The Government and Its Creditors

THE government of the United States had been in operation for sixty-five years, and the Constitution was sixtyseven years old, before a private person, citizen or alien, was permitted to demand justice of the republic. Here was a nation founded on the idea that the law is supreme ; that the rich and the poor stand on an equal footing in the courts of justice. With a few conspicuous exceptions, like Washington, Franklin, and Robert Morris, the civil chiefs of its first days were lawyers. The congresses of the colonies, the Confederation, and the States were dominated by lawyers. Lawyers were the authors of the Declaration of Independence, the Articles of Confederation, and the Constitution; and yet, so far as its own obligations are concerned, ours has been the most lawless government in the civilized world. It has persistently refused to pay debts which it owed. It has even gone so far as to deny a hearing to claimants, although the Constitution provides that the right of petition shall not he denied nor abridged. It is but a sorry right which permits one who has been aggrieved to hide a petition in a wooden box in one or the other House of Congress, but which does not include a determination of the grievance; yet that is what the right of petition now means; and not many years ago, before the Court of Claims was established, it was mainly through the wooden box that creditors of the government appealed to Congress, then the only tribunal with jurisdiction over the demands of individuals against the Treasury. How inadequate a tribunal it was. how frequently unjust, how occasionally corrupt, how impossible it has always been for it to perform judicial functions, are known to all who have any acquaintance with the facts and the law of claims against the government. Congress absolutely broke down under the burden which it had assumed. At first it simply neglected to perform the stupendous task, but finally it created a court whose jurisdiction and usefulness have been steadily widening ever since the passage of the first organizing act.

It was in 1854 that this law was enacted. - Before then the host men in Congress had felt the necessity of creating a tribunal into which the government could be haled as defendant in an action brought by an individual. 1 he act was very tardy, and even at this day we are far behind other civilized nations in our methods for the collection of claims against the government. In the first half of the century we were almost barbarous. We were ruled by a principle which we had inherited from our English ancestors, and we were accepting literally a fiction which had been circumvented in the home of its nativity. We had taken as true the maxim which declares that the king can do no wrong, and for the king we had substituted the government, with all its complicated machinery and its variety of officials. We seemed, nation of jurists as we were, to have forgotten that our British cousins had set up a responsible committee who might be punished for whatever wrong the king really committed. As our government could do no wrong, it was right in refusing to recognize the justice of a claim, in declining to grant to its creditors a hearing, in denying an adverse judgment or an execution upon its goods. Upon this theory we lived for nearly two thirds of a century, in the rear of the civilized world, committing acts of gross injustice that would have consigned an individual to a penitentiary, and stripped from a merchant every shred of his credit. Even now we have very little to boast of. although Lord Campbell told no more than the truth when he said, " Jurisprudence is the department, of human knowledge to which our brothers in the United States of America have chiefly devoted themselves, and in which they have chiefly excelled.”

An excellent authority has recently said that “ the United States holds itself, of nearly all governments, the least amenable to law.” The justice of this remark, which was made by one of our own judges, who has had a very long experience with the class of cases that come before the Court of Claims, may be demonstrated by a brief examination of the law and of the methods pursued under it.

Until 1854 there was no judicial tribunal for the trial of a case of debt between an individual and the government. We were nearly singular in this respect. In Germany either a citizen or a foreigner could sue, recover judgment, and levy an execution against the fiscus. Execution ran also against the governments of Hanover and Bavaria. A writ of replevin could he issued against the English king. The United States alone could not be compelled to pay its debts, and it still refuses to permit the forcible collection of a judgment. In 1848, the Hon. J. N. Rockwell, a member of the House of Representatives, made a report on this subject in behalf of the Committee on Claims. In it he stated that of 17,537 private claims which had been presented to Congress within ten years, 8948 had never been acted on, and but 910 had passed both Houses. No government could have made a more shameful confession than was involved in that report. Within ten years nearly 9000 persons had been denied justice, had been refused even a hearing; and of the 8589 who had received any hearing whatever, only 910 had prevailed. The result of this was inevitable. Only the impecunious or the corrupt would consent to have business relations with so dishonest a debtor as the United States government. Reputable merchants would not sell their goods to it, and honest contractors would not expend their money in its service. Corruption flourished. The lobby grew in numbers and influence. Schemes and schemers succeeded. and accounts against the government were made large enough to cover the expense of their collection. The United States was discredited at home and abroad. In a very able opinion in which the law for collecting claims against the government is discussed, Judge Nott, of the Court of Claims, recites an interesting illustration of the condition of mind which prevailed among our own people. A citizen of the United States recovered a judgment against Spain for $373,880. It was suggested, in the course of some diplomatic negotiations, that this government should be substituted as the debtor. The creditor refused, electing to retain Spain, notwithstanding its low credit, rather than run the risk of subjecting himself to the dishonest waywardness of the legislature of his own country. Nevertheless, and against his consent, the transfer was made, and the wisdom of the claimant in refusing to trust his own government is shown by the fact that Congress has never appropriated the money to pay the debt.

What was true in those early days is true now. Indeed, the difficulties in the way of collecting debts that depend upon congressional action have been increased. There has been a struggle between politicians of a certain low order to win a reputation for economy. That is, they strive to keep the totals of appropriations as low as is consistent with the waste of money on rivers and harbors, pensions, public buildings, and a hundred and one other matters in which money is thrown away. In order to accomplish their purpose, they rob the public service of much that it needs, while they cannot be induced to pay a private claim merely because it is just, or because distress will follow its nonpayment. The misery, poverty, desperation. and death that have resulted from the cruel injustice of the selfish politicians who too often rule in Congress are incalculable. Some day the sad story may be told, to the lasting disgrace of many a Congressman who has figured in public life as a “ great economist.”

But the rivalry of these pigmies does not account for all the ill results of the undertaking of Congress to examine and pass upon private claims. In the first place, a standing committee cannot properly carry on a judicial investigation as to the merits of a controverted account. It does not possess adequate machinery. It cannot, try the cases that are submitted to it. The government and the claimants are not represented before it by counsel. It has not the time to do the immense amount of work which is involved in examining all the disputed claims upon the government. Its members have other legislative duties. Moreover, as committee meetings are secret, the temptation to corruption in the transaction of business involving millions of dollars is very great. It is impossible to overcome it. Every opportunity for bribery and its kindred knaveries is afforded by the claims system which prevailed in this country for many years, and is still more followed than it ought to be. The truth is that the corruption which grew up about the prosecution of claims before Congress was one of the causes which led to the establishment of the Court of Claims. That and the loss of credit by the government were probably the controlling reasons that induced Congress to create a tribunal before which the government might appear as a defendant, with counsel for both sides, to try the questions in open court, with all the safeguards by which the common law has surrounded the administration of justice.

All the evils incident to the system of turning Congress into a court of equity sprang from the theory that the government is too sacred to be sued ; that it ought not to be compelled to do right, because it can do no wrong. One of the results of this theory is a belief, still the possessor of many an otherwise honest mind, that all persons who assert that the government owes them money are, prima facie, robbers.

The manner in which claimants have been treated by Congress is illustrated by a case which was before the legislative and judicial branches of the government for sixty years. Its history may be read in the reports of the Supreme Court and the Court of Claims.

In 1814. John H. Piatt resigned his commission as a commissary in the army, and became a contractor. He entered into an agreement with the Secretary of War to supply the army of the Northwest with rations at the rate of twenty cents a ration. On the 1st of January, 1815, the government had defaulted, refused to pay Piatt’s drafts, and was in debt to him in the sum of $210,000. Piatt could not afford to feed the army for nothing, and stopped supplying the rations. Secretary of War Monroe thereupon admitted that the government was without money, that it could not pay its debt, and that there was no prospect that the Treasury would be in a condition to pay for further supplies under the contract. Nevertheless, it was necessary to care for the troops who were guarding the frontier, and the Secretary appealed to Piatt to continue to furnish the rations. As compensation for losses and for the uncertainty of payment, he made a verbal agreement with the contractor to pay “whatever price the rations might be reasonably worth " at the time and place of delivery. Under this new agreement, Piatt furnished rations which were adjudged to be worth forty-five cents each. The aggregate of his claim against the United States was $328,532.

Piatt now encountered the accounting officers of the Treasury. These people, acting in the name of and for the United States, refused to recognize the agreement which Secretary Monroe had made with Piatt. They found it was not binding on the government because it was not in writing. The rations had been furnished and eaten, and they were admitted to be worth the forty-five cents charged ; but these accounting officers sent the claimant back to his first contract, on which the government was already in default to the amount of $210,000. They said that he could have only twenty cents for each ration, and computed the amount due at $l48.-792, leaving a disallowed balance of $179,740.

While this balance was in controversy, the government discovered, probably through the same accounting officers, that Piatt’s commissary accounts were unsettled, and that he owed to the Treasury $48,251. Suit for tins sum was immediately brought against the unfortunate man. who doubtless now sincerely regretted that he had ever had any business relations with the United States. So fierce was the claimant in this case, the very claimant that had wronged its victim out of a fortune, that the defendant was arrested. Five years had now elapsed since the making of the first contract. It was 1819. Congress took part in the game, and lent to the Executive Department its aid in crushing the creditor who wanted to be paid. It passed an act providing that Piatt’s claim for $179,740 should he paid after it had been reduced by computations, to be invented and applied by the Treasury Department, to $48,251, the exact amount claimed by the government on the commissary accounts. If an individual creditor, having the power, should be guilty of such conduct, it would be charged, and generally believed, that he had trumped up his own claim for the sake of wiping out the score against him without paying it in money. Be that as it may, Congress provided that the discontinuance of the suit against Piatt was to satisfy his claim for rations. There was another undisputed claim for $63,620, for transportation, and this was generously allowed. The Treasury officers made the deductions required by the act. At first they undertook to follow a rule, but the rule they adopted did not produce the desired result; it did not sufficiently reduce the claim of the creditor whom they had in the gripe of a statute alleged to be for his “ relief.” Another rule was adopted to wipe out the remaining excess over the amount of the government’s claim. Again the competition fell short. There was still a balance. The last time, all attempts to invent a reasonable way to rob the creditor were abandoned, and t the Treasury officers simply rubbed out the score. If they had done this in the first place, they would have saved themselves time and trouble, and left less evidence of the baseness of the executive and legislative branches of the government.

It was now 1820. Congress, by its statute, had declared that $63,620 was due to Piatt, but it made no appropriation for its payment. It is one of the almost singular characteristics of our government that it may acknowledge in the most formal way that a debt is due, and then calmly decline payment. The recognized creditor is without remedy. He cannot receive what is due to him unless Congress sees fit to make the necessary appropriation. In this case, the refusal to appropriate the money found to be due Piatt led to serious results. His creditors had waited patiently for the government to put him in possession of the sum that he needed to meet his own obligations. They now became impatient, and threw him into the debtor’s prison. Two years later, after ten years of hard experience as a government creditor, Piatt died. He was still under arrest, and on the prison bounds of Washington.

But the tragedy did not end with Piatt’s death, for the government subsequently emphasized its cruel injustice to its creditor by paying to his heirs the money that might, have saved his life, and given to him the wealth he had earned by liberal treatment of the soldiers of the country in a time of peril and distress. Two years after his death, in 1824, Congress made an appropriation for the payment of the $63,620. In 1874, more than fifty years after his death, and nearly sixty years after the debt became due, the Supreme Court decided that the verbal agreement made in 1815 between Secretary Monroe and Piatt was valid ; that the latter was entitled to receive forty-five cents for each ration furnished by him to the army of the Northwest; and that his heirs should be paid the whole amount of the claim of $179,740, less the government’s de mand of $48,251. Of course no interest was allowed. The United States is not yet honest enough to pay interest, although it exacts every penny from its own debtors.

This is an especially hard case, but it represents what Congress could ancl did do when there was no judicial tribunal for the trial of actions of debt against the government, It also indicates the good that has been accomplished by the establishment of a Court of Claims. It seems to be the truth that the government will not be honest except under compulsion. It is true that it does not refuse or neglect to pay judgments which are rendered by the Court of Claims, for there is something sacred in a judgment, to the mind of the common-lawyer. It cannot be attacked in a collateral proceeding, and although the obligation exists prior to the judgment, it does not appeal to the honor of the government, because the government, is without honor.

The Court of Claims was established for the purpose of hearing and determining claims against the government, based upon contracts express or implied, the laws of Congress, or regulations of the Executive Department. Outside of such cases are others, referred to the court by special acts of Congress. Under the Bowman Act, Congress has referred a large number of claims which do not arise from contracts or statutes. These are known, technically, as “congressional cases.” They will be spoken of further on. At first, the court acted as a referee to report the facts and the law, and the evidence and findings were transmitted to Congress. This did not afford much relief to the legislative branch of the government, for the reports were laboriously studied, and the public creditors found themselves almost as badly off as they had been before the court was established. It seemed very difficult for Congress to consent to make the government a real defendant in a real court having the power to pronounce judgment in favor of an individual suitor, and it was not until 1863 that the court, enlarged by the addition of two judges, was clothed with full judicial powers and made part of the federal system, at the head of which is the Supreme Court; though it was not until the law was amended, in 1866, that the latter Court recognized the Court of Claims as a tribunal from which appeals might be taken to the court of last resort.

There are many questions of law determined by the Court of Claims. Indian treaties, treaties with foreign powers, and statutes, as well as contracts, are interpreted by its judges. The court has listened to cases arising under the general land laws, the patent laws, — for the United States sometimes infringes upon its own patents, — the landgrant, railroad, and post-office laws. Its establishment has resulted in the doing of much justice that might have gone undone, and the prevention of much injustice that would have been done under the old system. Congress relieved itself of a great part of a task that it had never performed well, and recognized the principle that the government’s executive officers who refuse to pay a private person’s demand may possibly he wrong. The law permits not only citizens, but certain aliens, whose governments accord like privileges to our own citizens, to bring actions in the Court of Claims. Congress, however, has not done all that it ought to do, or all that must be done before the United States will become wholly amenable to law.

We have now a court into which the government can be summoned as a defendant. But while this court can render judgment against the defendant, it cannot issue a writ of execution to enforce the judgment. It is true that this has not been necessary, for Congress has paid all the judgments which the court has rendered. At one time a general annual appropriation was made for this purpose on estimates furnished by the clerk of the court, but for about fifteen years it has been the practice to make the appropriations after the judgments have been rendered. The result is that a claimant whose demand has been determined to be just may be compelled to wait a year or more for the money due him. In view of the fact that the government pays no interest except in certain specified cases, this is a serious hardship.

Notwithstanding the existence of this tribunal, there are many cases that must go before Congress unless they are referred to the court by special acts. A statute of limitations provides that petitions must be filed within six years of the accruing of the cause of action. This rule is reasonable enough, but it does not govern. Congress continues to examine claims that are barred by this statute of limitations. The court is hound to follow the statutes, and wherever a claim is based on pure principles of equity it must fail or go to Congress, unless it may come under the Tucker Act of 1887.

It is impossible, however, for Congress to do even and exact justice. When it undertakes to settle a claim that does not come within a general law, it is likely to err one way or the other. It throws out a just claim, and allows one that is dishonest, while, as a rule, it is supine and helpless before a case which involves any serious question of law or fact, or any considerable amount of money. There are many cases still pending in Congress which ought to be referred to the court for final action, and there are many more which have been referred for a report on the facts and the Saw. Experience shows that while these reports are helpful to some extent, they do not usually result in the payment of debts that are owed by the government. Congress still clings to the notion that the payment of a claim is in the nature of a gift to the person receiving it; and the delay of justice, which often brings great suffering to individuals, does not very greatly trouble the congressional conscience, if there is such a thing, so far as the relations between the government and its creditors are concerned. There are cases now before Congress which are peculiarly hard and oppressive. They were sent to the Court of Claims for report, and in many instances the court found that the government was indebted to the claimants. Most of these were loyal citizens of the border States during the war of the rebellion. Many of them are poor farmers of West Virginia and East Tennessee. Some of them claim under the Abandoned and Captured Property Act of 1863, which provided that the petition should be filed within two years after the suppression of the rebellion. Many persons did not know of the limitation of the law until it was too late to avail themselves of its benefits. A decision of the Supreme Court held that the general amnesty proclamation of 1868 rendered proof or allegation of loyalty unnecessary in a case brought under the Abandoned and Captured Property Act. This decision was rendered in 1871, three years after the expiration of the time within which claims might be filed. It brought to Congress a large number of cases which ought to be examined by a judicial tribunal. Many of these, for property taken by our troops during the war in Southern States, have been referred to the Court of Claims. A Northern contractor, who sold supplies to the army under agreements which made him rich, received payment promptly on the presentation of his voucher to the proper officer of the Treasury or the Quartermaster Department. If there occurred any difference of opinion between the contractor and the officer, the former had his remedy by a petition to the Court of Claims. If the property of a Southern Union farmer was taken by the army for its needs, the government’s creditor, who is merely seeking pay for his own, must wait until Congress is ready to appropriate the money that is his due. His case may have been passed upon by the Court of Claims; the findings may be in his favor; nevertheless, the claim remains unsettled, because Congress is not in a hurry to pay debts that have not been perfected by a judgment. The war has been over for nearly twentyfive years, but there are still very many people in the border States who are creditors of the government for supplies furnished to the army, and who cannot prevail upon Congress to appropriate the money necessary to discharge the honest debts of the country, —debts of honor, debts that were contracted for the necessities of the Union troops. Of this dishonest neglect of ordinary obligations that must be recognized by every business man, a refusal to observe which is equivalent to ruin, Congress must always be guilty. Injustice will be the rule so long as Congress undertakes to adjudicate upon claims; and this is true although a very large majority of Congressmen are honest. Even men who do all in their power to delay the creditors of the government would not think of committing a dishonest act in their own behalf.

The manner in which Congress has dealt with the French Spoliation Claims is another admirable illustration of the difficulties which lie in the way of a government creditor. It is unnecessary to say anything concerning the merits of these claims. Every honest man who understands the subject realizes the dishonorable attitude which the United States has maintained towards them. Having assumed the obligations of France, our government refuses to perform them, and even now Congress declines to make provision for payment. It will be recollected that after the government had failed to pass a law for the settlement of the claims, the subject was referred to the Court of Claims for a report. At once the government raised the question that nothing was due from the United States; but the court decided against this pretension, and the indebtedness of the United States was established. Then the claimants, by invitation of the act of Congress, went into court. The court reported, and the sums found to be due were provided for, last winter, in the Deficiency Bill, not by the House, but by the Senate. The items of the bill were thrown out in conference, however, because some of the members of the House who are most bitterly opposed to the public creditor threatened to filibuster against the Deficiency Bill, and to kill the Sundry Civil Bill which was behind, if the attempt to pay the debts, which had been declared due by the Court of Claims, was not abandoned.

This is the most recent of important instances of the dishonesty of the United States; and what makes it the more shameful is the fact that much of the opposition to the Spoliation Claims is sectional. More than one member is opposed to the payment of this debt because the creditors are principally from the Atlantic seaboard. It is true that Congress allows a great many private claims upon the government. Many of these are dishonest. Some of the awards have been the fruit of bribery and corruption. Nevertheless, the fact remains that the government’s creditor must seek his dues in pain and disappointment, it his case does not come within the jurisdiction of the Court of Claims. He must have influence to secure the introduction of his bill, and it will require many a day of toil and much persistent eloquence to prevail upon some member to take an interest in it. Many a claimant has failed to obtain justice because he has had no friend in Congress or on terms with a Congressman. It will cost him much loss of time and a great expenditure of money to secure a hearing before the committee. And even after the bill is on the calendar there will be long delays, and the creditor will be very fortunate if his bill is passed within six or eight years of its first introduction. He may see it safely on the calendar of one House in this Congress; in the next he may hear it discussed; in the next it may pass one House, and not the other; in the fourth it may become a law. During all this time he must watch it industriously. He must make frequent visits to Washington, in order that the interest of the member who has charge of it may not flag. If it involves an important sum of money, he must employ counsel familiar with the devious paths of congressional legislation. From the beginning to the end, he will find that he is regarded with suspicion; that the men who hold the purse-strings are busily searching for reasons which will sustain a disallowance of his claim. The man with whom he made his contract will endeavor to find a statute which invalidates the agreement. In this he will be helped by the accounting officers of the Treasury and by Congress. The man who collects a disputed claim from the United States must have courage, tact, great persistence, and competent counsel.

One fact should not he lost sight of by those who are in any danger of becoming creditors of the government: no one but a lawyer thoroughly versed in the federal statutes and the decisions of the federal courts can be trusted to prepare a contract that will be binding on the government. Scattered throughout the volumes of general acts and the Revised Statutes are sections and paragraphs which limit the powers of officers of the government in the transaction of the public business. One officer may draw the plans and specifications for a public building, while another may be charged with the task of construction. Although it may be the former who procures the estimates of the builders, it is only with the latter that a valid contract can be made. The courts have decided that officers of the government are agents with limited powers, and that as these limitations are stated in the law every one dealing with the government is charged with notice of them.

Thus it has been decided by the Court of Claims that a laborer who chopped wood for the government could not recover the contract price because his contract was not in writing ; that a farmer who sold and delivered hay must lose the price because, before the performance of the contract, he transferred an interest in it; that a builder who constructed barracks for the army could not be paid because he dealt with an officer of engineers instead of with an officer of the Quartermaster Department ; that a contractor who furnished fuel for troops could not recover the price of it because the military emergency that required it was not declared by the commanding general ; and that a grain dealer who delivered his corn to a quartermaster must stand the loss of its destruction in the hands of government officers because his agreement was not founded on advertisement.

There is at present a tendency to broaden the jurisdiction of the Court of Claims, and the time is doubtless approaching when the injustice practiced by the government in the cases just quoted will be impossible. The Tucker Act of 1887 is an effort in this direction. Under it, the court has some equity jurisdiction. How great is the remedy given by the law is still undetermined, for it has not received a judicial interpretation. There is a tendency, also, among the lawyers who practice at the claims bar, to hold that in cases of tort there is an implied contract on the part of the United States to pay whatever damages may have been caused by the wrongful acts of the officers of the government. Cases of collision, for example, in which the United States vessels are in the wrong, may now be referred to the court by special acts of Congress ; but there are lawyers who assert that these special acts are not necessary, and that the government should be held to a perpetual agreement to pay for the wrongs which it does. There can come no danger to the government from increasing the jurisdiction of the court, the judges of which are exceptionally able men. It is true that many of the claims now resting in the files of Congress would be paid if the court could render judgment upon them ; but it is right that they should he paid, and the fact that the claimants are still begging for their due is a crying dishonor to the country. Congress is not economical nor conservative in dealing with claimants. It is an unjust spendthrift. Most of its energies are devoted to the consideration of private acts. Of the 966 laws enacted by the forty-eighth Congress, 682 were private. Of the 1442 acts of the forty-ninth Congress, 1019 were for individuals. But of all this vast number of special acts, very few provided for the payment of debts. Most of them were for pensions, and for the relief of officers from the consequences of their own or their subordinates’ neglect. As to special pensions granted in contravention of the general law, the presumption is against their honesty. They are the discoveries of pension agents, whose occupation will be gone when the government insists upon rewarding its old soldiers and sailors on a principle that shall guard both from fraud and exaction. That time will come when Congress becomes conscious of the discreditable character which the United States sustains as a debtor.

The task of providing a remedy for the prevailing evils may be full of difficulties, but the difficulties are not so great that they cannot be overcome. It may be that there will come a time, looked for by many who are distinguished in law and government, when actions for the collection of debts will be abolished. It may be that the individual debtor can some day be left wholly to his honor, but there are very few signs that it will be possible to treat the government so trustfully. The experiment has been tried, and it is a failure. The government will not pay so long as Congress is the court. Once disputed, the claim must go to judgment, or the creditor must go without his money. The government can be made an honest debtor only by taking from its legislature all jurisdiction over Claims founded in law or equity.

Henry Loomis Nelson.