ON NOVEMBER 4, 1935

Miscellaneous Cases

ON APRIL 8, 1935

J-586. Carl Godfrey Allgrunn. Infringement of patent.

L-64. Chicago, R. I. & Pacific Ry. Co. Transportation of shells.

M-186. Citizens' Band of Pottowatomie Indians. Money for lands sold.

42313. Thomas S. Williams. Deduction from judge's salary under Economy Act.

42655. Charles H. Wall. Lost vouchers, Veterans' Bureau.

ON NOVEMBER 4, 1935

E-622. First National Steamship Co.
E-623. Second National Steamship Co.

E-624. Third National Steamship Co. Purchase of Government ships.
42800. Caffery Interests, Inc. For sand, etc., taken.

ON NOVEMBER 5, 1935

Contract for airway construction.

Congressional Cases

ON OCTOBER 7, 1935

17391. Home Mixture Guano Co. Contract for cotton linters.
17420. McDuffie Oil & Fertilizer Co. Contract for cotton linters.
17445. Grenada Oil Mill. Contract for cotton linters,
17488. Stanley Cotton Oil Co. Contract for cotton linters.
17582. Jacksboro Oil & Milling Co. Contract for cotton linters.
17595. Mineola Cotton Oil Co. Contract for cotton linters.

17629. Monroe County Cotton Oil Co. Contract for cotton linters.

ABSTRACT OF DECISIONS

OF

THE SUPREME COURT

IN COURT OF CLAIMS CASES

JAMES A. HEARN & SON v. UNITED STATES [80 C. Cls. 260; 294 U. S. 722]

Petition for writ of certiorari denied by the Supreme Court March 18, 1935.

UNITED STATES v. CREEK NATION

[77 C. Cls. 226; 295 U. S. 1031

Certiorari to review a judgment of the Court of Claims on a claim for the value of Indian lands taken by the Government.

Judgment was rendered in favor of the plaintiff in the court below. Upon certiorari the decision was reversed April 29, 1935, as to the time of the taking and valuation of the land, the Supreme Court deciding:

1. By a treaty of 1833, and patent, the United States conveyed to the Creek Tribe of Indians in fee simple a large tract of land. By treaty of 1866, the Creeks receded half of the tract, the United States undertaking to survey the dividing line and guaranteeing the Creeks quiet possession of the other part, The survey, made in 1871, was recognized in an agreement between the Tribe and the United States, Act of March 1, 1889. By error of the Land Department, part of the unceded land was included (1872-73) in the survey of a tract assigned to the Sac and Fox Indians under a treaty of 1867; and later, in carrying out an agreement with those Indians, embodied in the Act of February 13, 1891, by which their lands were receded to the United States, the Creek lands so surveyed with them were erroneously assumed to be part of the Sac and Fox

recession, and due to such error, were disposed of under the last mentioned agreement, partly by allotments in severalty to the Sacs and Foxes and partly by sales to settlers; and such dispositions were effectuated by patents signed by the President, The United States retained the proceeds of the dispositions.

Held:

(1) That the claim of the Creek Tribe for compensation was a claim "arising under or growing out of" a "treaty or agreement" between the United States and that tribe, or "arising under or growing out of" an "act of Congress in relation to Indian affairs", within the meaning of the act of May 24, 1924, conferring jurisdiction on the Court of Claims to adjudicate.

(2) The lands were appropriated by the United States in circumstances which involved an implied undertaking by it to make just compensation to the Creek Tribe.

(3) The taking was accomplished, not by the erroneous survey (1873), but by the disposals under the act of 1891. (4) Though the disposals rested upon an erroneous application of the act of 1891, that application was in effect confirmed by the United States, so that the matter stands as if the act had directed the disposals.

(5) Compensation should be based, not on the value of the lands at the time of the erroneous survey nor at the time of bringing the suit, but on the value at time of the disposals, with reasonable interest added, as a measure, to make up the full equivalent of value paid contemporaneously with the taking.

(6) As shown by the past agreements between the parties, a reasonable rate of interest is 5%.

2. Property of an Indian tribe under guardianship of the United States cannot constitutionally be appropriated by the United States without just compensation.

Mr. Justice VAN DEVANTER delivered the opinion of the Supreme Court.

BULL, EXECUTOR, v. UNITED STATES

[79 C. Cls. 133; 295 U. S. 247]

Certiorari to review a judgment of the Court of Claims rejecting a claim for refund of income and estate taxes. Upon certiorari the judgment in the court below was reversed, April 29, 1935, the Supreme Court deciding:

1. Moneys received by a deceased partner's estate as his share of profits earned by the firm before he died, are taxable as his income and also are to be included as part of his estate in computing the Federal estate tax.

2. Where the articles of a personal service partnership having no invested capital provide that in the event of a partner's death the survivors, if his representative does not object, shall be at liberty to continue the business for a year, the estate in that case to share the profits or losses as the deceased partner would if living, the profits coming to the estate from such continuation of the business are not to be regarded as the fruits of a sale of any interest of the deceased to the survivors, but are income of the estate, taxable as such; they are no part of the corpus of the estate left by the decedent upon which the Federal estate tax is to be computed.

3. Retention by the Government of money wrongfully exacted as taxes is immoral and amounts in law to a fraud on the taxpayer's rights.

4. A claim for recovery of money so held may not only be the subject of a suit in the Court of Claims, but may be used by way of recoupment and credit in an action by the United States arising out of the same transaction, and this even though an independent suit against the Government to enforce the claim would be barred by the statute of limitations.

5. Recoupment is in the nature of a defense arising out of some feature of the transaction upon which the plaintiff's action is grounded. Such a defense is never barred by the statute of limitations so long as the main action itself is timely.

6. The Government wrongfully collected and retained an estate tax on moneys earned for and paid to an estate in partnership transactions after the decedent's death, and which were not part of the corpus of the estate and were properly taxable only as income of the estate. Before the time allowed for claiming reimbursement had elapsed, the Government proceeded to assess and collect an income tax on the identical moneys. Held:

(1) That the taxpayer was entitled to recoup from the amount of the income tax the amount of the unlawful estate tax by suit for the difference in the Court of Claims, although suit to recover the unlawful tax independently had become barred.

(2) A complaint by which the taxpayer prayed judgment in the alternative, either for the amount of the income tax or for what should have been credited against it on account of the estate tax, was sufficient to put in issue the right to recoupment.

7. The Court of Claims is not bound by any special rules of pleading; all that is required is that the petition shall contain a plain and concise statement of the facts relied on and give the United States reasonable notice of the matters it is called upon to meet.

Mr. Justice Roberts delivered the opinion of the Supreme Court.

BUCHANAN ET AL. v. UNITED STATES

[80 C. Cls. 850; 294 U. S. 723]

Petition for writ of certiorari denied by the Supreme Court March 18, 1935.

BROOKLYN ASH REMOVAL CO. v. UNITED

STATES

[80 C. Cls. 770; 295 U. S. 752]

Petition for writ of certiorari denied by the Supreme Court May 20, 1935.

DUWAMISH TRIBE OF INDIANS v. UNITED

STATES

[79 C. Cls. 530; 295 U. S. 755]

Petition for writ of certiorari denied by the Supreme Court May 27, 1935.

BUSHMAN, ADMINISTRATOR, v. UNITED STATES

[80 C. Cls. 175; 295 U. S. 756]

Petition for writ of certiorari denied by the Supreme Court May 27, 1935.

RATHBUN, EXECUTOR OF HUMPHREYS, v.
UNITED STATES

[Decided May 27, 1935; 295 U. S. 602]

Response to the following questions certified by the Court of Claims.