U.S. Supreme Court United States v. Prescott, 44 U.S. 3 How. 578 578 (1845)
United States v. Prescott
44 U.S. (3 How.) 578
ON CERTIFICATE OF DIVISION IN OPINION BETWEEN THE JUDGES OF THE
CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF ILLINOIS
The felonious taking and carrying away the public moneys in the custody of a receiver of public moneys, without any fault or negligence on his part, does not discharge him and his sureties, and cannot be set up as a defense to an action on his official bond.
On 4 March, 1839, Prescott was appointed Receiver of Public Moneys at Chicago, in Illinois.
On 1 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, safekeeping, 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 15 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 safekeeping of the same, and this they are ready to verify, wherefore they pray judgment,"
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 defense to an action on his official bond?
Upon this question the cause came up.
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 defense 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 the 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 defense 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 faithfully 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"
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 defense 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 v. 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 said,
"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 practiced 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 defense. 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 defense to the bond can be made.