The claim, therefore, is clearly one subject to compromise under this section."

In 27 Op. 241, Attorney General Wickersham held that the Secretary of the Treasury had no authority under section 3469 to compromise a suit for a penalty incurred for violation of the Alien Contract Labor Law. Many previous opinions of the Attorney General were cited as distinguishing between the purely fiscal authority conferred by section 3469 to compromise "claims " in favor of the United States, and the authority conferred by other statutes to remit or mitigate fines, penalties and forfeitures. Reaffirming the views expressed by Attorney General Evarts (12 Op. 543), that in enacting section 10 of the Act of 1863 (later incorporated in the Revised Statutes as section 3469), it was the purpose of Congress "to enable the Government to realize the largest amount from money claims which might be of doubtful recovery or enforcement," the opinion quoted the following remarks made on the floor of the Senate by Mr. Fessenden, who had introduced in that body the bill which subsequently became the Act of 1863, and who, in support of section 11 of the bill (afterwards section 10 of the Act), said (p. 244):

"Section 11 merely authorizes the Secretary of the Treasury, upon the report of the district attorney, or any special attorney, approved by the Solicitor of the Treasury, to compromise a claim. There are three several officers to act upon it. There must be a power to compromise claims somewhere. You can not bring every one of them to Congress. That is out of the question. There are a great many claims in favor of the United States which are like claims in favor of individuals, better compromised than left to stand; because it was a remark made by one of the shrewdest merchants I ever knew in our section of the country, that if a man who failed offered him anything, he always took his first offer; because, said he, you never get so good an offer afterwards, and he will live out of what he has in his hands as long as you put off compromising. I think it is so in a great degree with claims in favor of the United States. There is no power to compromise them now, and they lie for years. Here are three officers: first, the district attorney, or the special agent, if we have one; then

his recommendation has to be approved by the Solicitor of the Treasury; and third, by the Secretary of the Treasury. I see no possible way in which it could be fixed better, if you allow a compromise at all; and this shadowy idea of danger to the Government from compromising its old debts through three successive steps strikes me as rather imaginary; but, so far as these special agencies are concerned, I explained this morning what is the object of them."

And as an additional reason why the penalty in question could not be compromised under section 3469, Mr. Wickersham stated (p. 251):

"It may be said, in this connection, that the papers accompanying your communication show that the arguments made in support of the offer of compromise are based upon the ignorance of the offending party as to the criminality of his act in prepaying the transportation of the alien laborers referred to, and not upon any real inability to pay the full amount of the penalty incurred, although the offender claims to be a poor man and that the infliction of the extreme penalty would be a great hardship and injustice to him.

"These are manifestly considerations to be addressed to the department of the Government charged with the administration of the criminal laws of the nation, and not to the department charged only, so far as section 3469, Revised Statutes, is concerned, with the collection of revenue, and whose duty, under that section, is to be exercised upon fiscal considerations alone."

In 29 Op. 217, Attorney General Wickersham approved an opinion by Solicitor General Lehman wherein section 3469 was construed as having the effect given it by Attorney General MacVeagh in 17 Op. 213, supra. The questions there considered were (1) whether corporations having an annual net income of $5,000 or less were required by the Revenue Act of August 5, 1909, to file a tax return, and (2) whether the Commissioner of Internal Revenue had authority to accept an offer in compromise of the 50 per cent addition to the tax which the Act directed the Commissioner to assess in the event of a failure to file a return required by the Act. Answering the first question in the affirmative, Solicitor General Lehman concluded that the

Act required a tax return regardless of the amount of net income received by the corporation. As to the right to compromise the 50 per cent additional assessment, he held that authority to effect such a compromise was conferred upon the Secretary of the Treasury by section 3469 of the Revised Statutes. The latter conclusion was supported by little, if any, independent reasoning, but was based almost wholly upon the views of Attorney General MacVeagh hereinbefore quoted and upon the following language of the Supreme Court in Dorsheimer v. United States, 7 Wall. 166, 174-175:

"The power intrusted by law to the secretary was not a judicial one, but one of mercy, to mitigate the severity of the law. It admitted of no appeal to the Court of Claims, or to any other court. It was the exercise of his discretion in a matter intrusted to him alone, and from which there could be no appeal."

As appears above, however, Mr. MacVeagh's opinion, if construed as holding that section 3469 authorized the compromise of a claim where there was no doubt of its entire and ready collectibilty, was expressly overruled by Attorney General Harmon in 21 Op. 264, on the ground that it ignored the clear distinction between the compromise of a doubtful case and the remission of a penalty, forfeiture or disability; and an examination of the Dorsheimer case shows that the above quoted remarks of the Supreme Court were addressed to a statute which conferred upon the Secretary of the Treasury authority to mitigate or remit a fine, penalty or forfeiture, rather than to compromise a claim in favor of the United States.

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The foregoing review of the opinions of my predecessors foreshadows the reply I must make to the question you propound. As repeatedly stated in those opinions, the word compromise" has a clear and well defined meaning and implies the making of mutual concessions in the settlement of claims of doubtful recovery. The authority to "compromise" conferred by section 3469 can have no application, therefore, to a situation such as that here involved, where the claim has been judicially and finally determined and no doubt has been suggested of its entire collectibility. Any

uncertainty which might remain in that regard is fully dispelled by the analysis made by Solicitor General Phillips (16 Op. 617) of the Act of 1863, from which section 3469 was derived, as well as by the statement quoted by Attorney General Wickersham (27 Op. 241) from remarks on the floor of the Senate by the proponent of the bill which became the Act of 1863, regarding the purpose and scope of the original statute. The analysis and statement referred to unmistakably show that, in enacting the provisions here in question, Congress was concerned only with the interests of the United States and sought to provide a means for recovering as large a part as possible of moneys claimed by the Government which were of doubtful collectibility.

The contrary view taken in the opinion of Attorney General MacVeagh (17 Op. 213), and followed in the opinion of Solicitor General Lehman, approved by Attorney General Wickersham (29 Op. 217), manifestly disregards, not only the plain meaning of the text, but the legislative history, of the statute. It proceeds on the theory that the statute was enacted for the benefit of those against whom money claims are asserted by the United States, and was designed to relieve them of the payment of such part of the claims as the Secretary of the Treasury might determine, upon grounds of justice, equity and sound public policy, should not be exacted. While considerations of this character may doubtless be taken into account in determining whether a fine, penalty, or forfeiture shall be remitted or mitigated, as authorized, for example, by section 618 of the Tariff Act of 1922 (42 Stat. 987), or by section 709 of the Revenue Act of 1928 (45 Stat. 882), they have, in my opinion, no place in the determination of whether claims in favor of the United States shall be compromised under section 3469.

In answer to your inqury, therefore, I have the honor to advise that you have no authority under section 3469 of the Revised Statutes to accept the offer of compromise made by the Great American Indemnity Company.

Respectfully,

WILLIAM D. MITCHELL.

To the SECRETARY OF THE TREASURY.

VALIDITY OF BOND ISSUE BY THE CITY OF MANILA, P. I.

The proposed issue by the City of Manila, P. I., of bonds for permanent public improvements in the aggregate sum of $5,000,000, being authorized by Act No. 3456 of the Philippine Legislature of December 3, 1928, and being within the limit of indebtedness authorized for the City of Manila by Congress, and all statutory requirements regarding the issue of the bonds having been complied with, it will be proper for the Secretary of War to issue the bonds in series as the funds are required and those of the first series, amounting to $500,000, when issued in the form proposed, will have been legally issued and will be valid and binding obligations of the City of Manila.

DEPARTMENT OF JUSTICE,

May 11, 1929.

SIR: I have the honor to acknowledge receipt of your letter of April 9, 1929, with which you transmit a copy of Act No. 3456 of the Legislature of the Philippine Islands, approved December 3, 1928, authorizing the Secretary of War to issue and sell in the name and on behalf of the City of Manila, Philippine Islands, bonds in the aggregate sum of $5,000,000 for the purpose of providing funds to acquire and construct such permanent public improvements as may be deemed advisable and necessary. A form of the proposed bonds is enclosed with your letter, and my opinion is requested as to the legality of the bonds when issued.

While Act No. 3456 of the Legislature of the Philippines authorizes an issue of bonds in the total amount of $5,000,000, you state that it is your purpose to issue at this time but $500,000 of such bonds; that they are to be issued in coupon form of the denomination of $1,000 each, bearing interest at the rate of 42 per cent per annum, to be dated April 1, 1929, and to mature on April 1, 1959. You further state that it is proposed to issue the balance of the bonds authorized by said Act in series of later dates as funds may be required for the purposes indicated.

Said bonds are to be issued pursuant to the authority contained in Act No. 3456 of the Philippine Legislature, approved December 3, 1928, and section 11 of the Act of Congress approved August 29, 1916 (c. 416, 39 Stat. 548), as amended by Act of May 31, 1922 (c. 203, 42 Stat. 599).