Bolognesi v. United States
| Decision Date | 08 May 1911 |
| Docket Number | 238. |
| Citation | 189 F. 335 |
| Parties | BOLOGNESI et al. v. UNITED STATES. |
| Court | U.S. Court of Appeals — Second Circuit |
The question of primary importance which the defendants present to this court is thus stated at the conclusion of their brief:
'The question to be determined by the court is whether, assuming that the plaintiffs in error have adduced proof of their absolute innocence and good faith, the government is entitled to recover on the theory that the orders being in fact fraudulent the plaintiffs in error must suffer the loss and not the government.'
In the following opinion this question will be first considered. If it is answered in the affirmative no examination of the facts assumed to be established in it will be required. If it is answered in the negative such examination will be necessary.
Mayer & Gilbert (A. S. Gilbert and Julius M. Mayer, of counsel), for plaintiffs in error.
Henry A. Wise, U.S. Atty., and Felix Frankfurter, Asst. U.S. Atty.
Before LACOMBE, COXE, and NOYES, Circuit Judges.
NOYES Circuit Judge (after stating the facts as above).
The act of 1872 [1] establishing a money order system in the United States, provided in its first section (Rev. St Sec. 4027 (U.S. Comp. St. 1901, p. 2741)):
'To promote public convenience, and to insure greater security in the transfer of money through the mail, the Postmaster-General may establish and maintain, under such rules and regulations as he may deem expedient, a uniform money order system, at all suitable post offices, which shall be designated as 'money order offices."
Thus in the introduction to the act is the source of congressional authority to enact it disclosed. That which promotes the public convenience and provides for the transfer of money by mail is undoubtedly a proper exercise of the power conferred upon Congress by the Constitution 'to establish post offices and post roads. ' Const. art. 1, Sec. 8.
In the establishment and operation of the money order system the government exercises a governmental power for the public benefit. It serves the public by furnishing a safe and cheap method for transmitting small sums of money. It carries on the system not for gain, but to supply a public need. It does not engage in business, but stands in its position of sovereignty. Consequently the principles which govern commercial transactions between individuals have little application in this case and the cases are not in point which hold that
'if it (the Government) comes down from its position of sovereignty and enters the domain of commerce it subjects itself to the same laws which govern individuals there. ' Cooke v. United States, 91 U.S. 396, 23 L.Ed. 237.
It follows as a corollary to the conclusion that the government in issuing money orders exercises a governmental function and does not engage in a commercial transaction that money orders are not negotiable instruments subject to the defenses permitted by the law merchant to bona fide holders for value. They stand in marked contrast to notes or similar obligations which the government might issue to obtain money for its own use and upon which it might incur all the responsibilities of a private person.
Moreover, the restrictions and limitations which the postal laws and regulations place upon money orders are inconsistent with the character of negotiable instruments. Thus:
(1) The cashing of a money order cannot, under ordinary circumstances, be made in advance of the receipt of the corresponding advice. Postal Laws and Regulations, Sec. 1002.
(2) More than one indorsement of a money order invalidates it. Id. Sec. 1007.
(3) After an order has once been paid by whomsoever presented, the department will not be further liable. Id. Sec. 1009.
(4) Payment of orders will be withheld under a variety of circumstances.
In view of these regulations which have been made in accordance with acts of Congress it is apparent that no such unconditional promise of payment and freedom of circulation attach to money orders as to make them negotiable instruments. [2]
The conclusion that money orders are not negotiable instruments is also to be reached upon authority. In United States v. Stockgrowers' Natl. Bank (C.C.) 30 F. 912, 914, Mr. Justice Brewer, then Circuit Judge, said:
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