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 U.C. BERKELEY LIBRARIES 
 
 CD3T235714D 
 
OPINION 
 
 OF 
 
 HON. EDWARD BATES, 
 
 ATTORNEY GENERAL OF THE UNITED STATES, 
 
 OX THE 
 
 VALIDITY OF THE ACCEPTANCES 
 
 GIVEN BY 
 
 JOHN B. FLOYD, SECRETARY OF WAR, 
 
 TO 
 
 RUSSELL, MAJORS, & WADDELL, NOW 
 HELD BY PEIRCE & BACON. 
 
University of California Berkeley 
 
OPINION 
 
 OF 
 
 HON. EDWARD BATES, 
 
 it 
 
 ATTORNEY GENERAL OF THE UNITED STATES, 
 
 ON THE 
 
 VALIDITY OF THE ACCEPTANCES 
 
 GIVEN BY 
 
 JOHN B. FLOYD, SECRETARY OF WAR, 
 
 TO 
 
 RUSSELL, MAJORS, & WADDELL, NOW 
 HELD BY PEIRCE & BACON. 
 
 WASHINGTON: 
 
 GOVERNMENT PRINTING OFFICK. 
 
 1862. 
 
ATTORNEY GENERAL'S OFFICE, 
 
 JUNE 20, 1862. 
 
 Hon. E. M. STANTON, 
 
 Secretary of War. 
 
 SIR : When I had the honor to receive your letter of April 21, 
 1862, referring to me the consideration of the claim of Messrs. Peirce 
 & Bacon, as holders of certain drafts drawn by Russell, Majors & 
 Waddell, upon the Secretary of War, and accepted by John B. Floyd, 
 the then Secretary, I doubted for some time whether I could venture 
 to give any official answer touching the merits of the claim, because 
 your letter does not contain, and was not accompanied by, any "case 
 made," or statement of facts, which I might fairly take to be the 
 true and only facts upon which the merits of the claim ought to be 
 determined. My office has no legal faculty to investigate and adjudge 
 facts no power to compel the presence of persons and papers, nor 
 even to administer an oath. It cannot, therefore, be expected of me 
 to deal with the facts of the case beyond the means of knowledge 
 which you have furnished me, that is, "the report of the special 
 committee of Congress and the letters of Peirce & Bacon accom- 
 panying this reference." You also furnish, for my assistance in the 
 matter of law, the printed arguments of four learned counsel, (Messrs. 
 Goodrich & Gushing, of Boston, Mr. Black, of Washington city, and 
 Mr. Broadhead, of St. Louis,) in support of the claim of Peirce & 
 Bacon against the United States, for the amount of acceptances of 
 Secretary Floyd, which they now hold. 
 
 Accompanied by only these means of information, you propound to 
 me the following questions : 
 
 "1. Whether the government of the United States is legally or 
 equitably bound to make payment to Peirce & Bacon, holders of the 
 acceptances given by John B. Floyd, while Secretary of War, to 
 Russell, Majors & Co., under the circumstances stated in the report 
 of the special committee of Congress, and in the letters of Peirce & 
 Bacon, accompanying this reference? 
 
 "2. What law or appropriation by Congress would authorize the 
 Secretary of War to make payment of these acceptances, or any part 
 thereof? 
 
"3. Whether the government of the United States have any, and 
 what, interest or claim to the acceptances given by John B. Floyd, 
 and specified in the letter of Peirce & Bacon, to the Secretary of 
 War, dated the 18th of March, 1862, and therein offered to be deliv- 
 ered up?" 
 
 If the legal merits of the claim depended altogether upon the facts, 
 as disclosed in the testimony which you have sent me, I could not 
 venture to give a definitive opinion upon them, because the testimony 
 is contradictory in some particulars, and wholly wanting in others, 
 and thus it is apparent that all the facts of the case are not fairly 
 before me. 
 
 Some important facts, however, do appear with sufficient clearness, 
 being plainly stated in the testimony and not contradicted, such as 
 the following : 
 
 1. That Russell, Majors & Waddell had contracts with the War 
 Department for transportation, to a large amount, from Missouri and 
 Kansas to Utah and other places in the far west; that those contracts 
 stipulated for payment by the government, by instalments, or rather 
 successively, as the money should be earned by the performance of 
 the work ; and that the money was paid under the contracts, from 
 time to time, as it was earned ; and paid in the regular and accus- 
 tomed manner by the quartermasters at Leavenworth and Washing- 
 ton city, respectively. 
 
 2. That Russell, using the name of his firm, drew a great many 
 money orders, and to a very large amount, upon the then Secretary of 
 War, Mr. Floyd, and that Mr. Floyd accepted them; that they were 
 so drawn and accepted without any design or expectation that they 
 should ever be presented to the War Department for payment; that 
 they were drawn, not upon money already earned, but in anticipation 
 of the contracts, and for the purpose of enabling Russell to raise 
 money; and that it was understood and agreed between Russell and 
 Floyd, that Russell should take up the acceptances at maturity, and 
 retire them from the market; and that the acceptances now held by 
 Messrs. Peirce and Bacon, and which form the basis of their present 
 claim, are of that class. 
 
 In proceeding to answer your first question, I waive the considera- 
 tion of the supposed equitable obligation of the government, beyond 
 the law of the case, partly because all the facts which might touch 
 the equities between the parties are not disclosed to me; but chiefly 
 
because the claimants in their letters to you and your predecessors, 
 Messrs. Cameron and Holt, and by their counsel in the printed 
 arguments, rest their claim upon the sole ground of the legal obliga- 
 tion of the goverment to pay these drafts, which it is insisted are 
 commercial bills of exchange, accepted by the government, negotia- 
 ted in open market, and now held by innocent purchasers, for value. 
 
 That is the governing question in the case, and perhaps the only 
 one which I ought now to consider. 
 
 Certainly the War Department has lawful authority to make 
 contracts, binding upon the government, for transportation and 
 supplies for the army. This is a statutory power, and must be 
 exercised according to law. In this case, the legality of the original 
 contracts with Russell, Majors and Waddell is not drawn into ques- 
 tion; and those contracts seem to have been fulfilled, by the perform- 
 ance of the service, and the payment of the money. 
 
 It is not denied that the government, acting by the heads of 
 departments, or by other subordinate officers, may use bills of ex- 
 change, in the transaction of the public business, in cases proper for 
 the use of such instruments, and under circumstances which make it 
 necessary, or, at least, convenient to use them. And when so used, 
 they come under the law merchant and are governed by its rules. 
 But it is not every order for the payment of money, drawn by one 
 public officer upon another, or by a creditor or contractor upon a 
 disbursing officer, that is a bill of exchange. What is a bill of ex- 
 change? is a judicial question, proper for the determination of the 
 courts. It does not always depend upon the mere form of the 
 instrument; for no particular form is required by law, but rather 
 upon its basis, the character of the parties who use it, the nature of 
 the transaction in which it is used, and the object to be attained by 
 the use of it. Among merchants, it is an instrument requiring the 
 utmost good faith in all the parties, and a careful conformity to the 
 rules of law and the usages of trade. It is not used as a common 
 evidence of debt, as a bond or note is, but generally for the payment 
 of a pre-existing debt; and its characteristic office is to transfer 
 money from one man to another or from one place to another. As a 
 mercantile bill of exchange performs, to a large extent, the function 
 of money in the general current of commerce, when once it has been 
 drawn and accepted, and passed to an innocent purchaser, for value, 
 it ought to have the full confidence of the trading community, and to 
 
to be as free as possible from doubt and cavil. It ought to be free 
 from all equities between the original parties, and to import an 
 absolute debt at the time and place appointed. And this cannot be 
 without exact knowledge of two very important facts the genuine- 
 ness of the acceptance and the authority of the acceptor to bind 
 himself by such an instrument, if he appear to act in his own right, 
 or to bind his principal if he assume to act as an agent. These facts, 
 every man who buys such a bill must ascertain for himself and at his 
 own peril, for it is plain that if the agent had not authority from his 
 principal to accept the bill, the acceptance is void, as to the principal, 
 and he is not bound by it. In such case, no matter how honest the 
 endorsee, nor how much value he has paid, he has vested his money 
 in a void security. And that not wholly without his own fault, for 
 it was his business, (in the language of the Supreme Court, 15 Pet. 
 393,) to look to "the genuineness of the acceptance, and the 
 authority of the officer to give it." 
 
 It is a general rule which admits of few exceptions, that a man 
 who has money in the hands of another with a right to receive it now, 
 or at some known future time, if he do not choose to demand it him- 
 self in person, may, by a written note, direct the holder of the money, 
 to whom he must pay it it may be to the creditor, the child, the ser- 
 vant of him who gives the order. And the holder of the money, in 
 such a case, has a perfect right, if not a moral obligation, to admit 
 the goodness of the draft, and promise to pay it, and that is an ac- 
 ceptance. Still, it does not follow that the order is a bill of exchange. 
 If it be a bill of exchange, it is made so by the drawer, and is perfect 
 the moment he gives it out; and its character, as such, is not altered 
 by the acceptance or refusal of the drawee. 
 
 Two questions here demand consideration 
 
 1. Are these drafts, as now held by Messrs. Peirce & Bacon com- 
 mercial bills of exchange, subject to the law merchant ? 
 
 2. If they be such bills, had Mr. Floyd, as Secretary of War, law- 
 ful authority to accept them so as to bind the United States for their 
 absolute payment ? 
 
 As to the first : I have already given a brief statement of what I 
 consider a bill of exchange to be, in point of law. The definition, 
 the description, and the general rules of law applicable to bills of 
 exchange are so familiarly known to intelligent merchants and lawyers, 
 that I forbear the citation of many authorities upon that branch of 
 
the subject. I only refer at large to Chitty on Bills, p. 134, &c. ; 
 also, for Agency, p. 27, <fec. 
 
 The drafts held by Pekce & Bacon have not been seen by me, but 
 I accept as sufficiently reliable for this argument, the information fur- 
 nished by Messrs. Peirce & Bacon themselves as to the form of the 
 drafts. In their statement of case for the opinion of their counsel, 
 Mr. Goodrich, as to the liability of the government, they say, ' * We 
 are the holders of sundry acceptances, drawn by Russell, Majors & 
 Waddel upon the War Department, and accepted by Secretary Floyd, 
 of which the folloioing are samples. (Of course, each one of the rest 
 is in the one or the other of these forms.) 
 
 "$20,000. WASHINGTON, November 26, 1859. 
 
 "Ten months after date pay to our own order, for value received, 
 at the Bank of the Republic, New York city, twenty thousand dol- 
 lars, and charge to account of our contracts for supplies of the army 
 in Utah. 
 
 "RUSSELL, MAJORS & WADDELL. 
 "Hon. J. B. FLOYD, 
 
 " Secretary of War." 
 
 Endorsed upon the back : " RUSSELL, MAJORS & WADDELL. " 
 
 Written upon the face : 
 " E. T. WAR DEPARTMENT, November 26, 1859. 
 
 " Accepted. 
 
 "JOHN B. FLOYD, 
 
 " Secretary of War." 
 
 "$5,000. WASHINGTON CITY, August 15, 1860. 
 
 "Seven months after date pay to our own order, at the Bank of 
 the Republic, New York, five thousand dollars, for value received, 
 and charge to our transportation contract of the 12th day of April, 
 1860. 
 
 "RUSSELL, MAJORS & WADDELL. 
 "Hon. J. B. FLOYD, 
 
 "Secretary of War." 
 
Endorsed upon tlie back : " RUSSELL, MAJORS & WADDELL." 
 
 Written upon the face : 
 
 "No. 58. Accepted. 
 
 "JOHN B. FLOYD, . 
 
 ' ' Secretary of War. 
 " WAR DEPARTMENT, 22d August, 1860." 
 
 Their statement proceeds : ' ' Russell, Majors & Waddeli were con- 
 tractors with the War Department for supplies and transportation for 
 the use of the array in Utah. We have no means of stating the 
 terms of their contracts, except so far as they appear or may be 
 implied from the bills of exchange." 
 
 On this I remark 
 
 1. These forms are well enough for bills of exchange, if the facts 
 warranted the forms. 
 
 2. Peirce & Bacon dealt directly with Russell, Majors & Waddell, 
 (who were both drawers and endorsers of the drafts.) and thus they 
 themselves began the operation of giving currency to these drafts. 
 
 3. They did it with full knowledge that Russell, Majors & Waddell 
 were government contractors ' * for supplies and transportation for the 
 use of the army in Utah." And, dealing with them as such con- 
 tractors, they probably knew, in fact, and in contemplation of law 
 were bound to know, that the drafts were drawn upon money to be 
 earned under those contracts, and to be paid according to the terms 
 thereof. 
 
 4. And yet, without assigning any reason for their lack of know- 
 ledge, they avow their ignorance of the terms of the contracts under 
 which they were vesting large sums of money j and they utterly 
 ignore the statute laws which govern such contracts. 
 
 5. Under these circumstances, it requires, I think, some degree of 
 boldness to affirm that Messrs. Peirce & Bacon, who I understand are 
 eminent merchants, are prudent and innocent holders of the drafts. 
 for value, believing them to be mercantile bills of exchange. 
 
 I said above that the claimants rested their right upon the sole 
 ground of legal obligation, resulting from the facts of the drawing, 
 the accepting, and the endorsing of the drafts. Perhaps that state- 
 ment ought to be a little modified ; for I perceive that one of the 
 learned counsel (by way, I suppose, of committing the government 
 to an acknowledgment of the validity of the drafts, as accepted,) 
 
9 
 
 state?, in his printed argument, that ;t acceptances taken by them 
 and their correspondents had been duly paid, as they matured." That 
 is a clear mistake of fact.. Not one of them was paid by the acceptor, 
 at maturity, or ever; and that alone is due payment. If Russell (who 
 was at once drawer and endorser) took them up and retired them, 
 that is not due payment, but is only the carrying out by Russell of 
 his private bargain with Floyd, whereby he (Russell) was to be en- 
 abled to raise money in advance of his lawful contracts, by selling 
 the simulated securities of the government, in the shape of accepted 
 drafts, which the drawer, and not the acceptor, was to redeem. 
 
 The War Department has never recognised these drafts as debts, 
 legally binding upon it. Four Secretaries, in rapid succession 
 Floyd, Holt, Cameron, Stanton have had the matter urgently 
 pressed upon them ; yet not one of them has paid a single one of 
 those drafts. And, although three sessions of Congress have been 
 held since the beginning of this difficulty, still, I believe, not one of 
 those four Secretaries has included this item in his estimate of appro- 
 priations, proper to be made by Congress, for the public service. 
 Why t I cannot certainly know, but probably because every one of 
 them, knowing the statute law, knew that the Secretary of War had 
 no authority to bind the United States, by accepting a contractor's 
 draft, in advance of his contract, and before he had earned the 
 money drawn for. 
 
 Now, an order to pay money, and an acceptance (which is an 
 implied promise to pay) on a particular contingency, which may or 
 may not exist, is not a mercantile bill of exchange ; for, however 
 respectable and solvent the names of the drawer, the acceptor, and 
 the endorser, it does not import an absolute debt, payable at the 
 time and place named. It cannot command the confidence of the 
 trading community, nor pass current in the money market, for the 
 plain reason that every holder must take it at his own risk, assuming 
 the duty to ascertain for himself the existence of the facts necessary 
 to make the instrument an available security in other words, that 
 the contingency will happen. Such a paper may be a very good 
 contingent order for money, but not a commercial bill of exchange. 
 
 The word draft is generic, and comprehends all the species of 
 money -orders embracing bills of exchange, checks on bankers, and 
 indeed every variety of written directions to pay money. All of them 
 
10 
 
 are drafts, conferring rights and imposing obligations upon all who deal 
 in them, as the laws apply to their respective cases ; but certainly 
 they are not all commercial bills of exchange. If a public contractor 
 draw upon the fiscal agent of the government for money supposed to 
 be due him, by the terms of a written contract, it is, of course, 
 subordinate to the contract; for the contractor can have no right to 
 draw, nor the agent to promise to pay, otherwise than according to 
 contract. Such a draft may be a good order to pay, under the 
 circumstances, but surely not a commercial bill of exchange. 
 
 That Mr. Pierce knew the quality of these drafts, and the circum- 
 stances under which they were drawn and accepted, is manifest, from 
 his letters which you sent me, and especially from his testimony 
 given before the committee of the House of Representatives. (See 
 printed report, p. 359, &c.) He knew that the drafts were drawn 
 in reference to written contracts for supplies and transportation j 
 that they were drawn in advance of those contracts, and for money, 
 at the date of the drafts, unearned under the contracts. And, under 
 the circumstances, it is fair to impute to him the knowledge that 
 Russell, and not Floyd, was expected to take up the drafts. He 
 believed, with Floyd, (see his printed testimony as above,) that these 
 drafts were the best public securities, because the appropriation was 
 already made to pay Russell, Majors, and Waddell's contracts, and 
 so "no further action of Congress ivas necessary." 
 
 In my opinion, these drafts are not mercantile bills of exchange 
 not negotiable paper, under the law merchant. 
 
 The learned counsel of Messrs. Peirce and Bacon, all four of them, 
 begin by assuming the main question in the case that is, that these 
 drafts are mercantile bills of exchange, that the United States had 
 become a party to them by the acceptance of Mr. Floyd, and that 
 they had been negotiated in open market. Assuming these funda- 
 mental propositions as true, a very easy and simple process of rea- 
 soning, (if, indeed, any reasoning be necessary in such a case,) leads 
 to the inevitable conclusion that the United States ought to pay the 
 money. It needs no argument to convince me that the United 
 States, like a private person, ought, in all honesty, to fulfil its con- 
 tracts. I am not resisting the conclusion drawn from the assumed 
 premises, but denying the premises themselves denying that these 
 acceptances of Mr. Floyd constituted any contract of the United 
 States. 
 
11 
 
 As to the second question that ie, had Mr. Floyd, as Secretary of 
 War, and, in that capacity, agent of the United States, authority to 
 accept these drafts, so as^to bind the government? 
 
 It seems to me very clear that he had no such power ; that it did 
 not belong to him, as a general power inherent in his office, or inci- 
 dent to the discharge of any duty imposed upon him by law; and, 
 moreover, that it is forbidden by statute. 
 
 The United States always, and individuals often, act by agents, as 
 well in regard to bills of exchange as other pecuniary transactions; 
 and I am not aware of any legal difference between these two kinds 
 of agencies, public and private, so marked as to need the separate 
 consideration here of each kind. For the purposes of this argument, 
 I will suppose that they are alike, and are governed by the same 
 law. with perhaps this difference, that it is generally easier to ascer- 
 tain the powers of a public agent, who is such by reason of holding 
 a public office, than the powers of a private agent, because the 
 powers and duties of the former are granted and limited by law, and 
 therefore are presumed to be known to all men, whereas the powers 
 and duties of the latter, depend upon the will of the individual 
 employer, and are evidenced only by private acts. 
 
 I assume it as a general principle, inculcated by the whole theory 
 and practice of our government, that there is no officer under the 
 Constitution, from the President down to a disbursing clerk, who is 
 entrusted by law with unlimited power over the money and the credit 
 of the nation no officer who has authority by law to create valid 
 debts against the nation in any form, and especially by the bare fact 
 of accepting bills of exchange, and that too without any rule but his 
 own judgment, or any limit but the interest of himself and his 
 friends. Such a power would be at war not only with the theory of 
 our institutions, but with our history and our legislation from the 
 very beginning of the government. There is no subject of legisla- 
 tion in regard to which Congress has habitually exhibited such vigi- 
 lant caution and such jealous distrust, as the custody and disposition 
 of the public money. The statute book abounds with checks and 
 guards against those officers who are entrusted with the keeping of 
 the public funds, and with penal denunciations against those who 
 abuse that trust. Yet it is now seriously claimed that the head of a 
 department, (and consequently any subordinate, who is entrusted 
 with the keeping and the paying of the public money, or the making 
 
12 
 
 of any contracts,) has power to create and establish a debt against 
 the United States, by the bare fact of the acceptance of a bill of 
 exchange, without any reference to the amount involved, or to the 
 truth or falsehood of the facts upon which the bill is supposed to be 
 founded. The acceptance of the Secretary of War, they insist, 
 admits all material facts, and concludes the government. 
 
 One of the learned counsel in his printed argument thus compen- 
 diously states the law of the case, in favor of his clients : 
 
 "The Secretary, by an unconditional acceptance of the drafts, 
 admits the contracts, and the right of the drawers, under their con- 
 tracts, to make the drafts. These admissions, in contemplation of 
 law, upon the facts stated, in my judgment, are conclusive in your 
 favor, as indorsees. The United States cannot be permitted to say 
 that the drawers are not contractors, or that they were not authorized 
 to make the drafts. This is the result of the principle that an 
 acceptor who makes an unconditional acceptance, cannot resist the 
 title of the holder, by saying he had no funds, or the drawer had no 
 right to make the draft. This principle is applicable to the United 
 States, as acceptors, to the same extent as it is to an individual who 
 becomes an acceptor." 
 
 If all this be true, there is no room for argument, and no possi- 
 bility of escape; for it boldly assumes every material fact and every 
 legal doctrine necessary to establish a perfect claim against the gov- 
 ernment. It assumes that the Secretary of War has "a general 
 authority," a broad, unlimited power, to accept bills of exchange, in 
 the name of his office, so as to bind the nation. It assumes that be- 
 cause the Secretary wrote across the face of the bills these words, 
 "Accepted, John B. Floyd, Secretary of War," the United States 
 has admitted that Russell & Co. had contracts with the government 
 under which they had the right to draw the bills, (and, of course, if 
 they had a right to draw, there was a corresponding duty to accept 
 and pay) without any reference to the terms of the contracts, (for the 
 terms are not stated,) and without any regard to the number of the 
 drafts or the amount drawn for ! And it assumes that these admis- 
 sions are "conclusive " in favor of the claimants; and that the United 
 States is, by some latent potency in the words, "accepted, John B. 
 Floyd, Secretary of War," estopped, concluded, "not permitted" 
 to deny the obligation to pay the drafts, however large the amount ; 
 nor to inquire into the truth or falsehood of the assumed facts ! 
 
13 
 
 These assumptions are all made without any reference to the sta- 
 tute law ; for it is not even claimed that there is any act of Congress 
 granting such enormous power to the Secretary of War. or to any 
 officer of the government. But the power is inferred, by construc- 
 tion only, from the supposed nature and character of his legal duties. 
 Waiving all prolonged argument against such startling inferences and 
 dangerous constructions, I content myself with quoting a dictum of 
 the Supreme Court, delivered by Chief Justice Marshall, in the case 
 of the Postmaster General vs. Early, (12 Wheat., 136.) In that case, 
 treating of the powers and duties of the Postmaster General, and the 
 construction which had been attempted to be put upon them, and 
 upon the laws which govern them, the court uses this emphatic lan- 
 guage : "That construction which will produce a consequence so 
 directly opposite to the whole spirit of our legislation, ought to be 
 avoided, if it can be avoided without a total disregard of those rules 
 by which courts of justice must be governed." 
 
 Thus far I have endeavored to treat of the authority of the Secre- 
 tary to accept these drafts, upon general principles, and in view of 
 his official relations to the nation, as one of its fiduciary agents. Let 
 us see now whether there is any statutory prohibition against his 
 giving such acceptances. 
 
 The act of Congress of January 31, 1823, chapter 9, section 1, (3 
 Stat. at Large, p. 723,) provides, "that from and after the passage of 
 this act, no advance of public money shall be made in any case what- 
 ever; but in all cases of contracts for the performance of any service, 
 or the delivery of articles of any description for the use of the United 
 States, payment shall not exceed the value of the service rendered, 
 or of the articles delivered, previously to such payment." 
 
 [There are two provisos to this section, giving to the President 
 certain special powers, in the cases therein mentioned, which do not 
 touch the matter in hand.] 
 
 It is the plain meaning of this law, that no money shall be advanced 
 to contractors; that is, that no money shall be paid to them on account 
 of their contracts before the actual performance of the service or the 
 delivery of the articles stipulated for. And this not only forbids the 
 contracting officer of the government to pay the money in advance, 
 but forbids him also to contract for such payment; for, manifestly, 
 he cannot lawfully contract in behalf of the government to do a thing 
 which the law forbids to be done. 
 
14 
 
 If it be said that the giving of these acceptances is not an advance 
 of public money, is not a payment exceeding the value of the services 
 rendered or the articles delivered, I answer it is an attempt to enable 
 the contractor to raise money, under color of his contract, which he 
 had no right to have by the contract itself. It is an effort to pledge 
 the faith of the nation, in a vendible form, for the obvious purpose 
 of enabling the contractor to get money on account of his contract 
 before the government owed him anything for service done or goods 
 delivered under the contract. If this be not verbally and technically 
 a breach of the statute, it is plainly an indirect contrivance to have 
 money advanced to the contractor in fraud of the act of Congress. 
 
 Again, the act of February 26, 1853, chap. 81, section 1, (10 Stat. 
 at Large, p. 170,) entitled ''An act to prevent frauds upon the 
 Treasury of the United States, ' ' provides, ' ' That all transfers and 
 assignments hereafter made, of any claim upon the United States, or 
 any part or share thereof, or interest therein, whether absolute or 
 conditional, and whatever may be the consideration therefor, and all 
 powers of attorney, orders, or other authorities for receiving pay- 
 ment of any such claim, or any part or share thereof, shall be abso- 
 lutely null and void, unless the same shall be freely made arid 
 executed in the presence of at least two attesting witnesses, 
 after the allowance of such claim, the ascertainment of the amount 
 due, and the issuing of a warrant for the payment thereof." 
 
 Since the receipt of your letter, you have, at my request, caused 
 me to be furnished with a copy of two of the contracts made by Rus- 
 sell, Majors & Waddell, with the Quartermaster General, approved 
 by Mr. Floyd, then Secretary of War. By these it appears that the 
 quantity of freight to be carried was not precisely stipulated in the 
 contracts, nor foreknown to the parties, but depended upon the exi- 
 gencies of the government, and the directions of the quartermasters 
 in charge ; that the money did not fall due in any stipulated amounts 
 or at stipulated times, but according to the amount of freight carried 
 to particular places or particular distances, at rates fixed in a bill of 
 prices, which forms a part of the contracts ; and that there were 
 contingent claims agreed for, which might or might not exist and be 
 allowed. 
 
 And thus it appears that, under these contracts, settlements from 
 time to time were indispensable ; for in no other way could there be 
 
15 
 
 "an allowance of such claim, and the ascertainment of the amount due, 
 and the issuing of a warrant for the payment thereof," as provided 
 for in the above cited act of 1853. If these drafts were intended by 
 the parties to be "order*" upon the contract money, then they were 
 expressly forbidden by the act ; and if they were intended to be 
 general, commercial bills of exchange, without reference to the con- 
 tracts, or to the funds to arise under them, then they had no honest 
 foundation in fact or law and, consequently, the Secretary of Wai- 
 had no authority to pledge the national faith for their payment. If 
 he had such authority, it must rest upon the assumption that he is 
 the general agent of the United States, with full power to charge 
 the nation with indefinite debts, with no guide for his conduct but 
 his own discretion, and no restraint but his personal honesty. 
 
 It is claimed on the part of Messrs. Peirce and Bacon, that the long 
 practice of the government, and a long course of judicial decisions, 
 do plainly establish the legality of their present demand. I cannot 
 concur in that opinion; and in expressing my dissent, in view of the 
 authorities cited in their behalf, I shall not weary you with any criti- 
 cal examination of the numerous cases referred to; for all of them, it 
 seems to me, are substantially embraced within and covered by the 
 leading case the United States vs. Bank of the Metropolis, 15 Peters' 
 Rep., p. 378. That was an action of assumpsit, for the balance of 
 an account; the plea was the general issue only. No bill of exchange 
 or other draft was pleaded on the record, by either party, and so 
 there could not be any direct issue of fact or law upon the existence 
 or the legality of any such instrument. At the trial, indeed, the 
 defendant gave in evidence certain drafts which had been drawn by 
 mail contractors, drawn in some instances upon the Postmaster Gen- 
 eral, and in others upon the treasurer of the General Post Office, 
 (who, I suppose, is, in fact, the disbursing clerk of that Department ) 
 These drafts, it seems, were accepted by those officers, respectively, 
 and had passed to the bank by endorsement, in the way of trade. 
 
 The bank claimed to be allowed the amount of these drafts, by 
 way of offset against the balance due to the United States, upon the 
 account; and the court allowed the offset, and gave judgment accord- 
 ingly. The Supreme Court simply affirmed the judgment of the 
 court below. 
 
 Viewing this judgment, in itself, and in its legitimate legal con- 
 
16 
 
 sequences, there is nothing in it conflicting with my doctrines, as 
 herein expressed. For the action of the court did no more than 
 allow the amount of the drafts to be set off against so much of the 
 balance of account due the United States. And it is now the well- 
 established doctrine of the Supreme Court, that equitable as well as 
 legal claims may be allowed in offset. (See Gratiot vs. United States, 
 15 Peters, 336 especially p. 370.) And if it were made known to 
 the court, by investigation of the circumstances, that the amount of 
 the drafts was honestly and equitably due to the holder, the court 
 could do no otherwise than allow it to be set off, even though the 
 court should be of opinion that the Postmaster General and the 
 treasurer had no lawful authority to accept those drafts as bills of 
 exchange. 
 
 It is not, however, the judgment of the court that the claimants 
 rely upon, but rather what was said, arguendo, by the learned judge 
 who pronounced the opinion. It is true that there are several pas- 
 sages in the reported opinion tending to show that the court treated 
 the drafts used in evidence in that case as bills of exchange, subject 
 to the law merchant, and argued to the effect that the United States, 
 when it becomes a party to negotiable, commercial paper, is, like 
 private men, bound by that law. Still, there is not a sentence in 
 the opinion tending to the conclusion that the nation is bound by the 
 mere fact of acceptance by its officer. To the contrary, the court left 
 the party in that case, under the burden imposed upon all by the well 
 known law of agency, that is, whoever deals with a known agent, 
 must, at his own peril, know the character and extent of the agent' s 
 power. For the court, after stating various important matters which 
 are admitted and foreclosed by a genuine and authoritative accept- 
 ance, uses the plain and strong language: "All he had to look to was 
 the genuineness of the acceptance, and the authority of the officer to 
 give it." 
 
 Upon the whole, I am clearly of opinion, that the acceptance by 
 Mr. Floyd, the Secretary of War, of the drafts drawn upon him by 
 Russell, Majors & Waddell, now held by Peirce & Bacon, are not legal 
 contracts of the United States, and that the United States is not 
 legally bound to pay any money on account thereof. 
 
 As to the supposed equity of the claim, beyond the law, I must 
 decline to attempt the investigation. Such enquiries, it seems to 
 me. do not properly belong to my office, but to the judiciary and to 
 
17 
 
 Congress. Indeed, it seems strange to me, and is rather a suspicious 
 circumstance, that this matter has never been presented to the court 
 of claims, where both the law and the equity of the case could be 
 fully heard and determined. It has been objected, I know, that a 
 proceeding in that court would be ineffectual, because it cannot 
 enforce the payment of the debt when ascertained and adjudged. 
 But that objection lies equally against all courts j for none of them, 
 not even the highest, can issue execution against the United States, 
 or compel the government to pay a dollar. No money can be drawn 
 from the Treasury, for any purpose, but in consequence of appro- 
 priations made by law. It follows, therefore, in every such case, 
 that the actual payment must depend upon the action of Congress. 
 And I cannot question the wisdom and justice of Congress, by 
 doubting its readiness to make appropriations which may be necessary 
 to pay all honest claims against the government, whenever lawfully- 
 allowed, by the proper tribunals. 
 
 I have the honor to be, most respectfully, sir, your obedient ser- 
 vant, 
 
 EDWARD BATES, 
 
 Attorney General. 
 
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