United States v. Stockgrowers' Nat. Bank

• Decision Date: 04 May 1887
• Citation: 30 F. 912
• Parties: UNITED STATES v. STOCKGROWERS' NAT. BANK OF PUEBLO.
• Court: U.S. District Court — District of Colorado

30 F. 912

UNITED STATES v. STOCKGROWERS' NAT. BANK OF PUEBLO.

United States Circuit Court, D. Colorado.

May 4, 1887

H. W Hobson, for plaintiff.

J. Q Richmond, for defendant.

BREWER J.

The case of the United States against the Stockgrowers' National Bank is a case where the court has to traverse a field in which it finds little light from authority, and no case exactly in point. The facts are these: The postmaster at Lewiston, Idaho, seeking to defraud the government, issued certain post-office orders upon the post-office at Pueblo in favor of the Stockgrowers' Bank, the defendant here. As a matter of fact he received no money, and it was a cunningly devised and fraudulent scheme to rob the government. The post-office orders he mailed in a letter purporting to be written by one J. G. Wilson to the defendant bank, directing it to present the orders, draw the money, and hold it subject to his order. The amount which was thus drawn from the post-office was $600, which was received, deposited, and held by it to the credit of J. G. Wilson. Shortly thereafter the Lewiston postmaster as Wilson drew $500 of that amount from the bank. The other hundred dollars remained there at the time this suit was commenced. The government, in the course of time, finding these post-office orders were fraudulently issued by its postmaster at Lewiston, caused him to be arrested and prosecuted, and instituted this suit to recover from the bank the $600 which it had received. The bank makes no claim to the hundred dollars which it has not paid over but defends as to the $500 which it had paid over before this suit and before notice.

Section 4057 of the Federal statutes provides that in all cases where money has been paid out of the funds of the Post-office department under the pretense that service has been performed therefor, etc., 'and in all other cases where money of the department has been paid to any person in consequence of fraudulent representations, or by the mistake, collusion, or misconduct of any officer, or other employe in the postal service, the postmaster general shall cause suit to be brought to recover such wrong or fraudulent payment, or excess, with interest thereon. ' That this money was obtained wrongfully from the government is undoubted. If it is regarded as a transaction between the postmaster at Pueblo and the defendant bank, both that officer and that bank were innocent of intentional wrong. Both acted under the mistaken belief that those post-office orders rightfully issued, and were valid obligations of the government. If it be regarded in the light of a transaction between the government on the one hand, as represented by its two postmasters, that at Lewiston and that at Pueblo, and the Stockgrowers' Bank on the other band, then it was money wrongfully obtained from the government through the misconduct of one of its officers. In either case, within the strict words of that statute, money has been wrongfully obtained from the government by this defendant bank. But that only brings up the real difficulty in the case. An ordinary principal whose agent is guilty of wrong but who acts within the scope of his apparent authority, is bound by such acts so far as affects innocent third parties. In other words, under these cases, the principal assumes the burden of his agent's conduct: If it is wrongful, the principal only suffers, and innocent third parties are safe. That, with perhaps certain limitations, is the universal rule applying to the doctrine of principal and agency so far as private individuals are concerned. It is an open question under the authorities as yet whether the converse of that rule does not apply to the government and its agents. Many courts have in a general way affirmed that whatever of hardship there may be in particular...