Case ID: ky_76/html/0596-01.html
Source: Caselaw Access Project
Author: {"author": "JUDGE COFER", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Cases 5, 6 — PETITION ORDINARY
    February 9.
    Hughes v. Cotton, &c. Gallagher v. Hughes.
    APPEALS PROM JEPPERSON COMMON PLEAS COURT.
    1. Suit on an oppicer’s bond may be brought by a party in interest, in his own name, if there be any covenant in the bond to the benefit of which he is entitled. (Lane v. Kasey, 1 Met. 412.)
    2. A pensioner can not maintain an action in his oivn name on a United States pension agent’s bond, there being no covenant in such a bond for his benefit.
    Section 9, chapter 81, General Statutes, which provides that suit may be brought from time to time upon the bond of any officer for the benefit of any person injured by a breach thereof, relates only to the bonds of officers of this state, and has no application to bonds of officers of the government of the United States.
    3. A pension agent is personally liable to the pensioner, if he delivered the pensioner’s draft on the treasury to a person who was not authorized to receive it by the pensioner, but if such person was authorized by the pensioner to receive the draft, the agent is not personally liable to such pensioner, although the agent was forbidden by law to recognize any “ warrant, power of atttorney, or other paper executed, or purporting to be executed, by any pensioner to any claim agent, broker, or other person.”
    ALEXANDER, BAKER & READ por appellant.
    1. The bond of Gallagher, the pension agent, inured to the benefit of every pensioner on the rolls for the Louisville agency. (Rev. Stat. U. S., secs, 4764, 4765, 4766, 4779, 4780.)
    Section 4766 aforesaid prohibited the agent from recognizing the power of attorney, even if it had been properly executed, which is denied.
    2. Claiming to have acted under the power .of attorney, its execution being denied, it was incumbent on Gallagher to show its proper execution (1 Starkie on Evidence, 330, etc.), and until proof of its execution by appellees it ought not to have been admitted as evidence against appellant.
    3. Suit under our Code must be brought in the name of the real party in interest, and may be brought for the benefit of any person injured by a breach of tbe covenant or condition of any bond. (Sec. 9, chap. 81, Gen. Stat.) This right ought to apply to bonds executed to the United States.
    4. The covenant in Gallagher’s bond, “ to discharge the duties prescribed by law,” is broad enough to meet this case. (Lane v. Kasey, 1 Met. 412.)
    EMMET FIELD roe appellees.
    1. There is nothing in the United States Revised Statutes (secs. 4765, 4766), prohibiting a pensioner from authorizing a third person to receive a check: for the pension payable to the pensioner, or prohibiting the pension agent from delivering such a check to any one duly authorized by the pensioner to receive it.
    2. There is no law, statutory or otherwise, authorizing a pensioner to bring a suit on the bond of a pension agent. There is no covenant in the bond to the pensioner. (See Commonwealth for &e. v. Fugate, 1 Mon. 1.)
    3. The United States can alone sue on such a bond, and the federal courts have exclusive jurisdiction “of all suits for penalties and forfeitures incurred under the laws of the United States.” (U. S. Rev. Stat., sec. 711, page 134.)
   JUDGE COFER

delivered the opinion or the court.

Mary Hughes, a resident of Adair County, being entitled to' a pension under the laws of the United States, payable at the pension agency at Louisville, caused a proper voucher to be made out and forwarded it to that office. Upon receiving the voucher W. D. Gallagher, the pension agent, drew his draft on the assistant treasurer at New York in favor of said Hughes, for $311.80, and delivered it to one McLean, who claimed to have a power of attorney from her, authorizing him to receive it as her agent. McLean indorsed Hughes’s name and his own to the back of the draft, and delivered it to the Louisville City National Bank. The bank indorsed the draft to A. Lane, cashier, New York, for collection and credit, and Lane collected the money on it and placed it to the credit of the Louisville bank.

McLean failing to pay any part of the money to Mrs. Hughes, she brought this suit against Gallagher and his sureties on his bond as pension agent, to recover from them the amount of the draft.

A trial was had which resulted in a verdict, under peremptory instructions, against Gallagher and in favor of his sureties, and from the judgments rendered thereon botlp Hughes and Gallagher have appealed.

Gallagher’s bond was executed to the United States in the penal sum of $150,000, but to be void if he should truly and faithfully discharge all the duties of said office according to law, and the instructions which were then in force or should be in force at any time during his continuance in office, and if he should regularly account, when required, with such person or persons as should be duly authorized on the part of the United States for that purpose, and, also, refund at any time when required, any public money remaining in his hands unaccounted for.

The sureties claimed that they were not liable on the bond for any cause of action Mrs. Hughes might have against their principal. If they are right in this, the action of the court below was right so far as they are concerned, and the judgment in bar of the action against them must be affirmed.

It is perfectly clear that, according to the rules of the common-law, none but parties or privies can maintain an action upon a contract in their own name; and therefore that even if the covenants in the bond sued on are broad enough to cover this case, Hughes could not recover in her own name.

But under our system of practice, which requires every action to be brought in the name of the real party in interest, she may sue in her own name if there be any covenant in the bond to the benefit of which she is entitled. (Lane v. Kasey, 1 Met. 412.)

This brings us to the question whether the bond inures to her benefit.

We do not know of any statute which gives a pensioner a right of action on the bond, and there is nothing in its language which seems to us to indicate an intention to secure by it the faithful performance of the duties of the pension agent to pensioners having business with him in his official capacity. The bond is payable to the United States; all its covenants except one are expressly to them. There is a general stipulation for the true and faithful discharge of his duties,” but as that covenant was with the government, its plain, natural, and legal import is, that it bound him to a true and faithful discharge of his duties to the United States.

Counsel cite the case of Lane v. Kasey, supra, as an authority to support their views; but a critical examination of that case will show the cases are widely different..

The bond sued on in that case was executed in compliance with a statute which required that it should bind the warehouse-keeper and his sureties to pay to the owner of tobacco .sold by him the, proceeds of the sale. The bond was in substantial compliance with the statute, and the case was one in which one person had made a contract with another for the benefit of a third. The warehouseman had covenanted with the commonwealth for the benefit of the owners of tobacco sold by him. But in this case we have seen that there is no ■covenant for the benefit of any person except the United States.

Counsel also eite section 9, chapter 81, General Statutes, which provides, that suit may be brought from time to time upon the bond of any- officer for the benefit of any person injured by a breach thereof. This statute relates only to the bonds of officers of this state, and has no application to bonds of officers of the government of the United States.

The appeal of Gallagher presents the next question for consideration.

The laws of the United States make it the duty of pension agents to transmit drafts for pensions to the pensioners by mail, when not delivered to them in person, and forbids them to recognize any warrant, power of attorney, or other paper executed or purporting to be executed by any pensioner to any attorney, claim agent, broker, or other person.”

, McLean produced to Gallagher what purported to -be a power of attorney from Mrs. Hughes, authorizing him to receive her pension. In delivering the draft to McLean on that writing, Gallagher violated the law and his duty as agent, and if loss had resulted to the United States on account of his deviation from duty, he would certainly have been liable to them. But his act, though unlawful, was assented to by Hughes if she executed the power of attorney, and she can not complain that she has been damaged by that which was done with her consent, if not at her request.

She claims that she did not execute the alleged power of attorney, and on that point the evidence was conflicting. If she did execute it, she has no cause of complaint; and if she did not, the unauthorized delivery of the draft to McLean wras a conversion by Gallagher, and he is, on that ground, liable for its loss. He held the draft for her, and it was his duty, independent of the laws of the United States, not to deliver it to a person having no authority to receive it. In this view of the case his liability is personal and not official. Whether, if the' action be treated as one for official dereliction, the .state courts would have jurisdiction, is a question which would require careful consideration; and as the rights and liabilities of the parties are, in the view we have taken of the case, the same that they would be in the view in which the case has been presented by counsel, we have not examined the question of jurisdiction.

The judgment in favor of the sureties is affirmed, that in favor of Hughes is reversed, and the cause is remanded for a new trial upon principles not inconsistent with this opinion.