Case: GEORGE K. OTIS v. THE UNITED STATES
Abbreviation: Otis v. United States
Decision Date: 1889-01-14
Docket Number: No. 15603
Citation: 24 Ct. Cl. 61
Volume: 24
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: GEORGE K. OTIS v. THE UNITED STATES.
Judges: 
Pages: 61–73

Head Matter:
GEORGE K. OTIS v. THE UNITED STATES.
[No. 15603.
Decided January 14, 1889.]
On the Proofs.
The only question-in tlais case is -whether the Postmaster-General had the right, under a contract for “mail messenger” and “mail station” service, to impose fines and forfeitures.
I. The Revised Statutes (§ 3962) directing- the Postmaster-General to make deductions from the pay of contractors for failure to perform, and to impose fines for other delinquencies, make Mm the judge whether a fine shall be imposed.
II. When mail contracts are made they become subject to the provision of the statute defining the powers of the Postmaster-General, and the authority to make deductions and to impose fines becomes apart of the contract.
' III. The Postmaster-General is arbiter between the Government and the contractor, and his decision is final, unless impeached.
The Reporters' statemeut of the case:
The following are the facts of this case as found by this court:
I. The claimant was the contractor for mail messenger and mail station service on routes Nos. 6771 and 6772, New York City, for and during the contract term from July 1, 1881, to June 30,1885, for the annual compensation of $63,200 on 6771, and $19,704 on 6772, as shown by contracts, the material portions of which are stated in findings vn, viii.
II. The mail service on said routes, during said periods, was performed by claimants, and no deduction for failure to perform sucb service was made from claimant’s pay under said contract, except for delinquencies as hereafter shown.
III. In settling claimant’s accounts the Sixth Auditor, on the order or request of the Postmaster-General, withheld from claimant’s contract pay $4-,268.17 on route 6771, and $1,323.03 on route 6772, as fines imposed for alleged delinquencies on his (claimant’s) part,* and these amounts are still so withheld by defendants from claimant. ■
IY. All the orders withholding the several amounts which make up the aggregate ($5,591.20) of the fines thus withheld are dated subsequent to the month or quarter from the pay of which they were deducted.
V. On route No. 6771, from July 1, 1881, to June 30,1885:
Fines imposed for delays, irregularities, and failures reported... $7,327.35 Remit of same. 3,059.28
4,268.07
Amount of said fine that was imposed to furnish advance wagon,
as ordered. $1,958.00
Route No. 6772:
Fines imposed for delays, irregularities, and all failures reported- ({4,270.27 Remission ordered. 3,047.21
Balance. $1,223.06
YI. [This finding contains ten pages of tabulated items in small type, but presents no point of law not already presented by finding v.]
Y1I. After enumerating the different stations to and from which the mail should be carried, contract No. 6772 provides' as follows:
UA wagon to be kept at the post-office, ready for immediate use in such emergent service as may be required by the postmaster, from 5 a. m. to 9 p. m. daily, except Sunday; and any new or additional mail-station service which may become nec- ■ essary and be required by the Postmaster-General during the term of this contract; said service to be performed at such hours of arrival and departure at and from the above-designated points and places, or such new and additional points and places, contemplated as above, as the postmaster at the city of New York may order and direct; to carry said mails in a. safe and secure manner, free from wet or other injury, in substantial one or two horse wagons of sufficient capacity for the entire mail; the wagons to be employed in the performance of the service to bo built with closed bodies, paneled from bed or sill to the height of an ordinary wagon-body ; above to be built of plain wood, panel set off with molding, lined with canvas, with curved roof; the rear shall open below by gate, to drop to a level with floor of the wagon, to fasten by means of a catch when shut; above by door hinge or spring hinges, so arranged that it shall shut tight against the gate and lock. The double wagons in all cases, and the single wagons whenever the proper performance of the service requires it, shall have double doors in the side, extending from the paneled frame of the body to the drip of the roof; these doors shall be hung on spring hinges; the locks and hinges to be used on the doors of ail wagons shall be of the same make and pattern as is on exhibition on the sample door in the office of the Second Assistant Postmaster-General, at Washington, D. 0. On the front shall be seat for driver, with foot-board trimmed and finished in leather. The wagons shall be kept painted and varnished in a thorough manner, and ornamented according to specifications, and shall be kept at all times in good order and appearance. The painting, as to color, and the ornament, as to design, both on running gear and body, shall conform to the painting and ornamenting shown in the colored drawings on exhibition at the office of the Second Assistant Postmaster-General at Washington, D. 0. The bodies of such wagons shall be made to conform to the lithographic drawings of the side and rear elevations of both single and double wagons hereto appended and made part of this contract, giving scale of dimensions. In case it is desired to increase or decrease the size of said wagons, such increase or decrease shall be made in exact proportion as to height and length, the Postmaster-General reserving the right to vary, at any time, when in his judgment the service may require it, the plan or form of wagon to be used in the service. All of the wagons to be in charge of drivers above the age of sixteen years, of good moral character, who have taken the oath prescribed by law, and are able to read and write the English language; the horses, wagons, harness, service, and drivers to be subject at all times to the controlara! approval of the postmaster at the city of New York; the said mails to be delivered into the post-office and into the stations above described.
“They also undertake, covenant, and agree with the United States of America, and do bind themselves, jointly and severally, as foresaid, to be accountable and answerable in damages for the person to whom the said contractor shall commit the care and transportation of the mail, and for his careful and faithful performance of the obligations assumed herein and those imposed by law; not to commit the care or transportation of the mail to any person under sixteen years of age, and not of good moral character, who has not taken the oath pre scribed by law, or who can not read and write the English language ; and to discharge any carrier of said mail whenever required so to do by the Postmaster-General.
“For which service, when performed, the said George K. Otis, contractor, is to be paid by the United States the sum of nineteen thousand seven hundred and four dollars a year, to wit: Quarterly, in the months of November, February, May, and August, by warrants on the Treasury, or drafts on the postmaster at New York, at the option of the Postmaster-General ; said pay to be subject, however, to be reduced or discontinued by the Postmaster-General, as hereinafter stipulated, or to be suspended in case of delinquency.
“It is further understood and agreed that any increase in the service which may be rendered necessary by the removal to other localities of any of the above-named stations, or by any other cause, may be ordered by the Postmaster-General, and shall be paid for pro rata; and also that compensation pro rata shall be deducted in case of decrease in said service, caused by any such removal, or by the discontinuance of any of said stations.
“And it is also further stipulated and agreed that for a failure to deliver the mail into the post-office or into any station mentioned in this contract; for suffering other business or engagements, or any other cause whatever, not beyond the control of the contractor, to delay or interfere with the prompt delivery of the mail at the post-office or stations, or for carrying the mail in a manner different or inferior to that hereinbe-fore specified ; for suffering the mail to be wet, injured, lost, or destroyed; for all or any of which they shall forfeit a sum, in the discretion of the. Postmaster-General, according to the nature and frequency of the delinquency.
“And it is further stipulated and agreed that the Postmaster-General may annul the contract for repeated failures, for violating the post-office laws, for disobeying the instructions of the Department, for assigning the contract, or whenever the contractor shall become a postmaster, assistant postmaster, or member of Congress.
“And it is further hereby stipulated and agreed, and made an express condition of this contract, that no member of Congress shall be admitted to any share or part of this contract, or to any benefit to arise thereupon.”
VIII. Contract No. 6771. — After enumerating services to be performed, schedule time, and distance, the said contract contains the following provisions:
“All new or additional service will be performed on a schedule of time arranged by the postmaster at New York.
“An extra wagon, with driver, ready for immediate use, must be kept at the post-office between the hours of 5 a. m and .8 p. m., and at sued other hours as the postmaster may direct, and like wagons at Oonrtlandt street ferry; at the Pennsylvania Eailroad depot, Jersey City; at the Grand Central Depot, and at such other points, either for mail-messenger or transfer service, ‘ ordinary ’ or ‘ special,’ when the exigencies of the service require it.
“ ‘ Ordinary service.’ — Service to be performed within the maximum time given in accompanying time schedule.
“ ‘ Special service.’ — Service to be performed within the minimum time given in accompanying time schedule.
“ It is hereby stipulated and agreed that the Postmaster-General may, if it be required by the public interest, order new or additional service, which may become necessary to be performed, which shall be performed without additional compensation ; and there will be no diminution of compensation on account of the discontinuance of such portions of the service as may become unnecessary during the contract term.
“And it is also further stipulated and agreed that for the failure to deliver the mail to a departing train in time to go by said train, or for not delivering the mail at the post-office immediately upon its arrival; for suffering other business or engagements, or any other cause whatever not beyond the control of the contractor, to delay or interfere with the prompt delivery of the mail at the post-office, depots, and wharf, or for carrying the mail in a manner different or inferior to that hereinbefore specified; for failure to provide a guard for the mail as herein-before mentioned when the same is conveyed at night; for suffering the mail to be wet, injured, lost, or destroyed; for all or any of which they shall forfeit a sum, in the discretion of the Postmaster-General, according to the nature and frequency of the delinquency.
“And it is further stipulated and agreed that the Postmaster-General may annul the contract for repeated falures, for violating the post-office laws, for disobeying the instructions of the Department, for assigning the contract, or whenever the contractor shall become a postmaster, assistant postmaster, or member of Congress.
“And it is further hereby stipulated and agreed and made an express condition of this contract that no member of Congress shall be admitted to any share or part of this contract, or to any benefit to arise thereupon.”
IX. The whole amount of fines imposed by the postmaster for delinquencies under both of said contracts during the term of service is the sum of $11,597.62, of which amount said Postmaster-Genferal remitted, upon being satisfied that it was improperly imposed, the sum of $6,106.49, leaving a balance on both contracts of $5,491.13. The said fines were imposed by the Postmaster-General on reports furnished him from time to time by bis subordinates having personal knowledge of the manner in which the service was performed under said agreements. The contract price for said service has been paid, except for said amount.
X. An advance wagon is a wagon in which the letter mail might be transported from the depots to the post-office in advance of the paper and other mail matter, and also in advance of the schedule time for arrivals and departures, and also a wagon sent in advance of schedule time to carry papers from the post-office to postal car.
Mr. William Small for the claimant:
Doubtless the non-performance of any or all conditions might properly be made the subject of forfeiture stipulations if the amounts therefor were definitely fixed either by law or regulation conformable to law and agreed upon by the parties; and in view of the vigilance and exacting disposition of the Department in these matters, it is very remarkable that they failed to do so in this case, for we find that finable delinquencies, so called, number only six, and include but two or three of the foregoing covenants. And, as we contend, the whole provision is invalid because it fails to fix the sum to be forfeited by the contractor for any of the delinquencies specified. That these are indisputable facts the record shows.
Are we not warranted in claiming, as we do, that contracts so wanting in equality, and so inartificially drawn, should be strictly construed against the Government; and in insisting, as we do, upon this view being taken of that portion of it which is penal in effect and which contemplates the confiscation of our client’s property without u due process of law ? ”
If not sustained in our view that the failure of Congress to specify the delinquencies for which fines might be imposed, and to fix or limit the amount thereof, constitutes a “ casus omissus,” then we confidently submit that the forfeiture stipulation in each contract is void:
(1) For want of equality, as it contemplates the liability thereto of but one of the parties.
(2) For uncertainty, no sum being named, and as it can not be determined with certainty whether the discretion reserved refers to-fixing the amount, or, if the same is fixed by law, to its imposition.
(3) Because tbe discretion to both fix the amount, and to impose it or not is a judicial power which can not be exercised by an executive officer.
(4) Because confiscation of a contractor’s pay in such a manner would be unconstitutional, in that it deprives him of his property without “ due process of law.”
So far as our examination has extended, we have been unaable to find any authorities to sustain the view that the discretionary or quasi judicial power which may be properly and lawfully exercised by executive officers, include the power to impose a fine or exact a forfeiture in civil matters, unless the same is made the subject of contract stipulations, and..not even then unless both the character of the delinquency and the penalty for its commission are fully and definitely set forth; vagueness, uncertainty, and ambiguity on these points can not be cured either by construction or extrinsic evidence, as “ provisions imposing penalties and forfeiture can not be extended by implication.” (17 Barb., 39, 362.) And certainly the framer or stipulator of an instrument can not derive any advantage from its defectiveness in these respects without disregarding another well-established rule of construction, that “ the words of a deed or contract are to be taken most strongly against him who sets them up,” expressed by the maxim ‘‘verba clmrtarum fortius accip iunter contra prof erentemP (See also on this point, Noonan v. Bradley, 9 Wallace R., 394; Otis v. United States, 20 C. Cls. R. 315.)
The following authorities have also been consulted by us, and go to sustain the positions taken by us in this case :
Statutes prescribing a summary mode of taking property against owner’s consent are to be strictly construed. (Sedg. Statutory Laws, chap. 7.). Acts which work forfeiture or confiscation are to be strictly construed. (35 G-eo., 344.) Statutes authorizing summary administrative proceedings affecting rights of property must be strictly construed, and the power conferred must be executed precisely as it is given, and any departure will vitiate the whole proceedings. (Sedg. Stat. Laws, chap. 7.) Provisions imposing penalties and forfeitures can not be extended by implication. (17 Barb., 39, 362.) Extension of power of departments of government by implication not favored. (Anderson v. Dunn, 6 Wheat., 204.)
Penalties are never extended by implication; unless ex pressly imposed they cau not be enforced. [Elliott v. Railroad Oo., 99 U. S., 573.) A probable omission of some words in a penal statute can not be supplied by intendment.. (2 Oirc. N. Y., 1840; United States v. Ten Oases of Shawls, 2 Paine, 162.) Acts in derogation of common law are construed strictly. (Supreme Court, 17, 97 ; Brown v. Berry, 3 Dallas.)
Construction which will have a retrospective operation affecting the rights of parties should not be made. Retrospective laws divesting vested rights are impolitic and unjust. An executive officer of a Department of the Government has no power to impose fines and penalties upon its contractors, except by virtue of express stipulations to that effect. (9 Op. Att. Gen., 32.) The power to impose fines is limited to the cases and for the causes specified in the act. (4 Blatch., 142.) A statute is never to be construed as attempting to divest a vested right or annihilate a right of action or a right of property if its words will admit of any other construction, and it may be more than doubted if legislative power is competent to do so. (Cooley’s Const. Law., 237, 275, 357.)
Penal statutes must be construed strictly, and never to be extended by implication. (1 Oirc. Mass., 1842, etc.) Forfeiture of property and rights can not be adjudged by legislative acts, and confiscation without a judicial hearing, after due notice, would be void as not being due process of law. Nor can a parly by his misconduct so forfeit a right that it may be taken from him without judicial proceedings, in which the forfeiture shall be declared in due form. (Cooley’s Const. Law, 450; 38 Miss., 434 ; 24 Ark., 161; 27 id, 26.) A penalty can not be raised by implication, but must be expressly imposed. [Jones y.Estis, 2 Johns, 379; Allaire v. Howell Works Co., 14 N. J. L., 21.) The imposition of penalties for past omissions would be confiscation. [State v. Mayor of New Jersey, 37 N. J. Law, 39.)
Forfeitures are not favored in law, and he who insists upon them must show a right to demand them, and even then the law will seize hold of a slight circumstance to show that the right was waived. [Lester v. United States, 1C. Cls. 14., 58, and cases therein cited.) The law regards neither penalties nor forfeitures with favor, and equity relieves against them whenever it would be unjust or unconscionable to enforce them. (Id., 59, and cases cited.) Penalties are never extended by implication; unless expressly imposed, they can not be enforced. (94 U. S., 619 j Hr shine v. Milwauhee and 'St. JPaul R. It.; Elliot v. Railroad-Go., 99 U. S., 573.)
A forfeiture can' not be enforced except through the judgment of a court of competent jurisdiction, and this is true whether it be called costs, damages, or a¡ penalty. (Seaman v. Chicago, 44 Ill., 269, 278.) Forfeitures and penalties held in disfavor by the courts. (Bishop ou Law of Contracts, ed. 1887* page 418, and cases cited therein.)
Mr. Assistant Attorney-General Edwin JE. Bryant for the defendants :
It is respectfully submitted that the action of the Department shows the utmost consideration of the claimant’s rights, and a painstaking 'effort to temper justice with mercy. No abuse of discretion is shown, no harsh exercise of authority, but the greatest patience and lenity for the most lax, laggard, and imperfect performance of an important contract;
By glancing over the summary of fines and remissions, it will be seen that the remissions were made in bulk.
Presumably they have covered every case where there was doubt of the power to impose or severity in its exercise.
The rule, omnia prcesumuntur rite et sollenniter esse acta, is applicable here, and upon this record it will be presumed that the action of the Postmaster-General in imposing these fines and in remitting the portions of them was had upon satisfactory proof and on due authority. (Philadelphia, etc., R. R. Go. v. Stimson, 14 Pet., 448; 'United States v. Grusell, 14 Wad., 1; Coffield v. McClelland, 16 Wall., 331.)

Opinion:
Weldon, J.,
delivered the opinion of the court:
This claim is founded on two contracts made with the defendants in the year 1881 for "mail-messenger service" and " mail-station service " in the city of New York on mail routes Nos. 6771 and 6772. The consideration to be paid for the mail-messenger service on route No. 6771 was $63,200 per annum, and the service was to commence on the 1st of July, 1881, and extend for a period of four years. The consideration to be paid for mail-station service on route No. 6772 was $19,704 per annum, and the service was for a like period of time. The petition avers the performance of the entire service according to the requirements of the contracts, and alleges a failure on tbe part of the defendants to pay the sum of $5,591.20, and for that amount this suit is prosecuted. The findings show that the said amount was deducted by the Sixth Auditor from the compensation of the claimant "on the order or request of the Postm aster-General" " as fines imposed for alleged delinquencies" on the part of the claimant in the prosecution of the service of said contract.
The only question submitted for our consideration and decision is, had the Postmaster-General the right, under the contract and law, to impose fines and forfeitures in diminution of the claimant's compensation to the extent as shown by the facts of this record. In the contract on route No. 6772 it is provided:
"That for a failure to deliver the mail into the post-office or to any station mentioned in this contract; for suffering other business or engagements, or any other cause whatever, not beyond the control of the contractor, to delay or interfere with the prompt delivery of the mail at the post-office or station, or for carrying the mail in a manner different or inferior to that hereinbefore specified; for suffering the mail to become wet, injured, lost, or destroyed; for all or any of which they shall forfeit a sum, in the discretion of the Postmaster-General, according to the nature and frequency of the delinquency."
In contract on route No. 6771 it is provided:
"And it is also further stipulated and agreed that for a failure to deliver the mail to a departing train in time to go by said train, or for not delivering the mail at the post-office immediately upon its arrival; for suffering other business or engagements, or any other cause whatever not beyond the control of the contractor, to delay or interfere with the prompt delivery of the mail at the post-office, depots, and wharfs, or for carrying the mail in a manner different or inferior.to that hereinbefore specified; for failure to provide a guard for the mail, as hereinbefore mentioned, when the same is conveyed at night; for suffering the mail to be wet, injured, lost, or destroyed ; for all or any of which they shall forfeit a sum, in the discretion of the Postm as ter-General, according to the nature and frequency of the delinquency."
During the continuance of said contracts and upon the adjustment of the claims of said claimant the Postmaster-General, in pursuance to his alleged right, assessed asjfines against the said claimant the sum of $11,597; and, upon being satisfied that some of the fines had been improperly imposed, remitted the sum of $6,106.49, leaving a balance of $5,591.20, as shown by the fourth finding. It is insisted by the claimant that the said amount was improperly assessed or imposed by the Postmaster-General, and that therefore he should recover that amount. It is shown by the findings that the Department, in pursuance to the power claimed under the contract and law, imposed penalties and fines for many different classifications of delinquencies, as follows: " For failure to have wagon meet supplementary mails; " for " transfering mail in open wagons without screens; " for " delays; " for " special complaints; " for. " miscellaneous irregularities;" for "carelessness and drunkenness of drivers; " for "failure to furnish advance wagon; " " trips in open wagon; " " late arrivals; " " missions of special service; " " various failures."
The fines were imposed after the close of the quarter or month in which the service was rendered upon reports furnished the Postmaster-General from time to time, by persons having personal knowledge of the manner in which the service was performed. It will be seen from the general specifications that in many instances it is impossible to determine the exact delinquency of the contractor. For a failure to furnish advance wagons the sum of $1,958 seems to have been imposed. An advance wagon is defined by the findings to be a " wagon in which the letter mail might be transferred from the depot to the post-office in advance of the paper and other mail matter, and also in advance of the schedule time for arrivals and departures, and also a wagon sent in advance of schedule time to carry papers from the post-office to the postal-car." The law in force at the time the contracts were made and during their existence provides as follows:
" Sec. 3962. The Postmaster-General may make deductions from the pay of contractors for failures to perform service according to contract, and impose fines upon them for other delinquencies. He may deduct the price of the trip in all cases where the trip is not performed; and not exceeding three times the price if the failure be occasioned by the fault of the contractor or carrier."
By virtue of this provision of law the Postmaster-General is empowered to impose fines for " delinquencies " in the performance of the service, and under that power it is insisted that the fines were properly imposed in this case. The whole amount assessed under both contracts was $11,597.62, which was afterwards remitted to the amount in controversy, to wit, $5,591.13.
The statute makes the Postmaster-General the judge when a fine shall be imposed, and unless that power is exercised incompatibly with the reasonable and legitimate use of the power, parties contracting with the Government are bound by his action. The service to be performed is of such a character that a provision of that kind is essential to the successful performance of the most important function incident to the executive branch of the Government. If the Post-Office Department were subjected to the ordinary remedy for a violated contract, the measure of protection would be incommensurate to the wrong inflicted, and the mail service might thereby be impaired in th at efficiency required by public policy, When the contracts were made they became subject to the provisions of the statute defining the powers of the Postmaster-General; and that power became a part of the contracts, with the same force as if specially provided for by the terms of the agreement.
In a case involving the question of the right of a public officer uuder a contract, the Supreme Court has said:
" Be this supposition as it may, it is sufficient that theparties have agreed that distance should be ascertained and fixed by the chief quartermaster, and in the absence of fraud or such gross mistake as would necessarily imply bad faith, as a failure to exercise an honest judgment, his action in the premises is conclusive upon the appellant and Government." (Kihlberg v. The United States, 97 U. S. R.., 398.)
The law having selected the Postmaster-General as the arbiter between the Government and contractor to determine the question of delinquency, his action in the premises, if objected to, must be impeached by showing such a state of facts as constitute in law a failure on the part of the officer to discharge the duty imposed on him in substantial requirement, with his duty in the premises. The findings show that for each month .during the performance of the service, the Postmaster-General imposed finesfor delinquencies, andofthosefines more than •one-half has been remitted by him upon subsequent investigation and proof. That fact would seem to indicate an honest effort upon the part of the officer to preserve the rights of the parties and so administer his trust as that no wrong' should be done to either side by the exercise of his power. In the remission of the $6,106.49 it is impossible to tell what items of the aggregate fines were embraced in that amount.
Under the heads of " omissions of special service," " special complaints," and " miscellaneous irregularities," less than $1,000 were imposed; and if it should be held that such assessment were void for uncertainty, it not being shown that such fines have not been remitted, that conclusion of law would not avail the claimant in this proceeding. The law presumes that public officers perform their duty; and in the absence of evidence tending to rebut that presumption, courts must give their acts the force of valid transactions. (United States v. Crusell, 14 Wall. R., 1; Philadelphia R. R. Co.v. Stimson, 14 Pet., 448.) Upon the question of advance wagons, the amount assessed for a failure to furnish such' wagons is in the same condition of uncertainty as the amounts assessed under the general classifications of delinquencies; it does not appear that the amount assessed for such failure was not included in the remission.
It does not follow that because the delinquencies upon which the fines were assessed were not specified in the contract, that therefore such failures were no violations of the contracts, as we have already held that the agreements must be enforced in the spirit of the law regulating the power of the Postmaster-General in existence at the time the agreements were made. The aggregate compensation for the service under both contracts was $82,904, which has been paid the claimant except the sum of $5,591.13.
This deduction may be a hardship to the claimant, but he dealt with the defendants in the light of that law which conferred upon a public officer almost absolute power, and in the absence of a showing that such officer acted in bad faith, or beyond the legitimate domain of his rights, we must recognize his action as binding upon the interests of the claimant. If this court were to so construe the law that these defendants could only recover fór a violation of contracts according to-the usual mode of assessing damages, the postal service might be stripped of that efficiency required by public necessity.
Congress have seen fit to clothe the Department with a plenary power; and in the absence of proof that such power has been mistaken or abused courts must enforce the law to protect the rights secured by its provisions, it is the judgment of the court that the petition be dismissed.