Source: https://caselaw.findlaw.com/us-supreme-court/148/573.html
Timestamp: 2019-04-24 17:15:08+00:00

Document:
In 1869, one Henry P. Woodward died in Shelby county, Tenn., leaving a will, in which he directed that certain insurance money due his estate should be invested in United States interest-bearing bonds, with coupons attached, which coupons were to be given to his wife, Sallie, as they fell due, for her support and the support and education of her child; and that when the child should arrive at the age of 21 years the bonds should be divided between the said child and its mother equally, one Marcus E. Cochran being appointed sole executor of the will.
Cochran collected the interest on these bonds regularly, and paid the same to the widow of the testator, as provided in the will, until May, 1873, when he died. On September 9th one James A. Anderson, public administrator, was appointed by the probate court administrator de bonis non of Woodward's estate, duly qualified as such, and three days thereafter obtained these bonds from the Union & Planters' Bank of Memphis, in whose custody they had been, and by which the interest had been collected and paid over, giving therefor a receipt as administrator. He subsequently gave another receipt to the attorney of Mrs. Cochran, as administrator of her deceased husband.
In January, 1877, Anderson took the third bond to the German National Bank, by which it was transferred to the Chemical National Bank with similar instructions. The latter bank transferred the bond to the treasury department, which thereupon issued to the Chemical National Bank three new bonds, in which it was certified that 'the United States of America are indebted to the Chemical National Bank of New York, or assigns, in the sum of five thousand dollars,' etc. The Chemical National Bank of New York having thus obtained title to these bonds, sold the same, and transferred the proceeds, $16,840.60, to the German National Bank of Memphis, where they were passed to the personal credit of said Anderson, drawn out by him from time to time on his personal checks, and lost to the beneficiaries by conversion to his own use.
When taken to the German National Bank of Memphis the blank form of assignment had been filled out, (except the name of the assignee, for which a blank was left,) signed by Anderson, and executed before a notary public.
In 1872, the widow of said Woodward married Thomas H. Covington, who died in 1884. Anderson paid her the interest on the bonds up to 1880, when he failed, and the payments ceased. During that year a bill was filed in the equity court by Covington and wife and Henriella P. Woodward, minor child of testator, against Anderson, who had become insolvent, the German National Bank of Memphis, the Chemical National Bank of New York, and others, defendants, charging Anderson with a breach of trust in the sale of the bonds, and the conversion of the proceeds to his own use, and the two banks with participating therein by receiving and selling the bonds charged with notice of the trust. The final result of this suit after trial in the chancery court of Memphis, and in the supreme court of Tennessee on appeal, was a decree against the two banks in favor of the plaintiffs in the sum of $23,211.82, that being the principal and interest of the bonds so converted. Covington v. Anderson, 16 Lea, 310. [148 U.S. 573, 577] Subsequently the two banks paid the amount of this judgment to a trustee appointed by the chancery court, and on November 22, 1888, filed a petition in the treasury department for the payment of the money here claimed. The petition was referred to the solicitor of the treasury, who advised that the amount for which the bonds were sold should be paid by the government, but the secretary of the treasury thought the claim presented was not of such a nature as to be properly adjudicated by him. On March 12, 1889, another petition was presented to the treasury department, which decided that the government was not liable, and this suit was begun.
Upon a finding of facts, of which the above statement is the substance, the court of claims dismissed the petition, (26 Ct. Cl. 198,) and the claimants appealed to this court.
Wm. S. Flippin, A. H. Garland, and Heber J. May, for appellants.
The question in this case is whether the government can be held liable for the amount of certain registered bonds which the register of the treasury had canceled without authority of law, plaintiffs themselves having been held liable to the owners of the bonds for having been parties to the transaction.
Briefly stated, the facts are that the bonds were originally issued to 'M. E. Cochran, executor or assigns;' that, Cochran having died, one Anderson was appointed administrator de bonis non, obtained possession of the bonds, took them to the German National Bank, and requested the bank to sell them for him, exhibiting a paper from the treasury department at Washington to the effect that, as the successor of Cochran in the administration of the estate, he had power to [148 U.S. 573, 578] transfer them. The bank sent them to the Chemical National Bank of New York with a similar request to sell. The Chemical National Bank transmitted them to the register of the treasury, stating that neither the German National Bank nor the Chemical National Bank wished to be responsible for any irregularities in the papers. In reply the register stated that there was on file in that office satisfactory power in favor of the bank to transfer the bonds, and subsequently, at the request of the bank, issued new bonds to the 'Chemical National Bank of New York, or assigns.' These bonds were sold, the proceeds transmitted to the German National Bank at Memphis, passed to the personal credit of Anderson, and embezzled by him. Suit was thereupon begun against the two banks by the heirs of the estate represented by Cochran and Anderson, upon the theory that, as the bonds ran to 'M. E. Cochran, executor or assigns,' the banks were apprised of the fact that there was a trust of some kind impressed upon them, which could be ascertained by reference to the will; and that they bore the unmistakable brand of the rights of ownership of others, without the slightest evidence of claim of any character on the part of Anderson.
Plaintiffs now seek to hold the government liable upon the ground that the register of the treasury participated with them in such conversion. In other words, it is an attempt on the part of one wrongdoer, not merely to enforce contribution from another, but to hold him liable for the entire amount of damages occasioned by their joint negligence. It is only upon the theory that the register exceeded his power that the plaintiffs have any possible standing. If his conduct in canceling the original and issuing the new bonds was within the scope of his authority as register of the treasury, there is no possible reason for charging him or his principal with liability. Assuming, however, that he was guilty of negligence in reissuing these bonds upon insufficient evidence of the authority of the holder to demand such reissue, (as to which we express no opinion,) it was an act of negligence for which the government is not liable to these plaintiffs. It is a well-settled rule of law that the government is not liable for the nonfeasances or misfeasances or negligence of its officers, and that the only remedy to the injured party in such cases is by appeal to congress. This rule was applied in the cases of U. S. v. Kirkpatrick, 9 Wheat. 720, 735; U. S. v. Van Zandt, 11 Wheat. 184; U. S. v. Nicholl, 12 Wheat. 505; and [148 U.S. 573, 580] Dox v. Postmaster General, 1 Pet. 318,-cases of laches in failing to prosecute delinquent officers within a reasonable time; in Gibbons v. U. S ., 8 Wall. 269, to a case of alleged duress by a military officer; in Jones v. U. S., 18 Wall. 662, to the negligence of the government in permitting a dishonest postmaster to remain in office; in Hart v. U. S., 95 U.S. 316 , to the negligence of an officer of the United States in permitting the removal of distilled spirits from a distillery warehouse before the payment of taxes; in Minturn v. U. S., 106 U.S. 437 , 1 Sup. Ct. Rep. 402, to the unlawful act of a customs officer in giving up goods without the payment of duty; in Moffat v. U. S., 112 U.S. 24 , 5 Sup. Ct. Rep. 10, to certain frauds by officers of the United States in issuing land patents; and in Robertson v. Sichel, 127 U.S. 507 , 8 Sup. Ct. Rep. 1286, to the negligence of an officer of the customs in keeping a trunk of a passenger on the pier instead of sending it to the public store, so that it was destroyed by fire.
If this be treated as a case of tort, then it is clear that the government is not liable, not only upon the ground above stated, but because under the act of congress conferring jurisdiction upon the court of claims (24 St. p. 505) there is an express exception of cases sounding in tort.
Plaintiffs, however, take the further ground that if, instead of suing the banks, Covington and his wife and daughter had sued in the court of claims upon the original bonds, the government could not have shown in defense that the bonds had been canceled and reissued to the Chemical National Bank, since such cancellation was without authority. Therefore they insist that, having paid these bonds themselves, they are entitled to be subrogated to the claim of the heirs of the estate, and to recover in their own names upon these bonds. There are difficulties, however, in sustaining this position. In the first place, the plaintiffs themselves had no contract with the government and, if they had, such contract was fully performed by the issuing of the new bonds to them. They are not entitled to be subrogated to the heirs of the estate, since their right of subrogation arises from certain conduct of theirs which was adjudged by the supreme court of Tennessee to be tortious. [148 U.S. 573, 581] It is said that a person who invokes the doctrine of subrogation must come into court with clean hands. Sheld. Subr. 44; Railroad Co. v. Soutter, 13 Wall. 517; Wilkinson v. Babbitt, 4 Dill. 207; Guckenheimer v. Angevine, 81 N. Y. 394. They are unfortunately put in the position of claiming through the judgment of the supreme court of Tennessee, which held them liable for having participated in the alleged misconduct of the register of the treasury. As we hold that they are not entitled to invoke the doctrine of subrogation, it becomes unnecessary for this court to determine as an independent question whether the register acted within the scope of his authority in canceling and reissuing the bonds. The opinion of the supreme court of Tennessee would not be conclusive upon that point, the government not having been a party to that action.
Under no view that we have been able to take of this case can we hold the government liable, and the judgment of the court of claims is therefore affirmed.

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