United States v. the Bank of the Metropolis

• Decision Date: 01 January 1841
• Parties: UNITED STATES, Plaintiffs in error, v. THE BANK OF THE METROPOLIS, Defendant in error
• Court: U.S. Supreme Court

40 U.S. 377

15 Pet. 377

10 L.Ed. 774

UNITED STATES, Plaintiffs in error, v. THE BANK OF THE METROPOLIS, Defendant in error.

January Term, 1841

[Syllabus from pages 377-379 intentionally omitted] ERROR to the Circuit Court of the District of Columbia and county of Washington. The United States, on the 25th of June 1838, instituted an action of assumpsit against the President and Directors of the Bank of the Metropolis, for the recovery of $27,881.50, for sundry matters properly chargeable in an account, as by an account annexed to the declaration appeared. The declaration contained the usual counts in an action of assumpsit.

The account referred to contained numerous items of deposits made in the Bank of the Metropolis, from the post-office department, leaving a balance due to the United States of the sum stated in the declaration. The defendants pleaded the general issue.

The defence to the claim of the United States, was founded on credits which amounted to $23,000, exclusive of interest, which had been presented to the accounting officers of the treasury, and which had been refused allowance. They were for acceptances of the post-office department of drafts drawn upon the post-office department, and an over-draft by E. F. Brown, an agent of the post-office department. The jury found a verdict for the defendant, and certified that there was due from the United States to the bank, $3371.94, with interest from March 6th, 1838.

The plaintiffs, on the trial, asked the court to give certain instructions to the jury, which was refused, to which the plaintiffs excepted. These are stated in the opinion of the court. The United States prosecuted this writ of error to the judgment of the circuit court, entered on the verdict. The case is fully stated in the arguments of the counsel, and in the opinion of the court.

The case was argued by Gilpin, Attorney-General, for the United States; and by Coxe, for the defendant.

Gilpin, Attorney-General, for the United States.—In the year 1836, the Bank of the Metropolis was a depositary of public moneys, which were in the treasury of the United States. On the 2d July, an act of congress (5 U. S. Stat. 80) was passed, ordering that all the public revenue derived from postages should be deposited, when collected, 'in the treasury of the United States,' as the rest of the revenue was; and that it should be there held by the treasurer, to pay such appropriations as might be directed by congress 'for the service of the post-office department.' On the 16th July, deposits were made, under this act, in the Bank of the Metropolis; and when they were so made, written instructions were given by the postmaster-general, and acceded to by the bank, that the post-office revenue, as deposited, was to be kept in the name of the 'treasurer of the United States for the service of the post-office department;' to be paid on his warrants, to be reported monthly, and settled quarterly, with him; and that 'there was to be no credit, deduction or set-off admitted, except for moneys drawn out on the treasurer's warrant.' At the monthly return of 1st October 1837, there was a balance of revenue deposited to the credit of the treasurer of the United States of $42,171.88. During that month, the deposit was increased by the sum of $1317.57, and warrants of the treasurer, amounting to $16,132.88, were paid; thus leaving a balance to the treasurer of $27,356.57. Instead of reporting this balance on the 1st November 1837, the bank admitted a balance only of $1031.97, having deducted therefrom the amount, with interest, of a draft for $10,000, drawn on the 14th April 1835, at ninety days, by Edwin Porter, on Richard C. Mason, treasurer of the post-office department,' and accepted by him, as 'treasurer;' and also of four drafts for $13,000, drawn in October 1835, at ninety days, by James Reeside, on Amos Kendall, postmaster-general, and accepted by him 'on condition that his contract be complied with.' All these drafts had been discounted by the bank, before they became due; but had not been paid by the acceptors. The bank also deducted $611.52, which sum was overdrawn, in the year 1835, by E. F. Brown, the agent for disbursing the contingent fund of the post-office department. These credits were claimed at the treasury and disallowed.

At June term 1838, a suit was brought by the United States to recover the whole balance of $27,356.57. On the trial, the bank proved the facts above stated, and claimed the credits which had been disallowed. The district-attorney of the United States requested the court to charge the jury on three points; which were, substantially, as follows: 1. That if they believed there was nothing due to Porter and Reeside, at the time of the acceptance of their drafts, or at the time they became due, the bank was not authorized by law to set off such draft against the deposit of 'the treasurer of the United States.' 2. That if the accounts of Porter and Reeside were not finally settled at the department, it was the duty of the postmaster-general to have them settled; and in such settlement, he ought not to allow credits for illegal extra allowances, where such allowances had been merely entered in the journal, but never brought into the ledger. 3. That the over-draft of the agent for disbursing the contingent fund could not, by law, be set off against the deposit of 'the treasurer of the United States.' These instructions the court refused to give; and it is submitted, that they erred in so doing.

I. When Porter's draft became due, was it a just claim against the United States? would the acceptor have been justified, by law in paying it to the drawer? He accepted the draft as a public officer—as 'treasurer of the post-office department.' He was to pay it out of the public money in his hands, appropriated by law to pay the drawer, when it became due. It was an arrangement between the department and a contractor, for the benefit of the latter. It was an acknowledgment in advance. When the day of payment arrived, the money had not been earned; no debt was due from the United States to Porter; there is, consequently, no appropriation by law to pay him. If paid, he receives, from the public treasury, money not appropriated to him. Could the acceptance of a public officer, made under a misapprehension of the facts, authorize this? If it be a principle not doubted, that the neglect of a public officer cannot deprive the United States of their right to recover money from their debtors; is it not a principle equally well founded, that they cannot be made to pay money twice, by his error or indiscretion? Can the treasurer of the post-office department, or any other officer, promise to pay a sum of public money, ninety days hence, and then draw it from the public treasury, whether justly due or not? Under the instruction, as asked, the question whether the money was owing or not to Porter, on the day when the draft became due, does not arise; for it was requested, in the event of the jury believing that nothing was owing; but the evidence shows, that when that day arrived, everything to which he was entitled had already been absorbed by forfeitures and drafts previously drawn and accepted. A payment made to him, then, would not have been made, because he was entitled to the money, but only because the treasurer of the post-office department had accepted his draft. The constitution, art. I. § 9, par. 6, forbids the payment of any money from the treasury, but in pursuance of appropriations made by law. The appropriation for the benefit of Porter was exhausted. He had received from it all that he was entitled to. To pay him more would be to pay that for which there was no appropriation. United States v. Barney, 3 Hall's Law Jour. 130; United States v. Nicoll, 1 Paine 649.

If, then, it be established, that the United States would not have been bound to pay Porter himself, notwithstanding his possession of the acceptance, were they bound to pay the bank to whom he transferred it? An illegal payment is not authorized, by the constitution or law, to be made to a transferee, any more than to the claimant himself. Every principle which forbids double payment to one, forbids it to the two. It is not requisite to controvert the general rule of commercial law, discussed before this court in the case of Townsley v. Sumrall, 2 Pet. 183, 185, as to the liability of an acceptor, whether he has funds or not, for an unconditional acceptance; nor is it necessary to examine how far the ordinary responsibility, which attaches to parties to negotiable paper, can be imposed, by the acts of their officers, on the United States; nor how far such rules can be applied to them, in a case where they have the effect to draw money from the treasury, without an appropriation (12 Wheat. 561; 4 W. C. C. 464); because, in this instance, the aceptance was clearly of such a nature as to put the acceptor on his guard. If it was not strictly conditional, in terms, it was so in substance. The bank knew, when it received the draft, that it was payable out of a public fund; and that the payment could not be made, unless there was money, appropriated by law for that purpose, in the hands of the acceptor. They knew the acceptance was given by the acceptor 'as treasurer;' and that the law of the land gave public notice that the treastreasurer;' could not bind the United States, beyond the funds appropriated for the use of the drawer. Suppose, an agent accepts as agent, will it be pretended, that the principal is bound beyond the extent of his agency? The holder must inquire into that extent; must see the acceptor's authority; must know how far the acceptance binds the principal. 1 Pet. 283, 290. There is no hardship or injustice in this; the bank, like any other holder, had ample opportunity, before it discounted the draft, to ascertain the exact extent of the obligation assumed by the acceptor. This principle, which is just in...