Case ID: us-ct-cl_20/html/0537-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE STATE NATIONAL BANK OF BOSTON v. THE UNITED STATES.
    (17 C. Cls. R., 329; 114 U. S. R., 401.)
    
      On the claimant's Appeal.
    
    Hartwell, cashier of the United States Treasury in Boston, embezzles government money and loans it to Carter. Subsequently Carte,r goes to the claimant’s cashier and gets the bank’s draft on New York for §125,000, promising to give therefor his firm’s draft and certain collateral security. Ho then gives the bank’s draft to Hartwell, who gives it to an officer of the Treasury to help in making good his own defalcation. The officer exchanges it with another bank for its drafts, which he sells. The claimant’s cashier had no knowledge of the fraudulent purpose of Carter. It made no defense, but paid its own draft. The moneys received by the Treasury officer are in the Treasury.
    The court below decides—
    (1.) Where a person indebted to the government fraudulently obtains a negotiable draft from a third person, without consideration, and the government, through its officers, exchanges the draft for the negotiable paper of a bank, which it sells, and obtains the value thereof in cash, no cause of action arises in favor of the third person, and the government cannot be deemed t.o hold moneys which he should recover cr. mino et tono.
    
    (2.) If a person indebted to the government hy false and fraudulent repre-se.ntations borrows money from a third person, and the government officers, without knowledge of the fraud, receive the money andpay it into the Treasury, no action will lie to recover it hack.
    (3.) Where a person indebted to the governme"t procures from a third person, by false and fraudulent representations, his draft, which the government officials dispose of to a bank in exchange for its paper, the drawer is bound to set up whatever defense he can urge against the payment of it. If he voluntarily pays it, he abandons every defense, and cannot afterward recover back the money in the hands of the government.
   The judgment of the court below is affirmed on the ground that where, by the connivance of a clerk in the office of an assistant treasurer of the United States, a person unlawfully obtains from that office money belonging to the United States, and, to replace it, pays to the clerk'money which he obtains by fraud from a bank, the clerk having no knowledge of tbe means by which the latter money was obtained, the United States are not.liable to refund the money to the bank.

Mr. Justice Harlan delivered the opinion of the Supreme Court, April 13, 1885.