Case: THE GERMAN BANK OF MEMPHIS and CHEMICAL BANK OF NEW YORK v. THE UNITED STATES
Abbreviation: German Bank v. United States
Decision Date: 1891-03-02
Docket Number: No. 16722
Citation: 26 Ct. Cl. 198
Volume: 26
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: THE GERMAN BANK OF MEMPHIS and CHEMICAL BANK OF NEW YORK v. THE UNITED STATES.
Judges: 
Pages: 198–215

Head Matter:
THE GERMAN BANK OF MEMPHIS and CHEMICAL BANK OF NEW YORK v. THE UNITED STATES.
[No. 16722.
Decided March 2, 1891.]
On the Proofs.
United States bonds belonging to a trust estate are in terms payable to Cochran, executor. He dies, and an administrator with the will annexed is appointed, who files copies of his letters at the Treasury and delivers the bonds to the German Bant to sell. It sends them to the Chemical, which makes inquiries at the Treasury. The Register replies “That there is on file in this office satisfactory power in faver of your hank to transfer the bonds.” They are transferred and sold and the proceeds paid to the administrator, who embezzles the money. The cestui que trust brings suit against him and the banks for misappropriation of the trust estate and recovers against all. The banks pay the judgment, and claim to be subro-gated thereby in a right of action against the Government.
I.Where the Register of the Treasury is not informed that United States bonds offered for transfer were part of a trust estate, and the will which created the trust would not have disclosed the fact, he may infer that the bonds were part of the general assets of the testator, subject to transfer and sale by his administrator.
II.Wrongdoers can not be subrogated in the rights of those whose interests have been impaired by their acts.
III.The Government is not responsible for an erroneous opinion concerning the right of an administrator to transfer a United States bond given by the Register of the Treasury, though an innocent party made the transfer on the faith of the opinion.
IV.To give advice and assistance in the transfer of bonds is an excess of authority by a public officer, and to transfer them without authority is a wrongful act, and for neither is the Government respon- , sible.
The Reporters' statement of the case:
The following are tkefacts of this case as found by the court:
I. Henry P. Woodward died in Shelby County, Tenn., in 1869, leaving a will in which were the following provisions among others:
“ Third. The balance of the insurance money that may be due my estate after the paying my just debts to be invested in United States interest-bearing bonds (gold) with coupons attached, interest payable semi annually; these coupons to be given my wife, Sallie F. Woodward, as they fall due, for her support and the support and educating her child by me begotten.
“Fifth. When the child of my wife, Sallie F. Woodward, by me begotten, shall arrive at the age of twenty-one years, the said United States bonds is to be divided between the said child and its mother, Sallie F. Woodward, equally, provided the said Sallie F. Woodward shall not have married again; if she has, then she, the said Sallie F. Woodward, is only to receive one-third of said bonds and the said child two-thirds.
“ Ninth. I do hereby nominate and appoint Marcus E. Cochran my sole executor to carry into effect this my last will and testament.”
II. The will was admitted to probate in November, 1869, and said Marcus E. Cochran was appointed and qualified as executor. Having a balance of insurance remaining after paying the debts, he invested the same in three United States registered bonds, of one of which the following is a copy :
7701.] [7701.
“It is hereby certified that the United States of America are indebted unto M. E. Cochran, executor or assigns, the sum of five thousand dollars, redeemable at the pleasure of the United States after the 1st day of July, 1872, and payable on the first day of July, 1885, with interest from the 1st Jan’y, 1870, inclusive, at six per cent, per annum, payable on the first day of January and July in each year. This debt is authorized by act of Congress approved March 3d, 1865, and is transferable on the bonds of this office.
[seal.] “John Allison,
“ Register of the Treasury.
“Washing-ton, January'51,1872.”
The other two bonds were identical with the above, except the number and dates, which were No. 6080, and No. 6081, both dated January 8, 1870. Said executor regularly collected the interest on said bonds and paid the same to the widow of the testator, as provided in the will, until May, 1873, when he died.
III. On the 9th of September, 1873, James A. Anderson, official public administrator, was appointed by the probate court of said Shelby County, on his own petition, to be administrator de bonis non of the estate of said Woodward, with the will annexed, and duly qualified as such. Prior to September 12,1873, these bonds had been in the custody of the Union and Planters’ Bank of Memphis, by which the interest had been collected and paid over. After letters of administration had been granted to Anderson he obtained the bonds from said bank, giving therefor the following receipt:
“ Memphis, Tenn., Sept. 12,1873.
“ Received of the Union and Planters’ Bank of Memphis, fifteen thousand dollars, U. S. registered bonds. Registered in name of M. E. Cochran, ex’r.
“ J. A. Anderson,
“Adm’r of H. P. Woodward, and Public Admit of 8. 0., Tenn.”
Subsequently Anderson, by the advice of the attorney of Mrs. Cochran, gave to said attorney the following receipt without her knowledge:
“Received of S. E. Cochran, adm’r of M. E. Cochran, dec’d, late ex’c’r of H. P. Woodward, deceased, the note of B, J. Pope for $432.41, made March 27, 1872, and due one day after date, and three United States 5-20 bonds for $5,000, with July, 1873, interest unpaid on them, each as the property belonging to the estate of said EL P. Woodward, deceased.
Oct. 4,1873.
“ J. A. Anderson,
“Adm’r de bonis non of PL. P. Woodward, dec’d.”
IY. In December, 1876, Anderson, who had long been a depositor in the German National Bank of Tennessee, and a man of high standing, took two of said bonds to said bank and requested it to effect a sale of the same, saying that he wanted to invest for a better interest; that he could get 10 per cent, for the money, at the s.une time showing a paper from the Treasury Department at Washington which in some way recognized his authority to transfer the bonds, but by whom such paper was written, and the exact terms of it, do not appear, no copy of the same being in evidence.
V. The German National Bank of Memphis sent said bonds to the Chemical National Bank of New York with the following letter:
“ German National Bank op Memphis,
“Memphis, Pec. 15ill, 1876.
“ G. G. Williams, Esq..
“Cashier, New YorTc:
“ Dear Sir : I hand you herein, per express co., $10,000, registered Government bonds, Nos. 6081 and 7701, for $5,000 each, which you will please sell and place proceeds to our cr. Judge J. A. Anderson filed the proper papers with the Department, as per memo, inclosed. We do not wish to be responsible after paying the funds over here for any irregularity in papers.
“ H. E. Garth, Pi.”
The following correspondence in relation thereto appears of record:
“ Chemical National Bank,
“New York, Dee. 19,1876.
“ Hon. Beg-ister oe Treasury :
“ Dear Sir : We have received from the German Nat. B’k of Memphis, Tenn., the following described certificates U. S.: 5-20-65, Jan. and July, No. 7701, to order M. E. Cochran, executor, of Memphis, Tenn., $5,000; do. No. 6081, to order of M. E. Cochran, executor, and $5,000, which said bank request us to sell, but distinctly state that they do not wish to be responsible after paying the funds over for any irregularity in papers which 1 herein inclose.
“ We desire to comply with the. wishes of the German Nat., but do not wish to become responsible for regularity, etc., and therefore refer the case to you.
“ Please to inform us what action to take. The certificates are assigned in blank by J. A. Anderson, adm’r of H. P. Woodward, deceased, and appear to have been witnessed by a notary public, having his official seal attached.
“ If you are willing, we will forward them for registration in our name, as in their present shape they are not a good delivery in this market.
“ Very resp’y, “ G. G. Williams, Cash.”
“ Treasury Department,
“Register’s Offiee, ‘Dec. 20th, 1876.
“ Sir : In answer to your inquiry of yesterday, I have to state that there is on file in this office satisfactory power in favor of your bank to transfer the bonds referred to, and a reassignment by your Mr. Jones as prest, to any party purchasing will be recognized, or if preferred new bonds will be issued to your bank under the present assignment.
“ Bespectfully, yours,
‘•H. Jennison,
“For Begr.
“ G. G. Williams,
“Cashier Chemical Nil. Bank, New York.”
“ Chemical National Bank,
'■‘■New York Dee. 28th, 1876.
“ Beg-ister oe the Treasury :
“ Dear Sir : Many thanks for your favor of the 20th inst., and as suggested therein have inclosed herein registered bonds, 65’s, No. 7701, for $5,000; 67’s, No. 6081, for $5,000, for which please to issue new bonds in name of ‘The Chemical Nat. Bank of N. Y.’, and oblige,
“Yours, resp’y, “ Wm. J. Quinlan, Jr.,
“Ass’i Cashier.”
In January, 1877, said Anderson went with the third bond to said German National Bank of Memphis, by whom it was transmitted to the Chemical National Bank of New York with the following letter:
“ German National Bank of Memphis,
“Memphis Janhj 11, 1877.
G. G. WILLIAMS, Esq.,
“Cashier, New Yorlc:
“Dear Sir: I hand you for sale and credit Nos. 6080 5-20-65, new, $5,000. This is to be sold subject to same conditions as the 10 M sent you some time since — i. e., we are not to be held in any way tor irregularity in transfer.
“ Very resp’y,
“ H. E. Garth, Pi.”
The latter bank in like manner transmitted' it to the Treasury Department at Washington.
The Treasury Department issued to the Chemical National Bank three new bonds: Nos. 9176, 10379,10306, all in the same form, of one of which the following is a copy :
“It is hereby certified that the United St ates of America are indebted unto Chemical National Bank, New York, or assigns, in the sum of five thousand dollars, redeemable at the pleasure of the United States after the 1st day of (July, 1S70, and payable on the 1st day of July, 1885, with interest from the 1st January, 1877, inclusive, at six per cent, per annum, payable on the first day of January and July in each year. This debt is authorized by act of Congress approved March 3d, 1865, and is transferable on the books of this office.
“Washing-ton, Jan. 3rd, 1877.
[seal] “ John Allison,
“Register of the Treasury.'”
YI. The following are copies of the papers on file in the Register’s Office hereinbefore referred to:
“ Shelby County Probate Court, Tenn., 1873,
“Memphis, Tenn., Sept. 9, 1873.
“Upon application, and it appearing that M. E. Cochran, executor of the will of H. P. Woodward, deceased, has departed this life, and that it is necessary that an administrator should be appointed on the estate of said Woodward :
“ It is therefore ordered that J. A. Anderson, public administrator of Shelby County, be appointed such administrator; and it appearing that he has given bond and qualified as such administrator in the county court, it is therefore ordered that letters of administration de bonis non cum testamento annexo issue to him.”
“ State op Tennessee, Shelby County :
To J. A. Anderson,
“Public Admr. of said County:
“ It appearing to the probate court, now in session, that H. P. Woodward has died, leaving a will, and the court being satisfied as to your claim to the admiuistration, and you having given bond and qualified as directed by law, and the court hav-' ing ordered that letters of administration de bonis non cum tes-tamento be issued to you:
“ These are, therefore, to authorize and empower you to take into your possession and control all the goods, chattels, claims, and papers of the said estate, and return a true and perfect inventory thereof to our next probate court; to collect and pay all debts, and to do and transact all the duties in relation to said estate which lawfully devolve on you as administrator; and after having settled up said estate to deliver the residue thereof to those who are by law entitled.
“Witness James Beilly, clerk of said court, at office, this 9th day of Sept., 1873, and the 98th year of American Independence.
“ Jamel Beilly, Cleric.”
No copy of the will appears to have been in the Begister’s office.
Said bonds had printed on the back a blank form of assignment, subsequently executed by said Anderson as hereinafter stated, with the following instructions:
“ The execution of the above assignment, when not made at this Department, must be witnessed by a United States judge, district attorney, or cleric, or a collector of the customs, United States Treasurer or assistant, an American minister abroad, United States consul, or notary public. If witnessed by either of the two latter, his official seal must be attached. In all cases the witness must add his official designation and residence. If assigned by a corporation, it must be described as the assignor.
“When it has not been previously done, evidence of the official character of the person signing must be furnished, as that he is president or chasier of the banlc, and also proof of his authority to make the assignment.
“Executors, administrators, and trustees, when the stoclc stands in the name of the person they represent, must furnish legal evidence of their official character to be filed.”
The regulations of the Treasury Department in relation to suceessorship assignments at the time of said assignment were as follows:
“ In case of death or suceessorship, the representative or successor must furnish official evidence of decease and appoint ment. An executor or administrator may assign stock staud'ng in the name of a deceased person. Where there is more than one legal representative, all must unite in theassignment, unless by a decree of court or provision of will some one is designated to dispose of the stock. If the stock was held by the deceased as afiduciary, the letters of administration must be accompanied by an order of the court authorizing the transfer.”
When taken to the German National Bank of Memphis as aforesaid, the blank form of assignment had been filled out (except the name, of the assignee, for which a blank was left), signed by said Anderson, and executed before a notary public in the following form:
“ For value received I assign unto-the within certificate of United States stock, issued by the Treasury Department, and hereby authorize the Register of the Treasury to transfer said stock on the books of the Department.
“ J. A. Anderson,
“Adinh- of R. P. Woodward, deceased.
“ Dated Memphis, Tenn., Dec. 15,1876.
“Executed in presence of M. B. Trezevant, notary public of the county of Shelby, of the city of Memphis, in the State of Tennessee.
“M. B. Trezevant,
“ Rotary Public, Memphis, Shelby County, TennP
When transmitted to the Treasury Department the name of the assignee, “ The Chemical National Bank of New York,” had been inserted. *
The Chemical National Bank of New York having thus obtained title to said bonds, sold the same and transmitted the proceeds, $10,840.60, to the German National Bank of Memphis, where it was passed to the personal credit of said Anderson, drawn out by him from time to time on his personal checks, and lost to the beneficaries by conversion to his own use.
VII. In 1872 the widow of said Woodward married Thomas H. Covington, who died in 1884. Anderson paid to her the interest on said bonds or the amounts equal thereto up to January, 1880, when Anderson failed and the payments ceased. In 1880 a bill in equity by said Thomas H. Covington and his wife (who was the widow of said Woodward), andHeriella P. Woodward, the minor child of the latter, referred to in his will, as complainants, against said Anderson (who had' become insolvent), the German National Bank of Memphis, the Chemical National Bank of New Yoik, and others, defendants, was filed in the Chancery Court of Memphis, Tenn., charging said Anderson with a breach of trust in the sale of said bonds and the conversion of the proceeds thereof to his own use, and the two claimant banks with participating therein by receiving and selling the bonds charged with notice of the trust. The final result of said suit, after trial in said court and in the Supreme Court of Tennessee on appeal, was that on April 19, 1886, a decree was entered against the German National Bank of Memphis and the Chemical National Bank of New York “ in favor of the complainants in the sum of $23,211.82, that being the principal and interest of the bonds so converted to this date, with interest thereon, as appears by simple calculation from the face of the papers. (See Covington et al., 16 Lea, Tenn., Reports, 310).
VIII. The two claimant banks, paid to a trustee appointed by the Chancery Court of said Shelby County, to take care of and hold said fund and to carry out the trusts in favor of the widow and child of said Woodward according to the terms of his said will, from time to time, various sums amounting to $9,331.47, and on January 16, 1890, they paid the balance of said judgment ($23,211.82), with interest to that date.
IX. The Chemical National Bank of New York was the regular correspondent of the German National Bank of Memphis, and received uo benefit from the sale of these bonds except that of the deposit of the proceeds of sale until withdrawn by the latter bank, which received nothing on account of the sale except a small percentage as compensation for its services.
The German Bank of Memphis is the successor of the German National Bank of Memphis.
(Found on Request oe Claimants’ Counsel.)
X. November 22, 1888, William S. Flippen, attorney for the claimant banks, filed a petition in the Treasury Department asking payment of the money here claimed, and offering to pay the balance of the judgment.
The petition was referred to the Solicitor of the Treasury, then Mr. Carey, who advised that the amount for which the bonds were sold, $16,840.60, without interest, should be paid by the Government as soon as the banks paid the balance of the judgment.
Tbe Secretary of tbe Treasury, then Mr. Fairchild, after careful cousideration, decided that tbe claim presented was not of such nature as to be properly adjudicated by tbe Secretary of the Treasury.
Thereafter, on March 12,1889, the same attorney presented a like petition to the Treasury Department, which was also referred to the Solicitor of the Treasury, then Mr. Hepburn, who advised that the Government was not liable, and so reported to the Secretary, then Mr. Windom, who also decided that the Government was not liable.
Mr. Wm. 8. Flippin (with whom were Mr. A. R. Garland and, Mr. Reber May):
The Government is bound by the act of the Register of the Treasury. It can do no intentional wrong. It acts by agents. It is not bound by the declaration of its agent, it is true, when founded upon a mistake of fact, unless it clearly appears that the agent was acting within the scope of his authority. (Lee v. Monroe & Thornton, 7 Or., 306.) The true rule is laid down in 12 C. Cls. It., 24, which is that while private parties sometimes bind their principals when acting without their authority but in the usual course of employment, such rule does not apply to Government agents. But the Government is bound, where the agent has acted within the scope of his authority, or was employed in his capacity as public agent to do the act or make the declaration for the Government. And Story (Agency, 307 A) lays it down that where an agent is acting strictly within the line of his authority, not only are individuals, but the Government itself is bound. However, the action of the Government through its agent must, in legal effect, amount to that class of estoppel which would and ought to bind.
In this case there is a statute which creates an office — that of Register of the Treasury. His duties are to issue certificates of indebtedness; to keep the accounts of the Government; to journalize the issues and redemption of bonds of the United States, all of which it is made his duty to issue; he keeps a ledger account with each holder of registered bonds ; keeps a register of all transfers; also a record of caveats; declares dividends of interest, and conducts correspondence connected with the issue of bonds and of a miscellaneous character; files and binds letters, and cancels registered bonds and various vouchers of issues, (Rev. Stat., §312, Lawreuce Appendix to vol. v., Decisions of First Comptroller, 442.) He is, iu effect, alone charged with all these duties. When he promised to recognize a transfer of the bonds if transferred by Mr. Jones (finding iii), then president of the Chemical National Bank, or to issue and did issue new bonds to the Chemical National Bank for the purpose of facilitating a sale, he clearly bouud the Government, because he was acting fully within the scope of his authority. He made a mistake certainly, but that mistake does not excuse the Government; he was placed where he was to issue and cancel bonds, and the presentment of bonds and recognition of transfers by him was the act of the Government. In this case he declared that what he instructed and was done by the Chemical National Bank would be recognized by the Government, and it was upon such declaration that the bank acted. This comes clearly within the case of Huntington v. Texas (16 Wall., 316).
Huntington consulted the Treasury officers before advancing money for the bonds, who promised to pay them. The Comptroller recommended their payment. It was upon this Huntington acted. He did not hold the bonds nor control them. Neither did the Chemical National Bank. It was merely the agent of Anderson. The facts here are just as applicable as they were in Huntington’s Case. He was a banker in Washington when making the transaction. The Supreme Court, when Huntington was sued for the value of the bonds on the ground that no good title had passed from the State of Texas, said, in view of the facts:
“We think it clear that no other than a holder of the bonds, or one who, having held them, has received the proceeds with notice of the illegal transfer for an illegal purpose, can be held liable. * * * After presentment, recognition, and order of payment, anyone never having held or controlled the bonds may receive the proceeds upon a proper order. In such case the State, or other parties who have lost, must look to the United States, if bonds still belongiug to her or others have been paid to third parties after presentment and allowance in favor of holders without good title.” See Gigo’s Case (8 Op. Atty. Gen., 307,29S); see also Baldwin v. Mi (15 U. S. R. (M. D.), 9 How., 580); Texas v. White (7 Wall., 700); Vermilyea v. Adams Ex. Go. (21 Wall., 138); Bayne v. United States (93 U. S. R., 642; 16 Wall., 316); Bank of Boston v. United States (10 O. Cls. R., 513); Atlantic Bank v. Merchants’ Bank (10 Gray, 532); Skinner v. Bank (4 Allen, 390).
The Floyd acceptance cases do not militate against the rule, The statute of January 31, 1823, prohibited any payment in advance for supplies, and it was really upon that ground that the acceptauces were adjudged not to be binding on the Government. Floyd had transcended his power and acted directly contrary to the law; but even here Justices Nelson, Grier, and Clifford dissented.
These banks were wholly innocent of any wrong intention. Did they not do all that prudence required ? The one at Memphis, the German Bank, in sending them on to the Chemical National Bank, wrote that “there is on file in the Department his (Anderson’s) authority to transfer;” that “it did not want to be held liable after paying over the money for any irregularity in paper,” the onty irregularity being in the mind of the writer, the fact that the bonds were assigned in blank. They “referred” the matter to the Register, asking what to do, and being advised, carried out his instructions.
It is argued that there can be no subrogation here, because the banks were in fact joint wrongdoers with Anderson, and reference is made to the language of Chief Justice Turney, of Tennessee, when commenting on this case (1C Lea, 310). All are bound by the Tennessee decision, but in no sense by the reasons given therefor, for, in fact, the language used is entirely too strong. Wrongdoing amounting to tort is not the test to apply here. Subrogation applies whether there is or is not tort. The best statement of the law is, perhaps, found in Jllosier’s Appeal (56 Pa., 76; 93 Am. Dec., 783). It is purely an equitable result, and depends, like other controversies, on equity or facts to develop its necessity, that justice may be done. Priority of contract is not necessary; it exists on principles of equity and benevolence (1 Johns. Chy. R., 409; Blafcesly’e Appeal, 66 Pa., 11; Harris, 294; 4 Johns. Chy. R., 370; 45 New Jersey Eq., 610; Leading Oases in Equity, Bering v. Bari of Winchelsea,99). Thompson, chief justice, says in 56 Pa., 56: “I regard the doctrine as applicable in all cases where a payment has been made under a legitimate and fair effort to protect the ascertained interests of the party paying, and when intervening rights are not legally jeoparded or defeated.” And see 51 Md., 34; 4 Mackey, 202; 2 Brock. (Marshall, J.), 168 ; and 2 E. Reporter, 335 (W. Ya.). It depends on no contractual relations neither; has no reference to the relations between the parties, and is broad enough to cover all cases, and rests upon the right between man and man. “The mere fact that the loss of the party seeking to be subrogated arose from his own negligence will not debar him, unless its enforcement would be prejudicial to others who are not at fault.” But in this case the Government was already at fault. (See Sheldon, and particularly at pp. 45 and 54, Wisconsin.)
The rule to be deduced from the authorities is this: If Mrs. .Covington had in this particular case requested Anderson to get into his possession the lands and sell them and he had done so, she could not have maintained an action here, because she would herself have brought about the loss, and in such case there could have been for that very reason no subrogation. What is there to show that the banks may not have supposed that such was the fact. It is true that Mrs, Covington had nothing to do with the business; but there is nothing to show such knowledge on the part of the banks. They may have well supposed so, as she was one of the owners and a woman of full age. '
The Register of the Treasury did not have on file the will, but he did have a copy of Anderson’s letters of administration.
It is insisted that the regulations of the Treasury forbade the transfer by the Register, and that he was controlled by them. Todd v. United States (93 O. Ols. R.j is an authority to the effect that such regulations are good only between officials in the Treasury, but are not law as to the public; can not in anywise change the law.
Giving advice suggesting what should be done with the bonds to the Chemical National Bank was fully within the scope of the Register’s duties, and was not transcending his authority.
Again, this case was in fact a payment to the wrong person.
Reverdy Johnson (15 Opin. Atty-Gen., 183): “Payment of a liquidated demand against the Government to a person not authorized to receive it does not relieve the Government from responsibility to make payment to proper claimant * * * If accounting officers, err designedly or by mistake in making payments, the loss must fall on the United States.’’ 0. Cushing’s opinion in Gigo’s Case proceeded upon similar reasoning.
But the issuauce of tbe new bonds to the Chemical National Bank for the purpose of sale was, in fact, an issuance to Anderson ; which bonds so issued were a payment or redemption of the old bonds — a payment to the wrong person.
Suppose Anderson had gone to the Treasury himself and had demanded and received new bonds; that would have been for all practical purposes a payment to him — a payment to the wrong person — so in either or any case it would have come within the doctrine of a payment to the wrong person, where government has always been held bound to pay to the right person.
Mr. James R. Nixon (with whom was Mr. Assistant Attorney-General Cotton) for the defendants.

Opinion:
Bichardson, Oh. J.,
delivered the opinion of the court:
The material facts in the case, concisely stated, are as follows :
H. P. Woodward, of Tennessee, died in 1869, leaving a will, in which he directed certain insurance money when collected to be invested in United States coupon bonds for the benefit of his widow and child.
The executor, one Cochran, invested the same in three United States registered bonds of $5,000 each, payable to himself, executor, or assigns, and regularly paid over to the widow the income of said bonds until May, 1873, when he died.
In September, 1873, one Anderson, a public administrator, on his petition, was duly appointed administrator de bonis non with the will annexed of the eatate of said Woodward, obtained possession of the bonds, paid the interest thereon, or amounts equal thereto, up to January, 1880, when he failed, and the payments ceased. In the mean time the widow had intermarried with one Covington.
In December, 1876, Anderson took two of said bonds to the German National Bank of Memphis in order to effect a sale, saying that he wanted to invest for a better rate of interest ; that he could get' 10 per cent, for the money, at the same time showing a paper from the Treasury Department at Washington, of which no copy is in evidence, to the effect that as successor of Cochran in the administration of Woodward's estate be bad tbe power to transfer tbe bonds. Tbe Memphis Bank, one of tbe.claimants, sent them to the Chemical Bank of New York, tbe other claimant, with these instructions: " Judge J. A. Anderson filed tbe proper papers with tbe Department, as per memo, inclosed. We do not wish to be responsible after paying tbe funds over here for any irregularity in tbe papers."
Tbe following correspondence took place between tbe Chemical National Bank and the Begister of tbe Treasury.
"Chemical National Bank,
" New York, Dec. 19, 1876.
"Hon. Begister on Treasury:
" Dear Sir : We have received from tbe German Nat. Bk., of Memphis, Teun., tbe following-described certificates: U. S. 5-20-'Ü5, Jan. and July, No. 7701, to order M. E. Cochran, executor, of Memphis, Tenn., $5,000; do. No. 6081, to order to M. E. Cochran, executor, and $5,000, which said bank requests us to sell, but distinctly state that they do not wish to be responsible after paying the fund over for any irregularity in papers, which are herein inclosed.
" We desire to comply with the wishes of the German Nat., but do not wish to become responsible for irregularities, etc., and therefore refer tbe case to you.
" Please to inform us what action to take. The certificates are assigned in blank by J. A. Anderson, admr. of H. P. Woodward, deceased, and appear to have been witnessed by a notary public, having bis official seal attached.
" If you are willing, we will forward them for registration in our name, as in their present shape they are not a good delivery in this market.
" Very resp'y,
"G. G. Williams, Gash."
" Treasury Department, Register's Oeeice,
"Nee. 20,1876.
" Sir : In answer to your inquiry of yesterday, I have to state that there is on file in this office satisfactory power in favor of your bank to trahsfer the bonds referred to, and a reassignment by your Mr. Jones, as pres't, to any party purchasing will be recognized, or, if preferred, new bonds will be issued to your bank under the present assignments.
"Bespectfully, yours,
" H. Jennison, for Beg'r.
" G. G. Williams, Esq.,
" Cashier Chemical Nat. Bank, New York.'"
Thereupon the Chemical National Bank surrendered said bonds, and received from the Register of the Treasury new bonds of like kind, payable to itself or assigns, according to tbe terms of the assignment written on the back of the old bonds. They were then sold and the proceeds transmitted to the Memphis bank, passed to the personal credit of said Anderson, checked out from time to time on his personal check, converted to his own use, and lost to the beneficiaries.
The only papers appearing to be on file in the Register's office were the copies of the decree of court appointing Anderson administrator de bonis non with the will annexed of the estate of said Woodward and his letters of administration. No copy of the will appears to have been on file.
Whether or not the Register of the Treasury was justified in receiving and canceling the bonds and issuing new bonds by the assignment of Anderson upon authority of the papers on file in his office it is not necessary to determine. Cochran took the bonds in his name as executor and not as trustee, as though they were part of the estate of the deceased over which he had control, and declared no trust. The will itself, if it had been filed, would not have disclosed the trust to which they really belonged, as it finally appears by other evidence, and if its contents had been known to the Register he might have been misled. It required certain specific money obtained from insurance " to be invested in interest-bearing bonds (gold) with coupons attached, interest payable semiannually, these coupons to be given to my wife, Sallie F. Woodward, as they fall due, for her support and the support and educating her child by me begotten." The bonds received for transfer were not coupon bonds, and that clause of the will did not in terms apply to them. The Register might have naturally concluded, if he did see the will,, that the insurance money left in trust for the widow and child was invested in coupon bonds as required, and that these registered bonds were part of the general assets of the testator, which passed to the successor of the executor. How far the Register of the Treasury is bound to go in taking evidence aliunde upon such intimation of a secret trust as would put interested private parties on their guard, and charge them with notice, we shall not undertake to decide.
If the action of the Register of the Treasury was correct upon the papers on file in his office or otherwise, then the claimants have no cause of action.
If tbe Register was wrong, and the claimants contributed to the commission of their error, then, also, they have no cause of action.
Public officers are mere agents of the Government, and all persons dealing with them are bound to act in perfect good faith, to obtain and disclose all facts within their reach material to the matter in hand, and not to aid in misleading them into errors of omission or commission. (Hume's Case, 21 C. Cls. R., 328, affirmed on appeal, 132 U. S. R., 406).
The claimants have been charged by the Supreme Court of Tennessee as wrongdoers, and a judgment has been recovered against them on that ground alone (Covington et al. v. Anderson et al., 16 Lea, Tenn. R., 310).
In the opinion of the court, delivered therein by the chief justice, it is said:
" It was impossible to have read the bonds, however casually, without discovering that there was a trust of some character impressed upon them, which trust could be ascertained by reference to the will.
"They bore the unmistakable brands of'the rights of ownership of others, without the slightest evidence of claim of any character on the part of Anderson.
"The banks were interested in the conversion to the extent of the remuneration received for making the sale.
"The opinion of the Treasury, officer in Washington can avail nothing. His mistake of law or fact furnishes no ground of relief. Besides, his was not the office to consult.
" In taking up the original bonds earmarked with a trust, and issuing others to the bank, the trust left out, he made himself a party to the conversion. The consent to and acceptance of such issue was a positive conversion on the part of the bank.
" They were by all the facts and circumstances put upon the inquiry, and did make a partial inquiry at the office in Washington. They are conclusively presumed to have known that any information they received from the Washington correspondent must have been based on information derived from Memphis, where the records were, and they must also be presumed to have known that the only reliable source of information for them was in those records.
" Surely it can not be that they are to be excused upon the ground that they passed by the only reliable evidence, and adopted in its stead, and acted upon the conclusion, without any statement of facts, of one not authorized to construe the records.
" They were aware that Anderson had furnished the only information upon which the Washington correspondent acted, as they say themselves that Anderson exhibited a paper or memorandum from the Treasury Department at the time he applied to sell the bonds.
"This fact, connected with the reply of the Washington correspondent, that Anderson, as the successor to Cochran, had the right to control the bonds, made it plain that it was their duty to have examined into the fact whether he was the successor, when they would have proved he was not. Although the evidence furnished may have satisfied the writer of the memorandum or paper that Anderson was the successor, it does not satisfy the law, and was not such as is admissible in the courts. This ignorance of law will not excuse the conduct of the defendants."
Haviug paid that judgment, they seek to recover the amount from the defendants by subrogation to the rights of Mrs. Woodward and her child, the beneficiaries of the trust fund.
Wrongdoers can not be subrogated to any rights of those whose interests have been impaired or imperiled by the acts of the former. The claimants were the agents of Anderson to obtain a transfer and sale of the bonds. They aided in the commission of his wrongdoing, and were participants therein, according to the judgment of the Supreme Court of Tennessee. Through their action Andérson managed to get the trust fund into his own hands. One of them took a transfer to itself, sold the bonds, and forwarded the proceeds to the other bank, which passed the same on its books to his personal credit, and allowed it to be drawn out on his own personal checks. By this joint action and otherwise the two banks have made the transactions a common cause, and they must stand or fall together.
What rights of the beneficiaries could the claimants be subrogated to? Certainly not to any right of action against the United States, for it has been too long and too well established to admit of further discussion that the Government is not responsible for the laches or wrongful acts of its officers (Hart v. United States, 95 U. S.R., 316; Moffatt v. United States, 112 U. S. R., 24; Gibbons v. United States, 8 Wall., 269). Besides, the court has no jurisdiction of actions sounding in tort (Act of 1887, March 3, ch. 359, 24 Stat L., 503) and this case, as presented in the petition and set out in the findings, may be regarded as of that kind, unless some promise is to be implied, and we can see no ground for that.
It has been much argued that the Government is liable for tbe conduct of public officers when acting within the scope of their authority. There are many cases wherein that doctrine has been upheld in matters of coutract, out none in which it has been applied to wrongs committed when not constituting breaches of contract. The scope of authority of the Register in this connection, in the absence of express statutory provisions, is defined to be " to transfer on proper authority the ownership of registered bonds from one person to another." (Ellmes on Executive Departments, §690.)
To give advice and assistance in the transfer of bonds, whether by the Register or by one of his subordinates, was an excess of authori ty, and to transfer them without proper authority was a wrongful act, for neither of which is the Government liable.
In point of fact, the beneficiaries have treated the transfer of the bonds as valid, though procured by fraud. They have pursued the, proceeds as rightfully belonging to them, and have recovered judgment therefor against Anderson as principal in the fraud and against the claimants as aiders and abetters.
The petition is dismissed.