Tiffany v. Morrison

Hallett, C. J.

Collectors of revenue have authority by law to appoint deputies as they shall think proper, and to revoke such appointments. Security may be taken from *45the persons so appointed to secure a faithful discharge of duty, and the collector is responsible for their conduct in office.

Within their districts such deputies have the same am thority to collect taxes as the collector himself, and when the collector is unable to act, or there is a vacancy in the office, his duties may be performed by one of them. R. S. U. S., p. 606, § 3148 et seq.

Whether a deputy collector is regarded as an officer of the government, or as the agent of the collector merely, all must agree that money received by him in virtue of his appointment belongs to the government.

To protect himself from liability, the collector has a remedy against his subordinates, but the money collected is in fact and in law due to the government from the tax payer, and the deputy collector and his principal as well, are agents of the government to receive it. If, after receiving money on behalf of the government, a deputy collector converts it to his own use, it is plain that the government may hold him directly responsible in an action for money had and received, although it has another remedy against his principal.

The circumstance that the collector is liable for money received by his deputies cannot affect the right of the government to recover its own from one who unlawfully withholds it.

If, then, the bankrupt, as deputy to defendant, collected taxes due to the United States, and afterward converted the same money to his own use, in respect to that money he was indebted to the government.

It may be conceded that after the conversion took place tbe bankrupt did not occupy the' position of a trustee in charge of specific property,, but he was nevertheless a debtor to the government for the money which he had received as its agent.. The collector was authorized to receive such money on behalf of the.government, and payment to him exonerated the bankrupt;.

*46The case presented is of payment to the government of money due from an insolvent debtor within four months before the filing of a petition in bankruptcy against the latter, the agent of the government who received the money having reasonable cause to believe that such debtor was insolvent.

Assuming that such payment was made with a view to give a preference to the government, we are now to consider whether such payment was void under the 85th section of the Bankrupt Act. Upon this point it is to be observed that the act forbids only such preferences as are given to a creditor or person having a claim against the bankrupt, and it has been recently decided by the supreme court that the government is not included in the term “creditor,” as used in the act. U. S. v. Herron, 20 Wall. 251.

The question presented in that case was, whether a debt due the United States was discharged by proceedings in bankruptcy, and after reviewing the act at length, the conclusion was reached that it was not in any way applicable to the government, except the 28th section, which regulates the order of paying debts due from the estate. The word “person,” which is found in the 35th section, was obviously inserted to describe those who, not being creditors of the bankrupt, had assumed some liability for him, and does not enlarge the meaning of the term “creditor.”

In this view of the law it is clear that a preference given to the government by the bankrupt was not prohibited by the 35th section of the act, because it was not given to a “creditor or person having a claim against him,” within the meaning of that section.

Payments to the government, although with intent to give a preference, are not forbidden by the act, and therefore they cannot be avoided by its provisions.

This reasoning is equally applicable to the 89th section which is to be read in connection with the 35th. Other considerations support the judgment given in the court below, but it is not necessary to refer to them.

The judgment is affirmed with costs. Affirmed.