Opinion of the Court

the petition and those mentioned in the two counts, respectively, and contend that in a suit brought by three parties, relying upon a contract they jointly have with the Government, the latter can not set up as a defense or prosecute a separate claim or demand it may have against one of the parties plaintiff arising out of a distinct contract with which the other parties plaintiff are in nowise concerned.

We think the demurrer is well taken. The right of the Government to file a set-off or counterclaim rests upon the authority of section 145 of the Judicial Code, which also defines generally the jurisdiction of this court in suits against the United States. This statute provides that the court shall have jurisdiction to hear and determine, first, certain claims against the Government, and, second, "all set-offs, counterclaims, claims for damages, whether liquidated or unliquidated, or other demands whatsoever on the part of the Government of the United States against any claimant against the Government in said court." In giving its consent to be sued, the Government has thus attached conditions to which the party suing subjects himself. See McElrath case, 102 U. S. 426. But there is nothing in the statute conferring jurisdiction to entertain suits against parties indebted to the United States except they be claimants. It has hence been held that where the court is without jurisdiction of the case set forth in a petition it has no jurisdiction of a counterclaim by the Government against the plaintiff in such a case. The dismissal of a petition for want of jurisdiction carries with it a dismissal of the counterclaim. See Looney v. District of Columbia, 18 C. Cls. 8; B. & O. R. R. Co. v. United States, 34 C. Cls. 484, 502.

It is a familiar rule that to a suit upon a joint cause of action a plea of set-off arising out of a claim against one of the plaintiffs is not allowable. In Gray v. Rollo, 18 Wall. 629, 632, the court approves the general rule as stated by Justice Story to be that courts of equity, following the law, will not allow the set-off of a joint debt against a separate debt or, conversely, of a separate debt against a joint debt; or, to state the proposition more generally, they will not allow a set-off of debts accruing in different rights. The

Opinion of the Court

court said (p. 634): "The debtor who owes a debt to several creditors jointly can not discharge it by setting up a claim which he has against one of those creditors, for the others have no concern with his claim and can not be affected by it." See also Young v. Black, 7 Cranch 565, 568. We find nothing in the language of the jurisdictional act which requires or authorizes a different rule when suit is brought against the United States. The act in allowing counterclaims to be interposed contemplates mutual debts or demands. See Eckford case, 6 Wall. 484, 488. It is apparent that much confusion, delay, and injustice could arise in the disposition of the original suit if the defendant's theory were allowable that claims in nowise mutual or in the same right could be set up by the Government against one or another of the parties plaintiff and be heard along with the original suit. Neither of the items under consideration purport to be claims against all the real plaintiffs, nor is it sought to treat them as set-offs against the claim asserted by these joint contractors. The question has been decided, however, by this court.

In Boehm's case, 20 C. Cls. 241, the suit was brought by three persons setting up a cause of action that accrued to them as partners. The defendant pleaded a counterclaim against all of the parties and attempted also to set up as an alleged counterclaim a judgment it had secured against two of the three plaintiffs. The court sustained the right to assert the first but sustained a demurrer to the second of these supposed counterclaims. In an opinion by Judge Nott there is adopted the language of Chief Justice Gibson in Archer v. Dunn, 2 Watts & Serg. 361, that "there is no instance of a set-off of a debt due by one of several plaintiffs, because that would enable the defendant to pay his debts to the prejudice of the others. The point is too clear for elucidation and it was directly decided by this court in Henderson v. Lewis, 9 Serg. & Rawle 379." It but strengthens the view thus expressed to note that in the Boehm case the plea set forth a dissolution of the partnership, the settlement of its debts, and the individual interests of the several partners. When

Reporter's Statement of the Case

the case came on for trial the ruling upon the counterclaim. was followed, and it was dismissed. See Boehm case, 20 C.. Cls. 241, 250.

The demurrer to "Count II" and "Count III" of defendant's counterclaim should be sustained and the two countsdismissed. And it is so ordered.

GRAHAM, Judge; HAY, Judge; DOWNEY, Judge; and BOOTH, Judge, concur.

1

CHARLES A. LUDEY v. THE UNITED STATES 1

[No. D-360. Decided November 9, 1925]
On the Proofs

Income tax; oil rights.-The extraction of oil from the earth repre-sents income and not depletion of capital.

Same; sale; depreciation.-Depreciation is covered in the sale price, and may not be deducted by the Government from the pur-chase price in arriving at a taxable gain from the sale of property.

Same; sale; actual loss.-As to property purchased prior to March 1, 1913, where there is no actual loss, the plaintiff is not entitled to deduct from his tax return on gross income the dif-ference between the fair market value as of March 1, 1913, and the selling price in 1917.

The Reporter's statement of the case:

Mr. Wayne Johnson for the plaintiff. Messrs. Lyle T. Alverson and Mark J. Ryan, and Johnson & Shores were on the briefs.

Mr. Thomas H. Lewis, jr., with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant. Messrs. Fred K. Dyar and Nelson T. Hartson were on the brief.

The court made special findings of fact, as follows:

I. Plaintiff is a citizen of the United States and a resident of the city of Parkersburg, county of Wood, State of West Virginia.

II. Plaintiff on or about March 23, 1918, filed his incomeand excess-profits tax returns for the taxable year ending

1 Writ of certiorari granted.

Reporter's Statement of the Case

December 31, 1917. In said income-tax return plaintiff's net taxable income was stated to be $30,594.33. True copies of said income and excess-profits tax returns are annexed to plaintiff's petition as Exhibits C and D, respectively, and made a part of this finding by reference.

III. On or about June 1, 1918, there were assessed against plaintiff upon his net taxable income shown in said incometax return income taxes in the sum of $2,110.15, which plaintiff duly paid to the collector of internal revenue for the district of Oklahoma on or about June 15, 1918.

IV. In determining his net taxable income reported in said returns plaintiff deducted $7,621.33 as a loss alleged by plaintiff to have been sustained by him upon his sale in February, 1917, of certain oil lands, leases, and property, to wit, the fee to Goodman farm, a lease to Matney farm, a lease to Wolfe farm, a lease to Billingslea farm, the fee to Pitman farm, and one-third interest in Helphrey oil-drilling rig.

All of said lands and property were located in the county of Tulsa, State of Oklahoma.

The fee to said Goodman farm and said Matney lease were purchased by plaintiff in 1911 at an aggregate price of $20,000, and had on March 1, 1913, an aggregate fair market value, with physical equipment, of $47,500, of which $39,500 was the value of oil reserves and $8,000 the value of the physical equipment. Subsequent to March 1, 1913, there were added by plaintiff to said Goodman farm equipment and improvements at a cost of $6,000.

Said Wolfe lease was purchased by plaintiff in July, 1913, for $26,500, of which $17,500 was paid for oil reserves and $9,000 for physical equipment, and thereafter equipment and improvements were added thereto by plaintiff at a cost of $1,794.

Said Billingslea lease was purchased by plaintiff in December, 1913, for $11,000, of which $5,000 was the value of the oil reserves and $6,000 the value of the physical equipment.

The Pitman fee was purchased by plaintiff in February, 1915, for $3,000, and was sold by him in 1917 for $4,500, a gain of $1,500.

Reporter's Statement of the Case

The one-third interest in Helphrey oil drilling rig was purchased by plaintiff in 1916 for $183.33 and sold by him in February, 1917 for $200, a gain of $16.67.

The Goodman fee, Matney lease, Wolfe lease, and Billingslea lease were sold by plaintiff in February, 1917, for an aggregate price of $76,500. This price was based on the daily production of the four properties, namely, 51 barrels, valuing the properties at $1,500 for each barrel of oil produced daily. The daily production of each of the four properties at the time of sale was as follows:

The Goodman fee, 21.5 barrels; Matney lease, 9.6 barrels ; Wolfe lease, 12.5 barrels; and Billingslea lease, 7.4 barrels. The proportion of the total sales price allocable to the Goodman fee and Matney lease was $46,650. As this was in excess of the cost of these properties but less than their fair market value as of March 1, 1913, there was neither gain nor loss on the sale of these two properties.

The proportion of the total sales price of $76,500 allocable to the sale of the Wolfe lease, the Billingslea lease, and their equipment was $29,850.

As the Wolfe and Billingslea leases and their equipment cost the plaintiff $39,294, these properties were sold at a loss of $9,444.

On the sale of all the properties there was a loss of $7,927.33. Considering this loss, the correct taxable net income of plaintiff for 1917 was $30,288.33, and the correct tax due thereon was $2,073.36. The total tax paid by plaintiff for 1917 was $12,966.81, of which $2,110.15 (an overpayment of $36.79) was paid on June 15, 1918, and $10,856.66 was paid on November 9, 1923. The difference between the total tax paid by plaintiff for 1917, namely, $12,966.81, and the tax due on the basis of the above computation, namely, $2,073.36, is $10,893.45.

The parties stipulated that the amount of the judgment herein, on the basis of the court's conclusion herein, should be $10,893.45, with interest on $36.79 from June 15, 1918, and interest on $10,856.66 from November 9, 1923.

V. Between March 1, 1913, and the date of said sales in February, 1917, depletion was sustained upon said proper