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DEPARTMENT OF JUSTICE, October 5, 1886. SIR: I have the honor to state that in obedience to your instructions to him, dated July 31, 1886, Leigh Chalmers, esq., examiner in the Department of Justice, reported to me for duty in the investigation of the sureties on the bond of D. B. Bonfoy, late collector of the fourth district of Texas, to bave the proceedings now pending against them at Jefferson division of the United States court for the eastern district of Texas dismissed ; said cause being Chancery No. 12, The United States v. William T. Scott, William Umbdenstock, et al., the object of this suit being to set aside a compromise heretofore made with the Government and to enforce the former judgment.

After a full and careful investigation of the whole matter we respectfully submit the following: (The United States v. William T. Scott et al., Chancery No. 12, pending in circuit court at Jefferson,

Tex., fifth circuit.)

Statement.

Davis B. Bonfoy was appointed collector of internal revenue of the fourth district of Texas July 27, 1866, and entered regularly upon the discharge of the duties of his office January 1, 1867, with William T. Scott, Reuben Knight, W. C. Bristow, W. E. Miller, B. H. Martin, and William Umbdenstock as sureties, with his office and residence at Marshall, Tex.

He was a citizen of good standing, temperate, intelligent, energetic, and diligent in the discharge of his official duties. (See Ex. B, R, T, N.) He kept and used three several safes, in which he deposited Government money collected by himself and deputy-one small safe, which he kept in his office, in which he deposited daily collections; one large safe in Jones's store, in the lower part of the same building, and yet another large safe at his residence.

It was his custom to handle all Government moneys pertaining to his office in person.

On the receipt of money from his deputies he would count it, put a wrapper around the money received from each deputy collector separately, write the name of the deputy and the amounts on the wrapper, date of receiving the same, making it the same time on the same note on the accompanying monthly report of the deputy paying it in. The monthly report was handed to the bookkeeper to enter up, and the money thus wrapped and marked placed in the small safe kept in his office, and at the close of each day's business he would take the money from the small safe and carry it downstairs and deposit it in the large safe kept in Jones's store, where he would let it remain until the bookkeeper examined the monthly report and entered the amount on his books. The wrappers were then taken from the money and thrown away and the money carried to his residence and deposited in the large safe with the general fund. (See Ex. B, C, D, H, L, N, O, U, W.) On the 7th of August, 1867, Bonfoy had a difficulty with Fowler, one of his deputies, at Jefferson, Tex., about 20 miles distant from Marshall, in which he killed Fowler, for which he was arrested and lodged in jail at Jefferson. (See Ex. B, C, D, H, L.) At this time the State of Texas was under military rule and the civil arm of the State government paralyzed and powerless to protect its citizens.

The sureties on Bonfoy's bond, upon the casting of their principal into prison, notified the Commissioner of Internal Revenue of the facts and applied to him for an agent to take charge of the business and the money collected by Bonfoy and remaining in said safe, which the Commissioner failed to do. (See Ex. B, R, T.)

Mrs. Bonfoy, wife of the collector, becoming alarmed at the state of affairs, called upon Lieut. William Hawley, Twentieth United States Infantry, commanding the post at Marshall, for a guard to protect her person and the Gorernment funds in the safe at the residence, which request was complied with, and the very guard sent to protect her cruelly murdered her, and a few days afterwards Bonfoy died. (See Ex. B, N, O.) Upon the imprisonment of Bon. foy, Lieut. William Hawley informed Lieutenant Blatchford, Twentieth United States Infantry, commanding the post at Shreveport, of the fact of Bonfor's imprisonment and that there were large sums of Government funds left by Bonfoy and no one to take charge of them.

Whereupon Lieutenant Blatchford ordered Lieutenant Hawley to take charge of the same. Obeying said order, Lieutenant Hawley, on the 13th or 14th of August, took forcible possession, by soldiers armed with muskets and bayonets, of the office, money, books, and papers belonging to Collector Bonfoy, carrying

some to his camp and some to the court-house in Marshall, against the protest of S. D. Wood, senior deputy and legal custodian of the same in such case so made and provided (R. S., sec. -), and against the earnest protest of the sureties. (See Ex. No. 1, B, C, D, L, M, N, R, T.) This seizure was not only approved of by the Secretary of the Treasury, but the officers commended by him for the act. (See his letter in Ex. No. 1.)

Hawley retained possession of the books, papers, etc., for several days, when he returned the small safe and some of the books and papers (in great confusion) to the said s. D. Wood, whom he placed in possession of the office with instructions to turn over to him, Hawley, all moneys subsequently collected. (See Ex. B, and B-in red ink.)

There was at the time of the seizure of the safe by Hawley the following sums of money contained in them: In the safe at Bonfoy's residence, $47,337.25 Government funds, $13,000 Mrs. Bonfoy's private funds, and a small package marked “ I. O. O. F.” In the safe at Jones's store, $65,000; amount in the small safe not known, but several days' collections. (See Ex. No. 1, B, C, D.)

The safe at Jones's store with contents has never been accounted for by the officer seizing it.

Hawley received from Deputy S. D. Wood, of money subsequently collected, $27,000, making a total, with the money taken with the safe, of $139,337.25. This money Hawley held possession of for several months, when he turned a part of it over to Capt. T. M. K. Smith, Twenty-sixth United States Infantry, who had custody of the same until the 21st day of April, 1868, a period of eight months from the time of the seizure by Hawley, when he (Smith) turned over to the United States Treasury, a New Orleans, $68,982.59 of it, leaving a balance of $70,354.66 Government money and $13,000 belonging to Mrs. Bonfoy unaccounted for. (See Ex. No. 1, B B, red ink, and C.) The officers (Smith and Hawley) were very dissipated men and much addicted to gambling and used the money from the safe to gamble with, and loaned it to individuals for private speculation, receiving heavy interest for said loan. (See Ex. F, H, I, J, K, L, N, V.) At the April term, 1872, of the United States circuit court at Tyler, for the western district of Texas, four years after the death of Bonfoy, suit was instituted against the sureties on Bonfoy's bond. (Ex. S.) On the 11th day of December, 1873, judgment was recovered against William T. Scott, William Umbdenstock, et al., as sureties on Bonfoy's bond for $50,000. Notwithstanding this judgment, the defendants claimed at the time and sought to prove, and subsequent facts develop, that Bonfoy's account with the Government actually stood as follows: Davis B. Bonfoy, late collector fourth district of Teras, in account with the

United States.

DR.

To balance as per report of Fifth Auditor, No. 6441--

$130, 022. 68

5, 339. 19 2, 909. 48

757. 27

CB.
Taxes on bonded goods erroneously charged---
Taxes collected by S. D. Wood, not previously credited
Taxes collected by H. C. Hunt in April, 1874.--

CR.
Taxes abated on lists Nos. 7255, 7256, 7455, 731.
Cash deposited C. D. No. 464..
Commissions due Bonfoy
Cash seized by Lieut. William Hawley ----

$47, 193. 67 10, 888. 37 13, 761.82 139, 337. 25

220, 187. 05

Deduct amount deposited by Capt. T. M. K. Smith in United States

Treasury at New Orleans..

68, 982. 59

151, 204. 46

Deduct amount claimed by Government as per report Fifth Auditor,

No. 6441.

130, 022. 68

Leaves

21, 181. 78 which was due Bonfoy by the Government at the time the judgment was rendered against his sureties for $50,000. (See Ex. A, and A, B, C, D.)

This result was so foreign to what we anticipated, and so incompatible with the fact that a judgment had been obtained for so large an amount against the sureties, although it had been arrived at from facts obtained by us and the data furnished by the Solicitor of the Treasury, that we were unwilling to base a report upon it alone. For this reason, at the request of Mr. Chalmers, Hon. G. A. Jenks, Acting Attorney-General, addressed a note to the Commissioner of Internal Revenue, asking information on the subject, which was answered by a communication from H. C. Rodgers, Acting Commissioner, dated September 20, 1886, which is herewith submitted, marked Ex. No. 2, and made a part of this report.

It will be seen from this communication that the Government was indebted to the estate of Bonfoy at the date of the judgment in the sum of $5,999.43. This reduction of the amount found by us to be due was made by credits to the Government, which we knew not of at the time we made up the account, nor are they contained in the data furnished by the Solicitor. This statement of the account, coming as it does through official sources and from official records, we, of course, adopt as more accurate than the result arrived at by us. In the trial of the suit, at Tyler, it appears that the defendants were forced to trial unprepared. (Ex. L. P. R. and S., pp. 69 to 78.) Execution was issued on the judgment and levied upon fifty-seven sections of land in Texas, formerly owned by William T. Scott, but sold and conveyed by him to a purchaser, not a party to the judgment, before the date of the judgment.

An equity suit was instituted on behalf of the United States at Austin, in the western district of Texas, for the discovery of fraud in Scott's conveyance, and dismissed on defendant's answer. (See Wood, 334.) Notwithstanding this proceeding the land was offered for sale by the United States marshal and bought in by the Government, but no credit for the value of the same appears to have been entered on the judgment, or claim against the defendants. In 1879 the records of the court at Tyler, including said judgment, returned esecution, and all the file papers were burned.

In 1891 the defendants William T. Scott and William Umbdenstock, offered in compromise of said judgment $5,500, which, upon the recommendation of Edward Guthridge, esq., then United States attorney for the eastern district of Texas, was accepted by the Government. In 1884 a suit was instituted in the United States court at Jefferson, in the eastern district of Texas, to set aside said compromise on the ground that it was procured by fraud and bribery. (See copy of plaintiff's amended bill. herewith submitted and made a part of this report, marked Ex. Z.) The substance of this petition is, that the United States attorney, Edward Guthridge, was bribed by Scott and Umb denstock to recommend said compromise, and that the statements made by him as to the solvency of the defendants were false. (For a more comprehensive view of all the facts in this case reference is respectfully made to the exhibits submitted and made a part of this report and marked No. 1 and from A to Z, inclusive.) The evidence is conclusive that at the time of Bonfoy's death the sureties used diligence in telegraphing the facts to the Commissioner of Internal Revenue at Washington, and asking him to send an agent to take charge of the oflice and effects, which was not done, but the office books, papers, ani money were forcibly taken in charge by Lieut. William Hawley, Twentieth United States Infantry, then commanding the post at Marshall (the State being under military rule). against the protest of the legal custodian, Deputy S. D. Wood, and the sureties.

That Hawley refused to have the money, except that in the safe at the residence, counted, or to render the sureties any statement or account of the same, although frequently requested by them so to do.

The evidence abundantly shows that Hawley was a dissipated man, and used the “ Bonfoy money freely for gambling and other purposes; that his sue cessor, Smith, was also a dissipated man, and loaned said money to individuals for speculation. That on the trial of the case against the sureties they were deprived of their defense by having, through mistake, presented their accounts and facts in favor of Bonfoy to the wrong officer at Washington for his action thereon, and said accounts were returned by said officer without any action thereon, which was not known to the defendants until they had announced really for trial. (See Ex. L. P. R. S., pp. 69 to 78.) For eight years after said judgment nothing had been realized thereon (barring the question to the title to the above-named land), although sundry executions had been issued. That at the time of the compromise the defendants were insolvent, and that said compromise was to the interest of the Government,

While we do not exonerate the late United States attorney, Edward Guthridge, from the grave charge of bribery, we can find no evidence showing that William T. Scott had any connection with or knowledge of the bribery.

We find no property belonging to the defendants, or either of them, subject to execution, out of which said judgment, or any part thereof, can be made.

The defendants have answered the bill under oath, denying the allegation of fraud and bribery, and we can find no evidence of the former and but meager of the latter, except the affidavits of Guthridge and Umbdenstock, which in their answer they attempt to explain away. (See Ex. 2, X.)

In view of all the facts, after carefully considering the evidence, we respectfully recommend : (1) That the suit pending at Tyler to substitute the original judgment, and the suits pending at Jefferson to set aside the compromise, and recommended by the late United States attorney, Edward Guthridge, and accepted by the Government, be dismissed; (2) it would seem that justice demands that the $5,500 paid in compromise should be refunded to the sureties on Bonfoy's bond, and that the Government should, by some proper action, release the lands levied on by reason of the aforesaid execution. We have the honor to be, very respectfully,

J. E. McCOMB,
United States Attorney, Eastern District of Texas.

LEIGH CHALMERS,

Eraminer, Department of Justice. The ATTORNEY-GENERAL

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