Case: Dover Five-cent Savings Bank v. The United States; E. D. Morgan and Others v. The United States; Boatmen's Savings Institution v. The United States
Abbreviation: Dover Five-cent Savings Bank v. United States
Decision Date: 1867-12
Docket Number: 
Citation: 3 Ct. Cl. 10
Volume: 3
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: Dover Five-cent Savings Bank v. The United States. E. D. Morgan and Others v. The United States. Boatmen’s Savings Institution v. The United States.
Judges: 
Pages: 10–17

Head Matter:
Dover Five-cent Savings Bank v. The United States. E. D. Morgan and Others v. The United States. Boatmen’s Savings Institution v. The United States.
On the Proofs.
The claimants bring their actions on certain acceptances of Floyd as Secretary of War. They are identical in terms with those in the Floyd Acceptance case, (I C. Cls. R., p. 270,) and the material facts arethe same. The claimants allege as an additional ground for recovering, that the evidence shows the defendants were and still are indebted to the drawers “in a larger sum than the acceptances granted by Secretary Floyd in their favor. But the court finds as a matter of fact that there was a less sum due to the drawers, and that the drafts were accepted by Floyd for the benefit of the drawers, and on an agreement between them, that they should be taken up and paid by the drawers and should.not be presented for payment at the treasury of the United States. '
The facts in these cases being substantially the same as those in the Floyd Acceptance Case, (1 C. Cls. R., p. 270,) the court reaffirmed the decision and reasoning in that case.
Mr. Caleb Cushing for tbe claimants:
The petitioners represent that they are holders in good faith, and owners for a valuable consideration by them paid, of drafts or bills of exchange, made by Russel, Majors & Waddell upon John B. Floyd, Secretary of War of the United States, which were accepted by him in his official capacity and in behalf of the United States.
They aver that the said John B. Floyd, as such Secretary, and in behalf of the United States, had authority to accept said drafts, and that by his acceptance thereof the said acceptances became payable by the United States to the lawful holders thereof, the aforesaid petitioners.
Upon a petition in substantially the same words, and for similar cause of action, the case of Thomas W. Peirce v. The United States has been heard and adjudged by this court. (l'Nott & H., p. 270.)
We still conceive, notwithstanding the opinion of the court to the contrary, that these documents are such negotiable bills of exchange, and that therefore all the evidence introduced by the United States is irrelevant and incompetent in law, and we still persist in objecting to it as not being entitled to be considered by the court.
But we do not propose to reargue tbe questions argued in tbe ease of Peirce against Tbe United States. Instead of that we assume, for argument’s sake, tbe conclusions of tbe court in that respect, and present amended petitions, for tbe purpose of calling tbe attention of the court to a new view of tbe subject in.the interest of the petitioners.
Tbe amended petitions are founded on tbe evidence introduced by tbe United States, showing or tending to show that the United States were and still are indebted to Bussell, Majors & Waddell in a larger sum than tbe acceptances granted by Secretary Floyd in their favor, and that by reason hereof tbe United States now unlawfully bold the moneys of tbe petitioners.
Tbe evidence on which this new question arises was introduced by tbe United States under objection, consisting of statements by William H. Bussell, a witness for tbe United States.
In addition to the testimony of Bussell, the United States, in Peirce’s case, introduced a pretended balance of appropriation, leaving tbe sum of $673,044 in tbe treasury, subject to draft on tbe subsistence contract of Bussell, Majors & Waddell.
Tbe government, in that case, did not introduce any evidence tending to contradict the testimony of Bussell; nay, in reference to this point, Bussell swears as follows :
“Bussell, Majors & Waddell have often demanded a settlement of and with tbe government. No settlement has been bad since our suspension ; and neither the War Department nor any officer or agent of tbe government has, since that time, rendered any settlement or account showing tbe balance on one side or tbe other. I mean, no such statement has been rendered to us.”
Notwithstanding, as tbe testimony of Bussell shows, be caused to be filed in the Interior Department á large amount of these acceptances, to cover bis responsibility there, (namely, for the abstracted bonds,) yet tbe government has not, so far as it appears in tbe evidence, brought suit against Bussell on this account, or entered into any liquidation of account as between tbe acceptances filed and tbe bonds abstracted; yet, although entreated by Bussell, nay, challenged by him to make a settlement of bis transportation and subsistence account, including tbe matter of tbe abstracted trust bonds, still tbe United States has refrained from making any such settlement, or even commencing suit against Bussell.
In consideration of all these facts, we think there is irresistible presumption in favor of tbe reiterated and constant assertion of Bussell, that there would appear a balance due to him more than sufficient to cover the whole amount of acceptances issued by Secretary Floyd, including those held by the present petitioners.
We maintain, therefore, that as the United States were indebted to Russell, Majors & Waddell at the time the drafts were' drawn and accepted, the acceptance should operate, in favor of the petitioner, as an equitable assignment by Russell, Majors & Waddell of so much of their claim upon the United States as the drafts amounted to, the acceptances by Secretary Floyd being effective to express the assent of the United States to such an assignment. The question for the court, then, is to determine whether there was as large a sum due to Russell, Majors & Waddell as the drafts called for at their date. If so, then the draft, as it is submitted, ought to be paid.
We maintain further, that this court has no rightful ground on which to raise presumption to the contrary of this. All the facts proved tend to show that the acceptances, at the time they were drawn, were for indebtedness of the United States, adequate to cover all the acceptances, and that indebtedness still continues, and that it should be adjusted for the benefit of the petitioners,, whose money the United States have received, and still hold in the treasury.
Finally, we further maintain that the facts devolve upon the United States an obligation thus to settle the account, which obligation should be enforced by this court, the court having all proper authority by statute to enter upon such investigations, in that respect, as justice and the rights of the parties shall require.
The Assistant Solicitor for the defendants:
It will be observed, from an examination of the several petitions which contain the respective statements of the claimants’ right to recover in these suits, that they are not in any essential particulars different from the case of Thomas W. Peirce v. The United States, decided at the last term of this court. The averments of the several amended petitions which, by leave of court, have been filed in each of these cases, involve only an examination into these questions of facts which are stated in said amended petition, and from the existence of which it is claimed that the rights of these parties are relieved from the effects of the decision made by the court in the case to which we have referred.
We do not propose to discuss again any of the questions which were examined with so much thoroughness, and discussed with so much research and elaboration in the decision of the court in that case.
In that case the court held—
1. That the facts proven did not authorize the Secretary of War to bind the United States by the acceptances upon which that suit was instituted, and that the United States were not therefore liable upon them.
2. That the act of January 31, 1823, chapter nine, applied to the head of a department.
3. That negotiable securities, such as were offered in evidence in that case, were within the prohibitions of said act.
4. That by virtue of said act, the acceptances upon which said suits were instituted were void.
5. That the Secretary of War was prohibited by said act, as well as by the act of August 6, 1846, from giving, in his official capacity, in behalf of the United States, the acceptances upon which said suit was instituted.
6. That from the facts established upon the hearing of said case, it was evident that said acceptances were issued for the purpose of evading the act of the 31st of January, 1823, as well as the act of the 26th of February, 1853, and were therefore null and void.
7. That the evidence adduced in said case failed to establish any usage or practice in the different departments of the government, by virtue of which the Secretary of War was authorized to accept, in behalf of the United States, the bills to recover which said suit was instituted, and that if such usage or practice were proven, it could not avail the claimant, because in derogation of the plainest provisions of law.
8. That it appeared from the evidence that the claimant had actual notice of the illegal character of the acceptances, and that he was therefore under the same legal disability in respect to his right to maintain his suit upon them, as the original payees and indorsers of said! bills would have been had the suits been instituted in their names and on their behalf.
9. That the authority of the Secretary of War to issue said acceptances was not established by any decisions of the Supreme Court of the United States.
The amended petitions aver—
1. That each of the bills of exchange or instruments in writing, set forth in the original petitions in these cases, were drawn on the said John B. Floyd, Secretary of War, for moneys due the said Bussell, Majors & Waddell by the United States, as contractors with the United States, at tbe dates respectively of said bills or instruments in writing,
2. That at tbe respective dates when said bills of exchange were drawn and accepted, and when, according to tbeir tenor and effect, said bills became due and payable, tbe government of the United States was indebted to said Russell, Majors & Waddell, as government contractors, in much larger sums of money than are specified in said bills of exchange or instruments in writing.
3. That the said John B. Floyd, Secretary of War as aforesaid, had authority, under the laws of the United States, to ascertain and determine the indebtedness of the United States to Russell, Majors & Wad-dell, as government contractors; that in pursuance of this authority he did determine that there was due to said Russell, Majors & Waddell the sums respectively specified in said bills of exchange, at their respective dates; and that the said bills of exchange so drawn and accepted, as aforesaid, are conclusive evidence against the United States of such indebtedness.
Such, briefly stated, is the case which these claimants now present for the consideration of the court.
In behalf of the United States we shall endeavor to maintain the following propositions:
1. That the evidence fails to establish that John B. Floyd, as Secretary of War, had authority to accept the several instruments in writing or bills of exchange for or on behalf of the United States, or to bind the United States for their payment; and that the evidence rather shows that in issuing such acceptances, he acted beyond the scope of his actual or implied authority.
2. That the several parties to these suits had actual notice, at or before the time of the negotiation and purchase by them of the several bills of exchange or instruments in writing described in their several petitions, of the facts and circumstances attending the'issuance of said several bills, and the consideration upon which they were issued.
3. That independently of statutory provisions and prohibitions, the several instruments in writing set forth and described in the petitions aforesaid, are not commercial, negotiable instruments subject to the law merchant.
4. That the evidence fails to establish either that the United States was indebted to the payees of said acceptances at the time the same were issued in the amount of said acceptances, or that they thereafter became indebted to said Russell, Majors & Waddell, in the amount of said several acceptances or instruments in writing.

Opinion:
Loring, J.,
delivered the opinion of the court:
The petitioners claim against the United States the amount due on two drafts or bills of exchange of which they aver they are'the bona fide holders, and which are set forth in the petition- as follows :
"$10,000.] "Washington City, July 10, 1860.
" Six months after date, pay to our own order at the Bank of the Republic, New York city, ten thousand dollars for value received, and charge to account of our transportation contract of the 12th of April, 1860.
" Russell, Majors & Waddell."
"Hon. John B. Floyd,
" Secretary of War."
[Indorsement, j
" Russell, Majors & Waddell."
[Acceptance. J
"War Department, July 16, 1860.
" Accepted:.
"John B. Floyd,
" Secretary of War."
"$10,000.] "Washington, July 16, 1860.
" Seven months after date, pay to our own order for value received, Bank of the Republic, New York city, ten thousand dollars, and charge to account of our transportation contract of the 12th of April, 1860.
"Russell, Majors & Waddell."
" Hon. J. B. Floyd,
" Secretary of War."
[Acceptance.]
" Russell, Majors & Waddell."
[Indorsement. ]
"Accepted;
" John B. Floyd,
" Secretary of War."
And the court find the facts to be—
1. That the petitioners purchased the said bills in open market before they severally matured.
2. That it is and has been the practice of heads of departments to accept drafts or bills of exchange for the transmission of funds to dis bursing officers, or the payment of those serving on distant stations, or for services rendered.
3. That on the 16th day of January, 1858, Russell, Majors & Wad-dell contracted with the United States for the transportation of army supplies from Forts Leavenworth and Riley, in Kansas, and other points on the Missouri river, to any depot or post in the Territory of Nebraska, south of latitude 44° north; in the Territory of Oregon, south of the same latitude, and to the Territory of Utah, to its south boundary, agreeably to a schedule of prices annexed to the contract. The contract provided for payments from time to time, as the services might be performed, upon certificates of an officer of the quartermasters' department; a portion when the train was started, and the balance when the supplies should be delivered at their destination; and the payments were to be made at the rate specified, either at the quartermaster's office at Fort Leavenworth, or by draft on the assistant treasurer at New York, as the contractors might elect.
4. That on the 3d of March, 1858, Russell, Majors & Waddell contracted with the United States for the delivery of 3,500 beef cattle, to be delivered between the 1st October, 1858, and the 1st of January, 1860, to the principal officer or agent of the subsistence department with the army of Utah, in lots of not less than 250 head at one time; payments to be made by the commissary of subsistence at St. Louis, on presentation of duplicate receipts for any delivery.
• 5. That on the---day, Russell, Majors & Waddell con-
tracted with the United States for the delivery of 763,000 pounds of flour, to the same army of Utah, at Great Salt Lake, or at Camp Floyd; payments to be made to the contractors by the commissary of subsistence at St. Louis, in checks upon the sub-treasurer of New York, on presentation of duplicate receipts of the officer or agent of the subsistence department at the points of delivery, for each partial delivery.
6. That the fourth and last contract was dated the 11th day of April, A. D. 1860. It was for the transportation of quartermasters' stores from Forts Leavenworth and Riley to Fort Union, in the Territory of New Mexico, and for the years 1860 and 1861; the prices to be paid, as is usual in all such contracts, were contained in a tabular statement, or schedule, annexed to it; and the contractors were to be paid for such service, and according to the rates contained in the schedule, at the office of the quartermasters' department at Fort Leavenworth, by drafts upon the assistant treasurers of the United States at St. Louis, Missouri, or at New York city; or in specie, (if equally con venient to the quartermasters' department at Fort Leavenworth,.) as the said firm might eleet.
' 7. That some time early in 1858, and during the period covered by
these contracts, under arrangement between these contractors and Floyd, the Secretary of War, the contractors drew a large number of bills of exchange'upon Floyd, as Secretary of War, which he accepted as such; that these bills of exchange so drawn and accepted, amounted, in the aggregate, to over $6,000,000. All of them have been taken up or returned by Russell, Majors & Waddell, except about $800,000, which are still outstanding, and of which those in suit form a part. A portion of the acceptances were taken up by the sale and negotiation of Indian trust bonds, abstracted from the office of the Commissioner of Indian Affairs, in the Department of the Interior. The United States also proved, by clerks in the War Department during the time these acceptances were given, that no regular entry or record was made in the department of these acceptances, as was usual in the ordinary and accustomed official transactions of the department.
8. That there were large appropriations for' subsistence and transportation for the army in the years in which the said contracts were made, and the said drafts or bills of exchange were drawn and payable ; that the unexpended balances of the appropriations for those purposes on the 1st of July, 1859, was $357,696, and on the 1st July, 1860, was $673,044 79.
9. That on the 18th day of May, 1861, and when the said drafts or bills of exchange were drawn and accepted, there were due to the said contractors, above specified, on their contracts for transportation, the sum of $17,488 84 and no more.
10. That the said drafts or bills of exchange were accepted by the said Floyd, for the benefit and accommodation of said Russell, Majors & Waddell, and on an agreement between them and the said Floyd, that the same should be taken up and paid by the said Russell, Majors & Waddell, so that they should not be presented for payment at the treasury of the United States. .
Upon the facts, found in this case upon the original and amended petition, we are of opinion.that it is substantially the same in legal effect as the case of Thomas W. Peirce v. The United States, heretofore adjudged; and for the reasons stated in that case, and applied to the same facts found here, we decide that the petition should be dismissed and judgment entered for the defendants.