Court Opinion

ID: 9841874
Source: CourtListenerOpinion
Date Created: 2023-09-22 20:09:52.735283+00
Date Added: 2024-06-11T09:05:50.930916
License: Public Domain

*178Mk. Justice Peckham,
with whom concurred Mb. Justice Shieas,
dissenting.
I dissent from the conclusion arrived at in the opinion of the court, and from the judgment thereon. I agree as to the general character and extent of the liability of an officer entrusted with the care and custody of public moneys, as stated in the cases cited, in the opinion upon that subject. But those cases do not touch the question involved. It is undisputed that the' property, for the loss of which the defendants have been held,, consisted of $25,000 of treasury notes of the government of the United States; in other words, it consisted of the written promise of the government to pay money upon presentation of the notes. There was evidence also, at least sufficient to go to the jury, to prove that most of these notes were wholly destroyed by fire, so that there was no possibility of their being thereafter presented for payment or redemption. Treasury notes amounting to about eleven hundred dollars wrere not so far destroyed as to be incapable of identification or presentation for payment, and they were taken possession of and retained by the government, and yet the government also recovered judgment for their amount.' Assuming the liability of the obligors in the bond to respond for all the damage sustained by the government by reason of this destruction by fire, the question is, what damage has the government suffered ?
Within the case of The United States v. Morgan, 11 How. 154, cited in the opinion of the court, that question- should have been submitted to the jury under instructions that the defendant was not liable for the amount of the face of the notes in case they had been -totally7 destroyed by the fire, but only for such cost and expense as the government might incur by reason of the replacing of the notes destroyed, including cost of paper, printing, engraving, and the trouble and inconvenience caused the government, etc., together with the cost, if, necessary7 or more convenient to the government, of the transportation of other notes to take the place of those destroyed.
This suit is upon the bond, which, as it seems to me, is plainly one of indemnity. The legal purport of such a bond is to indemnify the government from any loss occasioned by any *179dereliction of the obligor. In case of a breach of the bond, the amount which the government would be entitled to recover would be measured by the loss incurred. If the loss were shown to have been the sum of five dollars or merely nominal, the plaintiff could not recover a thousand dollars, or the penalty of the bond. It is conceded in the present case that what the defendant and his sureties have been adjudged to answer for as a breach of the bond, was because $25,000 (less'about eleven hundred dollars) of treasury notes of. the United States, in the. custody of the superintendent, had been burnt ,and destroyed by fire. I concede that the bondsmen would be responsible for any loss thereby occasioned to the United States, even though without negligence on the part of the officer in whose custody the money had been placed.
In Morgan's case, supra, there was a suit by the United States against a collector of revenue. It appeared in evidence that the collector had collected about $100,000 for duties in treasury notes, and had cancelled them. The notes'were then put in a bundle and sent to the Treasury Department through the post office, but the bundle was lost or stolen. The Circuit Court gave judgment to the government in the amount of the penalty of the bond, which judgment this court reversed, and in its opinion said:
“ The rule of damage would be the amount of the notes— unless it appeared, as here, that they had been cancelled, and unless it was shown that the government had suffered, or was likely to suffer, damages less than their amount. How much is the real damage, under all the circumstances, is a question of fact for the jury, and should be passed on by them at another trial. Only that amount rather than the whole bond need, in a liberal view of the law, and of his bond, be exacted ; and that amount neither he nor his sureties can reasonably object to paying, when he, by the neglect of himself or his agent, has caused all the injury which he is in the end required to reimburse. . . . Finally, we decide on this last question as a matter of law this, and this only, namely, that the collector is liable for all the actual damages sustained by his not returning the notes as required by law and official circulars; or for not putting *180them in the post office so as to be returned. 5 Stat. 203. But how much this damage was is a matter of proof before the jury, fixing the real amount likely to happen from their getting into circulation again, as two of them did here, from delay and inconvenience in obtaining the proper vouchers to settle accounts, for the want of evidence at the department that the notes had been redeemed, or from any other direct consequence of the breach of the condition of his bond, and of his instructions under it.”
The attempt made to distinguish the present case from that of United States v. Morgan, does not seem to me to be successful. Indeed the case before us presents a stronger case of a substantial defence than that of Morgan’s.
To refuse, this defence of a burning and total destruction of the notes leaves the strange and anomalous spectacle of a recovery by the government on account of a damage which in fact and in law it has not sustained. The recovery must be upon the contract, evidenced by the bond, to safely keep and pay over, and in default to pay the damage up to the penalty of the bond. This is the contract, and that there has been a breach may be admitted at once, but the question on the part of the obligors in the bond then comes back, what damage has the government suffered by reason of the failure to keep the contract, for it is only the damage which the government in fact has sustained that we have contracted to pay. How can it be said, "with the slightest reference to fact, that the damage amounts to the face of the notes when those notes are simply the promise of the government to pay upon their presentation, and the possibility of such presentation has ceased to exist ?
But the right to set up and prove a defence of this character seems to be denied on some view of public policy, the propriety of which I admit I fail to recognize, and I also- fail to recognize the legal power of the court to deny to the obligors the validity of a defence which shows that no damage or a less amount than claimed has been sustained, because of any assumed public policy. It is a case- of contract and not of policy.
The denial of the sufficiency of the defence seemingly rests upon the ground that it is against the interests of the govern*181ment, and therefore is against the public policy of the United States to permit any defence to be interposed in an action upon this kind of a bond; that no. matter how clearly it may be proved that no damage has been sustained by the government, and therefore there is nothing which the obligors have contracted to pay, still the full amount of tlie face of the notes must be paid to the government in order to reiinburse it for a loss it has never in fact sustained. And it is proof of this very fact which is refused oifthe ground of public policy. •'Can-the government maintain the proposition that if it has suffered in truth no loss it can nevertheless recover either the penalty of the bond or any less sum ? This is to change the legal import of the bond. But it is nevertheless maintained that it is against public policy to permit proof of a fact which if it really existed would undoubtedly constitute a defence to the claim made by the government. T.hat kind of a public policy which prevents a legal defence I cannot understand. I can and do appreciate a public policy that refuses to admit the sufficiency of a defence that the property was lost by or stolen from the officer without any fault on his part. The officer and his sureties have frequently endeavored to have the government bear the loss which has actually been sustained, because it happened without any fault on the part of the officer; but the courts have held that such defence is insufficient on the ground that it is against public policy to recognize it as an answer to defendant’s obligation to pay over, because it would tend to diminish the care which the officer would otherwise take of the property entrusted to his custody and would lead the government into an investigation . of the facts surrounding or causing the loss, under very great disadvantages, and therefore as the loss had in fact occurred, and one or the other of the parties must bear it, the courts have said he must bear it in whose custody it had been placed by the government when it was stolen or destroyed, and the proffered answer has been held to be no defence to the contract to pay over existing in the bond, which has therefore been enforced. The courts simply decided what the contract between the parties meant, but they did not decide that a legal defence, showing there was no damage, could not be interposed.
*182Here, however, it seems to me plain there is no question of public policy as to what should constitute a defence. The amount of damage is what the defendants have promised to pay and nothing more. Consequently, what is damage must be shown. Now that is a question of fact, and if no damage has in fact been sustained, it is the legal right of the defendant to prove it, and it cannot, as I think, be denied him on any question of public policy. This is to me a new application of the doctrine of public policy to a strictly legal defence to the obligation contained in a contract sued upon, where both parties acknowledge the validity of such contract and the defence is founded upon the terms of the contract about whose legal meaning there cannot, as it seems to me, be any difference of opinion.
Upon the other branch of the subject, the case shows that at least $1182 in treasury notes were saved, although charred, and were taken possession of by the agents of the government and were identified as to the amount and date of issue. The defendants insisted there could be no recovery for this sum, as the government already had the notes in its possession, but this objection was overruled. The sections of the Revised Statutes ■ of the United States, §§ 951, 957, set forth in the opinion, are said to render this defence insufficient, for the reasons that the defendants had not submitted their claim for audit to the accounting officers of the Treasury. These sections are, as stated, simply reproductions of the act of 1797, which was in force when the Morgan case, 11 How. 154, supra, was decided, and it is not mentioned therein as an answer to the defence set up by defendants. Probably the provision was not regarded as applicable, although it must be admitted the record does not affirmatively show the non-presentation of the matter to the Treasury officials. But, in my judgment, the sections have no application to this case. The defendants are not seeking a claim or credit against the government, and the provision applies to such a case, while here the question is as to how much the government has been damaged, and when it is shown that, in any event, it has in fact received $1182 of the $25,000 it claimed, it seems to me that, upon any basis of liability, such fact reduces the claim on the part of the government, not by rea*183son of a credit, but because the defendant never was liable to the extent claimed, and in proving the facts which'show there never was any such liability, it cannot, as it seems to me, be said that the defendants thereby claim a credit. They claim no such thing, but they do claim, first, that the government has failed to prove a cause of action for any more than a nominal sum ; or, second, for any greater sum than $23,818, being the difference between $25,000 and the $1182 already received, and this is the extent of the cause of action proved by the government, after all the facts are in evidence.
The recovery in this case was not for the whole penalty of the bond, which was $100,000, but judgment was .prayed for and recovered to the extent of $25,000, the whole amount of the notes, not deducting the $1182 already received;by the government. This shows that the recovery .was at least based upon the amount of the damage and not upon the penalty, and it therefore further shows that it was indemnity, pure and simple, which the government claimed. Therefore it was necessary for it to' prove the damage, and in proving the defence at least as to $1182, the defendants were not proving a credit, but disproving to that extent the cause of action of the plaintiff.
For the reasons thus stated, I am in favor of reversing the judgment of the court below, and I dissent from the opinion of this court directing an affirmance.
I am authorized to state that Me. Justice Shikas concurs in this dissent.