United States v. Prescott/Opinion of the Court
It is true that Powell, J., in the same case, says, (p. 910,) 'The party's special assumpsit and undertaking obliges him so to do the thing, that the bailor come to no damage by his neglect, and the bailee in this case shall answer accidents, as if the goods are stolen, but not such as happen by the act of God;' but from the reference made to the case of the ferryman, immediately after, he was probably alluding to the case of the common carrier. But, at any rate, the reason assigned by him for the liability of the bailee in case of accidents, as in case the goods are stolen, viz., that the bailee has a remedy against the wrong-doers, as an appeal of robbery, or action against the hundred, is unsatisfactory. It might furnish a reason in England, where a speedy and certain remedy is given for the man robbed, by a special action on the case against the hundred for damages equivalent to his loss unless they make hue and cry after the felon, and take him, which excuses them. 3 Bl. Com., 160. But no such remedy exists here. And it is to be observed, that the reason given by Powell, J., was probably altogether wrong. Sir Wm. Jones expresses his disapprobation as follows, (Jones Bail., 44, orig. ed.:) 'Mr. Justice Powell, speaking of Southcote's case, which he denies to be law, admits that 'if a mandoes undertake specially to keep goods safely, that is a warranty, and will oblige the bailee to keep them safely against perils, where he has a remedy over, but not against those where he has no remedy over.' One is unwilling to suppose that this learned judge had not read Lord Coke's report with attention; yet the case which he puts is precisely that which he opposes, for Bennet did undertake to keep the goods safely; and with submission, the degree of care demanded, not the remedy over, is the true measure of the obligation, for the bailee might have his appeal of robbery. Yet he is not bound to keep the goods against robbers without a most express agreement.' Jones Bail., 44.
In 2 Bl. Com., 452, the same construction is given to the words 'keep safely and securely,' viz., 'he is bound to take the same care of them as a prudent man would of his own,' i. e. reasonable care. And the case of Coggs v. Bernard, 2 Ld. Raym., 909, is cited, and the law is spoken of as settled.
Finnucane v. Small, 1 Esp., 315, was a case in which the depositary received pay, and he was held, by the opinion of Lord Kenyon, to be liable only for ordinary neglect. In this case the property had been stolen from the depositary.
The American authorities are to the same effect.
Foster v. The Essex Bank, 17 Mass., 479, was a case of deposit of gold in a bank, under a memo. signed by the cashier, that it was 'left for safe keeping;' the court, (Parker, J.,) delivered an elaborate opinion, and reasons on the nature of the undertaking to keep safely in a very full and satisfactory manner, (see pages 499, 500, 501 and 502,) showing that the contract to keep safely, in the case of a simple depositary, extends his liability to ordinary neglect, and in the case of a depositary for hire, the principle goes no farther than liability for ordinary neglect; 'so that if he shows that he used due care, and nevertheless the goods were stolen, he would be excused.' 17 Mass., 502.
1 Dane's Abr., chap. 17, art. 11, § 3, lays down the same doctrine.
Judge Story, (Story Bail., §§ 70, 71, 2d edition,) evidently leans to the same doctrine, where he says that 'there is much to warrant the suggestion that in a case where the bailment is to keep safely, the depositary would not be liable for a loss by theft, unless it should arise from his own negligence, and want of due diligence and care.'
Chancellor Kent (2 Kent Com., 563, note d, 3d edition) alludes to the decision in 17 Mass., 479, with approbation.
The great weight of authority, then, both in England and in this country, supports the doctrine, that under the contract to keep safely, the depositary would not be liable for a theft committed without his default, and that in such case he is only liable for ordinary diligence.
The case relied on, chiefly, on the other side, is a dictum of Lord Chief Justice Willes, (Kettle v. Bromsall, Willes, 118,) where he speaks of the liability of the depositary to keep safely, in case he is robbed of the goods. But it is to be observed that this is said as being according to Southcote's case, the case of Coggs v. Bernard. Willes, 121. It is hardly conceivable how the judge, who delivered the opinion in Kettle v. Bromsall, could have fallen into such error, for the first authority cited by him, (Southcote's case,) had been expressly overruled in the last authority cited, (Coggs v. Bernard;) and in the last case, Lord Holt and the majority of the court, dissenting from Southcote's case, lay down a contrary rule, (as we have shown above,) viz.: that the depositary would not be liable for the acts of wrong-doers, without his default.
Chancellor Kent savs, in the note above referred to, that the doctrine in Kettle v. Bromsall, Willes, 118, and in Southcote's case, 'is held to be exploded in the case of Foster v. Essex Bank.'
A distinction has sometimes been taken between a loss by theft, and a loss by robbery, from the last being considered irresistible, and the former not so. But see, as to this, Story Bail, § 39, 2d edition, where the distinction is refuted; and it is held that 'no degree of vigilance will always secure a party from losses by theft,' &c., &c.
When the contract is a special acceptance, the taking a reward can make no difference in the construction of it.
It is to be observed that where there is a special contract to 'keep safely,' the contract is expounded according to the meaning of the terms themselves, without inquiring whether a reward was paid or not. The acceptance is a sufficient consideration for the promise to keep safely, as was determined by the case in point in Coggs v. Bernard, (see first mar. note;) and in that case the court decided that the bailee, to keep or carry safely, is liable for ordinary negligence, without inquiring whether he received a reward or not. None was averred in the declaration, and there might or might not have been one.
In Hargrave and Butler's note to 2 Co. Litt., n. 78, it is said, in reference to the decision in the case of Coggs v. Bernard, that 'it was wholly grounded on a special undertaking to carry safely, without stating either that the defendant was to have hire or was a common carrier.' In giving an exposition, therefore, to the contract 'to keep safely,' it makes no difference whether a reward was paid or not. It is the special acceptance that makes the party bound to ordinary diligence and liable for ordinary neglect.
Again, In the contract 'to keep safely,' it is the special acceptance (without inquiring into a reward or not) that makes the party bound to ordinary diligence; and in the ordinary contract of a depositary for a reward, it is the reward that puts the party to ordinary diligence. Story Bail., § 442; Jones Bail., 49, 91, 98, 99, original ed. The liability, therefore, of the special depositary to keep safely, and of the depositary for a reward, in the same; and if the depositary for a reward accepts specially, the receiving the reward cannot put him to greater diligence than what the law determines that fact shall put a depositary to, which is ordinary diligence, (Story Bail., § 442,) and nothing more.
The cases and authorities that expound the meaning of the words 'keep safely,' speak of them generally in reference to the contract of depositum, or naked bailment without reward; (Story Bail., § 33, the opinion of the judges in Coggs v. Bernard, in relation to these words altering the responsibility in case of naked bailment; Southcote's case, 2 Bl. Com., 452; 17 Mass., 479;) and as enlarging the responsibility from slight diligence, in such case, to ordinary diligence. If the cases and authorities are silent as to the effect of these words in the case of other bailees, such as the depositary for hire, common carrier, &c., it is because, in these cases, their ordinary legal liability is the same, or more extensive, than the words 'keep safely' import, requiring ordinary diligence in some, and extraordinary diligence in others. No one would contend that these words enlarged the responsibility of a common carrier, who is liable for more than what they would import, viz., for all losses except 'by the act of God, or the king's enemies;' neither should it be contended that they enlarge the responsibility of the bailee for hire, whose usual legal responsibility is the same as what the special acceptance in the case of simple deposit has been decided to be, viz., ordinary diligence. These words only make a difference in the case of depositum, or naked bailment, because the usual liability in that case, for gross neglect only, is inconsistent with safe keeping. And this agrees with Sir William Jones, (p. 61, original ed.) where he says, in remarking on the opinion of Powell, J., in Coggs v. Bernard, 'Now the reason assigned by the learned judge for the cases in the register and year-books, which were the same with Coggs v. Bernard, viz., the party's special assumpsit, obliged him so to do the thing that the bailor come to no damage by his neglect, seems to intimate that the omission of the words salvo et secur e would have made a difference in this case, as in that of a deposit, but I humbly contend that those words are implied by the nature of a contract which lies in feasance,' &c. In the present case the duty of the receiver, for which he is paid, lies in feasance, for he is to receive, keep, transfer, and pay out, and do all other acts, as fiscal agent, which may be imposed on him by law, or the directions of the Treasury Department, (§ 6, act of 1840.)
By section 12, of the act of 4th July, 1840, government-agents are required to examine 'the money on hand and the manner of its being kept;' and by section 13, the register is required to examine and report, from time to time, the condition of the money on hand with the receiver; and by section 14, the officers may be allowed for fire-proof chests, vaults, &c., for safe-keeping, to be expressly authorized by the Secretary of the Treasury, whose directions, &c., 'are to be strictly followed.'
The law, then, vests the discretion of the safe-keeping, in a measure, in government agents, and in the Secretary of the Treasury, 'whose directions are to be strictly followed.' If, then, the Secretary of the Treasury has directed the money, deposited with the receiver, to be placed in a particular place, vault, &c., and it is stolen there; or, if the government agent, having examined 'the manner of its being kept,' is satisfied, and so reports, and still the money is stolen; the receiver, in either case, would not be liable, without his default; Story Bail., § 74, 2d ed.; 'if the depositor agree that the goods may be kept in a particular place, &c., he cannot object afterwards that the place is not a safe one.' And non constat but that, in the present case, the money had been directed to be kept in the particular place where it was stolen, nor but that the government agent had examined 'the manner of its being kept,' and reported it to be safe; in either of which cases the defendant, without his own default, would not be liable.
Finally, it may be said that government requires nothing unreasonable from its officers. If, as in the case of the Essex Bank, where $53,000 of gold was deposited, under a memo., for safe-keeping, and who might be considered in the light of a public depositary, and where considerations of public policy, in return for the extraordinary privileges conferred on the bank, were entitled to all their weight, the bank was held to ordinary neglect only, why should greater responsibility be thrown on a receiver of public money? Ch. J. Parker, in that case, 17 Mass., 501, says, 'and this certainly is the more reasonable doctrine, for the common understanding of a promise to keep safely, would be, that the party would use due diligence and care to prevent the loss or accident; and there is no breach of faith or trust, if, notwithstanding such care, the goods should be spoiled or purloined.' A contrary doctrine to this would be unreasonable. It would also be against public policy; for, if the receiver is to be held liable, when money is stolen from him without his default, having used due diligence and care in the safe-keeping, men of common prudence and responsibility would cease to become his sureties, since they would make themselves responsible, not merely for his prudence, good faith, and honesty, in keeping money, but sureties against the cunning, dishonesty, and villany, of all mankind.
Mr. Justice McLEAN delivered the opinion of the court.
This action was brought in the Circuit Court for the district of Illinois, on a bond given by Prescott, with the other defendants as his sureties, for his faithful performance of the duties of receiver of public moneys, at Chicago, in the state of Illinois. The defence pleaded was, that the sum not paid over by the defendant, Prescott, and for which the action was brought, had been feloniously stolen, taken, and carried away from his possession, by some person or persons unknown to him, and without any fault or negligence on his part; and he avers that he used ordinary care and diligence in keeping said money, and preventing it from being stolen.
To this plea, to plaintiffs filed a general demurrer; and on the argument of the demurrer, the opinions of the judges were opposed on the question, whether 'the felonious taking and carrying away the public moneys in the custody of a receiver of public moneys, without any fault or negligence in his part, discharged him and his sureties, and may be set up as a defence to an action on his official bond?' And this point is now before this court, it having been certified to us under the act of Congress.
On the part of the defendant it is contended that the defendant, Prescott, was a depositary for hire; and that 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; that the special contract does not enlarge his liability.
This is not a case of bailment, and consequently, the law of bailment does not apply to it. The liability of the defendant, Prescott, arises out of his official bond, and principles which are founded upon public policy. The conditions of the bond are, that the said Prescott has 'truly and fathfully executed and discharged, and shall truly and faithfully continue to execute and discharge, all the duties of said office,' (of receiver of public moneys at Chicago,) 'according to the laws of the United States; and moreover has well, truly, and faithfully, and shall well, truly, and faithfully, keep safely, without loaning or using, all the public moneys 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 would faithfully and promptly make, the same, as directed,' &c.
The condition of the bond has been broken, as the defendant, Prescott, failed to pay over the money received by him, when required to do so; and the question is, whether he shall be exonerated from the condition of his bond, on the ground that the money had been stolen from him?
The objection to this defense is, that it is not within the condition of the bond; and this would seem to be conclusive. The contract was entered into on his part, and there is no allegation of failure on the part of the government; how, then, can Prescott be discharged from his bond? He knew the extent of his obligation, when he entered into it, and he has realized the fruits of this obligation by the enjoyment of the office. Shall he be discharged from liability, contrary to his own express undertaking? There is no principle on which such a defence can be sustained. The obligation to keep safely the public money is absolute, without any condition, express or implied; and nothing but the payment of it, when required, can discharge the bond.
The case of Foster et al. v. The Essex Bank, 17 Mass., 479, was a mere naked bailment, and of course does not apply in principle to this case. The deposit in that case was for the accommodation of the depositor, and without any advantage to the bank, as the court say, 'which can tend to increase its liability. No control whatever of the chest, or of the gold contained in it, was left with the bank or its officers. It would have been a breach of trust to have opened the chest, or to inspect its contents.'
Public policy requires that every depositary of the public money should be held to a strict accountability. Not only that he should exercise the highest degree of vigilance, but that 'he should keep safely' the moneys which come to his hands. Any relaxation of this condition would open the door to frauds, which might be practised with impunity. A depositary would have nothing more to do than to lay his plans and arrange his proofs, so as to establish his loss, without laches on his part. Let such a principle be applied to our postmasters, collectors of the customs, receivers of public moneys, and others who receive more or less of the public funds, and what losses might not be anticipated by the public? No such principle has been recognized or admitted as a legal defence. And it is believed the instances are few, if indeed any can be found, where any relief has been given in such cases by the interposition of Congress.
As every depositary receives the office with a full knowledge of its responsibilities, he cannot, in case of loss, complain of hardship. He must stand by his bond, and meet the hazards which he voluntarily incurs.
The question certified to us is answered, that the defendant, Prescott, and his sureties, are not discharged from the bond, by a felonious stealing of the money, without any fault or negligence on the part of the depositary; and, consequently, that no such defence to the bond can be made.