Clark v. The Mayor, Aldermen, and Common Council of the City of Washington

ERROR to the Circuit Court for the District of Columbia.

This was an action of assumpsit, brought by the plaintiff in error, to recover of the defendants the amount of a prize drawn in a lottery called 'the fifth class of the National Lottery.' A verdict was found for the plaintiff in the Court below, subject to the opinion of the Court, on a case agreed, on which judgment was rendered for the defendants, and the cause was brought by writ of error to this Court.

By the constitution of the United States, Congress has power to exercise exclusive legislation in all cases whatsoever over the district, which being ceded by particular States, may become the seat of the government of the Union. The District of Columbia having been ceded for that purpose, Congress passed an act, creating a municipal corporation for the city of Washington; and by the act of the 4th May, 1812, for amending the charter, gave the corporation 'full power and authority to authorize the drawing of lotteries for effecting any important improvement in the city, which the ordinary funds or revenue thereof will not accomplish; provided, that the amount to be raised in each year shall not exceed the sum of 10,000 dollars; and provided also, that the object for which the money is intended to be raised, shall be first submitted to the President of the United States, and shall be approved by him.' For the purpose of carrying this power into execution, ten successive resolutions were passed by the corporation, the first of which was approved by the President of the United States on the 23d of November, 1812, and the last on the 21st of May, 1821, each of them for raising 10,000 dollars by lottery, for the several objects of endowing two public school houses, on the Lancasterian system; of building a work house and penitentiary, and a town house or city hall. On the 24th of July, 1815, the corporation passed an ordinance for carrying into effect the three first of the above resolutions, and appointed certain managers by name, viz. John Davidson, Thomas H. Gillis, Andrew Way, Jr. Moses Young, William Brent, Daniel Rapine, and Samuel N. Smallwood, whose duty it was made to agree on and propose a scheme or schemes of a lottery or lotteries, to raise the sum of 30,000 dollars, (clear of all expenses,) and to sell and dispose of the tickets therein to the best advantage, with the least possible delay, and diligently to attend the drawing of the said lottery or lotteries, which should be in the city of Washington; and within 60 days after the drawings of the same, respectively, (the time of each drawing not to exceed two years,) to pay and satisfy the fortunate adventurers for prizes; and, within 70 days, to pay over the balance, after deducting all necessary expenses, into the city treasury; and giving to said managers full power and authority to appoint all necessary agents, clerks, and servants, to do and perform all such acts and things as might be necessary to carry into effect the provisions of the ordinance. Another ordinance was passed on the 17th of November, 1818, for the purpose of carrying into effect the 4th, 5th, 6th, and 7th, of the aforesaid resolutions, by which (inter alia) the mayor was authorized to appoint seven citizens to act as managers for the purpose aforesaid, whose duty was declared to be to agree on a scheme of a lottery to raise the sum of 40,000 dollars, (clear of expenses,) and to sell the said lottery, or dispose of the tickets therein to the best advantage, with the least possible delay, and diligently to attend the drawing of the said lottery, which should be in the city of Washington: Provided, however, that if the said managers, or a majority of them, should sell the said lottery, the individual or individuals purchasing the same, should have the power of making a scheme for the aforesaid lottery, and within 60 days after the drawing, (the time of drawing not to exceed one year,) to pay and satisfy the fortunate adventurers for prizes; and within 70 days, to pay over the balance, after deducting all necessary expenses, into the city treasury, with the like power and authority to the managers, as in the former act, to appoint all necessary agents, clerks, and servants, &c. The mayor appointed, under the authority of the last mentioned act, seven citizens to act as managers for the purposes aforesaid, the same as those appointed by name in the former act, except that, in the last, Roger C. Weightman takes the place of Samuel N. Smallwood.

On the 25th of October, 1819, another ordinance was passed, by which the managers appointed under the ordinance of 1815, were empowered to sell and dispose of the lotteries to which that ordinance refers, or so much thereof as yet remains to be drawn, in such classes, and on such terms and conditions, as should appear to them right and expedient.

In pursuance of the ordinances of 1815 and 1819, the managers sold to David Gillespie, of New-York, a lottery called the 'Fifth Class of the Grand National Lottery,' for the sum of 10,000 dollars, to be paid before the commencement of the drawing thereof; and the following articles of agreement were entered into for that purpose.

'Memorandum of an agreement, made and entered into this 4th day of May, 1821, between Roger C. Weightman, John Davidson, Thomas H. Gillis, Andrew Way, jun., Moses Young, William Brent, and Daniel Rapine, as managers of the lotteries authorized by an act of the Board of Aldermen and Board of Common Council of the city of Washington, for the purposes therein mentioned, approved July 24, 1815, of the one part, and David Gillespie, of the city of New-York, in the State of New-York, of the other part: Whereas, by an act of the Board of Aldermen and Board of Common Council of the said city of Washington, approved October 25, 1819, supplementary to the act aforesaid, the said managers are authorized and empowered to sell and dispose of the said lotteries, in such classes, and on such terms and conditions, as shall appear to them right and expedient, and according to the true intent and meaning of the act aforesaid; and that the said managers, for the purpose of raising the sum of 10,000 dollars, in conformity with the provisions of the said first mentioned act, and in pursuance of the power and authority in them vested by the said supplementary act, have agreed to sell and dispose of, to the said David Gillespie, a lottery, denominated the Fifth Class of the Grand National Lottery, to be drawn according to the scheme hereunto annexed; and the said David Gillespie, in consideration thereof, hereby agrees to pay to the said managers the sum of 10,000 dollars, before the commencement of the drawing the said lottery, or class, at his own proper cost, charge and expense; to pay and defray all, and all manner of costs, charges, and expenses of the said lottery, or class, excepting the expense of drawing the same, and to draw the same in the city of Washington, in the presence of the said managers, and to finish and conclude the said drawing within two years from the date hereof, and to pay all the prizes within sixty days from the completion of the said drawing. It is further understood and agreed, by and between the said parties, that the said David Gillespie is to provide, at his own cost and expense, two competent clerks, to assist in the drawing of the said lottery, or class; and to execute and deliver, before the commencement of the drawing of the said lottery, or class, and within thirty days from the date hereof, to the said managers, a bond, with such security as may be approved by them, in the penal sum of 35,000 dollars, conditioned for the true, fair, and faithful drawing of the said lottery or class, and according to the said scheme; for the punctual payment of all prizes, and for conducting the said lottery or class fairly and honestly, and according to this agreement, and the true intent and meaning of the said acts of the said Board of Aldermen and Board of Common Council.'

The bond with security, as required by the above agreement, was given by Gillespie on the 28th of May, 1821.

On the 22d of the same month, an ordinance of the corporation was passed, authorizing the managers to appoint a president, whose duty it should be, in addition to the duties imposed by the ordinances of 1815 and 1819, to sign all contracts with the concurrence of a majority of the managers, and to sign all the lottery tickets, in every scheme or schemes sold by them. The 2d section of the ordinance allowed each of the managers of the city lotteries 3 dollars each day he had been, or should be employed; and the 7th section enacts that this compensation, 'except for the class now contracted for,' should be provided for and paid out of the proceeds of lotteries thereafter contracted for.

Under this authority, Thomas H. Gillis was appointed president, who signed the following ticket, No. 2929, on which the suit was brought, and which was endorsed, 'Undrawn 29th day over. D. Gillespie, per J. James.' The ticket was purchased by the plaintiff, from an agent of Gillespie, at Richmond, Virginia, and drew the prize of 100,000 dollars, in the fifth class of the lottery.

The drawing of the lottery was advertised in two newspapers printed in the city of Washington; in the National Intelligencer from the 18th of May, 1821, and in the Washington City Gazette from the 17th of July, 1821, until the completion of the lottery. These advertisements exhibited the scheme agreed upon between the managers and Gillespie, and annexed to their contract, gave notice of the time when the drawing would take place, of the number of days to be employed in the drawings, and that they would be completed as soon as possible, under the superintendance of the managers, whose names were annexed. To each of these advertisements was appended an advertisement signed by Gillespie as 'agent for the managers,' for the sale of tickets at his 'Fortunate office, Pennsylvania Avenue, Washington City.' The lottery was drawn in pursuance of the advertisements, and the managers superintended the drawing. In its progress a postponement took place; and an advertisement appeared, purporting to be signed by three of the managers, giving notice of the postponement, and its cause. Another advertisement soon afterwards followed, purporting to be signed by the President, by order of the board, giving notice when the drawing would recommence.

As soon as the scheme was agreed on, all the tickets, amounting to 50,000 in number, were delivered by the managers to Gillespie, some of them signed, and others unsigned, by the President, the latter of which it was necessary to take to him to be signed before they could be sold. Some time after the drawing commenced, the president refused to sign tickets unless an equivalent in prize tickets, either paid or taken in by Gillespie, or drawn on hand, or unless the notes of individuals which Gillespie had taken, payable to himself, for tickets sold, were deposited with them. When Gillespie's clerk and agent, Webb, presented tickets to be signed, he was obliged, at the same time, to deposit such prize tickets or promissory notes; and, on some occasions, when tickets were called for, and wanted, the managers refused to sign the same for want of such equivalent. The amount of the prize tickets so deposited with the managers was about 141,779 dollars. The managers, on such occasions, objected to trusting Gillespie with the disposal of the tickets much beyond the penalty of his bond, and Webb, who was a witness in the cause, understood, from the conversations and transactions between the parties at the time, that this precaution arose from doubts which had been circulated respecting Gillespie's solvency. Jan. 26th.

This cause was argued by the Attorney General and Mr. Webster, for the plaintiff, and by Mr. Jones, for the defendants.

On the part of the plaintiff, it was insisted, that the power of authorizing the drawing of lotteries, was a franchise, which the city corporation could not sell so as to avoid their liability for the abuse of the trust and confidence reposed in them by the legislature. It was admitted, that, in general, municipal corporations are not liable to be sued on contracts made by their agents. The suit must be brought against the agents. But that proceeds on the grounds that these quasi corporations have no funds; but where a grant is made, conferring a special franchise, and imposing special duties, there is the same responsibility in them as in any incorporated banking or insurance company. Here the contract was with the managers, as the agents of the corporation, acting within the scope of their authority. Where special duties are imposed upon corporations, which can only be performed through the instrumentality of their agents, the law will raise an implied assumpsit under the same circumstances as in dealings with private individuals. It is enought to show a ratification of the acts of the agent, by receiving the benefit of the act, or otherwise. In short, they are responsible, under these circumstances, for their promises, whether express or implied, in writing or by parol. And, it was contended, that the fact of their contract

15 ''Johns. Rep.'' 1. 7 Cranch, 299. 2 Taunt. 595. 12 Ves. 352.

''Mass. Rep.'' 372. 15 ''Johns. Rep.'' 1. 10 ''Mass. Rep.'' 397. 15 ''Mass. Rep.'' 125. Fowle v. Corporation of Alexandria, 11 ''Wheat. Rep.'' 320. 2 Taunt. 595. 15 East's Rep. 403. 3 P. Wms. 423. Cowp. 86. 4 Taunt. 576. in note. 2 Vern. 146. Paley, Ag. 143-145. 3 ''Stark. Ev.'' 1621. being cloathed with the forms of a legislative or political act of the corporation, or the authority being conterred on their agents by such an act, could make no difference in respect to their liability. But as the principal grounds of argument on the part of the plaintiff are fully stated in the opinion of the Court, it has been deemed superflucus to enlarge upon them.

On the part of the defendants, it was argued, that the documentary evidence given by the plaintiff was inadmissible, and incompetent to charge the defendants in the present action. 1st. Because, if the papers given in evidence imported any contract chargeable on the corporation through their supposed agents, the managers, or through their supposed agent Gillespie, no foundation was laid for their admission by any preliminary evidence to authenticate them as the acts either of the managers or of Gillespie, far less of the corporation; but the papers (all that are any wise essential, being taken from newspapers, or other printed papers) were left to their own internal and unvouched evidence of their authenticity, as the acts of the persons whom they purport to implicate. 2d. Because, if authenticated as the acts of Gillespie, there is nothing to connect him with the managers in the relation of principal and agent; but that relation is assumed from the mere acts of the supposed agent himself. 3d. Because, whatever privity may be inferred, as between those persons, there is nothing to connect the corporation with the supposed managers, in the relation of principal and agent. The authority of the mayor to appoint seven managers of a certain lottery described in the law which gives him that authority, is shown; seven persons are afterwards found professing to act as managers of a lottery, in the terms and description of which no reference whatever is made to any lottery authorized by the corporation; and from these premises alone are inferred, (1.) the actual appointment by the mayor of these same managers; and (2.) the identity of the lottery contemplated by the corporation law, and that promulgated in the scheme of the managers, and their alleged agent, Gillespie. 4th. Because, setting aside all the preceding objections, the alleged agency of the managers, or of any agents, clerks, or servants, of their appointment, purports not, from the terms of their authority as shown by the plaintiff himself, to have extended to the making of contracts for and in behalf of the corporation, or in any manner to bind the corporation as the guaranty or insurer of the due payment of prizes; far less of the solvency or punctuality of any lottery contractor or undertaker; but such agency is plainly and necessarily excluded by the nature of the official relation between them, and by the terms of the only authority for predicating the existence of any kind of agency. The authority of the managers is clearly limited to the performance of certain public duties, and to the exercise of certain ministerial functions prescribed by law to the officers or ministers of the law; the true and only relation between them and the corporation, is that which subsists between the legislative or paramount authority that enacts the law, and the ministerial functionaries who execute it; not that of principal and agent in a commercial sense. 5th. The same objection lies to the nature and extent of the alleged agency of Gillespie for the managers; which must be presumed to have been limited to the official and prescribed duties of the latter, as ministerial functionaries of the law.

No privity of contract, as between the plaintiff and the corporation, could be inferred from the evidence; but such privity was clearly and positively excluded: 1st. By the nature and objects of the power communicated to the corporation by the amended charter; a power to authorize, not to exhibit and draw lotteries, at the risk and charge of their constituents; and for important objects of public improvement, to which the ordinary revenues were inadequate; not as a source of revenue, or fiscal aggrandizement, far less as a gulf to swallow up all the subsisting sources of revenue in lottery speculations. 2d. By the terms, intent, and spirit of all the corporate acts in execution of the power; all of which strictly conform to the scope and policy of the paramount law, by which the authority was vested. 3d. By the fact that Gillespie had purchased the privilege, in integro, to exhibit and draw the lottery, at his own risk and charge, and for his own exclusive emolument; for which he had paid a gross sum, neither to be enlarged or diminished by, nor in any manner dependent upon the event of the lottery. The entire scheme was his, and at his disposal; subject merely to a superintending vigilance and control of municipal police, intended to protect the public from frauds and impositions in the conduct of the lottery; but, by no means, to guaranty the payment of prizes, or, in other words, the solvency and punctuality of Gillespie. 4th. By another fact, that the plaintiff purchased his ticket of one James, the keeper of a miscellaneous lottery office in Richmond, for Gillespie, and having no sort of connexion with the corporation or its managers, nor with any lottery authorized by the one, and conducted by the other, but as a general vender of lottery tickets, who might, in the course of his trade, occasionally buy or sell tickets in this as in other lotteries; and so the contract was solely between the plaintiff and James, who sold the ticket and received the price, not as the agent of the corporation or its managers, but as the agent of Gillespie individually. The lottery ticket, on which the plaintiff founds his claim, imports, in terminis, no contract whatever between the corporation and the possessor; nor any assurance or invitation to the ticket-buying public to trust to the corporate funds or credit for the payment of 'such prize as may be drawn to its number;' nor, indeed, the remotest allusion to any interest or concern of the corporation in the scheme. If any such contract, invitation, or allusion, be involved in the terms, it must be completely latent, and only to be developed by extrinsic facts and circumstances. All the facts and circumstances adduced to explain the relations and bearings of those terms, concur in fixing upon Gillespie the primary obligation to pay the prize, in virtue of his contract, express or implied, as the exhibiter and proprietor of the lottery, and vender of the ticket. Then, if there be any contract, express or implied, between the corporation, or the managers and vendee, to see to the payment of the prize, it must be as collateral guaranty for Gillespie. But no fact is deducible, from the evidence, which goes to fix either upon the managers, or, through their agency, upon the corporation, the relative duties and obligation of such collateral guaranty.

As to the managers; if they be under any obligation to see to the payment of prizes, it must be either because it was one of the official duties prescribed to them by the terms of their appointment under the law from which they derive their authority, or because they voluntarily assumed it in addition to the duties devolved on them virtute officii.

Then, 1st. No such duty is imposed upon them by the nature of their office and functions; 2d. If it be, it is not in the nature of an absolute obligation or duty, that makes them liable, in all events, for any failure to fulfil its end and aim, but of a relative duty, which, by the express terms of the law that creates it, exacts of them nothing but 'that they will diligently and impartially exercise and perform the duties and authority vested in them.' 3d. No breach of this duty, arising either from negligence or design, is imputed to them; but, on the contrary, by the plaintiff's own showing, they exerted great care, zeal, and diligence, (if, indeed, they did not take upon themselves gratuitous labour and trouble,) in order to secure the rights and interests of adventurers in the lottery; all that is imputed to them is, the mere failure to accomplish the end and aim of their exertions. 4th. But if the grossest breach of this duty, in act and intent, were imputed to them, they would be amenable for their official misdemeanour to the corporation only; or, if at all responsible to third persons, it could not be as collateral guaranties of Gillespie's contract, nor for any other duty ex contractu, but ex delicto, for consequential damage, unless in possession of the fund out of which the prizes should have been paid; and then they might have been liable, jointly or severally, according to the nature of their possession, to an action for money had and received for the use of the persons entitled to prizes. But this cannot be pretended in the present case. 5th. No voluntary assumption of any obligation upon themselves, beyond the limits of their prescribed authority and duties, can be presumed; and any express contract, beyond those limits, is not pretended.

As to the corporation; if there be any contract in the case, it must impose an obligation, either primary and absolute, to pay the prize, or secondary and contingent, as collateral guaranty for Gillespie. The plaintiff's declaration lays a contract of the first description only, and ties him down to the proof of such a contract, made through the agency of these managers, and in no other form; while his actual proof, and every circumstance in the case, exclude and repudiate it, by fixing upon Gillespie the primary and absolute obligation; and, indeed, equally exclude and repudiate any contract of the second description. If the managers held out any assurance or invitation to the ticket-buying public, or otherwise contracted any obligation, absolute or contingent, to see to the payment of prizes, it must have been either virtute officii, as one of the specific duties prescribed to them by the law of their appointment, or as one gratuitously undertaken by them, and not inherent to the nature of their office and functions; either way, it was an obligation contracted, proprio jure, and attaching responsibility to them personally and individually.

Then, 1st. For the due performance of the prescribed duties, inherent to the nature of their office, they are directly responsible, on their bond, to the corporation, from which it is impossible to infer such an inversion in the order of responsibility, as that the managers should have made that very corporation, to which they are themselves amenable, liable for their own transgressions of such duties. 2dly. If (as is quite clear from the plaintiff's own showing) no action lay against the managers, either because the seeing to the payment of prizes was no part of their prescribed duties, or because they 'diligently and impartially exercised and performed the duties and authority vested in them,' it follows, necessarily, that no action lies against the corporation. Though the converse of the proposition be utterly untenable, since they may have contracted an obligation either inherent to the nature of their office, or voluntarily superinduced, the violation of which was either an official misdemeanour, or a breach of contract; for neither of which could the corporation have been held anywise responsible. 3dly. If the corporation were chargeable, under any circumstances, or in any form of action, for the misconduct of the managers, in the course of their official or ministerial duties, it could only be ex delicto, or quasi ex contractu, in an action for consequential daurages, and not in an action, like the present, purely ex contractuly. 4thly. But no action could be conceived, to make the corporation responsible to third persons for a wrong done to itself; for a transgression by its own officers against its own authority, in the breach of a positive duty to itself, voluntarily prescribed, in the exercise of its own legislative discretion, to its own officers, and enforced by adequate sanctions of its own institution. 5thly. As an obligation not strictly imposed upon the managers, virtute officii, it is impossible to contend that the corporation can be responsible, in this or any other conceivable form of action, for that or any other act of its officers, without the prescribed limits and sphere of their duties and authority. Feb. 7th.

Mr. Chief Justice MARSHALL delivered the opinion of the Court.