Court Opinion

ID: 8310922
Source: CourtListenerOpinion
Date Created: 2022-10-17 13:48:12.763225+00
Date Added: 2024-06-11T16:44:43.430074
License: Public Domain

Jackson, C. J.
After a careful examination of this case, I concur in the conclusion reached by his honor, the district judge, that the plaintiff is entitled to recover the amount for which judgment has been rendered, and that the motion for a new trial should be denied. It is perfectly clear that the postmaster cannot hold or legally claim the benefit of the rebates made by his several landlords. To the extent that said rebates reduced the rent below the sum allowed by the post-office department, the postmaster and his sureties are legally liable to refund to the government. Good faith and his agency relation to the government required the bona fide expenditure of the allowance made, for rent actually paid ; and the postmaster could not lawfully appropriate it otherwise, or by *546any collusive arrangement with his landlord derive a personal benefit therefrom in excess of the rent actually paid. If this were otherwise doubtful under the evidence of the postmaster himself, Ms quarterly vouchers for rent paid would conclude him on the question.
On the other branch of the case, viz., the right of the government to hold the postmaster liable for the amounts received from sublettiiig portions of the premises rented for post-office purposes, I had, at first, some doubt, but upon further reflection, and in view of the fact that the allowance made to the postmaster was for the whole space (the first floor of the building) rented and appropriated to the use of the government, as shown by the proof, I am forced to the conclusion that the postmaster could not devote any portion of such space to private use, or take a personal benefit to himself therefrom, without a breach of the duty which every agent owes to his principal whose business he is intrusted to manage, viz., that of good faith, and the obligation to conduct the business for the sole benefit of the principal.
One of the department regulations (No. 72) required the postmaster to report whether “the clerk hire or other allowance was more or less than the service required.” Under this regulation and requirement, could the postmaster, without a breach of official duty, neglect to report that the $600 or $900 allowance for rent was more than the service required, while actually receiving'from subtenants rents for portions of the very space or premises appropriated for post-office purposes, and for which the allowance was made? I think not. He could not be allowed to say that, although the allowance is made in consideration of the .appropriation of the whole premises (the entire first floor) for government use as a post-office, and the convenience of the public in connection therewith, there is nevertheless a certain portion of the space, so appropriated and allowed for, which is not in fact needed to,meet the wants of the government or the convenience of the public, and “I will therefore devote that portion of the premises to my private benefit, and thereby save a large part of the allowance made for rent.” His agency relations required him to make that saving, out of space or premises rented for post-office purposes, for the benefit of his principal, the United States. It can hardly be doubted that, if he had reported the actual facts, his allowance for rent would have been reduced in exact proportion to his receipts from the post-office premises. The fact that the postmaster was himself the lessee of the premises from the owner of the property does not affect the question or change the principle on which we rest his liability. Take the allowance of $1,000 for clerk hire. Suppose the postmaster had employed a clerk at that salary, and had then entered into an agreement with a neighboring merchant that onc-fourth of the clerk’s time and services, embracing the hours covered by his employment, should be devoted to keeping the books of such merchant, and for which the postmaster was to be individually paid the sum of $250 per annum, would it be seriously insisted that the postmaster could retain the whole.$1,000 for clerk hire under the allowance? Hardly, and yet it is difficult to see wherein consists the difference between making a profit on the clerk’s *547time and services allowed for by the government and the making of a similar profit out of the “space” appropriated to post-office purposes, for which a like allowance is made. The long-continued practice of postmasters, and the apparent acquiescence of the government officials in acts and transactions of this character, cannot be invoked to legalize them. They arc contrary to public policy, and violation of that good faith which every one acting in the fiduciary capacity in the handling and expenditure of another’s funds must observe.
I concur with the district judge in thinking there is no error in the judgment heretofore rendered against the defendants, and that the motion for a new trial should he overruled.
Brown, D. J.
I have seen no reason to change the opinion I expressed at the trial. Defendant Baylor was allowed a thousand dollars per year with which to rent the post-office at Saginaw. At the end of every quarter an account was stated between the department and the landlord for the rent of the quarter, §250, and a receipt was appended and sent to the department as a vouchor for the expenditure. The defendant paid the landlord in fact hut §212.50. Now, by whatever name this difference is called, it is in fact a less sum paid for rent than the vouchers represented. Gilding it with the name of rebate does not change at all the legal or moral character of the transaction. The government placed in his hands a thousand dollars as an appropriation for rent, and it was his duty to make the best possible terms for the government. He was at liberty to expend the entire amount, if it was necessary, to procure a proper office; but if lie could procure one for a less sum it was his duty to do it, and return the difference. It is quite possible that a largo landowner, or an association of land-owners, might regard the location of the post-office as so desirable for their property that they would be willing to provide the department with a building free of expense. Upon defendant's theory, however, it would only ho necessary for him to induce the landlord to give vouchers for a thousand dollars to justify him in putting the whole amount in his pocket.
It is no excuse that the defendant was obliged to expend money in procuring boxes and other fixtures, and in incurring of expenses for repairs for w"hieh no allowance was made by the department. If the department had intended to allow for these expenditures, such allowance would have been made co nomine; if not, the defendant had no right to obtain a secret concession of the amount under another name. The amount of these expenditures, too, bore no relation whatever to the amount of the rebate. It may have been more, it may have been less; hut, whatever it was, the rebate was not gauged by it at all, nor had one any connection with tlio other.
His retention of the rents received from his subtenants is equally indefensible. He rented for the government, and as the agent of the post-office department, certain space for the post-office. This space belonged absolutely to the government during the continuance of the lease. If it was larger than was necessary for the purpose of the post-office, and *548defendant chose to lease the superfluous space to private individuals, he did so as the agent of the government, and the government is entitled to the rent. In other words, he has no right to receive rents as an individual for space for which he pays rent as an agent for the government. If ■the department had placed in his hands a thousand dollars for office expenses, and had taken vouchers from him to that amount, it might well be argued that it was no concern of the government what he did with the money, so long as proper facilities wrere provided. But the money wa§ placed in his hands to rent a post-office. The vouchers show a lease between the government and the landlord, and a receipt of the rent from Saylor as the disbursing officer of the government. Indeed, it was perfectly competent for the government to employ another person to lease this building, and pay the rent, if it had chosen to do so.
If this case had arisen between private individuals,—if, for example, a merchant in Detroit, desiring to set up a branch establishment at East Saginaw, were to send an agent there to rent a building, giving him a thousand dollars for that purpose, and he rented a building at that sum, and, not needing the whole of it, sublet portions of it to other persons, —it would scarcely be contended that the money so received did not belong to the principal. The fact that the principal is the United States instead of an individual does not vary the legal rights of the parties. Between the rebate of three hundred dollars, the rent of six hundred dollars from Gibbs, and the rent of eight to ten dollars per month from Jones & Ostrander, the defendant in fact managed to obtain a post-office for nothing, and to apply the entire thousand dollars to his own use. With equal justice he might rent any other building of a dozen rooms for the use of the department, sublet all but one of these rooms for a much greater sum than he paid for the entire building, and make a handsome profit out of the transaction.
But it is urged that the plaintiff is estopped to make this claim by reason of the fact that the inspectors and agents of the department were in the habit of making frequent visits to East Saginaw, saw that portions of the post-office were occupied by others, and made no objections to it; that the accounts of the defendant were settled quarterly, and no claim whatever was ever made that these rents should be included; that the same thing had been done in Saginaw and in other places, in this and other states, for more than 20 years; that in the instructions prepared by the post-oflice department, and given to its agents and examiners, no inquiry is made as to subletting; and that all this constitutes a practical construction by the department that rents received in this way are not a part of the postal revenues, or “from any other source connected with the postal service,” within the meaning of the bond, or to be accounted for to the department. While the contemporaneous and continuous construction of a statute or other writing by heads of departments and accounting officers is undoubtedly entitled to weight in a doubtful case, the doctrine is a somewhat dangerous one to import into actions for money unlawfully withheld by officers of the government, since defalcations of this kind are frequently rendered possible only by the connivance *549or loose practices of government agents. If these officers were always prompt in the performance of their duties in the first instance, their omissions would not be allowed to become precedents. The remarks of Air. Justice Stoby in delivering the opinion of the supreme court in U. S. v. Dickson, 15 Pet. 161, are pertinent in this connection':
“ The construction given to the laws by any department of the executive government is necessarily ex parte, without the benefit of an opposing argument, in a suit where the very matter is in controversy; and, when the construction is once given, there is no opportunity to question or revise it by those who are most interested in it as officers, deriving their salary and emoluments therefrom, for they cannot bring the case to the test of judicial decision. It is only when they are sued by the government for some supposed default or balance that they can assert tlioir rights. Their acquiescence, therefore, is almost from a moral necessity, when there is no choice but obedience, as a limiter of policy or duty. But it is not to be forgotten that ours is a government of la ws, and not of men; and that the judicial department has imposed upon it by the constitution tiie solemn duty to interpret the laws in the last resort; and, however disagreeable that duty may be, in cases whore its own judgment shall differ from that of other high functionaries it is not at liberty to surrender or to waive it.”
But, when carefully analyzed, it will be seen that the testimony in this case falls far short of bearing out defendant’s contention of a practical construction by the post-office department. It merely tends to show that certain subordinate officers, called “inspectors” or “'special agents,” whose duly appears to have been to make periodical examinations of the accounts and business of postmasters throughout their districts, probably saw that certain persons were carrying on the sale of newspapers and confectionery within the post-office building, and might have inquired of tlie postmaster his authority to permit this; and that this had been the practice of postmasters throughout this and oilier states, in different places, for a number of years. Conceding that all this was brought to their knowledge, they had no power to authorize or ratify this arrangement, and there is no evidence that they ever reported it to the postmaster-general, or to the accounting officers of the department. Their silence cannot ho regarded as a construction of the statute, nor will their laches be imputable to the government. U. S. v. Kirkpatrick, 9 Wheat. 720. The only evidence of the knowledge of the department officers is contained in a letter of the postmaster general to the defendant, directing him to discontinue the practice. It is impossible to extort from this any recognition of its legality or consent to its continuance. While it is quite probable, under the practice which had prevailed so long, that the defendant may have honestly supposed that he was entitled to do what he pleased with the space not needed for his post-office, I do not think the government is estop pod to claim the rent received by him.