People's United States Bank v. Gilson

• Decision Date: 29 April 1908
• Docket Number: 2,690.
• Parties: PEOPLE'S UNITED STATES BANK v. GILSON et al.
• Court: U.S. Court of Appeals — Eighth Circuit

161 F. 286

PEOPLE'S UNITED STATES BANK v. GILSON et al.

No. 2,690.

United States Court of Appeals, Eighth Circuit.

April 29, 1908

Shepard Barclay (Carter, Collins & Jones and Thomas T. Fauntleroy, on the brief), for appellant.

Henry W. Blodgett (Truman P. Young, on the brief), for appellees.

Before SANBORN and ADAMS, Circuit Judges, and PHILIPS, District Judge.

SANBORN Circuit Judge.

This is an appeal from a decree which dismissed a bill exhibited by the People's United States Bank, a corporation of the state of Missouri, against Frank Wyman, the postmaster at St Louis, and his subordinates, to enjoin them from marking fraudulent and returning to the senders letters and other packages of mail directed to it which contained valuable drafts and checks, in obedience to an order to that effect issued by the Postmaster General on July 6, 1905. The complainant charged in the bill that it was carrying on a legitimate and lucrative banking business through the mails that there was never any evidence before the Postmaster General, except certain secret reports of post-office inspectors which the Postmaster General refused to divulge that it was engaged in conducting any scheme or device for obtaining money through the mails by means of false and fraudulent pretenses, representations, or promises and that it was not in fact so engaged; that at a hearing before the Assistant Attorney General for the Post-Office Department, before the fraud order was issued, these secret reports were withheld, and inspection of them was denied to the complainant, there was no other evidence that the complainant was guilty of participation in such a scheme, and all the evidence at that hearing was, and the conceded and admitted facts at that hearing were, that the complainant was not engaged in any such scheme or device, but that nevertheless the Postmaster General issued the order whereby, unless its execution were stayed by the court, some of the complainant's property, consisting of remittances by checks, drafts, and post-office money orders through the mails would be confiscated, some of it would be returned to senders, and its business and reputation would be destroyed, to its irreparable injury, in violation of the fourth, sixth, and fourteenth amendments to the Constitution.

The defendants answered that the order of the Postmaster General was issued upon all the evidence taken both before and at the hearing before the Assistant Attorney General, both that in support and that in refutation of the charge that the bank was engaged in conducting a scheme or device for obtaining money through the mails by means of false and fraudulent pretenses, representations, and promises; that all this evidence taken together was satisfactory to the Postmaster General that the bank was so engaged; that it was in fact thus engaged; that the defendants were simply obeying the order of the Postmaster General, and they denied every allegation of the bill which was not thus expressly admitted. A general replication was filed, the case was set down for hearing on July 3, 1907, and on that day the court dismissed the bill.

Sections 3929 and 4041 of the Revised Statutes as amended by Act Sept. 19, 1890, c. 908, Secs. 2, 3, 26 Stat. 466, and by Act March 2, 1895, c. 191, Sec. 4, 28 Stat. 964 (U.S. Comp. St. 1901, pp. 2686, 2688, 2749), provide that 'the Postmaster General may upon evidence satisfactory to him that any person or company is engaged in conducting any lottery, gift enterprise or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind, or that any person or company is conducting any other scheme or device for obtaining money or property of any kind through the mails by means of false or fraudulent pretenses or promises, instruct postmasters' at any postoffice at which letters to such a person or company arrive to mark them fraudulent and to return them to the senders. The Supreme Court has had occasion to consider these acts of Congress in two cases, in the American School of Magnetic Healing v. McAnnulty, 187 U.S. 94, 107, 108, 109, 110, 23 Sup.Ct. 33, 47 L.Ed. 90, and in Public Clearing House v. Coyne, 194 U.S. 497, 506, 509, 24 Sup.Ct. 789, 48 L.Ed. 1092. In the former case the Postmaster General had found, upon evidence satisfactory to him, that a scheme or device for obtaining money through the mails by means of pretenses, promises, and representations that physical ills could be benefited and cured by the proper exercise of the mind was a scheme denounced by these acts of Congress, and had issued an order commonly called a 'fraud order' against the company which practiced it, whereby he directed the local postmaster to mark the letters sent to the complainant which contained checks and drafts for money 'Fraudulent,' and to return them to the senders.

The Supreme Court held (1) that, where the beneficial effect of the scheme or device in question as in that case is a matter of opinion not susceptible of proof as an ordinary fact, the Postmaster General has no lawful jurisdiction or authority to issue a fraud order (pages 106, 107 of 187 U.S., page 38 of 23 S.Ct. (47 L.Ed. 90)); (2) that, where the Postmaster General is induced to issue a fraud order by an error of law, his action is reviewable, and the execution of his order may be enjoined by the courts, citing Burfenning v. Chicago, etc., Railway Co., 163 U.S. 321, 16 Sup.Ct. 1018, 41 L.Ed. 175, Johnson v. Drew, 171 U.S. 93, 99, 18 Sup.Ct. 800, 43 L.Ed. 88, and Gardner v. Bonestell, 180 U.S. 362, 21 Sup.Ct. 399, 45 L.Ed. 574, which apply the same rule to the Land Department (page 108 of 187 U.S., pages 38, 39, of 23 S.Ct. (47 L.Ed. 90)); (3) that if there is no evidence before the Postmaster General of the violation of the federal law, or if the admitted, conceded, or established facts before him show no such violation, the Postmaster General's determination that the evidence of such violation is satisfactory to him and his issue of a fraud order thereon is a pure mistake of law remediable by the courts (pages 109, 110 of 187 U.S., page 39 of 23 S.Ct. (47 L.Ed. 90)); and (4) that, where the Postmaster General issues a fraud order without jurisdiction or by reason of an error of law, and thereby stops the delivery of letters which contain valuable inclosures, he violates the property rights of the person or company whose letters are thus withheld (page 110 of 187 U.S., page 39 of 23 S.Ct. (47 L.Ed. 90)).

In Public Clearing House v. Coyne, 194 U.S. 497, 510, 515, 24 Sup.Ct. 789, 48 L.Ed. 1092, the Postmaster General had held that a scheme or device for obtaining money through the mails by means of pretenses, promises, and representations that persons who remitted $3 enrollment fee and $1 per month for 60 months would receive moneys in return proportionate to the increase of the membership of the association they joined, subject to numerous conditions, whereby the scheme 'must ultimately and inevitably result in failure' and in loss to the great majority of the members (page 515 of 194 U.S., page 796 of 24 S.Ct. (48 L.Ed. 1092)), was not a lottery, but a scheme or device denounced by the acts of Congress. The court below had reviewed the finding of fact of the Postmaster General and had found that it was not such a scheme, but that it was a lottery. The Supreme Court upheld the constitutionality of these acts of Congress, 'the only reservation being that the person injured may apply to the courts for redress in case the Postmaster General has exceeded his authority or his action is palpably wrong,' (page 509 of 194 U.S., page 794 of 24 S.Ct. (48 L.Ed. 1092)); and it said:

'Inasmuch as the action of the postmaster in seizing letters and returning them to the writers is subject to revision by the judicial department of the government in cases where the postmaster has exceeded his authority under the statute (School of Magnetic Healing v. McAnnulty, 187 U.S. 94, 23 Sup.Ct. 33, 47 L.Ed. 90), we think it within the power of Congress to intrust him with the power of seizing and detaining letters upon evidence satisfactory to himself, and that his action will not be reviewed by the court in doubtful cases. ' Pages 509, 510 of 194 U.S., page 794 of 24 S.Ct. (48 L.Ed. 1092).

It also held that there was no error in the finding by the court below that the Postmaster General was mistaken in his finding of the fact that the plan was a scheme to obtain money by false representations and promises and in the finding of the court that it was in fact a lottery and not such a scheme. It sustained the fraud order because the plan constituted a lottery. Pages 512, 515 of 194 U.S., pages 795, 796, of 24 S.Ct. (48 L.Ed. 1092). A significant fact in this case is that the Supreme Court affirmed the review by the lower court of the Postmaster General's finding of fact, approved its reversal of that finding, and declared that such a review would not be made in doubtful cases, but only when his finding was 'palpably wrong.' Pages 509, 510 of 194 U.S., pages 793, 794 of 24 S.Ct. (48 L.Ed. 1092). These decisions are in exact accord with the settled principles of law which govern the decisions and acts of the Land Department and of the other executive departments of the government upon which quasi judicial powers are conferred by acts of Congress and from them, and the decisions cited therein and below, these conclusions may be safely drawn.

In a doubtful case within his jurisdiction in the absence of fraud or a gross mistake of fact, where there is some evidence which is satisfactory to the Postmaster General to sustain a fraud order, his decision of the question of fact upon which the order is founded is conclusive, and it will not be reviewed by the courts.

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