United States v. Prescott
THIS case came up on a certificate of division in opinion between the judges of the Circuit Court of the United States for the District of Illinois.
On the 4th of March, 1839, Prescott was appointed receiver of public moneys at Chicago, in Illinois.
On the 1st of October, 1840, he executed a bond, together with twenty-seven other persons, who were all defendants in the present suit, in the penal sum of $150,000, the condition of which was as follows: 'If the said Eli S. Prescott had truly and faithfully executed and discharged, and should truly and faithfully continue to execute and discharge, all the duties of said office, according to the laws of the United States, and moreover had well, truly and faithfully kept, and should well, truly and faithfully keep, safely, without loaning or using, all the public money collected by him, or otherwise, at any time placed in his possession and custody, till the same had been, or should be ordered by the proper department or officer of the government, to be transferred or paid out, and when such orders for transfer or payment had been or should be received, had faithfully and promptly made, and should faithfully and promptly make, the same as directed, and had done, and should do and perform, all other duties, as fiscal agent of the government, which have been or may be imposed by any act of Congress, or by any regulation of the Treasury Department made in conformity to law, and also had done and performed, and should do and perform, all acts and duties required by law, or by direction of any of the executive departments of the government, as agent for paying pensions, or for making any other disbursements which either of the heads of those departments might be required by law to make, and which were of a character to be made by a depositary constituted by an act of Congress, entitled 'An act to provide for the collection, safe keeping, transfer and disbursements of the public revenue,' approved July 4, 1840, consistently with the other official duties imposed upon him, then the said obligation to be void and of none effect, otherwise it should abide and remain in full force and virtue.'
In June, 1843, the United States brought an action of debt upon this bond against Prescott and all his securities, setting forth, amongst other breaches, that on the 15th of June, 1842, Prescott was ordered by the Secretary of the Treasury to transfer the public moneys to Edward H. Haddock, and that he neglected and refused so to do.
The defendants filed several pleas. The 3d, 4th and 5th were of the same character, and it is only necessary to insert one of them.
'3. And for a further plea in this behalf, the said defendants say actio non, because they say that the said Eli S. Prescott, before the commencement of this suit, did pay to the said plaintiffs all moneys which came into his hands as receiver of public moneys, excepting the sum of $12,815; and the said defendants aver that the said Eli S. Prescott tendered to the said plaintiff the sum of $127 before the commencement of this suit; and the said defendants aver that whilst the said Eli S. Prescott had said money in his possession, and before the commencement of this suit, some person or persons, to said defendants unknown, feloniously did steal, take, and carry away from the possession of the said Eli S. Prescott, the sum of $11,688; part and parcel of said money received by the said Eli S. Prescott, as receiver of public moneys, although the said Eli S. Prescott used ordinary care and diligence in the safe-keeping of the same, and this they are ready to verify, wherefore they pray judgment, &c.'
To these pleas the plaintiffs demurred generally, and the defendants joined in the demurrer.
And the cause being argued upon the said demurrer before the court, the opinions of the judges were opposed on this question, namely: Does the felonious stealing, taking, and carrying away the public moneys in the custody of a receiver of public moneys, without any fault or negligence on his part, discharge him and his sureties, and is that a good and valid defence to an action on his official bond?
Upon this question the cause came up.
Nelson, (attorney-general,) for the plaintiffs.
Dickey and Burke, for the defendants.
Nelson said, that if it were not for the printed argument, filed on behalf of the defendants, he would have thought it enough to say, with respect to the money being stolen, that there was no such condition in the bond. It was contended by the other side, that the case was to be governed by the principles of bailment. If the bond were to be laid aside, and the case examined as if it were one of parol contract, it would still be found that the defendant was responsible. In Southcote's case, 4 Co., 83, it was held no defence to say that goods were stolen, and in Willes, 118, it was again affirmed that a defendant was responsible for robbery. But this is not a case of general bailment; it rests on special contract. All the principles which govern it are summed up in Story Bailm., 21. Bailments may be enlarged or restricted by special contract. The condition of the bond here is to keep safely, and it is of course a special bailment. It would be mischievous to apply the doctrine of general bailments to such cases. If carriers are held responsible from motives of public policy, much more strongly is the necessity felt in the cases of officers of government, where the door could so easily be opened to collusion and fraud. In Coggs v. Bernard, 2 Ld. Raym., 918, this doctrine is indicated, when speaking of the fifth species of bailment, and the same principle is sustained by Raymond, 220; 1 Vent., 190; Holt, 131; 1 Wils., 281; 1 T. R., 27; Strange, 128.
The case relied upon by the other side is 17 Mass., 479, where gold was deposited with the Essex Bank for safe keeping, and stolen by the officers of the bank. But that was a bailment without consideration. The bank received nothing for keeping it, whereas, in this case, the party undertook to keep the money, and was paid for it.
The argument of Dickey and Burke was as follows:
1. The defendant, Prescott, is a depositary for hire, and unless his liability was enlarged by the special contract to keep safely, he is only subject to the liabilities imposed by law upon such a depositary.
2. The special contract to keep safely does not enlarge the liability in the case of a depositary for hire.
1st. It does not enlarge it by the ordinary meaning and acceptation of the terms 'keep safely,' nor,
2d. Has the judicial construction put on those words enlarged the liability.
1. The defendant is a depositary for hire, and comes under the liability imposed upon such depositary. He is within the class laid down by Lord Holt, Coggs v. Bernard, 2 Ld. Raym., 917, as the fifth class of bailments, and called by Judge Story in his Commentary on Bailments, and Jones on Bailments, locatio custodiae, or 'deposits for hire,' or 'the hiring of care and services to be performed or bestowed on the thing delivered,' or 'hire of custody.' Story Bail., §§ 8, 442, 2d ed.; Jones Bail., 90, 91, 96, original ed.
Such a depositary is bound to ordinary diligence, and only responsible for losses by ordinary negligence. Story Bail., § 442; Jones Bail., 97, 98, 99; Platt v. Hibbard, 7 Cow. (N. Y.), 497.
If he uses due care, and the property deposited is nevertheless stolen, he is excused; Coggs v. Bernard, 2 Ld. Raym., 918, where Lord Holt says, 'he is only to do the best he can; and if he be robbed, it is a good account;' and again, (p. 918,) 'and yet if he receives his master's money and keeps it locked up, with a reasonable care, he shall not be answerable for it though it be stolen.' See also Story Bail., §§ 444, 455, 2d ed.; Roberts v. Turner, 12 T. R., 232; Brown v. Anderson, 2 Wend. (N. Y.), 593.
If then the defendant, Prescott, was such a depositary, the pleas averring that the money was stolen without any default on his part, and that he used ordinary care in keeping the same, are good pleas, and excuse his liability.
2. The words 'keep safely,' in sect. 6 of the act of July, 1840, and in the condition of the bond declared on, following the words of the act, do not alter or extend the liability, otherwise imposed by law.
1st. They do not by the ordinary meaning and acceptation of the terms.
In the construction to be given to words, they are to be received according to their ordinary meaning and import, or such meaning as is given to them by the common sense and understanding of mankind. In this sense no other construction can be given to the words, 'keep safely,' than to keep with that degree of safety which prudent men ordinarily exercise, where safety is required; the common sense of mankind would construe it to mean reasonable safety. When A. accepts to keep safely, the meaning he would be apt to give to the contract, (supposing no judicial meaning had been given to the words,) would be, such reasonable safety as in the exercise of prudence, he and other men ought, under the circumstances of the case, to use; and this is exactly the degree of diligence or care required in the contract of bailment called 'locatio custodiae.'
The words 'keep safely,' therefore, considered in their ordinary and common acceptation, do not vary the usual liability of a depositary for hire.
2d. Judicial construction has not given a higher meaning to these words.
In Southcote's case, 4 Co., 83, 84, the plaintiff had delivered goods to the defendant to be by him safely kept. The plea was, that they were stolen out of the possession of the defendant, and judgment was given because the goods were to be safely kept. The plea, however, was defective in not averring that they were stolen without his default, or that he used ordinary care and diligence, and theft being evidence of ordinary neglect according to Sir Wm. Jones, (although this is now doubted,) it would be presumed that the defendant had been guilty of ordinary neglect, and this is in accordance with the opinion of Sir Wm. Jones in commenting upon this case, (Jones Bail., 43, original edition,) where he says: 'If the plaintiff, instead of replying, had demurred to the plea in bar, he might have insisted in argument, with reason and law on his side, that, although a general bailee to keep be responsible for gross neglect only, yet Bennet had, by a special acceptance, made himself answerable for ordinary neglect at least; that it was ordinary neglect to let the goods be stolen out of his possession; and he had not averred that they were stolen without his default;' thereby intimating, that if such averment had been made in Southcote's case, the plea would have been good. In the present case the pleas contain such averments.
The words 'keep safely,' then, by Southcote's case, and in the opinion of Jones, meant to bind the depositary to ordinary diligence only.
The case of Coggs v. Bernard, 2 Ld. Raym., 909, by the opinion of Lord Holt and the majority of the court, is to the same effect.
The question in point, decided, was, 'that if a man undertake to carry goods safely and securely, he is responsible for any damage through his neglect, although he was not a common carrier, and was to have nothing for the carriage.' (See 1st marginal note.)
The inference to be drawn is, if there was no neglect, he was not liable.
In commenting on the effect of the undertaking 'to keep and carry safely,' the judges who delivered opinions in this case differed. Lord Holt, who delivered the celebrated opinion which has been the foundation of the modern law of bailment, and which is entitled to the most consideration, together with all the other judges, (except Powell, J.) held, (as is remarked by Judge Story, Com. on Bail., sect. 35, 2d edition, 'that upon a promise by a bailee, without reward to keep or carry safely, he is not responsible for injuries or losses occasioned by the acts of wrong-doers, and a fortiori, that he is not responsible for a theft not caused by his own neglect.' In the same section, Judge Story remarks, 'Mr. Justice Powys, and Mr. Justice Gould, seem to have agreed in opinion with Lord Holt.' By referring to the opinion of the judges in his case, the same doctrine will be found. Lord Holt says, (2 Ld. Raym., 915,) 'Nay, suppose the bailee undertakes safely and securely to keep the goods, in express words, yet even that won't charge him with all sorts of neglect. For if such a promise were put into writing, it would not charge so far even then. * * * And if a promise will not charge a man against wrong-doers, when put in writing, it is hard it should do it more so when spoken. Doct. and Stud., 130, is in point, that though a bailee do promise to redeliver goods safely, yet if he have nothing for the keeping of them, he will not be answerable for the acts of a wrong-doer. So that there is neither sufficient reason or authority to support the opinion in Southcote's case; if the bailee be guilty of gross negligence, he will be chargeable, but not for any ordinary neglect.' See 2 Ld. Raym., 914 and 915; Lord Holt's comment on Southcote's case. In the same case, Gould, J., agreeing with Lord Holt, says, (2 Ld. Raym., p. 909,) 'So if goods are deposited with a friend, and are stolen from him, no action will lie. * * * But if a man undertakes expressly to do such a fact, safely and securely, if the thing comes to any damage by his miscarriage, and action will lie against him.' And again, (p. 910,) 'But when a man undertakes especially to do such a thing, it is not hard to charge him for his neglect, because he had the goods committed to his custody upon those terms.' It is apparent by the reasoning of these judges, that they intended to place the liability in the case of a special contract to keep safely, upon the neglect or miscarriage of the depositary, and that he would not be liable for the acts of wrongdoers, without his default; and this was the opinion of Lord Holt and all the other judges, except Powell, J. See Story Bail., § 35.