Case Name: The First National Bank of Newton v. The United States; The Eliot National Bank v. The Same; The Mount Vernon National Bank v. The Same; Daniel W. Jones, Receiver, v. The Same
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1880-12
Citations: 16 Ct. Cl. 54
Docket Number: 
Parties: The First National Bank of Newton v. The United States. The Eliot National Bank v. The Same. The Mount Vernon National Bank v. The Same. Daniel W. Jones, Receiver, v. The Same.
Judges: Nott, Richardson, and Hunt, JJ., concurred in the foregoing opinion. Davis, J., expressed no opinion.
Reporter: United States Court of Claims Reports
Volume: 16
Pages: 54–74

Head Matter:
The First National Bank of Newton v. The United States. The Eliot National Bank v. The Same. The Mount Vernon National Bank v. The Same. Daniel W. Jones, Receiver, v. The Same.
On the Proofs.
Hartwell, cashier of the sub-treasury in Boston, embezzles government money and' lends it to one Carter. ■ An examination of the cash in the treasury being expected, Carter undertakes to raise the money and place it temporarily in the trreasury. He is a director of the Bank of Newton, of which. one Dyer is cashier, who, ivith knowledge of the facts and purposes of Carter, lets him have money mid other assets of the bank. Dyer also draws checks and drafts as cashier on other banks and gives them to Carter, who sells them to third persons. The money thus obtained is placed in the treasury by Carter in the expectation that it will be returned, but Hartwell divulges the facts, and the money is retained by officers of the treasury. The case differs from Boston Bank Casos chiefly in the fact that the claimants’cashier had knowledge of the fraud.
I.Where the cashier and a director of a bank collude to take its money and assets for their own fraudulent purpose of placing them temporarily in the government’s treasury so as to hide an embezzlement of an officer there, the property of the bank in the money is not thereby divested.
II.The fact that two of three conspirators who take the money of a bank for a fraudulent purpose are the cashier and one of the directors of the bank does not make the bank a party to the fraud, nor preclude it from recovering back its money.
III.The legal principles laid down by this court in the Boston Bank Cases (10 C. Cls. R., 519), and reiterated by the Supreme Court (96 U. S. R., 30), are applicable to the present case.
The Reporters'* statement of tbe case:
Tbe following are tbe facts as found by tbe court:
I. At tbe time of tbe occurrence of tbe matters berinafter detailed, tbe First National Bank of Newton (wbicb hereafter., in these findings, will, for brevity, be styled tbe Newton Bank) was a banking association organized and in operation under tbe laws of the United States, located at Newtonville, in tbe town of Newton, Middlesex County, Massachusetts 5 and E. Porter Dyer, jr., was cashier, and tbe hereinafter-named Edward Carter was one of tbe directors of said bank. •
II. At tbe same time the Eliot National Bank of Boston (wbicb hereafter, in these findings, will, for brevity, be styled tbe Eliot Bank) was a banking association organized and in operation under said laws, and located in tbe city of Boston, Massachusetts.
III. At the same time tbe Mount Vernon National Bank of Boston (wbicb hereafter, in these findings, will, for brevity, be styled tbe Mount Vernon Bank) was a banking association organized and in operation under said laws, and located in tbe said city of Boston.
IV. At the same time there was in Boston a firm of brokers, doing business under tbe name and style of Mullen, Ward & Co.; of wbicb firm tbe Edward Carter above named was tbe junior member.
V. At tbe same time T. P. Chandler was assistant treasurer of tbe United States, in Boston; and George D. Whittle was tbe chief clerk of tbe office; and Julius, F. Hartwell was disbursing* clerk of the office, ordinarily called in tbe office paying-teller or cashier. For convenience, tbe office of said assistant treasurer will hereafter, in these findings, be styled tbe sub-treasury.
VI. The duties of said Hartwell were to have charge of and disburse all moneys in tbe sub-treasury. It does not appear that tbe assistant treasurer bad given him any authority to sign any receipt for tbe government.
VII. At tbe same time the Newton Bank bad been appointed, and was, a depository of United States moneys; and received also deposits of collectors of internal revenue; and received from tbe Government of tbe United States fractional currency and revenue stamps, ordered by it from tbe Treasury at Wash ington, in wbicb said bank did a large business; often sending orders to tlie Treasury to the amount of thirty thousand dollars a week.
VIII. At the same time the said Carter was a special agent, in Boston, of the Newton Bank, appointed by the directors thereof, to transact the business of the bank connected with government, and to assist the cashier of the bank in matters pertaining to the bank, which required attention in Boston.
IX. The Newton Bank ordered the fractional currency and revenue stamps to be delivered, for the sake of convenience, to Carter, in Boston, by mail or express, for they were to be used in that city; and he disposed of the stamps to banks, stationers, and other parties requiring them, and the fractional currency to banks and manufacturing corporations; and returned to the bank the funds derived from such disposition; and those funds were placed by the bank to the credit of the United States Treasury. The stamps were usually sent by mail to Carter by the Internal-Revenue Department, and the currency was sent by the Treasury Department to him by express — usually ten thousand dollars at a time — packed in sealed paper boxes.
X. The United States Treasurer, from time to time, sent by mail to the Newton Bank orders, styled transfer letters, to deposit certain sums with the sub-treasury in Boston or New York; and payments of those orders had to be made in United States notes or national-bank bills; and to meet any such payment in Boston, the cashier of the Newton Bank usually drew a check upon the First National Bank of Boston, or the Central National Bank of New York (with each of which the Newton Bank kept an account), and gave the check to Carter, who collected the necessary notes anu bills, and paid them in at the sub-treasury in Boston, and took the assistant treasurer’s receipt therefor; and the amount of such payment was then debited to the United States Treasury on the books of the bank.
XI. Prior to the first day of March, .1867, the said Mellen, Ward & Co., acting by and through the said Carter, had succeeded in inducing the said Hartwell to take out of the sub-treasury in Boston, at various times, and place in Carter’s hands, large amounts of money belonging to the United States, until, first and last, the sums which Hartwell so let Carter have aggregated a million to a million and a quarter dollars. The money which thus passed out of the sub-treasury to Carter was used by Mellen, Ward & Co. in speculating in stocks. About the middle of February, 1867, when the amount which Carter had so obtained was very large, Hartwell informed Carter that in their use of the public money they were guilty of a crime, and showed him the United States statutes making their act a crime.
XII. Learning from Hartwell that, on the 28th of February or the 1st of March, the money in the sub-treasury would be -counted by a commissioner sent from Washington, and that there was every reason to expect a very thorough examination of the sub-treasury at that time, Carter and Hartwell had many conversations for the purpose of seeing how they could best extricate themselves and restore the money to the sub-treasury. The substance of their communications to each other in those conversations, and of the arrangements between them as to the restoration of the money, is set forth in the next succeeding finding.
XIII. Carter told Hartwell that he saw no way-but to go on, and make his money whole on the 1st of March, to be kept in the sub-treasury over night while the count was going on, and after the count was over to be returned to him; and then in March go on to dispose of all their securities and stocks, and restore again, during that month, all the money that was possible, reducing the loss to the smallest possible amount; and Carter promised Hartwell that the money returned to him on the 1st of March should all be repaid to the government by the 1st day of April ensuing, not to come out again, and that the whole matter should be entirely ended and wound up in some form by that day. Carter told Hartwell, as a reason why they must go on till the 1st of March, that there was not time enough between the time of their conversations and that day to wind up so large an affair.
Carter also told Hartwell the general plan which he proposed to carry out, namely, that he would obtain the money from different parties, and bring it to Hartwell, and take from him his receipt therefor as cashier of the sub-treasury; which Carter ■supposed would bind the government and be the same as a -government receipt; and that he would give Hartwell’s receipt to the parties from whom he obtained the money as their security. Just before the end of February, Carter unfolded his plan still further to Hartwell, and mentioned to him two banks, the Newton Bank and the State National Bank of Boston, and told Hartwell what he expected to do from each of those banks. He did not tell Hartwell in detail what he expected the Newton Bank to do, but simply stated generally that he should obtain large assistance from that bank.
Two days before the end of February, Carter wrote a note to Hartwell in about these words: “ Ido you assure me that if I return that money to you on the 28th of February I can have it back again on the 1st of March, for I cannot allow the Newton Bank to run any risk.” To this note Hartwell returned this, answer in writing: “Tell Dyer to help you all he can, and I will protect the Newton Bank, come what will.” The person referred to there as “ Dyer” was the cashier of the Newton Bank.
XIV. About the middle of February, Carter informed Dyer that he had been using funds from the sub-treasury to quite a large amount, but not stating the amount; that on the 1st of March, then next, an examination of the funds of the sub-treasury was to take place; and that he should be obliged to return what moneys he had received, to tide over the examination; after which he was to receive the same back again from Hart-well. Carter also told Dyer that he should require his help to-some extent; and in answer to Dyer’s objection that it was not safe, he said he would take the receipt of the cashier of the sub-treasury for such amounts as he received from Dyer, and that such receipt was perfect security. This was the first that. Dyer knew of Carter’s having used the money of the government in that way.
XV. Afterwards, on the 25th of February, Carter, at his. office in Boston, told Dyer that he had arranged a loan at the Eliot Bank for $100,000, for half of which he was to deposit, as collateral, Copper Falls stock, and for $50,000 was to give a cashier’s check of the Newton Rank. As Dyer did not feel justified in carrying out that arrangement, and as there was a liability that the check so used might pass through the clearinghouse, and be demanded at the First National Bank of Boston (upon which the check would be drawn), without funds being there to meet it, Dyer desired to have some assurance from the officers of the Eliot Bank that they would retain the check in their hands until Carter should repay the loan and return the. check to him canceled or destroyed. Dyer then went with Carter to the Eliot Bank to see the president thereof, with whom Carter said he had made the arrangement. The president was not to be found, and Dyer was then introduced to the cashier, to whom Carter explained the arrangement he had made with the president, and asked him if he could not properly hold that check as part of his reserve, being an amount due from another national bank. After some hesitation the cashier said he could do so, and would hold the check a week. Dyer then returned with Carter to his office, and drew his check, as cashier, on the-First National Bank of Boston, for $50,000, in favor of Mellen, Ward & Co., and dated February 25 and gave the same to-Carter. Carter was then preparing to replace in the sub-treasury the money he had got from Hartwell, and Dyer was aware that the money to be got by the aforesaid arrangement with the Eliot Bank was intended by Carter to be used for that purpose.. Carter stated to Dyer, at the same time, some arrangments he-had made for raising funds in other directions. Carter got the said check cashed at the Eliot Bank.
In the ordinary course of business that check would have-come back to the Newton Bank, through the clearing-house, before the 28th of February.
XVI. A day or two after the transaction set forth in the next preceding finding, Carter asked Dyer for further help, when Dyer expressed a wish to have some assurance from Hartwell that any money lent by Dyer to Carter from the Newton Bank would be returned on the 1st of March. Carter then told Dyer-that he had Hartwell’s assurance that Dyer should .be kept entirely secured in any assistance he might render Carter; and then he showed Dyer the above note of Hartwell, set forth in finding XIII; and after that, Carter and Dyer had no doubts-about Dyer’s being perfectly secure in regard to any moneys or-securities that he allowed Carter to get from the Newton Bank..
XVII. In pursuance of Carter’s plan, as above set forth,, moneys and securities were obtained by him from Dyer, on the-28th of February, as follows in this finding:
1. On the 27th of February, Carter wished Dyer to bring-into Boston from the Newton Bank funds to the amount of $50,000. Dyer objected, on the ground that it was dangerous^ but Carter agreed to use the money or bonds that Dyer might-bring in such a way that the identical money or bonds should be returned to Dyer. On the next day, Dyer took from the «afe of the Newton Bank a package of compound-interest notes of the United States, amounting to $20,000; and also government bonds, chiefly seven-thirties, to the amount of $25,000, which were, in part, collaterals belonging to that bank, and, in part, private property deposited in the bank for safe keeping. These compound-interest notes and government bonds were delivered by Dyer to Carter, at the office of the latter in Boston, on the 28th of February, about noon. The packages ■of compound-interest notes and government bonds, when delivered to Hartwell, had paper straps around them, with the name of the Newton Bank written thereon.
As to the said government bonds, Dyer told Carter that he •should require something which was undoubted security, as he was using them without any shadow of authority; and thereupon Carter gave Dyer acceptances to the amouut of $30,000 of Quincy A. Shaw, drawn by the Huron Mining Company, •and indorsed, in part, by John Leighton.
2. As Dyer was about leaving Carter’s office, after the transaction set forth in clause 1 of this finding, and when he supposed he had done all that would be required of him, Carter name in in a hurry, and said that some parties had gone back on him, and that he must have more of Dyer’s assistance ; that it was his only resource; and that he must have the money, or everything was lost. Dyer went with Carter into the private office of the latter, when Carter said that he wanted Dyer’s check, as cashier, on the Central National Bank of New York for $100,000. Dyer demurred, because the Newton Bank had only a small deposit in New York, and he did not see how funds could be got there in time to meet the pa3’ment of the check. Carter explained that his partner, Ward, was going to New York that night, and in the morning, as soon as Carter got his funds back from Hartwell, he, Carter, would place the $100,000 by telegraph at Ward’s disposal, who would protect the check. Dyer then wrote his check, as cashier, for $ 100,000 on the Central National Bank of New York, payable to the order of Mellen, Ward & Co., and delivered it to Carter; who passed it the same ■■day to the Eliot Bank, receiving for it an equivalent amount in the checks of that bank on New York ; which checks Carter .•sold for money, and passed the proceeds over to Hartwell.
3. After Dyer had delivered to Carter the check for $100,000 as above stated, Carter said he wanted.more, and asked Dyer to write three checks, one for $50,000, one for $30,000, and one for $25,000 ; and Dyer wrote three checks, by. him as cashier,, for those sums, on the First National Bank of Boston, and delivered them to Carter, each of them being payable to bearer. .Dyer told Carter at the time that he must not allow any of those three checks to go through the clearing-house, as such large amounts would excite suspicion; and Carter assured him that, when he got his money back from Hartwell in the morning, he would take up those cheeks wherever he had placed them, and return them to Dyer.
Of those three cheeks Carter made the following use, to wit:. The one for $50,000 he got cashed by the Mount Yernon Bank;, the one for $30,000 he got cashed by Mr. Smith, cashier of the State National Bank, out of private funds in his hands; and the one for $25,000 he presented at the State National Bank, and drew the money upon it. And all the money so obtained by Carter on these three checks was passed by him to Hartwell the same day.
XYIII. On the 14th of February the Treasurer of the United States drew a transfer letter upon the Newton Bank as follows:.
“ $35,000. Treasury oe the United States,
Washington, JPeVy 1867.
“ Sir : Upon receipt of this, you will jilease deposit for my credit with assistant treasurer U. S., Boston, Mass., thirty-five thousand dollars. Acknowledge the receipt of this, and forward certificate of deposit when received.
“Very respectfully,
“F. E. SPINNER,'
u Treasurer United States.
“-,
11 Cashier 1st national Banlt of A eioton. .
At the time of the transactions between Carter and Dyer, set forth in the next preceding finding, the deposit required by that letter had not been made by the Newton Bank; and Dyer wished to have it made certainly by the 28th of February, in order that it might pass into the bank’s February account with the government. For the purpose of making, in part, that deposit, Dyer brought on that day from the Newton Bank to Boston $10,000 in bills, which he gave to Carter; and at the same time lie drew his check, as cashier, on the First National Bank of Boston, and delivered it to Carter, for $25,000. Those bills and that check were not delivered by Dyer to Carter for the purpose of aiding the latter to make good the money he •owed to the sub-treasury, but were placed in Carter’s hands as agent of the Newton Bank, for the purpose of enabling him to make the required deposit, and obtain a receipt therefor from 'the assistant treasurer. When the said bills and check were delivered to Carter, Dyer urged him not to use them for any •other purpose, as the money must be credited on the 28th of February, in order to have the bank’s account appear right. But Carter, instead of using the $35,000 for that purpose, presented the check on that day at the First National Bank of Boston, and received the money on it; and then passed the whole $35,000 over to Hartwell.
When Dyer gave Carter the said bills and check, Carter told him he would get the assistant treasurer’s receipt, as usual, and bring it out that night. He did not bring such receipt to Dyer, but told him he had deposited the money all right, and got it in after the assistant treasurer was gone, and would get the receipt the next morning, dated back to the 28th of February; but no receipt was ever given by the assistant treasurer for the ■$25,000.
XIN. On the 28th of February, Carter, as special agent of the Newton Bank, had in his hands the sum of $29,700 in fractional currency and internal-revenue stamps, or the proceeds of their sale and disposal. What the amount of fractional currency was, or what the amount of stamps was, does not appear; but whatever fractional currency he had was, on that day, delivered by Carter to Hartwell, in the packages that Carter had, ■as agent of the Newton Bank, received from the Treasury Department ; and the proceeds in money of the stamps were, on that day, passed over by Carter to Hartwell. It does not appear that Dyer had any knowledge of Carter’s intention so to use the said sum of $29,700, or, until after the 28th of February, ■of his having so used it.
XX. Some time in February, prior to the transactions of 'Carter and Dyer set forth in findings XY and XVII, Dyer gave Carter, as agent of the Newton Bank, a power of attorney, or order, authorizing him to receive from the sub-treasury, and receipt for, certain gold interest to accrue on the 1st of March, •on government bonds belonging to the Newton Bank, which bad been deposited in the United States Treasury at Washington, to secure the circulation of that bank, and the government deposits made therein. The interest so to accrue amounted to $6,32o. It does not appear that Dyer gave the power of attorney, or order, to Carter for the purpose or with the intent of aiding Carter to restore to the sub-treasury the money he owed it, but placed it in Carter’s hands as agent of the Newton Bank, for the purpose of enabling him to draw the interest for that bank. Notwithstanding, Carter, on the 28th of February, gave the order to Hartwell as so much cash, and signed a receipt on the books of the sub-treasury for the interest, without it, ox any part of it, being paid to him j and the interest never came into the possession of the Newton Bank, but was passed by Hart-well from one account to another on the books of the sub-treasury, to cover a portion of Hartwell’s deficit. ’
NXI. On the 28th of February, Carter delivered to Hartwell, at the sub-treasury, money and securities to an amount sufficient, as was supposed, to replace in the sub-treasury all the money Hartwell had taken therefrom and let him have, amounting to about one million dollars ; and hastily figuring the amount of the funds belonging to the Newton Bank, or for which that bank was responsible, and which he had used to supply" his deficiency at the sub-treasury, he made it out to be $336,000; for which sum Hartwell gave him the following receipt:
“United States Treasury, Boston.
“Deposited by Mellen, Ward & Co., of Boston, three hundred & thirty-six thousand dollars in governments & bills on acct. of deposit, to be returned on demand in governments or bills or its equivalent.
“Date Feb. 28th, 1867.
“ J. F. Hartwell, Or.”
This receipt was written on a regular blank in use at the sub-treasury.
Upon it Garter wrote, at the sub-treasury, in Hartwell’s presence, this indorsement: '
“Pay only the order of E. Porter Dyer, jr., cashier.
“Mellen, Ward & Co.
“Boston, Feb’y 28th, 1867.”
But it does not appear that Hartwell read the indorsement, nr otherwise knew its terms.
The receipt, with that indorsement on it, was, on the 1st of March, delivered by Carter to Dyer in accordance with Carter’s agreement, as hereinbefore stated in finding XIY; and on that day Dyer presented the same at the sub-treasury to George D. Whittle, the chief clerk, and demanded its redemption, 'but Whittle refused payment thereof, and the same has never been paid.
When Dyer went to the sub-treasury that day to present said receipt, he found Carter there, who informed him that Hartwell had revealed the whole matter of his letting Carter have the money of the government,- and that the assistant treasurer refused to allow any of the money or securities which Carter had delivered to Hartwell to go out of the sub-treasury.. Hartwell’s disclosure was made to the chief clerk on the afternoon of February 2-1, after Carter’s delivery to him of tire money and securities. In making that disclosure he told the chief clerk, in substance, that the Newton Bank was cleaned out.
No part of said money and securities has ever been returned to the Newton Bank, or any one representing it.
XNII. The receipt given by Hartwell to Carter did not represent the full amount of the money and securities which belonged to, or were received by Carter from, the Newton Bank, or upon the checks of that bank; but the whole amount of such money and securities was $371,025, made up of the following items:
1. Proceeds of Dyer’s check of February 25 on First National Bank of Boston (finding XY).$50, 000
2. Compound-interest notes (finding XYII, clause 1) - - 20,000
3. Government bonds (finding XYII, clause 1). 25, 000
4. Proceeds of Dyer’s check of February 28 on the Central National Bank of New York (finding XYII, clause 2) .. 100, 000
5. Proceeds of Dyer’s three checks of February 28 on the First National Bank of Boston, $50,000, $30,000, and $25,000 (finding XYII, clause 3) ... 105,000
6. Amount delivered by Dyer to Carter, as agent, to deposit for the Newton Bank, in obedience to the transfer letter aforesaid (finding XYIII). 35,000.
7. Fractional currency, and proceeds of fractional currency and internal-revenue stamps, in hands of Carter as agent (finding XIX). 29,700
8. Interest accruing March 1 on government bonds (finding XX). C, 325
Total. 371,025
XXIII. It does not appear that any officer of the Eliot Bant, or of the Mount "Vernon Bank, knew of, or had any reason to suspect, the existence of any of the acts, doings, arrangements, or purposes of Carter, Hartwell, or Dyer, as hereinbefore set forth in these findings, until after the disclosures made by Hart-well on the 28th of February, and the consequent publicity of the whole affair.
XXIV. On the 11th of March, 1867, D. Wayland Jones was appointed receiver for the Newton Bank, by the following commission :
“Treasury Department,
■' “Office Comptroller oe the Currency,
“ Washington, D. 0., March 11,1867.
“ Notice having been received by me that the First National Bank of Newton, a national banking association formed pursuant to the laws of the United States, and located at Newtonville, Massachusetts, had failed to redeem its circulating notes when payment thereof was legally demanded at" the office of said association, and being satisfied from the protest of two of the circulating notes of the said bank, produced to me, and from the report of C. A. Bansom, a special agent appointed to ascertain whether said association had refused to pay its circulating notes, that the said association has failed to redeem, in lawful money of the United States, its circulating notes when payment thereof was legally demanded, during the usual hours of business, at the office of said association, and is in default:
“Now, therefore, I, Hiland A. Hulburd, Comptroller of the Currency, in pursuance of the power and authority vested in me by law, and with the concurrence of the Secretary of the Treasury, do hereby appoint D. Wayland Jones, of Newton, in the State of Massachusetts, a receiver for the First National Bank of Newton, with all the power, duties, and responsibilities given to or imposed upon a receiver under the provisions of the act entitled “An act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof’ ’approved June 3d, 1864.
“ In .witness whereof I have hereto subscribed my name and have caused my seal of office to be affixed to these presents, at the city of Washington, in the District of Columbia, the day and year first above written. -
[seal.] “Hiland A. Hulburd,
“ Comptroller of the Currency.
“ Approved and concurred in.
“H. McCulloch,
“ Secretary of the Treasury.”
In pursuance of this commission the said Jones performed the duties of receiver, and collected notes due the Newton Bank to the amount-of $110,000; the whole of which he sent to the Comptroller of the Currency; and in December, 1867, he washy that officer discharged from his receivership, by the following letter:
‘'TREASURY DEPARTMENT,
“Office oe Comptroller of the Currency,
“ Washington, Dec. lOi/t, 1867.
“Dear Sir: You will please deliver the safe and other property of the First Nat. Bank of Newton in your possession to J. C. Stanton, Daniel N. Stanton, Edwin F. Waters, Willard Marcy, and Samuel A. Carlton. Upon doing this you are relieved from all further responsibility on account of your trust as receiver of said bank.
“ I take this occasion to thank you for the patience, promptness, and fidelity with which you have executed your trust.
“Very respectfully,
“ Jno. J. Knox,
u Deputy Comptroller.
“D. Wayland Jones, Esqr.,
11 Receiver First Nat. Bank of Newton, Newtonville, MassF
Mr. TF. Gr. Russell, Mr. T. K. Lothrop, and Mr. R. R. Bishop for the claimants:
Under the circumstances, no property in the money passed to the United States. It remained the property of the owners from whom by fraud it was taken; and, except for the fact that the United States cannot be sued in a court of law, an action for money had and received would lie for it. As was observed by Shaw, C. J., in a case which this closely resembles, this scheme was deliberately formed, and carried into effect with steady perseverance, attended with as much criminality and turpitude as can well characterize any transaction where rights of property only are violated. It is immaterial who of the parties was the first to propose the scheme, or what motive personally actuated them respectively. They each knew of the criminal purpose, and each contributed in his own measure to accomplish it. It was a criminal conspiracy to do an unlawful act by unlawful means. By means of it, the money and securities were taken from their owners without their authority, and for which they had received no consideration, and went directly into the possession of the United States, for which the United States paid no consideration. It was the property of the petitioners when it left their possession; the guilty agents in tbe transaction could acquire no title as against them, nor could they convey any. It is therefore the ordinary case where one party has received money, the property of another, which rightfully, equitably, and in good conscience, he cannot hold, and for which, therefore, the action of assumpsit for money had and received will lie. (Atlantic Banh v. Merchants’ Banh, 10 Gray, 532, 545, 546.)
Hartwell had full knowledge of the purpose of fraudulently obtaining funds, of the method by which they were to be obtained, and of the source from which they came.
This knowledge would prevent the transaction from being a payment in law, even if the parties intended it to be such. [Piercy v. Fynney, L. R. 12 Eq., 69, 65; Gla/rhe v. Shee, 1 Oow-per, 197.)
The government, receiving the money and funds through their officer and agent, Hartwell, who was fully cognizant of the fraud and a participator in it, took them with full notice, and acquired no property in them against the true owner. [United States v. State Banh, 96 U. S. R., 30; Atlcmtic Banh v. Merchants’ Banh, 10 Gray, 532; Shinner v. Merchants’ Banh, 4 Allen, 290; Castle v. Bullard, 23 How., 172, 189; Olmsteadv. Hoatling, 1 Hill, 318.)
Where a trust fund is perverted, it may be followed at law as well as in equity, as far as it can be traced. And the right only ceases when the means of ascertainment fail. [United States v. State Banh, 96 TJ. S. It., 30; Lord Fllenborough, in Taylor v. Plummer, 3 M. & S., 562, 575; May v. Le Claire, 11 Wall., 217; Be Rallett’s Fstate, Knatchbull v. Hallett, L. It. 13 Oh. D., 696, 717, 718; Rational Mahaiwe Banh v. Barry, 125 Mass., 20, 24.)
If Carter intrusted the funds of the petitioners to Hartwell, to whom he was indebted, not in payment of Ms debt, but for a different and temporary purpose, they may be recovered back by the petitioners, even though Hartwell had been without notice of the ownership of the funds. (Wilson v. Smith, 3 How., 763; Banh of Metropolis v. N. F. Bcmh, 1 How., 234; 6 ib., 212.)
A fortiori, such funds can be recovered, where, as in this case, they have befen fraudulently taken from the true owner, and delivered to the person receiving them by a conspiracy to which he was a party. [British and American Tel. Co. v. Albion Banh, L. E. 7 Exch., 119, 122.)
Where, as in this case, the United States, without consideration and by the fraud of its officer, receives the money of an individual, his right to it remains. The case is precisely parallel in principle to Bayne v. United, States (93 U. S. B., 642).
“The object was to give falsehood the appearance of truth, and no party to such transactions can derive any rights out of them.” {Gray v. Lewis, L. E., 8 Eq., 542.) •
An action for money had and received will lie wherever one has received money which is the property of another, and which the former is obliged by natural justice and equity to refund. (United States v. State Bank, 96 U. S. B., 30, 35; Mash v. Towne, 5 Wall., 689, 702; Moses v. Macferlan, 2 Burrows, 105, 112; Ciarle v. Johnson, 1 Cowper, 199; Carey v. Curtis, 3 How., 255; United States v. Lawson, 101 U. S. B., 164,169; United States v. Mlsworth, ib., 170, 174; United States v. State Bank, 96 U. S. B., 36.)
Mr. Assistant Attorney-General Simons for the defendants:
The claim in these cases arises from the same fraudulent transaction connected with the United States Treasury in Boston out of which arose the claims of the State and Merchants’ Banks, heretofore adjudicated in this and the Supreme Court. (10 O. Ols. E., 519; 96 U. S. E., 30.)
The claimants’ contention is, in general, that the facts in these cases do not materially differ from those on which the said judgments were rendered, and therefore a like judgment herein should be rendered. Not disputing the conclusion, if the premises are found correct, the defendants submit [that the cases here present a difference in facts which should at least receive the careful consideration of the court before adopting the claimants’ view. The controlling feature, as it seems to us, in the State Bank Case was that, being the innocent owner of certain certificates which were promises of defendants to pay gold on demand, it presented them to defendants for payment at the place where they were payable, and payment was without lawful justification refused. The attempt of Hartwell to convert instead of paying the certificates could not be such a j ustification. In these cases there is no such privity of contract. .The Newton Bank never came to any one in the treasury at Boston presenting for payment any promise of the defendants to pay anything. We submit, further, that no demand other than by these suits has been made by the claimants for the amount or matter in controversy. On March 1,1867, E. Porter Dyer-, jr., who was cashier of the Newton Bank, presented to Whittle, chief clerk at said treasury, a paper which he then and there knew to be not only without obligation on the defendants, but to be part of a fraudulent scheme in which he was directly concerned, and asked to be paid as therein specified. This request, made, as it would seem, without the knowledge of the bank, was properly denied. There was no authority under the circumstances to grant it, even if properly made. (§§ 6-10, Act August 6,1846,9 Stat. L., 60; § 1, Act March 3,1849, 9 Stat. L., 398; § 3, Act March 3,1857,11 Stat. L., 249; § 40, Act July 18, T866,14 Stat. L., 187. Title XL, Bevised Statutes.)
As the Newton Bank directors (except Carter) knew nothing of the transactions, so far as appears, until the night of March 1, the claim is essentially that of one innocent principal against another equally innocent, arising from the wrongful acts of the agents of each, and thus differs from the claim heretofore adjudicated.
The maxim “In tequali jure potior est conditio possidentis,” is at once suggested by the statement of such a case. By it the bank must show a superior right under the circumstances to the money in dispute, and to make this out it is contended, on the authority chiefly of a majority of the supreme court of Massachusetts deciding the suit of Atlantic Bank v. Merchants’ Bank (10 Gray, 532), that defendants obtained moneys and property of the bank without consideration, and had. constructive notice of the fraud. That no consideration passed directly from defendants to claimants is true; but that is not decisive, for it is well settled that under some circumstances rights of property can be acquired from or through persons who have no title, and the case of negotiable paper and money received in the usual course of business in good faith for valuable consideration is a familiar illustration. Fully recognizing this, Chief Justice Shaw argues in his opinion that because the defaulting teller in his case did not intend to pay the debt by his deposit, and his principal was ignorant of the defalcation, the principal took the money without consideration.
The facts we submit are otherwise here. Hartwell meant beyond question to restore, and did restore, the money. That it was restored was known to the chief clerk, "Whittle, at least before it was demanded by any one, and for nearly six years, as we say, there was no lawful demand by claimants. It was counted among the public funds according to law, and otherwise treated as public property, so as to leave no question as to the intent of defendants’ agents to receive it in payment or restoration, as indeed was their duty under the law (Statutes, swpra), in consideration of the indebtedness of both Hartwell and Mellen, Ward & Co., which was a full and valuable consideration.
As the course of business connected with the public funds was regulated by law, the receipt and acceptance of the funds, if according to law, was in due course of business. So far at least as the restoration was in funds lawfully receivable the law protects the receivers. As to any portion otherwise received the agents were of course accountable to their principal. They were not bound to return the property to an irresponsible debtor, and third parties cannot except to the form in which defendants choose to take payment from their debtors. So far as it was capable of identification as property of claimants, it may be that they could reclaim it in some proper form of action seasonably brought, but this would apply, if at all, to a portion only of the funds received.
On the point of notice it is plain from the evidence that neither Hartwell nor Whittle had direct notice of the alleged fraud on the claimants.
There is no foundation in fact for applying the theory of constructive notice adopted by the majority of the Massachusetts court.
The correctness of that doctrine was ably contested by the minority in that case, and we submit, with better reasoning. If the defendants are to be held cognizant of information received by their agent in an unlawful transaction, which was in every particular outside of his apparent as well as his real authority, why is not the Newton Bank to be likewise held cognizant of the information received in the same matter by its cashier, as also of the acts of that agent, which, though fraudulent, were strictly (except as to conversion of the collaterals) within the scope of both his real and apparent authority? In a subsequent case in South Carolina, the court, after a consideration of the Massachusetts decision, evidently differed in opinion from those who rendered it. (Bank of Charleston v. Bank of State, 13 Eich-;ardson, 309.)

Opinion:
Drake, Ch. J.,
delivered the opinion of the court:
In State National Bank v. United States (10 C. Cls. R., 519) is spread at large the history of one branch of a scheme of embezzlement, conspiracy, and fraud which is probably unsurpassed by any case in the reports of this country.
In the present case, the finding of facts gives at large the history of another branch of the same scheme, devised and carried out by two of the parties to the former one, but with a different third party.
The two leading conspirators, in each case, were Edward Carter, of the firm of Mellen, Ward & Co., and Julius F. Hart-well, the disbursing clerk, or cashier, of the sub-treasury of the United States in Boston.
The scheme of these two men was thus concisely stated, in .general terms, by the Supreme Court of the United States, in United States v. State Bank (96 U. S. R., 30): " Hartwell was •cashier of the sub-treasury in Boston. He embezzled a large amount of money belonging to the United States, by lending it to Mellen, Ward & Co. As the time for the examination of the Binds in the sub-treasury approached, Mellen, Ward & Co. endeavored to tide Hartwell over the crisis, and to conceal his .guilt and their own by the devices out of which this controversy has arisen."
This is just as applicable, so far as it goes, to the present case as to that in which it was written.
The whole amount embezzled by Hartwell and lent to Mellen, Ward & Co. was from a million to a million and a quarter dollars. In the former case the State National Bank of Boston recovered 1480,000. In this case the Newton Bank seeks to recover $371,025. Both of those sums were parts of the greater .amount which went into the hands of Hartwell on the 28th of February, 1867, with the intent to have it appear in his cash the .next day, when the examination of the sub-treasury was to take .place.
The sum claimed by the Newton Bank was obtained, in vari ous ways, by Carter from E. Porter Dyer, jr., tbe cashier of that bank, who knew, from Carter, of Hartwell's embezzlement, of his lending the money of the United States to Mellen, Ward & Co., and of the scheme of Carter and Hartwell to get the embezzled amount put back into the sub-treasury, so as to appear in Hartwell's cash when the examination should be made. The different ways in which Carter obtained that large sum from the cashier of a bank whose capital was only $150,000' are summarized by items in finding XXII,. and the facts in regard to each item are fully set forth in the several different findings there referred to; from all of which it appears that, in one way or another, Carter obtained from Dyer, the cashier of the Newton Bank, the sum of $371,025; made up partly of assets of that bank taken from its vaults by Dyer, and delivered to Carter; partly of its money deposited in other banks, and drawn by Carter or Dyer's cashier checks; partly of the proceeds of other cashier checks drawn by Dyer on other banks, where there were not funds to meet them, and which were sold by Carter; partly by fractional currency and proceeds thereof, and proceeds of internal-reArenue stamps, in the hands .of Carter as agent of the Newton Bank; and partly of a sum due the Newton Bank as interest on government bonds, to collect which Carter held Dyer's authority as cashier.
All of those items may be properly treated as assets of the Newton Bank, and Carter passed the whole amount of them over to Hartwell; not with any intention on the part of either of them that the amount should be a payment of so much of Mellen, Ward & Co.'s liability to Hartwell for his loan to them of embezzled money of the United States, nor even as a deposit in the sub-treasury for any legitimate purpose ; but simply for Hartwell's use the next day as a sham, to make it appear that his cash was right, and immediately thereafter to be returned by him to Mellen, Ward & Co., who would then replace in the vaults of the Newton Bank the assets taken therefrom, take up Dyer's outstanding checks, and otherwise save the bank from loss.
Hartwell, instead of carrying out his agreement to return the money to Carter, revealed the Avhole matter to. the chief clerk of the sub-treasury on the afternoon of the 28th of February; and the assistant treasurer refused to. allow any part of' the money to be returned to Carter; and tbe whole of it has ever since remained in the possession of the government.
Upon the case as thus outlined, the simple question of law is, whether the claimant's property in the assets was, by the fraudulent acts of its cashier and one of its directors, devested out of it and. vested in the defendants. There is not the least ground for answering these points in the affirmative, unless the claimant was privy to those transactions, and allowed its assets to be so used. But there is nothing in the case justifying a remote supposition that any officer, director, or stockholder of the Newton Bank, except Dyer and Carter, the conspirators, had the least knowledge or the faintest suspicion of, or the least cause to suspect, any part of the villainous scheme. It was simply a case of a bank being robbed, and of its stolen assets being put into the hands of the cashier of the sub-treasury, for a purpose which, by no possible view, could, in law, be held to effect a transfer of the bank's right of property in them, either to him or to the United States.
Such being the case, " It ought," in the language of the Supreme Court, of the United States, " to require neither argument nor authority to support the proposition, that, where the-money or property of an innocent person has gone into the coffers of the nation by means of a fraud to which its agent was a party, such money or property cannot be held by the United States against the claim of the wronged and injured party. The agent was agent for no such purpose. His doings were vitiated by the underlying dishonesty, and could confer no. rights upon his principal." (United States v. State Bank, ut supra.)
The judgment of the court is, that the claimant recover of the-defendants the sum of $371,025.
Nott, Richardson, and Hunt, JJ., concurred in the foregoing opinion. Davis, J., expressed no opinion.
Besides the above case were three others, growing out of the same transaction, viz: The Eliot National Bank of Boston v. The United States; The Mount Vernon National Bank of Boston v. The Same; Daniel W. Jones, receiver, v. The Same.
It was stated by the counsel in each of these cases, at the trial, that if the court should be of opinion that the Newton Bank was entitled to recover, the claims of the other three claimants would not be pressed, as there was no controversy between them and that bank.
The finding of facts in the Newton Bank Case will stand as the finding in each of the other cases; and in each of them the petition is dismissed.