#### STATE SAVINGS BANK OF ORTLEY, SOUTH DAKOTA, A CORPORATION, v. THE UNITED STATES.

[No. B-35.

Decided April 28, 1924]

*On the Proofs*

*Implied contract; exchange op Ponds stolen from mails; tort.*— Where Government bonds payable to bearer are stolen from the mails, and are afterwards in due course of business presented to and exchanged by the proper officials of the Treasury for other bonds, which are given to the holder of the stolen bonds and the stolen bonds canceled, there is no implied ijromise on tlie part of the Government to pay the value of said bonds to the owner, and. an action to recover their value is one sounding in tort.

*The Reporter's*statement of tlie case:

*Mr. M. O. Lasell*for tlie plaintiff.

*Mr. William- F.*Norris, with whom was *Mr. Assistant Attorney General Robert H.*Lovett, for tlie defendant.

The following* are the facts of the case as found by the court:

I. The plaintiff is a banking corporation doing a general banking business at Ortley, S. Dak.

II. On December 2, 1920, the plaintiff was the owner of the following-described United States bonds, in coupon form, payable to bearer, and all unmatured, to wit:

Serial No. 1243568-, 1243570. 1243585. 1243590. 1575835. 1575836. D-00950659. C-03045253. D-03045254. E-03045255. A-03045256. B-03045257. 2820670. 5054910. 5703985. 5703986. 2569112. 2569113. De-nation $50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 100 100 First 3H’S---_do_ _do_ _do — . _do_.. -do-Second 4}¿’s _do. .do. _do... _do... _do. Third *Qi’s—*_do_ _do. _do. _do. _do. Permanent. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. DO. Do. Do. Serial No. 2569114.... 2569128— 2569129_ 2569130.... 2569131— 2569132_ 2569133_ 2569134_ 2569135_ 2569136_ 2569137_ 2569138— 2569139— 2569140--. 2569141._._ 2569142— 2606513— De-nomination $100 100 100 100 300 100 100 100 100 100 100 100 100 100 100 100 100 Loan Third 4^’s. _do. _do. _do. _do. _do. _do. _do. _do. _do. _do. _do. _do. .do. _do. .do. .do. ISSUe P e r m aDo. ‘ Do. Do. Do. Do. Do. Do. Do. Do. ■ Do. Do. . Do. Do. Do. Do. • Do.

*622First Liberty loan 3% per cent bonds mature in 1947, Second Liberty loan 4^4 per cent bonds in 1942, and Third Liberty loan 4% per cent bonds in 1928.

III. On December 2, 1920, the plaintiff, by its officers, placed the bonds hereinbefore described in Finding II in a package addressed to O. F. Childs & Co., 120 Broadway, New York City, N. Y., with a return card of plaintiff in the upper left-hand corner of said package, placing said package in the hands of Carl Melander, postmaster, Ortley post office, Roberts County, S. Dak.; that the said Carl Melander registered said package under No. 218 and placed the same in a, registered mail pouch on board the railway post office traveling on the Chicago, Milwaukee & St. Paul Co.’s train which passed through Ortley on December 2, 1920; and that the said package was stolen from the said railway post office on or about December 2, 1920, by a person or persons unknown.

IY. Said package did not reach C. F. Childs & Co., 120 Broadway, New York City, N. Y., nor was said package returned to the plaintiff; 'that the plaintiff has not had in its possession, since the placing of said package in the hands-of the postmaster, Carl Melander, any of the bonds hereinbefore described in Finding II; and the qlaimant has received and accepted from the Post Office-Department the stipulated $50 indemnity for the loss of said registered package.

V. The plaintiff advised the Treasury Department in a letter dated December 24, 1920, received in the Treasury Department on December 29,1920, of the loss of the bonds here-inbefore described in Finding II, though failing to state in said letter of notification whether bonds Nos. 2820670, 5054910, 5703985, and 5703986 of the Third 4%’s, in the denomination of $50 each, were of the permanent issue or the temporary issue.

VI. The Treasury Department, in a letter dated February 1,1921, advised the plaintiff that no stoppage or caveat could be filed against the payment or exchange of the bonds, since they were in coupon form and payable to bearer, but that a memorandum of the loss had been entered against the bonds of the First and Second Liberty loans hereinbefore described in Finding II; that in case any of the bonds were presented the department would endeavor to advise the plaintiff of *623the source from which they were received, and that the plaintiff should advise the Treasury Department whether the bonds of the Third *tyi’s*hereinbefore described in Finding Y were of the permanent or temporary issue if it was desired to have a similar memorandum of loss entered as to such bonds; and that the Treasury could not in any event grant relief on account of the loss of any of said bonds here-inbefore described in Finding II.

VII. In a letter dated February 9, 1921, received in the Treasury Department February 12, 1921, the plaintiff advised the Treasury Department that the bonds of the Third 4%’s hereinbefore described in Finding V were of the per-' manent issue.

VIII. The following-described bonds, having first been received by the Federal Reserve Bank of New York, as fiscal agent of the United States, for denominational exchange, in the regular course of business, were exchanged by the Federal Reserve Bank of New York, as fiscal agent, for other bonds of the same respective issues of different denominations, but amounting to the same total face value, which were delivered to the bearers of the following-described bonds, and are not in the possession of the United States, and the following-described bonds subsequent to the denominational exchange transaction were canceled and retired by the Federal Reserve Bank of New York, as such fiscal agent, and were later shipped by the Federal reserve bank to the Treasury Department, Washington, where they were received on the dates set opposite the numbers of the bonds, to wit:

Serial No. of bond Date received Issue Serial No. of bond Date received Issue 1243568. 1243570. 1243585.. 1243590.. 1575835. 1575836. D-00950659. C-03045253. D-03045254. E-03045255 A-03045256 B-03045257 2820670 5054910 5703985 5703986 2569112 2569113 Jan. 10,1921 Feb. 10,1921 Jan. 10,1921 Feb. 10,1921 Jan. 10,1921 Feb. 10,1921 Feb. 18,1921 Jan. 10,1921 _do.. _do__. . Feb. 18,1921 Jan. 10,1921 Jan. 6,1921 _do.. _do.. _do_ Jan. 18,1921 Jan. 6,1921 Permanent. Do. Do. Do. 2569114. 2569128. 2569129. 2569130.. 2569131. 2569132. 2569133. 2569134. 2569135.-2569136.-2569137. 2569138. 2569139. 2569140. 2569141. 2569142. 2606513. Jan. 6,1921 _do. _do. _do. Feb. 10,1921 Jan. 6,1921 .do. .do. .do.. .do. _do. .do. .do. .do. .do. .do. .do. Permanent. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do. Do.

*624constituting all of the bonds described in Finding II hereof.

IX. The bonds herein described in Finding VIII hereof were thereafter examined in course of final audit by the Register of the. Treasury, and upon recordation of the serial numbers by the Register of the Treasury in the numerical registers of coupon bonds the memoranda of loss were duly noted and the plaintiff advised that the bonds had been received in the department.

X. The bonds described herein in Findings II and VIII bore no marks which would, when received by the Federal Bank of New York, identify any prior holder except bond No. 2569131, for $100, of the Third 414/s, which contained on the back thereof the notation, “ Pres, for exch. by Citizen's National Bank, Springville, N. Y. 50-561,” and neither the Federal reserve bank nor the Treasury Department was in possession at any time before such exchange of any information indicating that the persons presenting said bonds or any of them were not bona fide holders for value.

XL The plaintiff advised the Federal Reserve Bank of New York by a carbon copy of a letter dated January 26, 1921, sent by registered mail and received by said Federal reserve bank, a copy of which is attached hereto and made a part hereof, of the fact that the bonds described in Finding II hereof had been stolen form the United States mail car at or near Minneapolis.

XII. The plaintiff has never sold, hypothecated, or otherwise disposed of its interest in said bonds described in Finding II hereof in any manner whatsoever other than herein-before described.

Carbon copies of a letter were sent out by the State Savings Bank, one of which was received by the Federal Reserve bank reading as follows:

The State SaviNGs Banic,

Ortley, *S. Dale., January 26, 1921.*

Federal Reserve BaNK,

Fiscal Agency Department.

GeNtlemeN : You will please take notice that the following-described bonds are reported to have been stolen from a United States mail car in or near the city of Minneapolis *625on December 3d, 1920. These bonds are described as follows : First Liberty loan coupon bonds of $50 denomination numbered 1243568, 1575835, 1243585, 1575836, 1243570, 1243590 were the first issue of the *3y2%*bonds. The Second Liberty loan converted coupon bonds of $50 denomination numbered C03045253, D03045254, E03045255, A03045256, B03035257, D00950659 were of the 4*4% converted bonds. The Third Liberty loan permanent coupon bonds in the $50 denomination numbered 2820670, 5054910, 5703985, 5703986, and the Third Liberty loan converted permanent coupon bonds of $100 denomination numbered 2569112, 2569113, 2569114, 2569128, 2606513, 2569129, 2569130, 2569131, 2569132, 2569133, 2569134, 2569135; 2569136, 2569137, 2569138, 2569139, 2569140, 2569141, 2569142.

You are hereby notified that these bonds are the property of the State Savings Bank of Ortley, South Dakota, and that they have not been sold, assigned, nor transferred to any person, firm, or corporation, but are now the property of the said bank of Ortley, S. Dak., and you are hereby further notified that all interest coupons that are a part of said bonds are the property of said bank, and if any such interest coupons of bonds are presented for payment please notify the State Savings Bank of Ortley by Avire or by letter, as you may think best.

Yours sincerely,

State Savings Bank,

(Signed) By G. G. Lasell, *Vice President.*

Campbell. *Chief*Justice,

delivered the opinion of the court:

The facts are agreed upon. The plaintiff, a banking corporation located at Ortley, S. Dak., Avas the oAvner of certain coupon bonds of the United States (First, Second, and Third Liberty loans), which it sent by registered mail December 2, 1920, in a package addressed to C. F. Childs & Co., 120 Broadway, NeAv York City. This package Avas stolen en route, did not reach Childs & Co., and Avas never returned to plaintiff. In due time the Post Office Department paid to plaintiff the stipulated indemnity, $50, for the loss of the registered package. By letter dated December 24, and received by the Treasury Department on December 29, 1920, the plaintiff advised the latter of the loss of the bonds. On *626February 1, 1921, the Treasury Department informed plaintiff by letter of that date that *“*no stoppage or caveat could be filed against the payment or exchange of the bonds ” since they were in coupon form and payable to bearer, but that a memorandum of loss had been entered against the bonds, and that in case any of the bonds were presented, the department would endeavor to advise the plaintiff of the source from which they were received. The bonds were received by the Federal Reserve Bank of New York as fiscal agent of the United States for denominational exchange, in the regular course of business, and were exchanged for other bonds of the same respective issues, but of different denominations, amounting to the same total face value, and the latter were delivered to the bearers of the former. The bonds given in exchange are not in possession of the Government, but are outstanding obligations. Subsequently, the bonds received by it were canceled and retired by tire Federal reserve bank as such fiscal agent and were shipped by it to the Treasury Department, Washington, where they were received at divers dates between January 6 and February 10, 1921. In the course of the final audit by the Register of the Treasury the memoranda of loss appearing on the register, plaintiff was advised of the receipt of the bonds in the department. The plaintiff also sent a carbon copy of a letter to the Federal Reserve Bank of New York, which received the same, dated January 26, addressed to Federal Reserve Bank, fiscal agency department, which purported to notify the bank of plaintiff’s ownership of the bonds, that they had been stolen, and asking to be notified if any of the bonds or interest coupons were presented.

The bonds in question, United States coupon bonds, were negotiable paper. *Vermilye*v. *Adams Express*Co., 21 Wall 138; *Cooke*v. *United*States, 91 U. S. 389, 396. They were payable to bearer, and title to them would pass by delivery without indorsement. The plaintiff’s bonds had been stolen and were presented to the reserve bank, a fiscal agent, for exchange for bonds of like issue but of different denominations. Such presentation for exchange was not unusual. The ex*627change was made and other obligations of the Government were delivered and are outstanding. The bonds delivered to the fiscal agent and subsequently forwarded to the Treasury Department were canceled. They were received by the fiscal agent in the regular course of business and were acquired by the Government in good faith and for value. See *Hotchkiss*v. *National Bank,*21 Wall. 354; *Murray*v. *Lardner,*2 Wall. 110. The statute authorizes relief in the event of the destruction or defacement of a bond (Rev. Stat. 3702, et seq.) without bad faith on the part of the owner, but this statute does not apply to stolen bonds. And further the petition does not show a contract, express or implied. It in effect seeks to hold the Government liable in trover and conversion. This it can not do in this court. We have no authority to direct a delivery of the bonds to plaintiff by the Treasury Department, even if there were no question of ownership or right of possession involved; nor have we authority to give judgment for the value as upon a conversion of them by the Government to its own use. Such an action would sound in tort, and our jurisdiction does not extend to claims for damages in cases sounding in tort. (Sec. 145, Judicial Code.) In *Langford’s*case, 101 U. S. 341, 345, it is said:

> *“*It would ill become us to fritter away the distinction between actions *ex delicto*and actions *ex*contractu, which is well understood in our system of jurisprudence, and thereby subject the Government to payment of damages for all the wrongs committed by its officers or agents, under a mistaken zeal, or actuated by less worthy motives.”

See also *Jones*case, 131 U. S. 1; *Hill case,*149 U. S. 593, 598; *Bigby*case, 188 IT. S. 400, 407. In this case of *Bigby*it is held that a plaintiff may not waive the tort and sue the Government as upon implied contract. See also *Bussell ease,*182 U. S. 516, 530. *Harley case,*198 U. S. 229, 234. *Juragua Iron Co. case,*212 U. S. 297, 309. The petition should be dismissed. And it is so ordered.

Hat, *Judge;*DowNey, *Judge,*and Booth, *Judge,*concur.