never in any more favorable condition." Of course this has no application to indorsees of commercial paper indorsed before due.

Furthermore, if suit had been brought, as above supposed, long before it could have been prosecuted to final judgment, both of said obligations would have matured; and thereupon the receiver, either by special answer in the same cause, or "by a distinct and separate demand" in the same court, could have demanded that said obligations be applied as "set-off" ("compensation," as the Louisiana Code names it) in discharge of said nominal balance. (See La. Code of Practice, articles 367 and 368.)

Not only does this right still exist, although no suit has been instituted, but as soon as said obligations matured, the law of Louisiana, ex propria vigore, operated to "compensate" (offset) said mutual liabili ties to the extent of the amount of said obligations. (See Civil Code of Louisiana, articles 2207, 2208.) Said article 2208 is as follows: Compensation' (set off) takes place, of course, by the mere operation of law, even unknown to the debtors. The two debts are reciprocally extinguished, as soon as they exist simultaneously, to the amount of their respective sums."

Enough has been suggested to establish that both said "acceptance" and note should be, and are, legal offset against said pretended balance of $315,879.10.

3. If here it is asked "Why has there been such delay in presenting the present claim?" the query might be answered by propounding another, viz., "Why has the Government, up to this hour, failed to make any formal claim based upon said check-the check given to cover May's nominal credit?" But beyond this it is just to add, that, until within a few weeks past, it has been the effort and hope of your office and of the receiver to collect the said overdrawn partnership account ($237,008.89) from the purchasers of the assets of said firm, so that said sum of $315,879.10 nominally to May's credit, could be applied in adjustment of his individual liability as shareholder ($141,000) and other debts. The theory upon which this was attempted, on Louisiana law, is stated in said letter of August 16, 1873, as follows:

"Another view is, that the creditors of the bank, and the receiver for them, should insist upon the application of other liabilities of May to the bank, to the extinguishment of his nominal credit of $315,879.10, and that the copartnership property of May, Graham & Beauregard should be subjected to the payment of their aforesaid indebtedness of $237,008.89. True, May undertook and assumed to transfer all this copartnership property to the United States, viz., the railroad lease, cars, horses, mules, depots, houses, lands, and all other property; and the United States have since sold everything thus transferred to third parties, who bought with full notice that it was copartnership property they were purchasing, &c. In short, May attempted to appropriate the entire partnership assets to the satisfaction of his personal liability to the Government. But the law is that copartnership property must be first subjected, so far as needed, to the satisfaction of copartnership indebtedness, and that one member of the firm, by attempting to use it in liquidation of his individual liabilities, cannot defeat this right of copartnership creditors to be first satisfied their claims.

"When the bank failed, therefore, and its assets passed to the receiver, one of those assets was this 'chose in action, viz., the right to subject all said railroad property to the payment of said debt of

$237,008.89. This right May could not defeat by his transfer to the United States; this right it is the duty of the receiver to insist upon, as much so as it his duty to collect all other assets. The purchasers will, perhaps, then call on the United States for indemnity, but that possibility will not excuse the receiver from collecting all he legally can for the creditors of the bank."

Pursuant to the above views, within the past ten years, three suits have been instituted, two in chancery and one at law. All were carried to the Supreme Court of the United States, and decided adversely to the bank. The facts are now referred to in justification of the time that has thus been consumed. (See Beauregard vs. Case, 1 Otto, 134; Case vs. Beauregard, 9 Otto, 119; Case vs. Bank, 10 Otto, 446; Case rs. Beauregard, 11 Otto, 688.)

4. Can "prescription" (the statute of limitations) be set up to defeat the present claim?

The very propounding of this question suggests that it is scarcely compatible with that justice which should be the pride and glory of the United States, that they should interpose a defence which they will never permit to defeat any claim by them asserted. Still, it has been decided that a sovereign government may resort to this "one-sided" practice; and therefore the question is, would it avail, as to the claim How made? I have very carefully, and, as is believed, thoroughly examined the authorities upon this point. I do not propose here to state the argument or cite adjudications; but, if the point is raised, I believe it can, at the proper time, be shown that it will not shield the Government from liability.

5. Part of the claim can be, and is, "compensated."

Finally, it remains to suggest that there is in the hands of the Comptroller of the Currency the sum of $56,000, and over, [$65,826,40,] of dividends retained to abide the adjustment of this matter. This sum, beyond all controversy, you can "compensate" (offset) against the present claim, thus giving you at least that additional amount for distribution to creditors. The statute of limitations cannot be set up in bar of this right, whatever its effect might be as a defence to the full claim. July 23, 1880, the Comptroller of the Currency addressed a letter to the Secretary of the Treasury, in which he says:

"At the time of the failure of the First National Bank of New Orleans, there were standing on the books of the bank certain amounts which had been deposited by order of the court in favor of certain vessels, and which were, as I understand, the avails arising from the sale of those vessels and their cargoes, amounting to $208,360.56. Judgments were subsequently obtained against the United States for $188,075.47, and that amount, as I am informed, paid by the Government to the owners of the following vessels:

Schooner Flying Scud,' and cargo.
Brig Volante'.

Bark 'Science,' and cargo

$62, 814.58 116, 360. 89 8,900.00

188, 075. 47

"Dividends, in all amounting to 70 per cent., have been paid to creditors of the bank; but 35 per cent. dividends only have been paid to

the United States upon the account of these vessels, and there now remain in my hands additional dividends amounting to 35 per cent., or $65,826.40.

"There is due to the bank from the Government $94,000, which was transferred by me in the month of May, 1867, from the vaults of the bank to the office of the Assistant Treasurer, to be applied in payment of the checks of Thomas P. May, which checks were subsequently found to be without value.

"If, upon investigation, it is found that this claim is correct, it is suggested that the amount now due as dividends-viz., $65,826.40— be allowed as an offset upon an order of court, to be obtained for that purpose; and that Congress be asked, during its next session, to appropriate a sufficient amount to cover the deficiency."

September 15, 1880, this letter was, by the Secretary of the Treasury, "referred to the First Comptroller for his opinion."

The check for $315,779.11 was never proved as a claim against the receiver or the Comptroller of the Currency; and hence no dividend was ever declared for it.

There is appended to the argument of the receiver the following letter:

"DEPARTMENT OF JUSTICE, January 19, 1874. "SIR: I have considered the alleged claim of the United States against the First National Bank of New Orleans, submitted to me by your letter of the 11th November last.

"The facts of the case are complicated, and there has been no abstract or statement of them prepared, as there ought to have been, for my consideration.

"The facts, however, so far as they are necessary for me to dispose of the questions in the case, can be very briefly stated. By the act of 1864, ch. 106, sec. 54, (13 Ú. S. Stats., p. 116,) it is provided that the Comptroller of the Currency, with the approbation of the Secretary of the Treasury, as often as shall be deemed necessary or proper, shall appoint a suitable person or persons to make an examination of every banking association; which person shall not be a director or other officer in any association; whose affairs he shall be appointed to examine, and who shall have power to make a thorough examination into all the affairs of the association, and, in doing so, to examine any of the officers and agents thereof on oath, and shall make a full and detailed report of the condition of the association to the Comptroller.'

"On Sunday, the 12th of May, 1867, the agents for the Treasury, appointed under this act to investigate the affairs of the First National Bank of New Orleans, took possession of the bank, which, up to that time, had transacted business as usual.

"Thos. P. May, who had been the president of the bank, (but was not at that time,) and also assistant treasurer of the United States, was a defaulter in the latter office to a very large amount, and was also at this time hopelessly insolvent.

"There was then on the books of the bank an apparent balance standing to his credit of $315,779.11; but there was no such sum, nor, as it would seem, any sum, actually due him.

"On Monday, the 13th, while Mr. Knox and the Government agents were in possession of the bank, he drew a check in favor of T. P. May

& Co., indorsed in blank, upon the bank for the amount of this nominal balance and delivered it to the Treasury agents, who were also in possession of the sub-Treasury, and engaged in investigating May's affairs, as well as in examining into the condition of the bank.

"This check was marked 'good' by the teller, and a large payment was made upon it; and the check was protested for non-payment of the residue. The next day the bank, by direction of the Treasury agents, stopped payment on circulation and went into liquidation, and Mr. Chas. Case was appointed its receiver.

"Your question seems to be whether this check is a valid claim against the bank. This question turns entirely upon controversies dependent upon matters of fact which it is not the province of the Attorney-General to settle. (Opinion of Attorney-General Stanbery, 12 Opinions, 206.)

"If the check was marked 'good' by the teller without the approval or knowledge of other officers of the bank, I doubt whether it would bind the bank. At least the authorities on this point are conflicting. On the other hand, the president and cashier of the bank are undoubtedly officers who can by such a certificate bind the bank. (Merchants' Bank vs. State Bank, 10 Wall., 604; Faneuil Hall Bank rs. Bank of Brighton, 16 Gray, 534.) But in order, under any circumstances, to make such a certificate valid and binding upon the bank, it must have been made in the ordinary course of business, and the check received by the holder in good faith and without collusion. If, at the time the check was marked 'good' in this case, the officers were actually suspended from their duties, and the bank was entirely in the possession of the Treasury agents, so that, in marking it good,' the teller acted by their direction, and not that of the bank officers, then, in my judgment, the check would not have been received by the Goverument in good faith so as to render the bank liable for the amount thereof, or for any actual balance at that time due and owing to Thos. P. May. If, too, at the time the check was taken from May and marked good' by the teller, the gentlemen representing the Treasury knew that the bank was in a failing condition, that May's affairs with it were very much involved, and consequently took the check for what it was worth, being fully aware that it was doubtful whether such an amount was due May; and if they did all this, when from their investigation of the affairs of the bank, they had reason to believe that the bank was in a failing condition, then I do not think that the check can be considered to have been taken, either in the ordinary course of business, or in good faith, or at least in that degree of good faith which the law requires in order to make the bank liable for the amount of the check. "Of course, in using the phrase good faith, I merely mean good faith in a technical sense, and do not intend to impugn the motives of the gentlemen who represented the Government in this transaction.

"But it is very apparent that if they were instrumental in procuring the check to be drawn and the teller to certify that it was 'good' under the circumstances of the case, knowing or suspecting that there was no balance due to May by the bank, and that the bank was really insolvent, then the Government cannot take advantage of their action, so as to render the bank liable, by reason of the check, for any part of May's liability to it; nor can it found any claim upon the check, or in consequence of holding it, to share with other creditors of the bank in the assets in the hands of the receiver.

"From a perusal of the papers, I do not think it necessary for me, now, to go more fully into the case. To obtain any further opinion from me upon the subject, it will be necessary for the Hon. Secretary of the Treasury to submit to me a statement of the facts as they are ascer tained to be in his Department.

"Whether the Government officers had actual or constructive notice of the condition of the bank and May's balance there, is a question of fact and not a question of law, upon which I cannot undertake to decide. "I have the honor to be, sir, your obedient servant, "GEO. H. WILLIAMS, "Attorney-General.

"Hon. W. A. RICHARDSON,

"Secretary of the Treasury."

OPINION BY WILLIAM LAWRENCE, First Comptroller:

There is deposited in the Treasury of the United States, "subject to the order of the Comptroller" of the Currency, the sum of $65,826.40, paid there by the receiver of the First National Bank of New Orleans. (Rev. Stats., 5234.) This sum represents that portion of the money realized from the assets of the bank by the receiver which is due to the United States from the bank as dividends declared by the Comptroller of the Currency on claims duly proved. (Rev. Stats., 5236.)

I.-No part of this money can be paid on the claim now made. The law has determined against the claim; for it requires in effect that dividends declared as those in question have been shall be paid to the claimants entitled thereto. (Rev. Stats., 5236.) The duty of the Comptroller of the Currency is plain-it is fixed by law; it is to pay the money to the United States, so that it may be duly "covered into the Treasury."

The Comptroller of the Currency cannot pay this claim, because (1) he is not an officer charged with the duty of auditing or allowing claims against the United States; and, if the claim were legally established, (2) he is not authorized to appropriate to the payment of such claim money declared as dividends due to the Government.

(1.) Under the law it is the duty of the Comptroller of the Currency, only, to decide on the validity of claims against the bank, except that courts of proper jurisdiction may adjudicate them.

It is the duty of the receiver, only, "to collect all debts." In the discharge of this duty the Comptroller of the Currency has no part, unless by his power of appointment and removal; though in some suits, not material to the present case, the receiver acts "under the direction of the Comptroller." (Rev. Stats., 5234; Kennedy vs. Gibson, 8 Wall., H. Ex. Doc. 81-25