District of Columbia v. Cornell/Opinion of the Court

When the maker of a negotiable instrument lawfully cancels it before maturity, his liability upon it is extinguished, and cannot be revived without his consent. It is immaterial whether the cancellation is by destroying the instrument, or by writing or stamping words or lines in ink upon its face, provided the instrument, in the condition in which he puts it, unequivocally shows that it has been canceled. Scholey v. Ramsbottom, 2 Camp. 485; Burbridge v. Manners, 3 Camp. 193; Ingham v. Primrose, 7 C. B. (N. S.) 82, 86; Yglesias v. Bank, 3 C. P. Div. 60. In Burbridge v. Manners, Lord ELLENBOROUGH said: 'It is the duty of bankers to make some memorandum on bill and notes which have been paid;' clearly indicating his opinion that the making of such a memorandum upon the securities would be sufficient to protect the bankers from being afterwards held liable to any holder thereof. The decision in Ingham v. Primrose, holding the acceptor of a bill of exchange, who had torn it in halves and thrown the pieces into the street, liable to one who afterwards took it, in good faith and for value, from one who had picked it up and pasted the pieces together, proceeded upon the ground that the tearing of the bill into two pieces, as manifest on its face, 'was at least as consistent with its having been divided into two for the purpose of safer transmission by the post as with its having been torn for the purpose of annulling it.' And the decision can be maintained, if at all, on that ground only. Baxendale v. Bennett, L. R. 3 Q. B. Div. 525, 532. In Baxendale v. Bennett, one who had given his blank acceptance on stamped paper to another, and authorized him to fill in his own name as drawer, and received it back from him unfilled, and put it in the unlocked drawer of his desk, from which it was afterwards stolen, and filled up, without his authority, by inserting the name of another person as drawer, was held not liable to an indorsee for value. In State v. Wells, 15 Cal. 336, cited by the claimant, treasury warrants of the state of California had been once lawfully issued, presented, and paid, but never canceled in any way beforre they were stolen and again put in circulation; and the suit was not upon the warrants, but was brought by the state against bona fide holders who had presented them a second time, and to revover back the value of bonds which the state had delivered to them in exchange for the warrants, and which they, in good faith, had since parted with. Much reliance was placed by the claimant upon the case of Cooke v. U.S., 91 U.S. 389, in which the United States were held by a majority of this court to be liable to a bona fide holder of interest-bearing treasury notes, printed by the treasury department from genuine plates, and perfect in form, complete and ready for issue, and never issued by any authorized officer, but fraudulently or surreptitiously put in circulation. In the opinion, much stress was laid upon the considerations that the notes were perfect and complete as soon as printed, and did not require the signature of any officer, but, as soon as they had received the impression of all the plates and dies necessary to perfect their form, were ready for circulation and use; that in this respect they did not differ from coins of the mint when fully stamped and prepared for issue; and that these notes were intended to circulate and take the place of money, to some extent, for commercial purposes; were made a legal tender for their face value, exclusive of interest, as between the government and its creditors, and passed readily fro hand to hand as or in lieu of money. 91 U.S. 404. We are not prepared to extend the scope of that decision, and the facts of this case, as found by the court of claims, are quite different.

The certificates in suit, after they had been redeemed according to law, were canceled by the proper officers, by distinctly stamping in ink across the face words stating that fact, and in that condition were made up in bundles, and put away on a shelf, whence they were afterwards stolen by a clerk, who had no duty or authority connected with their redemption or care, and who afterwards fraudulently effaced the marks of cancellation by the use of detersive soap, and by pasting coupons over them, and then put the certificates in circulation. The provision of the act of congress of March 3, 1875, c. 162, § 16, by which officers of the District of Columbia are required to destroy by burning all redeemed certificates, is in terms and effect merely directory, and does not make the District liable on such certificates fraudulently put in circulation, after they have been otherwise unmistakably canceled. 18 St. 505. These certificates having been lawfully extinguished by stamping across their face marks of cancellation as clear and permanent as the original signatures, the liability of the district upon them as negotiable paper could not be revived by its omission to take additional precautions against their being stolen and fraudulently restored to their original condition by such means as ingenious wickedness might devise. Moreover, these certificates were in no sense money, or the equivalent of money. Though negotiable instruments, they belonged to a peculiar class of such instruments, being made by a municipal corporation, and having no validity unless issued for a purpose authorized by law, and as to which this court has repeatedly laid down and acted on the following rule: 'Vouchers for money due, certificates of indebtedness for services rendered, or for property furnished, for the uses of the city, orders or drafts drawn by one city officer upon another, or any other device of the kind, used for liquidating the amounts legitimately due to public creditors, are of course necessary instruments for carrying on the machinery of municipal administration, and for anticipating the collection of taxes. But to invest such documents with the character and incidents of commercial paper, so as to render them in the hands of bona fide holders absolute obligations to pay, however irregularly of fraudulently issued, is an abuse of their true character and purpose.' Mayor v. Ray, 19 Wall. 468, 477; Wall v. Monroe Co., 103 U.S. 74, 78; Claiborne Co. v. Brooks, 111 U.S. 400, 408, 4 Sup. Ct. Rep. 489. Considering the nature of these certificates, the method in which they had been canceled, and the means by which they were afterwards put in circulation, we are of opinion that there is no ground for holding the District of Columbia liable to this claimant. Judgment reversed.