Case Name: LEE v. MUNROE & THORNTON
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1813-02-26
Citations: 7 Cranch 366
Docket Number: 
Parties: LEE v. MUNROE & THORNTON.
Judges: Msent....Johnson, J. and Todd, J.
Reporter: United States Reports
Volume: 11
Pages: 366–370

Head Matter:
LEE v. MUNROE & THORNTON.
Msent....Johnson, J. and Todd, J.
The United bound5 declaration;! of frande^unoh a mistake of clear!?11 If55c? - that'the^géuT was acting scope*of hs authority, and SlutóTcapacity ofagent to make such
¿HÍS was an appeal, from the decree of the Circuu, Court for the district of Columbia, in a suit in Chance? fy, brought by Lee against Thomas Munroe, superin-, teodant of the city of Washington, and William Thornton, the survivor of the late board of commissioners for ^ía city. The object of the bill wasto obtain a discount of 3,000 dollars upon a judgment, Vhich Munroe, as superinténdant, had obtained against Lee upon his bond. The ground upon which this set-off was claimed, was this. Morris and Nicholson were indebted to Lee 1,1 that sum by promissory notes, and offered payment in certain city lots, the title whereof was in the commissioners of the city. Morris and Nicholson havmg paid money m advance to the commissioners, were, as they supposed, entitled, to demand from them the conveyance of the lots'in question," under existing contracts between the commissioners and themselves. Whereupon 'Lee applied to the commissioners to know of them whether'they would convey the'lots to him, upon the order of Morris and Nicholson. This they promised to do, and, made, áñ entry of it in their journal. Lee then agreed with Morris and Nicholson to receive the lots in-payment, and upon receiving their order to the commissioners to convey them to him, gave up to Morris and Nicholson their notes for 3,000 dollars, which were the evidence of the debt. On presenting this order to the commissioners, they' refused to convey the lots, unless he would pay them the purchase-money due thereon to them from Morris and Nicholson, alleging that the balance was against Morris and Nicholson in their account with the commissioners. Morris and Nicholson ly afterwards became insolvent.-
C. Lee, for the Appellant.
This case cannot be distinguished from tiiat of a mortgagee, who knowing another person is about to lend money upon the mortgaged premises, informs him that his mortgage is satisfied. If it be not, he shall be postponed to the 2d mortgagee. 2 Vern. 554. Ibbottson v. Rhodes. 1 P. Wms. 394. Mocatta v. Murgatroyd. 4 Dall. Levy v. Bank U. S.
The Commissioners were acting within the scope, of their authority. It was their business to keep the accounts with Morris and Nicholson, and to know the balance ; it was also their business to convey the lots. Ir is immaterial what was the real state of accounts at-the time. They acted at their peril.
The question is, who shall bear the loss ? Not he who was in no fault, but he whose duty it was to know the truth, and who by his negligence has brought this loss upon the Plaintiff.
Jones, contra.
This case does pot depend Upon the principle of first and second mortgagee. The bill does not seek relief per-, sonally against the superintendent, or the surviving commissioner, but is intended to charge the public with this loss. The commissioners were public'officers; they had no interest in the business. It was va simple mistake of a fact on their part, which cannot bind the U. States. It is an attempt to set off unliquidated damages incurred by these public officers against a judgment debt.
Feb. 26th....

Opinion:
Livingston, J.
delivered the opinion of the Court as follows;
This'is a bilí seeking relief against public officers nominally, but against the United States in fact, for a mistake of tlie former in a representation made by fliem to the Appellant, by which it is alleged, that he has sustained a loss, for the redress of which in this suit is brought. It has been contended in this case, that the Defendants having, in their .public character as commissioners of the city of Washington, misinformed the Plaintiff as to the state of the accounts between them and Morris and Nicholson, and thereby induced him to relinquish a demand which lie liad against the latter, he is now entitled to have discounted from a judgment, which they have obtained against him for the use of the United States, a sum equal to the principal and interest of-the debt which he lost by the confidence which he placed in them ; and this is supposed to be like the case of a party, who being about to lend money on real estate, applies to one who holds a prior mortgage to ascertain whether he has any incumbrance on it. There is no doubt, in such a case, that if the person malting the application discloses that he is about lending money on the estate, he will be preferred to the first mortgagee, should the latter deny his having a mortgage, or assert thqt it is satisfied; and it seems agreeable to the dictates of reason and good conscience, that his claim should be postponed to that.of a person whose confidence was inspired by the misrepresentation of one, who was acting for himself, and every way .competent to inform him of the truth. But in all the cases which have been decided on this principle, the fraud, for such it is supposed to be, has been practised by a party who has himself an interest in the subject-matter of inquiry, who cannot well mistaken, arid whose conduct therefore ought to be conclusive on him, when the rights of third persons come in question. It is, however, not known to the Court, that the same rule of decision has been extended as to affect the interests of principals, and particularly of the public, inconsequence of similar 'mistakes made by an agent, nor is it reasonable that such extension shoidd take place, .unless it most manifestly appear that the agent was acting within the scope of his authority, and was empowered, in his capacity of agent, to make the declaration or representation which is relied on the ground of relief. In the present case, the Defendants were employed and authorized by the public to sell arid riiake contracts for the sale of certain lands lying within this district. In pursuance of these powers, they had made contracts with Morris and Nicholson, who having advance's a considerable sui® of money, were in the habit of directing the Defendants from time to timé, to convey certain of the lots which they had tracted for, to the persons named in such orders. The commissioners supposing that Morris and Nicholson had not yet received titles to land equal in value to the sum which they had advanced, told the Plaintiff that if he would obtain an order from them for certain lots, they should be conveyed to him. But in a day or two after, they discover that Morris.and Nicholson had already received deeds for lots to the whole amount of the sum which they had advanced, and give notice of this fact to the Plaintiff, offering however to convey to him the lots in,question, on his paying for them at the rate expressed in their contract with Morris and Nicholson. The Court will not inqriiré whether the Plaintiff really suffered any injury from the confidence which he placed in the commissioners, or whether he lost his remedy against Morris and Nicholson, (of which very serious doubts ftiay well be entertained) but a majority of the Judges are of opinion, that the communication made by the commissioners, to the plaintiff, was altogether gratuitous, and that not being within the sphere of. their official duties,, the United States cannot be injured by it, and that the Defendants could not, without rendering themselves personally liable to the public, have, made a title to the Plaintiff after a discovery of the mistake which they had made, but on the terms proposed by them 5 or in other words, that the United States could not, by ally declaration of the commissioners proceeding from a mistake, lose the lien which was secured to them by the contract with Morris and Nicholson, for the stipulated price of this property. If the commissioners acted fraudulently, which is not pretended, they may he personally liable in damages to the.Plaintiff •, but if it were a mistake, and such it is represented tó be, the Court has:already said that the interests of the United States cannot, and ought not, to be affected by it.. "Were it otherwise, an officer entrusted with the sales of public lands, or empowered to riiake contracts for such sales, might by inadvertence* or incautiously giving information to others, destroy the lien of his principals on very valuable and large tracts of real estate, and Pveii |>roduce alienations "of them without any consideration whatever being received. It is better that- an individual should now and -then suffer by such mistakes, thaii to introduce a rule against ail abuse, of which, by improcollusions, it would be very difficult for the public tot protect itself. It is the opinion-of this Court, that the decree of the Circuit Court be affirmed.