Smythe v. United States

after making the foregoing statement, delivered thé opinion of the court.

As the Circuit Court and the Circuit Court of Appeals both held that the question of the liability of Smythe was determined for the Government by the decisions of this court — which view the defendants controverted — we must ascertain the import of those decisions. This course is made necessary by the contention of the defendants that the latest decision of this court, to which reference will be presently made, modified the earlier decisions upon which the Government relies.

The first case is that of United States v. Prescott, 3 How. 578 , 587. That was an action, on the bond of a receiver of public moneys, conditioned for the faithful performance of his duties, and that he “ should well, truly and faithfully keep, safely, without loaning or using, all the public money collected by him, or otherwise at any time placed in his possession and.custody, till the same had been, or should be ordered by the proper department or officer of the Government, to be transferred or paid out,” etc.

The defence was that the money for the non-payment of which the United States sued had been feloniously stolen, taken and carried away from his possession by some unknown person or persons without fault or negligence on his part, and notwithstanding he had used ordinary care and diligence in keeping it. The receiver contended that he was liable only as a depositary for hire, unless his liability was enlarged by the- special contract to keep safely, which he insisted was not the case.

The court said : “ This is not a case of bailment, and, consequently, the law of bailment does not apply to it. The liability of the defendant, Prescott, arises out of his official bond,

The next case is that of United States v. Morgan, 11 How. 154 , 158. That was an action upon the bond of a collector of customs, conditioned that he “ has truly and faithfully executed and discharged, and shall continue truly and faithfully to ex

The court characterized as an erroneous impression that the collector “ was acting as a bailee, and under the responsibilities of only the ordinary diligence of a depositary as to the cancelled notes,'when in truth he was acting under his commission and duties by law, as collector, and under the conditions of his bond. The collector is no more to be treated as a bailee in this case than he would be if the notes were still considered for all purposes as money. He did not receive them as a bailee, but as a collecting officer. He is liable for them on his bond, and not on any original bailment-or lending. And if the case can be likened to any species of bailment in forwarding them, by which they were lost, it is that of a common carrier to transmit them to the Treasury, and in doing which he is not exonerated by ordinary diligence, but must answer for losses by larceny and even robbery. 2 Salk. 919; 8 Johns. 213 ; Angell on Carriers, §§ 1, 9.”

In United States v. Dashiel, 4 Wall. 182 —which was an action on the bond of a paymaster in the army for not paying over or accounting for public money that came into his hands — the de-fence was-that without any want of proper care and vigilance on the part of the paymaster a certain part of the moneys had been stolen from him. The trial court held that the theft or robbery, if satisfactorily proved, was a good defence. _ But this court held otherwise upon the authority of United States v. Prescott and United States v. Morgan, above cited, and reversed the judgment.

Substantially the same question arose in United States v. Keehler, 9 Wall. 83 , which was an action upon a bond of a postmaster in North Carolina. The bond was conditioned, among other things, that the obligor would well and truly discharge, the duties of postmaster, and keep safely, without lending, using, depositing in banks, or exchanging for other funds, than as al-' lowed by law, all the public money at any time in his custody, till the same was ordered by the Postmaster General to be

After observing that the postmaster had no right to select a creditor of the United States and pay what he might suppose the Government owed him, the court said that “ the acts of the Confederate Congress could have no force, as law, in divesting ■ or transferring rights, or as authority for any act opposed to the just authority of the Federal Government.” Referring to the statement of facts made in the case, and which were substantially as above recited, it said : “ This statement falls far short ■ of showing the application of any physical force to compel the defendant to pay the money to Clemmens. Nor is it in the least inconsistent with the fact that hé might have been desirous and willing to make -the payment. It shows no effort or endeavor to' secure the funds in his hands to the Government, to which he owed both the money and his allegiance. Nor does it prove that he would have suffered any inconvenience, or been punished by the Confederate authorities, if he had refused to pay the draft of the insurrectionary Post Office

In Boyden v. United States, 13 Wall. 17 , 21, which was an action upon the bond of a receiver of public moneys — the de-fence being that the receiver had been by irresistible force robbed of the moneys sued for — the court said : “ Were a •receiver of public moneys, who has given bond for the faithful performance of .his duties as required by law, a mere ordinary bailee, it might be that he would be relieved by proof that the money had been destroyed by fire, or stolen from him, or taken by1 irresistible force. He would then be bound only to the exercise of ordinary care, even though a bailee for hire. The contract of bailment implies no more except in the case of common carriers, and the duty of a receiver, virtute officii, is to bring to the discharge of his trust that prudence, caution, and attention which careful men usually bring to the conduct of their own affairs. He is to pay over the money in his hands as required by law, but he is not an insurer. He may, however, make himself an insurer by express contract, and this he does when he binds himself in a penal bond to perform the duties of his office without exception. There is an established difference between a duty created merely by law.and one to which is added the obligation of an express undertaking. The law does not compel to impossibilities, but it is a settled rule that if performance of an express engagement becomes impos-

At the same term of the court the case of Bevans v. United States, 13 Wall. 56 , 60, was determined. That was a'suit upon a bond executed by Bevans, a receiver of public moneys, in a land district of Arkansas. The court reaffirmed the rule announced in the Prescott case, and said that “ it is not to be overlooked that Bevans was not an ordinary bailee of the Govern- ■ ment. Bailee he was undoubtedly, but by his bond he had insured the safekeeping and prompt payment of the public money which came to his hands. His obligation was, therefore, not less stringent than that of a common carrier, and in some respects it was greater ” — citing United States v. Prescott. In the same case the court, in reference to that part, of the defence attributing the loss of. the money in question to the action of the Confederate power, said: “ It may be a grave question whether the forcible taking of money belonging to the United States from the possession of one of her officers, or agents lawfully holding it, by a government of paramount force, which at the time was usurping the authority of the rightful government, and compelling obedience to itself exclusively throughout a State, wóuld not work a discharge of such officers or agents, if they were entirely free from fault-, though they had given bond to pay the money to the United States. This question has been thoroughly argued, but we do not propose now to consider it, for its decision is not' necessary to the case.”

The question thus reserved from decision arose and was decided in United States v. Thomas, 15 Wall. 337 , 341-2, 346-7, 350, 352. That was an action on the bond of a surveyor of

“ That overruling force arising from inevitable necessity, or the act of a public enemy, is a sufficient answer for the loss of public property when the question is considered in reference to an officer’s obligation arising merely from his appointment, and aside from such a bond as exists in this case, seems almost self-evident. . . . These provisions [prescribing the conditions of the bonds of receivers, etc.] show that it is the manifest policy of the law to hold all collectors, receivers, and deposi-taries of the public money to a very strict accountability. The legislative anxiety on the subject culminates in requiring them to enter into bond with sufficient sureties for the performance of their duties, and in imposing criminal sanctions for the unauthorized use of the moneys. Whatever duty can be inferred from this course of legislation is justly exacted from the officers. No ordinary excuse can be allowed for the non-production of the money committed to their hands. Still they are nothing but bailees. To call them .anything else,- when they are expressly forbidden to touch or use- the public money except as

directed, would be an abuse of terms. But they are special bailees, subject to special obligations. It is evident that the ordinary law of bailment cannot be invoked to determine the degree of their responsibility. This is placed on a new basis. To the extent of the amount of their official bonds, it is fixed by special contract; and the policy of the law as to their general responsibility for amounts not covered by such bonds may be fairly presumed to be the same.” Referring to the adjudged cases, the court said : “ It appears from them all (except perhaps the New York case) that the official bond is regarded as laying the foundation of a more stringent responsibility upon collectors and receivers of public moneys. It is referred to as a special contract, by which they assume additional obligations with regard to the safekeeping and payment of those moneys, and as an indication of the policy of the law with regard to the nature of their responsibility. But, as before remarked, the decisions themselves do not go the length of making them' liable in cases of overruling necessity.” The opinion concludes: “No rule of public policy requires an officer to account for moneys which have been destroyed by an overruling necessity, or taken .from him by a public enemy, without any fault or neglect on his part.”

We think the Government is quite correct in its conclusion that the Thomas case does not materially modify the decisions in previous cases. The general rule announced in those cases —and the question need not be discussed anew — is that the obligations of a public officer, who received public moneys under a'bond conditioned that he would discharge his duties according to law, and safely keep such moneys as came to his hands, by virtue of his office, are not to -be determined by the principles of the law of bailment, but by-the special contract evidenced by his bond conditioned as above stated; consequently, it is no defence to a suit brought by the Government upon such a bo'nd that the monej'S, which were in the custody of tlie officer, had be«¡n destroyed by fiie occurring without his fault or negligence.. This rule, so far from being modified by the Thomas case, is reaffirmed by it, subject, however, to the exception (which, indeed, some of the prior cases had, in effect,

It is appropriate here to say that the rule established by this court in the Prescott case has been enforced by numerous decisions in staté courts. In Commonwealth v. Comly, 3 Barr, 312—which was an action on the bond of a collector of tolls, conditioned that he would “ account for and pay over all moneys he may receive for tolls,” and in which the defence was that the moneys sued for. had been stolen from the collector — the court said : “ The opinion of the court in the case of the United States v. Prescott is founded in sound policy and sound law. The responsibility of a public receiver is determined not by the law of bailment, which is called in to supply the place of a special agreement where there is none, but by the condition of his bond. The condition of it in this instance was to ‘account for and pay over’..the'moneys to be received ; and we would look in vain for a power to relieve him from the performance of it. . . . The keepers of the public moneys, or their sponsors, are to be held strictly to their contract, for if they were to be let off on. shallow pretenses, delinquencies, which are fearfully frequent already, would be incessant. A chancellor is not bound to control the legal effect of a contract in any case; and his discretion, were he at' liberty to use it, would be influenced by considerations of public policy.” To the same effect are Inhabitants v. Hazzard, 12 Cush. 112 ; Inhabitants v. McEachron, 33 N. J. L. 339 ; State v. Harper, 6 Ohio St. 607 ; Halbert v. State, 22 Indiana, 125 ; Morbeck v. State, 28 Indiana, 86; Ross v. Hatch, 5 Iowa, 149 ; Taylor v. Morton, 37 Iowa, 551 .

AVe hold that as the accounts of the defendant Smythe showed a deficit of $25,000 in the moneys in his. custody as Superintendent of the Mint, the Government was entitled to a judgment for that amount unless, as the defendants contend, they were entitled to at least a credit for $1182, which, it is alleged, was the amount of treasury notes not entirely destroyed

A complete answer to this suggestion is to be found in sections 951 and 957 of the Revised Statutes — reproduced from the act of March 3, 1797, 1 Stat. 514 , c. 20. Those sections are as follows:

§ 951. “In suits brought by the United States against individuals, no claim for a credit shall be admitted, upon trial, except such as appear to have been presented to the accounting officers of the Treasury, for their examination, and to have been by them disallowed, in whole or in part, unless it is proved to the satisfaction of the court that the defendant is, at the 'time of the trial, in possession of vouchers not before in his power to procure, and that he was prevented from exhibiting a claim for such credit at the Treasury by absence from the United States or by some unavoidable accident.”

§ 957. “When suit is brought by the United States against any revenue officer or other person accountable for public money, who neglects or refuses to pay into the Treasury the sum or balance reported to be due to the United States, upon the adjustment of his account it shall be the duty of the court to grant judgment at the return term, upon motion, unless the defendant, in open court, (the United States attorney being present,) brakes and subscribes an oath that he is equitably entitled to credits which had been, previous to the commencement of the suit, submitted to the accounting officers of the Treasury, and rejected ; specifying in the affidavit each particular claim so rejected, and’ that he cahnot then safely come to trial. If the court, when such oath is made, Subscribed, and filed, is thereupon satisfied, a continuance until the next succeeding term may be granted. Such continuance may also, be granted when the suit is brought upon a bond or other sealed instrument, and the defendant pleads non est factum, ,or makes a motion to the court, verifying such plea or motion by his oath, and the court thereupon requires the production of the original bond, contract, or other paper certified in the affidavit. And no continuance shall be granted except as herein provided.”

It is said, however, that the Government has not suffered any substantial damage by the destruction of its own obligations, and that in no event is it entitled to a judgment for more than nominal damages, or at most for only such amount in damages as would meet the cost of reprinting new treasury notes to take the place of those destroyed by fire. If this view be sound, a public officer, receiving United States treasury notes for the Government, under a bond to safety keep them and pay them over to the United States whenever required by law or ordered to do so, could deliberately destroy or burn them, and, then admitting that he had done so, could prevent any judgment against him, except one that would cover merely the cost and trouble of printing new notes. Such a proposition cannot be entertained for a moment. The pica of non damnificatus has

This view, it is contended, is not consistent with what was said in United States v. Morgan, 11 How. 154 , above cited. It appeared in* evidence in that case that the collector received nearly $100,000 for duties in treasury notes, and cancelled them. The notes were then put up in a bundle to be sent to the Treasury 'Department, through'’the post office, and orders were given to the servant accustomed to deliver packages there to deliver those. But the bundle was stolen or lost. It appeared, also, that two of the notes for $500 each were altered and soon after-wards presented to the collector in payment of other duties, and wére received by him as genuine. The court, in that case, as already shown, reaffirmed the principle announced in United

The injury that might probably have come to the Government by reason of the neglect of the collector in the Morgan, •case was such that the court could not, as in the present, case, give any peremptory instruction to the jury. It could not have said, in the former case, that cancelled treasury notes were to be regarded as money, or that the Government was entitled to judgment for the face amount of those notes, prior to their being cancelled. Nor could it say, as matter of law, that the Government was, in fact, damaged by not having the cancelled treasury notes as vouchers. Such being the case, it was held that it was for the jury, under such evidence as might be adduced, to say what actual injury, if any, accrued to the United States by reason of the non-delivery of the cancelled treasury notes.

The present case cannot be controlled by the rule laid down in the Morgan, case. Here the treasury notes received. by Smythe were not cancelled and could be used as money. They were not safely kept nor were they'destroyed ib l ough overruling necessity or by the public enemy. Hence, there was a breach of his bond, and as the amount of- the treasury notes which he failed to deliver to the Government was clearlyshown, there was nothing in this case to refer to the jury. There was no question of damage to be ascertained by a jury; for if under the circumstances disclosed the defendants were liable at all, the Government,'as matter of law, was entitled to a judgment for the full amount shown to have been received by the Superintendent and not paid over by him, as required by his bond.

It remains to consider some minor objections to the judgment. It is contended that it was error to give interest on the amount of the judgment from April 1, 18.93, the date from which the accounts of the Superintendent were stated at the Treasury Department.

This statute is mandatory, and the sureties on the bond of Superintendent Smythe must be held to have signed it in view of the requirement as to the date from which interest should be computed. It is not denied that the treasury notes in question were received at least as early as April 1, 1893.

It is also said that it was error, under the law of Louisiana, to have rendered an absolute judgment against Byrnes, the administrator of the succession of Conery, deceased ; that if any judgment was rendered it should have been against the-administrator, ‘payable only fn due course of administration. This objection is quite technical. If by the law of Louisiana- the judgment is so payable, it will be thus interpreted and enforced, subject, of course, to the priority given to the Government in the distribution of the proceeds of the estate of any person indebted to the United States whose estate is insufficient to pay all debts against it. Rev. Stat. secs. 3466, 3467.

The judgment of the Circuit Court of Appeals, affirming the judgment of the Circuit Court, ii

Affirmed.

with whom concurred Mb. Justice Shieas,

dissenting.

I dissent from the conclusion arrived at in the opinion of the court, and from the judgment thereon. I agree as to the general character and extent of the liability of an officer entrusted with the care and custody of public moneys, as stated in the cases cited, in the opinion upon that subject. But those cases do not touch the question involved. It is undisputed that the' property, for the loss of which the defendants have been held,, consisted of $25,000 of treasury notes of the government of the United States; in other words, it consisted of the written promise of the government to pay money upon presentation of the notes. There was evidence also, at least sufficient to go to the jury, to prove that most of these notes were wholly destroyed by fire, so that there was no possibility of their being thereafter presented for payment or redemption. Treasury notes amounting to about eleven hundred dollars wrere not so far destroyed as to be incapable of identification or presentation for payment, and they were taken possession of and retained by the government, and yet the government also recovered judgment for their amount.' Assuming the liability of the obligors in the bond to respond for all the damage sustained by the government by reason of this destruction by fire, the question is, what damage has the government suffered ?

Within the case of The United States v. Morgan, 11 How. 154 , cited in the opinion of the court, that question- should have been submitted to the jury under instructions that the defendant was not liable for the amount of the face of the notes in case they had been -totally7 destroyed by the fire, but only for such cost and expense as the government might incur by reason of the replacing of the notes destroyed, including cost of paper, printing, engraving, and the trouble and inconvenience caused the government, etc., together with the cost, if, necessary7 or more convenient to the government, of the transportation of other notes to take the place of those destroyed.

This suit is upon the bond, which, as it seems to me, is plainly one of indemnity. The legal purport of such a bond is to indemnify the government from any loss occasioned by any

In Morgan's case, supra, there was a suit by the United States against a collector of revenue. It appeared in evidence that the collector had collected about $100,000 for duties in treasury notes, and had cancelled them. The notes'were then put in a bundle and sent to the Treasury Department through the post office, but the bundle was lost or stolen. The Circuit Court gave judgment to the government in the amount of the penalty of the bond, which judgment this court reversed, and in its opinion said:

“ The rule of damage would be the amount of the notes— unless it appeared, as here, that they had been cancelled, and unless it was shown that the government had suffered, or was likely to suffer, damages less than their amount. How much is the real damage, under all the circumstances, is a question of fact for the jury, and should be passed on by them at another trial. Only that amount rather than the whole bond need, in a liberal view of the law, and of his bond, be exacted ; and that amount neither he nor his sureties can reasonably object to paying, when he, by the neglect of himself or his agent, has caused all the injury which he is in the end required to reimburse. . . . Finally, we decide on this last question as a matter of law this, and this only, namely, that the collector is liable for all the actual damages sustained by his not returning the notes as required by law and official circulars; or for not putting

them in the post office so as to be returned. 5 Stat. 203 . But how much this damage was is a matter of proof before the jury, fixing the real amount likely to happen from their getting into circulation again, as two of them did here, from delay and inconvenience in obtaining the proper vouchers to settle accounts, for the want of evidence at the department that the notes had been redeemed, or from any other direct consequence of the breach of the condition of his bond, and of his instructions under it.”

The attempt made to distinguish the present case from that of United States v. Morgan, does not seem to me to be successful. Indeed the case before us presents a stronger case of a substantial defence than that of Morgan’s.

To refuse, this defence of a burning and total destruction of the notes leaves the strange and anomalous spectacle of a recovery by the government on account of a damage which in fact and in law it has not sustained. The recovery must be upon the contract, evidenced by the bond, to safely keep and pay over, and in default to pay the damage up to the penalty of the bond. This is the contract, and that there has been a breach may be admitted at once, but the question on the part of the obligors in the bond then comes back, what damage has the government suffered by reason of the failure to keep the contract, for it is only the damage which the government in fact has sustained that we have contracted to pay. How can it be said, "with the slightest reference to fact, that the damage amounts to the face of the notes when those notes are simply the promise of the government to pay upon their presentation, and the possibility of such presentation has ceased to exist ?

But the right to set up and prove a defence of this character seems to be denied on some view of public policy, the propriety of which I admit I fail to recognize, and I also- fail to recognize the legal power of the court to deny to the obligors the validity of a defence which shows that no damage or a less amount than claimed has been sustained, because of any assumed public policy. It is a case- of contract and not of policy.

The denial of the sufficiency of the defence seemingly rests upon the ground that it is against the interests of the govern

Upon the other branch of the subject, the case shows that at least $1182 in treasury notes were saved, although charred, and were taken possession of by the agents of the government and were identified as to the amount and date of issue. The defendants insisted there could be no recovery for this sum, as the government already had the notes in its possession, but this objection was overruled. The sections of the Revised Statutes ■ of the United States, §§ 951, 957, set forth in the opinion, are said to render this defence insufficient, for the reasons that the defendants had not submitted their claim for audit to the accounting officers of the Treasury. These sections are, as stated, simply reproductions of the act of 1797, which was in force when the Morgan case, 11 How. 154 , supra, was decided, and it is not mentioned therein as an answer to the defence set up by defendants. Probably the provision was not regarded as applicable, although it must be admitted the record does not affirmatively show the non-presentation of the matter to the Treasury officials. But, in my judgment, the sections have no application to this case. The defendants are not seeking a claim or credit against the government, and the provision applies to such a case, while here the question is as to how much the government has been damaged, and when it is shown that, in any event, it has in fact received $1182 of the $25,000 it claimed, it seems to me that, upon any basis of liability, such fact reduces the claim on the part of the government, not by rea

The recovery in this case was not for the whole penalty of the bond, which was $100,000, but judgment was .prayed for and recovered to the extent of $25,000, the whole amount of the notes, not deducting the $1182 already received;by the government. This shows that the recovery .was at least based upon the amount of the damage and not upon the penalty, and it therefore further shows that it was indemnity, pure and simple, which the government claimed. Therefore it was necessary for it to' prove the damage, and in proving the defence at least as to $1182, the defendants were not proving a credit, but disproving to that extent the cause of action of the plaintiff.

For the reasons thus stated, I am in favor of reversing the judgment of the court below, and I dissent from the opinion of this court directing an affirmance.

I am authorized to state that Me. Justice Shikas concurs in this dissent.