UNITED STATES v. HONSMAN et al., 70 F. 581

HAWLEY, District Judge. This is an action brought by the United States, plaintiff in error, against II. E. Honsman, and the sureties upon his official bond, as postmaster, defendants in error, to recover the sum of $2,235.63.

The record shows that Honsman was postmaster at Missoula, Mont, from January 21, 1890, until February 13, 1891, when he was removed from office; that, when he entered upon the discharge of his official duties, he executed a bond, with sureties, as required by law; that prior to August 8,1890, the post-office department required him to execute, a new bond, and on the 8th day of August, 1890, he executed a new bond, with sureties, Avhich is the bond sued on in this action; that the new bond was accepted on the- 20th day of August, 1890, by the postmaster general, to take effect October 1,1890.

The cause was tried before the judge without a jury.

At the trial the United States introduced in evidence: “A. certified copy of the account of said Honsman with reference to the money-order business of said office; that it appeared from said account that, at the time the' new bond above set out took effect, there was due from the said Honsman, as postmaster at Missoula, Mont., the sum of $1,689.85, which said amount was charged against the said Honsman under the bond originally executed by him at the time he entered upon the discharge of his duties as said postmaster; that on the 11th day of October, 1890, said Hons-man had paid to the government of the United States the sum of $2,442, of which the sum of $1,689.85 was applied by the postmaster general, or the sixth auditor, to discharge the balance due from said Honsman, as such postmaster, under his old bond, in accordance” with the provisions of

section 3885, Revised Statutes of the United States; that thereupon said defendants, by their counsel, objected to their being held liable for any balance due from said postmaster under his said old bond, and prior to the execution and taking effect of the said new bond, and also, so far as the sureties on the new bond wore concerned, they were liable only for the balance due from said postmaster from the-date when the said.new bond took effect, and that, so far as the sureties on the new bond were concerned, neither the postmaster general nor the sixth auditor had any authority, under said

section of the statute, to apply said payment to discharge the said balance due from said postmaster under said old bond, and that, as to said amount, so applied, the said defendants were entitled to a credit upon their said balance of the entire amount of $2,442, so paid by said Honsman, as postmaster, on the 11th day of October, 1890, — which said objection of the said defendants was by the court sustained, and the court then and there held that the said obligation of the said defendants, as sureties, was only for delinquencies and balances accruing after the execution of the new bond, and after the date Avhen the same was to take effect, to wit, October 1, 1890, and that they Avere entitled to a credit for the entire amount of $2,442, so paid, as aforesaid, by said postmaster, Honsman, on the 11th day of October, 1890.” Did the court err in so ruling?

This is the only assignment oí error presented by the record.

Section 3835 of the Revised Statutes of the United States reads as follows : “Whenever any postmaster is required to execute a new bond all payments made by him after the execution of such new bond may, if the postmaster general or the sixth auditor deem it just, be applied first to discharge any balance which may be due from such xxostmaster under his old bond.”

Section 3837 reads as follows; “Whenever any of the sureties of a postmaster notify the postmaster general of their desire to be released from their suretyship, or when the postmaster general deems a new bond necessary, he shall require the postmaster to execute such new bond; with security.

When accepted by the postmaster general, the neAV bond shall be as valid as the bond given upon the original axxpointment of such postmaster, and the sureties in the prior bond shall be released from responsibility for all acts or defaults of the postmaster which may be done or committed subsequent to the last day of the quarter in which such new bond shall be executed and accepted.” It is conceded by counsel for tlie plaintiff in error that the sureties upon the second bond cannot be held liable for any defalcation of the postmaster which occurred prior to the time the second bond took effect, to wit, prior to October 1, 1890.

The supreme court of the United States lias repeatedly held that by no act of the officer or of the treasury department, or of both combined, can official moneys, collected by the officer and paid into the treasury department during one term of office, be appropriated to the accounts of the other term, to tlie prejudice of the sureties for the respective terms. U. S. v. January, 7 Cranch, 572, 575; U. S. v. Eckford’s Ex’rs, 1 How. 250, 262; Jones v. U. S., 7 How. 681, 688; U. S. v. Stone, 106 U. S. 525, 529, 1 Sup.

Ct. 287. .But in the present case there is no attempt upon the part of the government to make the new bond retroactive, or to make the sureties flier eon liable for any defalcation of the postmaster prior to the time the new bond took effect'. Its contention is that the presumption necessarily arises from the evidence that the sum of §1,689.85, which was the balance due on account of the money-order business, on the settlement of the .postmaster’s quarterly account for the quarter ending September 30, 1890, remained in his hands on the 1st day of October, 1890, when the new bond took effect.

If that money was in his hands on the 1st day of October, 1890, it is made certain and clear, by the provisions of

section 3837, that the sureties upon the old bond were then released of all liability on account thereof, and the sureties upon the new bond would be liable therefor. Upon such a state of facts, there can be no question as to the right of the proper authorities, under the provisions of

section 3835, to apply the sum of ft,689.85 out of the amount of $2,442, paid by the postmaster to the department on the 11th day of October, 1890, to (lie discharge of the balance due the government at the close of the quarter ending September 30,

Section 8816 of the Revised Statutes provides that: “Postmasters shall keep safely, without loaning, using, depositing in an unauthorized bank, or exchanging for other funds, all tlie public money collected by them, or which may come into their possession, until it is ordered by the postmaster general to be transferred or paid out.” The treasury transcript, introduced by the government, was prima facie evidence that the money dno from the postmaster at the close of the quarter ending September 30th remained and was in his hands on the 1st day of October, 1890. It was the money of the government.

There is no presumption that the postmaster was at the close of the last quarter a defaulter, and, without any proof to the contrary, the presumption is that the postmaster held the money in Id's hands until October 11, 1890, and ¡.hen forwarded the same, with other money due the government, to the post-office department. Upon these presumptions, which are well established by the decided cases, it necessarily follows that the sureties upon the second bond were not entitled to have the sum of $1,689.85 allowed as a credit on their behalf, and that tlie court erred in so ruling. In Alvord v. U.

S., 13 Blatchf. 279, Fed. Cas. No. 269, the facts were that Alvord was surety upon the official bond of postmaster Sedgwick; that on the 14th of September, 1861, a new bond, Avith other sureties, was accepted; that afterwards Sedgwick was removed from office, and at the time of removal was indebted to the government; that it was not shown that Sedgwick did not Imve in his hands on the 14th of September, 1861, when the new bond took effect, all moneys of the United States with which he Avas then chargeable.

The court held that it must be presumed that he had such money in his hands Avhen the new bond aa'us given, and that the sureties upon the old bond could not be held liable. In delivering the opinion, the court said: “In the absence of evidence from which, an inference can be directly drawn, the presumption of fact which the laAv raises must control. That presumption is that an officer has done his duty, until the contrary appears.

It was Sedgwick’s duty, under the law and the bond, to keep the money .which should come to his hands safely, without loaning, using, depositing’ in the banks, or exchanging for other funds than as alloAved by laAV, till it should be ordered by the postmaster general to be transferred or paid out. This duty he is presumed to have performed, until proof is made to the contrary. If the present action had been against the sureties on the bond accepted September 14, 1861, on the same proof, they would have been held lia- ■ ble, by reason of,the same presumption.” In Bruce v. U.

S., 17 How. 437, 443, wbicb' was a case of a new commission and a new bond of an Indian agent, it Avas beld that, if a balance was due from the officer when reappointed, the presumption was that it was then in his hands; and, if so, the sureties under his reappointment would be responsible for its due application. Chief Justice Taney, in'delivering the opinion of the court, said: “When Bruce received his second commission, if any money or property which he received in his former term of office still remained in his hands, he was bound to axxply and account for it, under the appointment ho then received.

The terms of the bond clearly require it, and his sureties are bound for it. It was so much money in his hands,-to be disbursed and applied under his second appointment.

Indeed, if it were otherwise, the government would have no, security for it; for, if it was not wasted or misapplied during his first official term, but still remained in his hands, to be applied according to his official duty, the sureties in his first bond would not be liable, for there would in that ease be no default or breach of duty in that term of office, and, if afterwards wasted or misapplied, it Avould be a breach of duty in that official term for which Steele was one of his sureties.

Undoubtedly, the sureties in the second term of office are not responsible for a default committed in his first; but, if any part of the balance now claimed from him was misapplied during that period, it Avas incumbent on the ifiain-tiffs in error to prove it.

No officer, Avitliout proof, will be presumed to have violated his duty, and, if Bruce had done so, Steele had a right, under the opinion of the circuit court, to shoAV it, and exonerate himself to that amount; but it could not be presumed merely because there apxiears by the accounts to have been a balance in his hands at the exxfiration of his first term.” In U. S. v. Stone, 106 U. S. 525, 529, 1 Sup.

Ct. 287, wbicb was an action upon tbe official bond of a collector of internal revenue, the court said: “It is true that the sureties are liable only for money received during the term for which the collector AA'as ax>pointed, covered by the bond to which they are parties, and not for the misapx>lication of money received and misapplied before or after that term. U. S. v. Eckford’s Ex’rs, 1 How. 250.

It is nevertheless equally true that they are liable for taxes which he collected during that term, upon assessment rolls received during a prior term, or for moneys or stamps on hand at the expiration of a former term, and. remaining- in his possession at the beginning of a new .one; for the collector is responsible, as well for moneys and stamps retained by him as his own successor, as for those received by him from any oilier predecessor, and the separate adjustment of his accounts for both periods, made at the treasury department'upon its books, is prima, facie evidence, not only of the fact and of the amount of'tlie indebtedness, but also of the time when, and the manner in which, it arose.

It is, of course, always open to the defendants sought to lie charged to. show by opposing proof that the default charged occurred before the commencement of their liability.” .In tlie present case the sureties did not offer any proof tending to ¡show that the postmaster did not have in his hands the sum oí ⅜ 1,(589.85, belonging to the government, at the time the new bond took effect. The case rested solely upon the prima facie evidence introduced by tlie government.

In order to relieve themselves from responsibility, it was essential for tlie sureties to.prove, by circumstances or otherwise, “that the default charged occurred before the commencement of their liability.” The judgment of the circuit court is reversed, and cause remanded for a new trial, in accordance with the views expressed in this opinion.