United States v. Bank of the United States/Opinion of the Court

THIS case was brought up, by writ of error, from the Circuit Court of the United States for the Eastern District of Pennsylvania, and was a continuation of the same case, between the same parties, which was reported in 2 How., 711.

Being sent back to the Circuit Court, it came up for trial in November, 1844, when the jury, under the instructions of the court, found a verdict for the defendants below, viz. the bank.

At the trial, the following bill of exceptions was filed, which brought the case again to this court.

Bill of Exceptions.

Be it remembered, that at the sessions of April, A. D., 1838, came the United States of America into the Circuit Court of the United States for the Eastern District of Pennsylvania, and impleaded the President, Directors, and Company of the Bank of the United States, in a certain plea of trespass in the case, &c., in which the said plaintiffs declared (prout narr.) and the said defendants pleaded (prout pleas). And thereupon issue was joined between them.

And afterwards, to wit, at a session of said court, held at the city of Philadelphia, before the Honorable Archibald Randall, judge of the said court, on the day of November, A. D., 1844, the aforesaid issue between the said parties came to be tried by a jury of the said district, duly impanelled (prout jury), at which day came as well the plaintiff as the said defendant, by their respective attorneys; and the jurors aforesaid, impanelled to try the issues aforesaid, being also called, came, and were then and there in due manner chosen and sworn, or affirmed, to try the said issues; and, upon the trial, the counsel of the said plaintiffs stated their demand to be for $170,041.18, with interest,-the balance unpaid,-due to the plaintiffs as holders of 66,692 shares of the capital stock of defendants, of $3.50 per share, being the amount of a dividend of half-yearly profits declared by the defendants in the month of July, A. D., 1834. And to maintain the said issue on the part of the plaintiffs, proved that they were then the holders of said shares of stock, and gave in evidence a resolution of the directors of the said defendants made on the 7th July, 1834 (prout), and their advertisement in one of the daily newspapers of Philadelphia (prout), and the account of the said defendants in their books with the plaintiffs for the first half-year of 1833 (prout).

And the defendants, to maintain the said issue on their part, gave in evidence a bill of exchange, drawn and dated at the treasury department of the United States, Washington, 7th February, 1833, by the Secretary of the Treasury on the Minister and Secretary of State for the Department of Finance of the kingdom of France for 4,856,666 66/100 francs, payable at sight to the order of defendants' cashier (prout bill); and the several indorsements thereon, (prout); and a writing of the same date with the said bill, under the seal of the United States and hand of the President, dated at Washington (prout); and the presentment and refusal of payment and protest of said bill, at Paris, on the 22d of March, 1833 (prout); protest, and a notice thereof by defendants, through their cashier, to the said Secretary of the Treasury, in a letter of 26th April, 1833 (prout); and the return of said bill and protest to the said Secretary of the Treasury, in a letter from the said defendants' cashier, dated 13th May, 1833, with an account annexed; in which letter and account demand was made of the payment of the principal of the said bill, with costs and charges of protest and interest thereon, and damages on said principal, at fifteen per cent. (prout letter and account); and proved the then rate of exchange to have been as therein stated; and gave in evidence a statute of the State of Maryland (prout), passed in 1785, and an article of the commercial code of France (prout); and the correspondence (prout) between the Secretary of the Treasury and the defendants, concerning said bill, before and after the drawing thereof, and proved the allowance by the Secretary of the Treasury of a credit for, and payment thus made, of the principal of said bill; and further proved the presentment to the accounting officers of the treasury, and their rejection and disallowance of a claim on the part of the defendants, for a credit of the said fifteen per cent. thereon, and said cost and charges of protest (prout exemplification); and the said defendants claimed on the said trial a credit for and to set off defalk.: the same claims being, as they alleged, in amount equal to the claim of the plaintiffs.

And the said plaintiffs, to rebut the aforesaid claim of the said defendants to a set-off, relied upon and gave in evidence a convention between the United States of America and France, made the 4th day of July, A. D., 1831, and ratified the 2d day of February, A. D., 1832 (prout same), together with an act of Congress passed the 13th day of July, 1832 (prout), by the seventh section of which it was made the duty of the Secretary of the Treasury 'to cause the several instalments, with the interest payable thereon, payable to the United States, in virtue of the said convention, to be received from the French government and transferred to the United States in such a manner as he may deem best, and the net proceeds thereof to be paid into the treasury.' And also a letter of Edward Livingston, Department of State, dated Washington, 8th February, 1833, to Nathaniel Niles, Esq., Paris. (prout same.)

And the counsel for the said plaintiffs requested the learned judge to charge the jury,--

1. That the evidence in the cause does not show a contract between the government and the bank for the sale of a bill of exchange, but an undertaking on the part of the defendants, as the agents of the plaintiff, to transfer to the United States the first instalment due under the treaty with France, and that the bill was only one of the instruments for carrying the same into effect. And further, that the question of agency is for the jury to decide.

2. That the act of Maryland of 1785, under which the defendants claim damages, does not extend to the United States.

3. That the bill in question, being drawn by one government upon another, and upon a particular fund, is not a bill of exchange within the legal meaning of the terms, and is not embraced by the statute.

4. That the defendants, being indorsers of the bill, and not the holders or owners at the time of protest, are not entitled to the damages, since they have not paid them.

But the court refused to instruct the jury as requested by the plaintiffs' counsel, and charged them as follows, to wit:--

It is admitted, that if this was a suit between individuals, and the defendant was the actual owner of a bill of exchange drawn by the plaintiff on a foreign country, and protected for non-payment, he would be entitled to the damages now claimed by the bank; but it is contended, 1st, that the evidence in this cause does not show a sale of the bill of exchange to the bank, but an agency on the part of the bank to assist in procuring the transfer of the funds to the United States. The whole of the evidence on this subject is in writing, and therefore a matter of law, and, in my opinion, establishes a clear and unequivocal sale by the United States, and purchase and payment for the bill by the bank; and that in the endeavours to collect it there was no other agency than always exists between the owner and other parties to a bill of exchange. Again, it is said, that if this was a purchase of the bill by the bank, yet the defendants cannot set off this claim, because the act of Maryland of 1785 does not extend to bills drawn by the government of the United States. When the United States, by its authorized officer, become a party to negotiable paper, they have all the rights, and incur all the responsibility, of individuals who are parties to such instruments; there is no difference, except that the United States cannot be sued; and from the unavoidable use of commercial paper by the United States, they are as much interested as the community at large in maintaining this principle.

In the present case, the United States do not sue for a debt due to them as a government, but as stockholders or copartners for their proportion of the profits accruing on the use of their money, which they have invested in the stock of the corporation, and are to be treated in all respects like any ordinary stockholder, who would be bound to pay a debt due to the bank before he could sustain an action for his dividends.

The remaining objections are, that if the Maryland act of 1785 does embrace bills drawn by government, then this, being a bill drawn on a particular fund, is not a bill of exchange in the legal meaning of the term; and that if it is such a bill, the bank was not the holder or owner of it at the time of protest, and therefore is not entitled to the damages given by the statute.

These questions appear to me to have been determined by the Supreme Court of the United States in the present cause in favor of the defendants; whether they were rightly determined, it is not for us to inquire; that determination is binding on us, and until reviewed by themselves must be considered the law of the land. If I have mistaken their views on this, or erred in any other point of the cause, it will be corrected by a reexamination of the case in that court; but a construction of their opinion, given by the jury, is only capable of being re examined in this court, which may lead to a new trial and lengthened litigation, to the disadvantage of all parties, as it will undoubtedly be only finally determined in the court of the last resort. This being, then, my view of the law, in my opinion the defendants are entitled to the verdict.

And thereupon the counsel for the plaintiffs excepted.

The cause was argued by Mr. Clifford (the Attorney-General) and Mr. Nelson, for the United States, the plaintiffs in error, and by Mr. Sergeant, for the Bank.

Mr. Clifford assigned five causes of error, viz.:--

1st. That the bill upon which the damages in controversy are claimed by the defendants in error, under the circumstances stated in the record, is not a bill of exchange and embraced by the Maryland statute of 1785.

2d. That if a bill of exchange within the terms of that statute, the statute does not extend to the United States, so as to render them liable to the payment of the fifteen per cent. damages claimed by the defendants.

3d. That the evidence in the cause does not show a contract between the plaintiffs and the defendants for the sale of a bill of exchange, but an undertaking on the part of the defendants, as the agents of the government, to transfer to the United States the first instalment due under the treaty with the King of the French of the 4th July, 1831, and that the bill in question was one of the instruments for accomplishing that object.

4th. That the defendants, being indorsers of the bill, and not owners or holders at the time of protest, are not entitled to damages, since they have not paid them.

5th. That there was error in the charge of the court below in having instructed the jury that the defendants were entitled to their verdict, thus withdrawing from the consideration of the jury the facts which they alone were competent to find.

After stating these points, the Attorney-General proceeded with the argument.

The demand of the plaintiffs is not the subject of dispute. The questions to be determined grow out of the set-off filed by the defendants. That claim had its origin in an unsuccessful attempt of the Secretary of the Treasury, through the medium of the Bank of the United States, to transfer to this country the first instalment payable to this government by France, under the convention of the 4th July, 1831. He proposed to discuss very briefly the several points taken in the bill of exceptions, at the last trial in the court below. He had no doubt he might properly do so, notwithstanding the cause was formerly before the court on a previous occasion, when a decision was pronounced upon the points then presented under the bill of exceptions at that term. See 2 How., 711. If it were not apparent then, the facts now disclosed afford convincing proof, that the record in the former cause was in many respects incomplete. Fortunately for both parties, the present record is sufficiently full, and the exceptions broad enough, to open the whole merits of the dispute, and to warrant the parties in submitting the cause to a final decision.

1. He submitted first the proposition, that the evidence in the cause does not show a contract between the plaintiffs and the defendants for the sale of a bill of exchange, but an undertaking on the part of the defendants, as the agents of the government, to transfer to the United States the first instalment due under the treaty, and that the bill in question was one of the instruments for accomplishing that object.

Whatever the forms may have been, this was a public transaction between two sovereign independent nations, for the purpose of carrying into effect a treaty stipulation. In this general view the real parties are,-1st. The United States; 2d. The government of France; 3d. The Bank of the United States, at that time the fiscal agent of the government, and authorized and commissioned to demand and receive from France a certain fund, and to transfer the same to this country. Such was the purpose. The instruments executed were such as the President of the United States, the Secretary of the Treasury, and the president of the bank deemed sufficient, and best calculated to effect this object. Leaving out of view the parties to the bill in London and Paris, and supposing it to have been presented by the cashier of the bank, in whose favor it was drawn, and protested for non-payment as in this case, but without intervention,-which is the strongest view that can be taken of the case for the bank,-still the letters of the parties, and other instruments executed at the date of the bill, would determine the character of the contract. The act of Congress of the 13th July, 1832 (4 Stat. at L., 574), made it 'the duty of the Secretary of the Treasury to cause the several instalments, with the interest thereon, payable to the United States, in virtue of the said convention, to be received from the French government, and transferred to the United States in such manner as he may deem best.' Congress conferred the power to cause the fund to be received and transferred. Under this act the Secretary had no right to deal in exchange, or even to draw a bill except as a means to accomplish the purpose described in the act itself. The Secretary of the Treasury took this view of the law in his letter to the president of the bank of the 31st October, 1832. He commences by referring to the convention, and remarks,-'The Secretary of the Treasury being charged by the act of the 13th July last with transferring to the United States the several instalments receivable under the convention, I am desirous of effecting that object in such a manner as may be most beneficial to the interests of the claimants for whom the money is to be received, and with this view I shall be glad to receive your suggestions in regard to the transfer of the first instalment.' The bank was thus officially apprized of the convention creating the fund to be transferred, and its attention specially directed to the act of Congress devolving that duty upon the Secretary of the Treasury. It was equally well advised, that the sole purpose of the head of that department was to effect the transfer of the first instalment, in a manner most beneficial to the claimants. The president of the bank, in his reply of the 5th of November, evidently regarded the proposition as one invoking the agency of the bank. He expresses himself as very willing to offer such suggestions as occur to him, in regard to the transfer of the first instalment. 'After examining the subject in all its relations, with an anxiety to make the transfer on such terms as would merely prevent a loss to the bank,' &c. Having given various suggestions, he concludes by saying, that the bank 'is influenced exclusively by the belief that any other arrangement would be less advantageous to the treasury.' On the 26th January, 1833, the treasury department notify the president of the bank of their readiness to draw on the French government for the first instalment payable under the convention. On the 30th January, the reply, marked confidential, after assigning reason for increasing the rate, adds,-'Without looking, therefore, to any profit on the operation, but merely with the expectation of incurring no loss upon it.' On the 6th of February, the Secretary of the Treasury accepts the terms. The bill was drawn on the 7th, and refers to the convention in these words:-'Being the amount of the first instalment to be paid to the United States, under the convention concluded between the United States and France, of the 4th July, 1831 (after deducting the amount of the first instalment to be reserved to France under the said convention), and the additional sum of nine hundred and forty thousand francs, being one year's interest at four per cent. on all the instalments payable to the United States, from the day of the exchange of the ratifications to the 2d February, 1833.'

Total amount of indemnity payable to the United

One year's interest, from 2d Feb. 1832, to 2d

First instalment payable to the United States,. 3,916,666