. The defense was that he was entitled to certain credits which the accounting officers of the government had refused to allow.

The items for which the defendant claimed credit were:

1. Charge of commission for drawing bills of exchange $1,601.86

2. Charge of commissions on payments to mechanics and laborers at navy yard, Pensacola 1,955.61

3. Loss of commissions and depreciation of property 9,360.31

4. Loss of commissions on sale of slops 385.52

It will be necessary to take up these several items in order, after a few general remarks.

The Act of Congress passed on 7 February, 1815, 3 Stat. 202, directed the Board of Navy Commissioners to prepare such rules and regulations as shall be necessary for securing responsibility in the subordinate officers and agents of the Navy Department. In obedience to this act, the Board of Navy Commissioners prepared a set of "Rules, Regulations, and Instructions for the Naval Service of the United States," which were published in Washington in 1818. This is the book which is referred to, both in the subsequent arguments of counsel and opinion of the court, as the Blue Book. Its bearing upon the several claims of the defendant, Buchanan, will be mentioned when they come to be noticed seriatim.

The Red Book was published at Washington in 1832. Its title was, "Rules of the Navy Department regulating the Civil Administration of the Navy of the United States." The order of the then Secretary of the Navy, prefixed to the book contained the following sentence:

"The 'Rules, Regulations, and Instructions' for the naval service, as published in 1818, relate to other branches of administration in this department, and in most particulars are entirely distinct in their character. They are now undergoing a thorough revision, and when corrected and enlarged, if approved by the competent authority, they will be separately printed and forwarded to those interested in their contents."

In this Red Book, at page 49, there is the following note to chapter 57, which treats of the printed regulations of 1818: chanrobles.com-red

Page 49 U. S. 85

"Note -- Except in these two particulars [which are mentioned in the page to which the note is attached] and in others in which they have been expressly amended, these regulations are now in full force, their force being derived from the provisions of the Act of Congress of 7 February, 1815, and from the sanction of the President and Secretary of the Navy, who have power to adopt any naval regulations, though not within the purview of the act of 1815, if not violating any law of Congress, and if supposed by them to be beneficial in their operation."

We will now take up the separate credits which were claimed by the defendant.

1st. Commission for drawing bills of exchange.

There was no dispute about the amount of bills drawn. A certificate of Mr. Dayton, the Fourth Auditor, stated them to amount to $65,074.34; that they were drawn on the Secretary of the Navy at various times from 24 May, 1827, to 9 February, 1828, by whom they were duly honored, and the amount thereof charged to Purser Buchanan on the books of the office.

In 1826, the two following orders were issued by the Secretary of the Navy, in the form of a letter of instruction to the Fourth Auditor.

"Navy Department, 9 November, 1826"

"SIR -- Instructions have been transmitted to the commanders of our several squadrons abroad to obtain the funds required for their support from the navy agent near their respective states."

"No percentage or premium will hereafter be allowed to officers of any grade making drafts upon the department unless they are too remote from the residence of any navy agent to procure the money."

"I am, respectfully &c.,"

"[Signed] SAMUEL L. SOUTHARD"

"TOBIAS WATKINS, ESQ., Fourth Auditor of the Treasury"

"I certify the foregoing to be a true copy of a letter from the Navy Department, on file in this office."

"A. O. DAYTON"

"Treasury Department, Fourth Auditor's Office, July 5, 1844"

"Navy Department, 10 November, 1826"

"SIR -- In reply to the inquiry contained in your letter of yesterday's date, I have to inform you that the allowance of premium or percentage, to officers drawing bills on the department

Page 49 U. S. 86

would cease from the time the officers shall severally receive instructions on the subject."

"I am respectfully, SAMUEL L. SOUTHARD."

"TOBIAS WATKINS, ESQ., Fourth Auditor of Treasury"

"I certify the foregoing to be a true copy of a letter from the Navy Department, on file in this office."

"A. O. DAYTON"

"Treasury Department, Fourth Auditor's Office, July 5, 1844"

2d. Charge of commission on payments to mechanics and laborers at the navy yard, Pensacola. These payments were made from October, 1835, to December, 1837, and amounted to $91,015.05, on which a commission of 2 1/2 percent was charged.

The Blue Book, at page 100, when treating of the duties of a purser, said -- "Every purser of a yard shall settle his accounts at the Treasury every twelve months," &c. But it nowhere recognized the allowance of a commission.

3d. Loss of commissions and depreciation of property.

4th. Loss of commissions on sales of slops.

These two items belong to the same head, and must be treated together.

The ship's stores under the purser's control are of two kinds, called public stores, or slops, and private stores. Both descriptions are purchased with the money of the government, but they are differently situated with respect to the commission which the purser receives upon their issue and consumption by the ship's crew. There was no dispute in this case about the first-mentioned class. The purser claimed a commission of ten percent, which was allowed to him in the settlement of his accounts. The controversy was confined to the second class.

In May, 1839, the frigate Constitution sailed for the Pacific. She was commanded by Captain Turner, and the defendant, the purser. On board of her was Commodore Claxton, the commander of the squadron on the Pacific station. Early in the year 1840, Commodore Claxton issued an order that, upon clothing taken from the private stores of the purser there should not be charged a greater advance than ten percent. The defendant remonstrated, and a long correspondence ensued, but he was compelled to submit, and during the rest of the voyage he disposed of his stores at that advance, instead of the larger premium to which he considered himself entitled. It is unnecessary to state the particulars of the claim or the reasons on which it was founded, because the court did not consider it a proper setoff in this action, even if the allegations of the defendant had been well founded. chanrobles.com-red

Page 49 U. S. 87

The suit was brought by the United States in the district court in May, 1844. It was an action of debt brought upon the three bonds mentioned in the commencement of this statement. The defendant pleaded non est factum and performance, and claimed to set off the items of account above mentioned, which had been rejected by the accounting officers. Before the trial, the counsel filed the following agreement:

"It is agreed, that, under the pleadings in this case, the question to be submitted, tried, and determined is the correctness of the credits, or any of them, claimed by the defendant in his account current with the United States under his old bond, and under the date of March 1, 1844, and which were disallowed in the reconcilement of his accounts by the Treasury Department, bearing date on 27 March, 1844, the said question to be considered as if arising under special pleadings in the cause. Credits claimed, if allowed, to be noted as of the date when they originated, with a view to future adjustment under his respective bonds."

"H. M. WATTS"

"May 16, 1845 Of special Counsel for Plaintiffs"

"G. M. WHARTON"

"For the Defendant"

The counsel for the United States then offered in evidence:

1. The above agreement.

2. The three bonds of the defendant.

3. The Treasury transcripts, which exhibited a balance due by the defendant to the United States of $11,535.50, with interest from 1 March, 1844.

The evidence on the part of the defendant consisted of the correspondence which had passed between himself and Commodore Claxton and others, and also testimony, oral and documentary, upon the respective binding authority of the Blue and Red Books, and also upon the custom and usage of the navy with respect to pursers' commissions. Upon the last point, the United States produced a great deal of counter-evidence.

The evidence being closed on both sides, the counsel of the plaintiffs then and there respectfully prayed the court to charge the jury:

1. That the rules, regulations, and instructions for the naval service of the United States, prepared by the Board of Naval Commissioners and approved by the Secretary of the Navy on 17 September, 1817, and particularly those under the head of "Pursers," Nos. 12, 13, 14, were in full force, and chanrobles.com-red

Page 49 U. S. 88

obligatory on defendant during the time he served as purser on the Pacific station, from 1839 to 1842, under Commodore Claxton.

2. That defendant had no right to issue slops, wearing apparel, or materials of which wearing apparel was made, at a greater profit than ten percentum.

3. That the issue of slops and private purser's stores was under the control of the commander, and that it was his right and duty, if he thought the interests of the government and the crew required it, to restrict such issues of private stores.

4. That if the jury believe that upwards of seventy pieces of silk handkerchiefs were issued from the purser's stores without the approval of the commander, such an issue was contrary to the regulations of the service, and justified the commander in restricting the future issues by the purser.

5. That the order of Commodore Claxton and Captain Turner to Purser Buchanan to limit his profit to ten percent on the cost of slops and wearing apparel, and the materials of which wearing apparel was made, was conformable to law and the regulations of the naval service.

6. That the United States is not responsible to the defendant for any supposed loss of commissions and depreciation of property arising out of the enforcement of the above order, or the conduct of Commodore Claxton.

7. That if the order of Commodore Claxton was illegal and loss actually resulted to the defendant, the United States would not be responsible in this action.

8. That damages arising out of torts cannot be set off.

9. That unliquidated damages arising out of the conduct of Commodore Claxton to defendant cannot be set off against the claim of the United States in this suit.

10. That defendant, in an action against him by the government, cannot set off a claim which depends upon the pleasure of the government, and is not susceptible of legal enforcement.

11. That the defendant cannot set off prospective profits, which he might have made if he had been permitted to sell to the crew without restraint, nor is the government responsible for any depreciation of property.

12. That there can be no usage recognized by our courts which is contrary to law, and that the evidence given by defendant of a practice to charge twenty-five percent on wearing apparel, and materials of which wearing apparel is made, is of a practice contrary thereto.

13. That the charge of two and a half percent by defendant for drawing bills of exchange upon the government is not warranted by law, and ought not to be allowed. chanrobles.com-red

Page 49 U. S. 89

14. That the charge of commissions by defendant for disbursing money of the government in payment of mechanics and laborers at the navy yard, Pensacola, is not warranted by law, and ought not to be allowed.

15. That the orders of the Secretary of the Navy, of 20 March, 1840, and 2 December, 1840, were not intended by the Secretary, nor do they or either of them contain an assumption or agreement on the part of the government to pay any loss of commissions or depreciation of property complained of by Purser Buchanan.

16. That the United States, by the agreement filed by the counsel of both parties in this cause, and the evidence, is entitled to recover a verdict for the sum of $11,535.50, with interest from March, 1844, as appears by the Treasurer's transcript referred to in said agreement.

And the learned judge charged the jury.

And thereupon the counsel for the plaintiffs excepted to said charge generally, and to every part thereon, and in addition to such general exceptions, and without prejudice thereto, specified the following exceptions, viz.:

That the said judge, in answer to the first, second, third, fourth, and fifth, and twelfth prayer for instruction, charged the jury:

"That the commander of a vessel of war has a right to issue orders in relation to the discipline of his ship, and the conduct of his officers on board, and to enforce these orders, he being responsible for any abuse of it. It is also his right to control the issues of stores by the purser, and if he thought the interest of the government or of the crew required it, to restrict the issues of such stores to a proper quantity; but he had no right to reduce or control the prices at which such stores should be issued, that being fixed by the rules and regulations, and the usages and customs, of the navy. Was there, then, a fixed price or rate of advance which the purser had a right to charge on these articles, and if so, what was it? And was it charged by the order of Commodore Claxton?"

"On behalf of the United States, it is contended that the rules and regulations prepared by the Board of Navy Commissioners and published in 1818 were in full force, and that by these, 'all articles of wearing apparel, and materials of which wearing apparel is made, to be charged as slops,' and an advance of ten percent only allowed."

"It is admitted that so far as these rules and regulations are not opposed to an act of Congress and subsequent rules and regulations they are in force, but is it contended that these

Page 49 U. S. 90

do not extend to the private stores of the purser, but only to those purchased by the government, or if they do that the rule is superseded by the regulations issued in 1832, which were in full force in 1839-1840."

"I deem it unnecessary to detain you by an examination of the first view, as I think the last is correct, although the rule or section referred to in the Red Book, on the face of it, purports to bear date 27 July, 1809, and may have been suspended by the rules of 1818 (as to which, however, it is unnecessary to decide). I consider the incorporation of it in the rule of 1832 as a new issue of that date, and binding from the time of its promulgation, although it may conflict with the rules of 1818."

"Each successive Secretary or head of a department has the same right as his predecessor to give a construction to the laws, or regulations, or usages, of the business of his department, and the construction given by the last will be binding until changed by his successor. This construction of the rules of 1832 has been adopted not only by the accounting officers of the government, but by Congress. See an act for the relief of E. B. Babbit, March 2, 1833. The rules of 1832 provide that twenty-five percent should be allowed upon articles of secondary necessity, embracing it &c. See Red Book 18."

"Are these articles of private clothing, and the materials of which such clothing is made, such as are furnished by pursers, articles of secondary necessity? This is a question for the jury to determine. From the evidence, it appears that the articles furnished by the purser are of a finer material than those provided by the government, and have generally been considered in the service as a holiday or shore dress for the seamen. They are not required to purchase them, but do so at their own pleasure. A number of witnesses have been examined who proved it to have been the custom and usage to charge upon these articles an advance of twenty-five percent, and that they were considered of secondary necessity. It is true there can be no usage recognized by the courts which is contrary to law. Usage cannot alter the law, but it is evidence of the construction given to it, and when the usage is established, it regulates the rights and duties of those who are within its limits. But it is said a different construction was given to these regulations by Secretary Paulding, and that he confirmed the view and construction of Commodore Claxton."

"If the order of Commodore Claxton had been confined to supplies purchased subsequent to the receipt of this general order, then there might have been force in this argument; but no

Page 49 U. S. 91

change of a usage, even by authority, can have a retrospective effect, but must be limited to the future."

And in answer to the sixth and fifteenth prayers for instruction, the learned judge charged the jury:

"It is, however, said, supposing all these doings by Commodore Claxton to have been wrong, still the government is not liable for his acts, and therefore the defendant is not entitled to a setoff in this action, although he may have sustained damages by them. For the purpose of this case, and with a view of obtaining your verdict on the merits of this claim, I state the law to be that Commodore Claxton was the agent of the government in all this transaction, and although his acts may not have been previously authorized by the government, yet if they were afterwards ratified by the Secretary of the Navy, with a full knowledge of the facts, as they appear to have been, then the government is responsible for any loss occasioned by his orders so ratified or confirmed."

In answer to the seventh, eighth, and ninth prayers of the plaintiffs for instruction, the judge charged the jury:

"Again it is contended that, supposing all the allegations on part of the defendant to have been fully made out by the evidence, yet this is not such a claim as can be set off against the demand of the government in this action. However this might be in suits between individuals, the government of the United States does not resort to technicalities to screen it from a just claim by any of its citizens. The Act of 3 March, 1797, directs not only that legal but that equitable credits should be allowed to the debtors of the United States by the proper officers of the Treasury Department, and if then disallowed, that they may be given in evidence at the trial, and this whether the credits arise out of the particular transaction for which he was sued, or any distinct or independent transaction, which would constitute a legal or equitable offset or defense, in whole or in part, of the debt sued for by the United States."

"If, therefore, you believe the defendant has sustained injury by the order of Commodore Claxton, which, according to these principles, was contrary to law in limiting the prices and which order was subsequently approved by the Secretary of the Navy, having a full knowledge of the facts, you will from the evidence ascertain the amount of such loss and credit the defendant with it as an equitable defense against the claim of the government. In ascertaining this amount, you will recollect that the prohibition of Commodore Claxton as to price applied only to clothing, or materials of which clothing is made, and to no other articles of secondary necessity. "

Page 49 U. S. 92

In answer to the tenth and eleventh prayers of the plaintiffs for instruction, the judge charged the jury:

"It is incumbent on the defendant to satisfy you of the amount of credit to which he is entitled under this head. In estimating it, you are to allow only the actual loss sustained by him, and not any prospective or anticipated profits which might have been made by the defendant, supposing his whole stock to have been sold at the prices claimed by him."

"If, in consequence of this order, the goods remaining on hand were injured or damaged, he is entitled to recover the amount of such damage; but the jury will determine whether such damage was caused by this order, and whether the sales were lessened in quantities in consequence of the reduction of price. The sales made on shore, and those to other pursers, are not such sales as would entitle him to charge the government with the advance of twenty-five percent on cost; but if made bona fide, with a view to reduce an anticipated loss, he will be entitled to be made good his actual loss on such sales."

In answer to the thirteenth and fourteenth prayers of the plaintiffs for instructions to the jury, the judge charged:

"The second and third items of claim are for commissions on moneys paid by the defendant to mechanics and laborers, when stationed at the navy yard at Pensacola from October, 1835, to December, 1837, and a commission on the amount of bills of exchanges drawn by him on the government from May, 1827, to February, 1830."

"These are alleged to be extra services, for which, by the custom of the department, he is entitled to extra compensation."

"From the rules and regulations of 1818 and 1832, as given in evidence, it appears that both the drawing of bills of exchange by the pursers when abroad, and the payment of mechanics and laborers by them, when stationed at navy yards, were duties devolved on and usually performed by pursers."

"But if from the evidence the jury believe that these duties were required of and were performed by the defendant over and above the regular duties of his appointment, and that it has been the practice of the government or Navy Department to allow to pursers compensation on commissions over and above the regular pay, and that the defendant took upon himself the labor and responsibility of such payments and drawing of bills, with an understanding on both sides that he should be compensated for the same as extra services, then it is competent for the jury to allow such sum as they may find to be reasonable and conformable to the general usages of the government in like cases. But the custom and usage which has been

Page 49 U. S. 93

invoked by the defendant in his favor, must also operate when it is established against him. The usage, to be binding, must be uniform, and be applicable to all officers of the same grade, under similar circumstances. It is not sufficient that one, two, or half a dozen officers have been allowed an extra compensation for such services, unless the rule was a general one, so that each officer performing the service might be supposed to rely on the known practice of the government to allow extra compensation at the time the service is performed. The jury will say, whether the few cases in which extra compensation is proved to have been allowed are not rather exceptions to the general rule of refusing such compensation, than proof of the rule itself."

"My opinion is that the weight of the evidence is against the claim of the defendant for either of these items."

"And thereupon the counsel for the said plaintiffs did then and there except to the aforesaid charge and opinions of the said judge, on the several points upon which his instructions were prayed for, to the jury. And inasmuch as the charge and opinions so excepted to do not appear upon the record, the said counsel for the plaintiffs did then and there tender this bill of exceptions to the opinion of the said judge, and requested the seal of the said judge should be put to the same, according to the form of the statute in such cases made and provided. And thereupon, the said judge being so requested, did put his seal to this bill of exceptions, pursuant to the aforesaid statute in such cases made and provided."

"[L.S.] ARCHIBALD RANDALL, District Judge"

The jury, under the above instructions of the court, found the following verdict:

"We, the jury, empanelled in the case of United States v. McKean Buchanan, a purser in the navy, find that there is due by the plaintiffs to the defendant the following sums, to-wit:"

Commissions on the payment of mechanics and

laborers at the navy yard, Pensacola . . . . . $ 2,275.38

Interest on the same . . . . . . . . . . . . . . 1,024.00

Commissions on drawing bills of exchange . . . . 1,626.86

Interest on the same . . . . . . . . . . . . . . 1,455.00

Loss on sales on board the frigate Constitution 385.52

Loss of commissions. . . . . . . . . . . . . . . 5,277.46

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$12,044.22

Deduct government claim . . . . . . . . . . . . 11,535.50

----------

Due Purser Buchanan . . . . . . . . . . . . . . $ 508.72

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Page 49 U. S. 94

The counsel for the United States then moved for a new trial, objecting, amongst other things, to the allowance of interest, where no such claim was made by the defendant. Whereupon the counsel for the defendant filed a remittitur for the two sums of interest, amounting together to the sum of $2,479, and agreeing that a judgment might be entered against him in favor of the United States for $2,148.99.

The court overruled the motion for a new trial, and directed a judgment to be entered accordingly.

By the above bill of exceptions, the case was carried to the circuit court, which, on 9 November, 1846, affirmed the judgment of the district court.

The United States brought the case up, by writ of error, to this Court. chanrobles.com-red

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