Rights of sureties.-Surety on bonds securing United States deposits in insolvent banks is entitled to interest at rate banks contracted to pay United States. Mothersead v. U. S. Fidelity & Guaranty Co. (C. C. A. 1927), 22 F. (2d) 644; Mothersead v. New Amsterdam Casualty Co. (C. C. A. 1927), 22 F. (2d) 654; Mothersead v. Fldelity & Deposit Co. of Maryland (C. C. A. 1927), 22 F. (2d) 654; Mothersead v. Fidelity & Casualty Co. of New York (C. C. A. 1927), 22 F. (2d) 654; Mothersead v. American Surety Co. of New York (C. C. A. 1927), 22 F. (2d) 655. Priority as against adverse rights-In general.-Persons claiming exemption from the operation of this section have burden of showing that they are not within its provisions. U. S. v. People's Trust Co. (D. C. 1927), 17 F. (2d) 437. Expenses. Decedent's reasonable funeral expenses have priority over his debts due United States for income taxes. In re Stiles' Estate (Sur. 1926), 215 N. Y. S. 134, 126 Misc. Rep. 715. Expenses of receivership of insolvent estate have priority over taxes due United States not secured by lien under R. S. 3186, as amended, notwithstanding this section, since there is no fund for payment of insolvent's debts until receivership expenses are paid. Kennebec Box Co. v. O. S. Richards Corporation (C. C. A. 1925), 5 F. (2d) 951, affirming (D. C. 1924), 299 Fed. 871. Priority over debts due a State.-Under Const. art. 6, providing that this Constitution and the laws of the United States which shall be made in pursuance thereof • shall be the supreme law of the land," and this section, taxes due to the United States from an insolvent corporation have priority over taxes due under the laws of the State. U. S. v. San Juan County, Wash. (D. C. 1922), 280 Fed. 120. Taxes due the United States from an insolvent corporation have priority over taxes due the State, and this right of priority is not affected by the fact that under the laws of the State the taxes due the State became a lien before the Federal tax accrued. Stover v. Scotch Hills Coal Co. (D. C. 1924), 4 F. (2d) 748. Federal estate tax and transfer tax imposed by act of June 20, 1919, of Pennsylvania, are both excises on transfer of property from a decedent and take effect at instant of transfer; neither having priority in time over other. Frick v. Commonwealth of Pennsylvania (1925), 268 U. S. 473, reversing (Pa. 1923), 121 Atl. 35. amended, tax claims against bankrupt's estate have precedence over all other claims, including wage claims; "dividends to creditors," as used In section 64, not being limited to claims of general creditors, but including any dividend. In re Essenkay Products Co. (C. C. A. 1925), 5 F. (2d) 668. Decree as bar. In action by surety on deposit of Indian funds under this section and R. S. 3468, ante, 531, to have its claim declared a preference against funds of insolvent State bank in hands of State commissioner of finance, final decree of dis missal of former action was held to estop plaintiff from suing on same cause of action, though allegations that defendant took possession of funds by virtue of assignment were first made in second action. U. S. Fidelity & Guaranty Co. v. Porter (D. C. 1924), 3 F. (2d) 57. Proceedings to enforce.-Denial of a petltion by the United States, asserting the right to priority of its claim under the statute, has been held not to bar it from subsequently seeking to establish a trust in property in the hands of the receiver. Equitable Trust Co. of New York v. Connecticut Brass & Mfg. Corporation (D. C. 1925), 6 F. (2d) 582, reversed on other grounds (C. C. A. 1926), 10 F. (2d) 913. Where answer in suit by the United States to recover postal and forestry funds deposited in State bank specifically denied that funds belonged to United States, within meaning of this section, general motions to strike answers will be denied, for the purpose of taking testimony to determine ebaracter of such funds. U. S. v. Porter (D. C. 1927), 19 F. (2d) 541. United States, in proceeding to recover public funds from insolvent State bank, need not pursue steps required by State law. Id. Jurisdiction of courts.-Federal court held without jurisdiction of suit by the United States against receiver appointed by State court. Merryweather v. U. S. (C. C. A. 1926), 12 F. (2d) 407. Failure to obtain consent of court to sue its receiver is jurisdictional. Id. Jurisdiction of courts.-If United States asserts claim against insolvent bank under State and Federal statutes granting priority, it may have question reviewed by United States Supreme Court. People's Trust Co. v. U. S. (C. C. A. 1928), 23 F. (2d) 381. State court proceedings for liquidation of Insolvent bank, and intervention of United States therein to establish claim, held in rem, precluding subsequent exercise of jurisdiction by Federal court. Id. Claims for labor or material.-Under this section, paragraphs (a) and (b) of section 64, bankruptcy act, and R. S. 3186, as 725. Liability for failure to give priority to the United States.-Every executor, administrator, or assignee, or other person, who pays any debt due by the person or estate from whom or for which he acts, before he satisfies and pays the debts due to the United States from such person or estate, shall become answerable in his own person and estate for the debts so due to the United States, or for so much thereof as may remain due and unpaid. R. S. 3467; U. S. C. 31: 192. Notes of Decisions Lien of Government.-Where one telegraph company leased all lines and property of another, agreeing to make payments direct to stockholders of lessor, stockholders' right to payments was held not property of lessor company, authorizing Government lien thereon for income taxes due from such company, either under R. S. 3186, or this section, in view of R. S. 3185. U. S. v. Western Union Telegraph Co. (D. C. 1926), 19 F. (2d) 157. Assignees and trustees.-Under this section and 724, ante, a claim for freight accruing to Federal Government while operating railroads is an indebtedness due the United States and is both preferred claim on estate of insolvent corporation and a personal liability of assignee for benefit of creditors if after notice he failed to pay claim out of assets of insolvent. In re Farmers' Co-op. Co. (Iowa, 1925), 206 N. W. 251. Notice of debt.-Under this section and 724, ante, it is not necessary for the Federal Government to obtain an extension of time for filing with assignee of insolvent corporation, of Government's claim for freight accruing to it while operating railroads, nor was it necessary to file claim within three months, it being suffcient that notice was given to assignee of such claim. Id. 726. Authority to make contracts; general provision.-No Act of Congress hereafter passed shall be construed to make an appropriation out of the Treasury of the United States, or to authorize the execution of a contract involving the payment of money in excess of appropriations made by law, unless such act shall in specific terms declare an appropriation to be made or that a contract may be executed. Sec. 9, act of June 30, 1906 (34 Stat. 764), making appropriations for sundry civil expenses; U. S. C. 31: 627. The act of Mar. 2, 1919 (40 Stat. 1272), authorized the Secretary of War to adjust, pay, or discharge upon a fair and equitable basis any agreement, express or implied, that had been entered into during the late emergency and prior to Nov. 12, 1918. The effect of this act was said by the Comptroller of the Treasury to be to give the Secretary of War original jurisdiction in the settlement of claims arising thereunder and to suspend temporarily further action by the accounting officers. In the same opinion, the Comptroller outlined the procedure which should be followed by claimants. See (1919) 25 Comp. Dec. 774. 727. Same; adequate appropriations required. No executive department or other Government establishment of the United States shall expend, in any one fiscal year, any sum in excess of appropriations made by Congress for that fiscal year, or involve the Government in any contract or other obligation for the future payment of money in excess of such appropriations unless such contract or obligation is authorized by law. R. S. 3679, as amended by sec. 3, act Feb. 27, 1906 (34 Stat. 49); U. S. C. 31: 665. No contract or purchase on behalf of the United States shall be made, unless the same is authorized by law or is under an appropriation adequate to its fulfillment, except in the War and Navy Departments, for clothing, subsistence, forage, fuel, quarters, or transportation, which, however, shall not exceed the necessities of the current year. R. S. 3732; U. S. C. 41: 11. Provided, That no contract or purchase on behalf of the United States shall be made, unless the same is authorized by law or is under an appropriation adequate to its fulfillment, except in the War and Navy Departments, for clothing, subsistence, forage, fuel, quarters, transportation, or medical and hospital supplies, which, however, shall not exceed the necessities of the current year. Act of June 12, 1906 (34 Stat. 255), making appropriations for the support of the Army: Medical Department; U. S. C. 41: 11. The heads of the executive departments were required to apportion the appropriations for the contingent funds among the bureaus and offices of the departments by act of Aug. 23, 1912, sec. 6, post, 1700. Restrictions on contracts for the rent of any building in the city of Washington, until an appropriation therefor had been made, were made by a provision of act Mar. 3, 1877, post, 961. Apportionment of appropriations for contingent expenses in monthly or other allotments, 1699, post. Appropriations for printing not to be exceeded, limitation on number of reports, etc., post, 1837, 1840. Notes of Decisions Construction and operation.-These provisions apply to the public service in general, and must yield to special provisions relating to a particular department. New York Cent. & H. R. R. v. U. S. (1886), 21 Ct. Cl. 468, The three paragraphs of this section should be construed together. The second and third paragraphs authorize the heads of the War and Navy Departments, in the absence of appropriations, to purchase or contract for clothing, subsistence, forage, fuel, quarters, or transportation, not exceeding the necessities of the current year. Such contracts are not within the prohibition of the first paragraph. (1876) 15 Op. Atty. Gen. 124; (1877), Id. 209. The words "contingent expenses mean such incidental, casual expenses as are necessary or appropriate and convenient to the performance of duties required by law of the department or the office for which the appropriation is made. (1879) 16 Op. Atty. Gen. 412. The object of this section was to prevent executive officers from involving the Government in expenditures or liabilities beyond those contemplated and authorized by the law-making power. (1895) 21 Op. Atty. Gen. 248. Restriction to appropriation for fiscal year. The statute restricts in every possible way the expenditures, expenses, and liabilities of the Government, so far as executive officers are concerned, to the specific appropriation for each fiscal year. Wilder v. U. S. (1880), 16 Ct. Cl. 528. General legislation in an appropriation act, beginning with the word "bereafter," takes effect at the date of the act, and not at the beginning of the ensuing fiscal year. Chance v. U. S. (1903), 38 Ct. Cl. 75. This section, relating to contracts involving payments from future appropriations, does not apply to license agreements permitting the Government to use patented inventions. Semple v. U. S. (1924), 59 Ct. Cl. 664. Obligations beyond amount of appropriation. This section and R. S. 3772 in effect prohibited any expenditure or contract in behalf of the Government in excess of appropriations therefor, except in the War and Navy Departments for specific purposes. Leavitt v. U. S. (D. C. 1888), 34 Fed. 623, 626. (NOTE--The court evidently intended to refer above to R. S. 3732, as R. S. 3772 is inapt in this connection, and Bradley v. United States (1878), 98 U. S. 104, 113. which is cited, refers to R. S. 3679 and 3732.) Where an alleged liability of the Government rests wholly on an appropriation, the lability and the appropriation must stand or fall together, so that when the latter is exhausted the former comes to an end. Shipman v. U. S. (1883), 18 Ct. Cl. 138. The fact that an appropriation is exhausted justifies an officer in stopping a contractor's work, but does not constitute a defense in a suit for breach of contract. Ferris v. U. S. (1892), 27 Ct. Cl. 542. Where, by the special provision for a particular work commenced and in progress, it was provided that nothing in the act should be so construed as to authorize any officer of the Government to bind the United States by contract beyond the amount of existing appropriation, held that if the public interest required the President to make a contract for the work exceeding such amount he might lawfully do so, subject to the chance of future ap |