United States v. Hill, 120 U.S. 169 (1887)

This suit was brought by the United States against Hill and Russell on said bond by a writ dated December 4, 1884, claiming $22,000 damages. The declaration alleges, as a breach of the bond, that Hill “ has not properly accounted for [p. 171] all moneys coming into his hands, as required by law, according to the condition of said bond.” The answer of the defendants denies that allegation, and avers that Hill “ has made full and sufficient returns of all moneys received by him, as required by law, and that he owes no sum of money to the said United States.”

<The clerks of the several courts of the state of Massachusetts made similar charges for like services, and made no [p. 172] returns to the treasurers of the counties of the fees so received until the passage of the statute of the State of 1879, c. 300.

Section 839 of the Revised Statutes provides, that “ no cler [p. 173] of a District Court . . . shall be allowed by the Attorney General ... to retain of the fees and emoluments of his office, . . . for his personal compensation, over and above his necessary office expenses, including necessary clerk hire, to be audited and allowed by the proper accounting officers of the Treasury, a sum exceeding three thousand five hundred dollars a year for any such district clerk, ... or exceeding that rate for any time less than a year.”

The blank used for the report of clerks’ fees and emoluments, and the oath appended to the report and the certificate [p. 174] of the judge upon it, were in the following form, as contained

On the foregoing facts and statutes it was contended by the United States, before the Circuit Court, held by the circuit ]ndge and the district judge, that the sums received as fees in naturalization proceedings were “ fees and emoluments ” within the meaning of § 833, and ought to have been included by the clerk in his returns, on the ground that they were received for services rendered by the clerk in his official capacity, and he was, therefore, bound to account for them, whether they were or were not chargeable under § 828, prescribing fees for clerks. The Circuit Court held that the action [p. 176] could not be maintained, and entered a judgment for the defendants, to review which the United States have brought a writ of error.

“ It is also to be noticed as significant, that the clerks of the courts of Massachusetts, under a fee-bill much like ours, an a statute requiring them to make to the county treasurer year y a return i of all fees received by them for their official acts and services,’ were never required to include in their retur [p. 181] the fees received in naturalization cases. Rev. Stat, of 1836, c. 88, § 15 ; Gen. Stat, of 1860, c. 121, § 22. This was changed by the act of 1870, c. 300, which defined what the fees in such cases should he, and directed the clerks to include them in their returns.

Air. Robert AL. Aforse, Jr. (Air. William AL. Richardson was with him on the brief), for defendant in error, cited: Hampshire Bank v. Billings, 17 Pick. 87; Stone v. White, 8 Grray, 589; American lnsura/nce Co. v. Alahone, 56 Miss. 180; Connecticut Lnsura/nce Co. v. Luchs, 108 U. S. 498; Liberty Hall Association v. Housatonic Lnsurance Co., 7 Gray, 261; Bardwell v. Conway Lnsura/nce Co., 122 Mass. 90; Hall v. Peopled Insurance Co., 6 Gray, 185; Lorillard Fire Lnsurdnce Co. v. ALcCulloch, 21 Ohio St. 176; Towne v. Fitchburg Insurance Co., 7 Allen, 51; Brennan v. Security Lnsura/nce Co., 4 Daly, 296; Fowkes v. ALa/nchester Lnsura/nce Co., 3 ost. & Fin. 440; Hoddson v. Gua/rdia/n Life Insurance Co., [p. 186] 97 Mass. 144; Frost v. Saratoga Insurance Co., 5 Denio, 154; S. C. 49 Am. Dec. 234; Ames v. New York Union Insurance Co., 14 N. Y. 253; Shearman v. Niagara Insurance Co., 46 N. Y. 526; Bevin v. Conn. Insurance Co., 23 Conn. 244; Bouton v. American Insurance Co., 25 Conn. 542; Walsh v. Ntna Insurance Co., 30 Iowa, 133; Insurance Co. v. Slockbower, 26 Penn. St. 199; North Berwick Co. v. New England Fire and Narine Co., 52 Maine, 336; Reynolds v. Commercial Insurance Co., 47 N. Y. 597; Kennedy v. Green, 3 Myl. & K. 699; Viele v. Germa/nia Insura/nce Co., 26 Iowa, 9; Von Bories v. United Insurance Co., 8 Bush, 133 ; Westchester Co. v. Earle, 33 Mich. 143 ; Williamsburg Co. v. Ca/ry, 83 Ill. 453; Anson n. Winnesheils Co., 23 Iowa, 84; Jewett v. Home Insurance Co., 29 Iowa, 562; Security Co. v. Fa/y, 22 Mich. 467; Horwitz v. Equitable Insurance Co., 40 Missouri, 557; Pitney n. Glens Falls Co., 65 N. Y. 6; Rechner v. Phoenix Insurance Co., 65 N. Y. 195; Hadley v. Fire Ins. Co., 55 N. H. 110; Fishbeclc v. Phoenix Insura/nce Co., 54 Cal. 422.

“ It is hereby declared, that the above are fair and true answers to the foregoing questions, and it is acknowledged and agreed by the undersigned that this application shall form the basis of the contract for insurance, which contract shall be completed only by delivery of policy, and that any untrue °r fraudulent answers, any suppression of facts, or should the applicant become, as to habits, so far different from [p. 188] condition now represented to be in, as to make the risk more than ordinarily hazardous, or neglect to pay the premium on or before the day it becomes due, shall and will render the policy null and void, and forfeit all payments made thereon.”

Where an answer of the applicant to a direct question of [p. 190] the insurers purports to be a complete answer to the question, any substantial misstatement or omission in the answer avoids a policy issued on the faith of the application. Cazenove v. British Equitable Assurance Co., 29 Law Journal (N. S.) C. P. 160, affirming S. C. 6 C. B. N. S. 437. But where upon the face of the application a question appears to be not answered at all, or to be imperfectly answered, and the insurers issue a policy without further inquiry, they waive the want or imperfection in the answer, and render the omission to answer more fully immaterial. Connecticut Ins. Co. v. Lucks, 108 U. S. 498; Hall v. Peoples Ins. Co., 6 Gray, 185; Lorillard Ins. Co. n. McCulloch, 21 Ohio St. 176; American Ins. Co. v. Mahone, 56 Mississippi; 180; Carson v. Jersey City Ins. Co., A Vroom, 300, and 15 Vroom, 210; Leba/non Ins. Co. v. Kepler, 106 Penn. St. 28.

In the contract before us, the answers in the application are nowhere called warranties, or made part of the contract. In the policy those answers and the concluding paragraph of the application are referred to only as “ the declarations or statements upon the faith of which this policy is issued; ” and in the concluding paragraph of the application the answers are declared to be “ fair and true answers to the foregoing questions,” and to “ form the basis of the contract for insurance.” They must therefore be considered, not as warranties which [p. 191] are part of the contract, but as representations collateral to the contract, and on which it is based.

But the four interrogatories grouped together in one ques; tion, and all relating to the subject of other insurance, would naturally be understood as all tending to one object, the ascertaining of the amount of such insurance. The answer in its i form is responsive, not to the first and second interrogatories, but to the third interrogatory only, and fully and truly anI swers that interrogatory by stating the existing amount of prior insurance and in what company, and thus renders the fourth interrogatory irrelevant. If the insurers, after being thus truly and fully informed of the amount and the place of prior insurance, considered it material to know whether any I unsuccessful applications had been made for additional insurI ance, they should either have repeated the first two interrogI atories, or have put further questions. The legal effect of | issuing a policy upon the answer as it stood was to waive I their right of requiring further answers as to the particulars I mentioned in the 28th question, to determine that it was I immaterial, for the purposes of their contract, whether any I unsuccessful applications had been made, and to estop them I 0 set up the omission to disclose such applications as a ground I mr avoiding the policy. The insurers, having thus [p. 192] conclusively elected to treat that omission as immaterial, could not afterwards make it material by proving that it was intentional.

For these reasons, our conclusion upon this branch of the case is that there was no error, of which the company had a [p. 193] right to complain, either in the refusals to rule, or in the rulings made.

The substance of the instructions to the jury on this part of the case was as follows: The judge directed the jury that if they should find that the assured was addicted to the habitual use of spirituous liquors at the date of the policy, or his habits afterwards changed in this respect so as to make the risk more than ordinarily hazardous, they would consider whether there had been a waiver on the part of the insurance company. The judge then told the jury that the plaintiff not only claimed that any misrepresentation as to the habits of the assured, or failure to inform the company of a change in those habits, had been waived by the company by accepting payment of a premium on or about April 25,1881, after it had knowledge of the habits of the assured, or of the change in those habits; but further claimed that mere silence of the company, after knowledge of such change in habits, was a waiver of the violation of the provision of the policy. And the judge did charge the jury upon both the supposed grounds of waiver, instructing them that if the defendant had knowledge of the change in the habits of the assured before receiving the premium of April 25, 1881, the acceptance of that premium would be a waiver, which would estop the company to set up that the policy was forfeited for a breach of that provision; and further instructing them that if the company, having knowledge of the change m [p. 195] the habits of the assured, did not give notice to the plaintiff of that change, and he was prejudiced in any way by the failure of the company to give such a notice, and by reason of this silence of the company did any act, or omitted to do any act, which prejudiced him, there was a like waiver and estoppel on the part of the company.

It does not therefore appear that the instructions requested, or the instructions given, except so far as they related to the effect of accepting payment of the last premium with previous [p. 196] knowledge of the habits of the assured, had any application to the case on trial. Except as just mentioned, the bill of exceptions is in the same condition as that of which Mr. Justice Miller delivering a former judgment of this court, said: “There is in no part of this bill of exceptions any statement of the evidence. There is no statement that any evidence was offered, or that any was objected to. With the exception of the reference to it in the charge of the court, there is nothing to show what was proved, or what any of the evidence tended to prove. The prayers for instruction, therefore, may have been hypothetical and wholly unwarranted by any testimony before the jury.” Worthington v. Mason, 101 IT. S. 149, 151.

The only objection remaining to be considered is that of variance between the declaration and the evidence, which is thus stated in the bill of exceptions: “ After the plaintiff had rested, the defendant asked the court to rule that there was a variance between the declaration and the proof, inasmuch as the declaration stated the consideration of the contract to be the payment of the sum of $152.10 and of an annual premium of $304.20, while the policy showed the consideration to be the representations made in the application as well as payment [p. 197] of the aforesaid sums of money, and that an amendment to the declaration was necessary; but this the court declined to rule, to which the defendant excepted.”

In a maritime cause of collision arising on the waters of the. Mississippi River, the owners of the steamboat Sabine filed their libel in the District Court of the United States for the Eastern District of Louisiana, against the steamboat Richmond, to recover damages for the loss alleged to have been occasioned by the fault of the latter. The owners and claimants of the Richmond, being the plaintiffs in error in this [p. 199] cause, defended against the libel filed by the owners of the Sabine, and also filed a cross libel, alleging damage to the Richmond in the collision caused by the fault of the Sabine, and claiming damages therefor. A decree was rendered in this cause June 5, 1873, against the steamboat Sabine and her owners, Sarah C. Shirley, R. F. Fuller, and America B. Selby, and Nathaniel C. Selby, her husband, together with Alfred Moulton, Charles Cavaroc, Jules Tuyes, and Achille Chiapella, the four last named being sureties for the owners of the Sabine in a bond for the sum of $8000, conditioned to pay any damages adjudged in favor of the owners of the Richmond as cross libellants in the suit, which the libellants had been required by the court to give. The amount of the decree against the owners of the Sabine, as principals, was $9750 damages, besides costs, and against each of the four named sureties the sum of $2000, that being the amount limited in the obligation as the several liability of each. From this decree all the parties appealed to the Circuit Court of the United States for the Eastern District of Louisiana. For the purpose of perfecting the appeal, Fuller, Moulton, Cavaroc, Tuyes, and Chiapella executed and filed an appeal bond in the sum of $20,000, the condition of which was that if they should prosecute their appeal to effect, and answer all damages and costs, and satisfy whatever judgment might be rendered against them if they failed to make their appeal good, the obligation should be void; and on this bond J. W. Hincks and Pierre S. "Wiltz, two of the defendants in error, were sureties, each in the sum of $5000. The cause was heard on this appeal in the Circuit Court on the 11th of March, 1876, when a decree was rendered in the cause, dismissing the original libel, maintaining the cross libel, and condemning the original libellants, the owners of the steamboat Sabine, together with their sureties in the original bond of $8000, viz., Moulton, Cavaroc, Tuyes, and Chiapella, to pay to the owners of the steamboat Richmond as damages the sum of $7392.60, with costs. The decree of the Circuit Court as against Moulton, Cavaroc, Tuyes, and Chiapella, sureties as aforesaid, was several as against each in the sum of $2000, that being the [p. 200] amount for which they respectively bound themselves. From this decree of the Circuit Court the owners of the steamboat Sabine, the original libellants, together with the Merchants’ Mutual Insurance Company, the Mechanics’ and Traders’ Insurance Company, the Factors’ and Traders’ Insurance Company, the New Orleans Mutual Insurance Company, the Sun Mutual Insurance Company, the New Orleans Insurance Association, the Crescent Mutual Insurance Company, and the Commercial Insurance Company, all which insurance companies were libellants and intervenors in certain other similar causes consolidated with that of the original libel of the owners of the Sabine against the Richmond, joined in an appeal to the Supreme Court of the United States from the several decrees rendered in the consolidated causes, including that in which the present defendants in error were parties. The bond given for the prosecution of that appeal to the Supreme Court was in the sum of five hundred dollars, and did not operate as a supersedeas. The defendants in error in this cause were not parties to this appeal. The appeal from the decree of the Circuit Court was heard at the October term, 1880, of the Supreme Court, when it was ordered and decreed that the decree of the Circuit Court appealed from should be and the same was affirmed. Subsequently an execution was issued on the decree of the Circuit Court, running against Moulton, Cavaroc, Tuyes, and Chiapella, for the sum of $7292.60, with interest at five per cent, per annum from March 11, 1876, and costs. Motions were made on May 3, 1881, on behalf of Moulton and Tuyes, defendants in that execution, to quash the same on the ground that the said decree, as against each of the said sureties, had been satisfied and discharged. These motions came on to be heard June 16, 1881, on consideration whereof they were allowed, and the writ of fieri facias quashed, and the marshal ordered to desist from any further proceedings thereunder.

The plaintiffs in error thereafter, on the 7th of March, 1882, being the owners of the steamboat Richmond or their representatives, commenced this action against the defendants m error, as parties to the appeal bond given for the prosecution [p. 201] of the appeal from the original decree of the District Court to the Circuit Court. The defendants rely upon two defences: 1st, That the matters in controversy were finally adjudged in their favor by the Circuit Court on the motion to quash the execution issued against them on its decree, so as to constitute an estoppel upon the principle of res judicata; 2d, That the decrees of the Circuit Court against them respectively were discharged by payments made and accepted in full satisfaction thereof, by way of compromise, prior to the appeal taken by the other parties to the Supreme Court of the United States. The cause came on to be heard before the Circuit Court on May 29, 1883, when the parties, having duly waived the intervention of a jury, submitted the cause to the court; on consideration whereof, the court rendered judgment in favor of the defendants. The object of the present writ of error is to reverse that judgment.

4th. The record of the proceedings in the Circuit Court on the motion to quash the execution, together with the [p. 202] judgment of the court allowing said motion and quashing the said execution.

“Received, New Orleans, July 3d, 1876, from the New Orleans Insurance Association, for account of Mr. C. Cavaroc, [p. 203] security on the bond given by libellants in the above cause to respond to the cross libel filed by N. S. Green & al., claimants of the st’r Richmond, the sum of $1166.66 dollars, in full satisfaction of decree rendered against said C. Cavaroc in above entitled cause, and I hereby subrogate the said New Orleans Insurance Association to the rights of N. S. Green and owners of the st’r Richmond.

It was then proved by John Kennard, a member of the firm of Kennard, Howe & Prentiss, that he signed the papers by the firm name of Kennard, Howe & Prentiss, who were the attorneys for the steamer Richmond; that he received the sums of money in the said papers severally mentioned, and that he executed the said papers under plenary authority from the plaintiffs to make the compromise. The plaintiffs then offered to prove by the same witness that the proctors for the owners of the steamer Sabine opened a negotiation with him to compromise said case, and offered to pay the sum of $5000 for a compromise of the litigation then pending between the parties, and threatened an appeal from the decree and judgment of the Circuit Court, which had been rendered in favor of the owners of the steamer Richmond, unless said money should e accepted and said compromise effected; and that for the [p. 204] purpose of ending said litigation he accepted said money and compromised said case; that it was expressly agreed by the parties to that cause that said litigation was then ended, and that no appeal should be taken from the said decree and judgment of the Circuit Court. To this offer and evidence the defend, ants objected on the ground that the papers in evidence constituted a contract in writing between the parties, and that no parol evidence impeaching them could be received. The court sustained the objection, and refused to hear the evidence, to which ruling the plaintiffs excepted.

It is not important to determine what effect, if any, should be given to the proceedings and order of the Circuit Court on the motion of the defendants Tuyes and Moulton to quash the execution issued on the decree against them. It does not appear from the record of these proceedings on what ground the judgment of the court was placed, and in its terms it is not final, as it merely quashes the particular writ of execution then in the marshal’s hands, and directs him to take no further proceedings thereunder. If it had been based upon a finding of a payment o‘f the decree, or of an accord and satisfaction equivalent to payment, and had directed satisfaction of the decree to be entered of record, as it clearly had power to do in such a proceeding, the judgment would have been conclusive as a defence to the bond in suit, notwithstanding the summary character of the proceeding. United States v. #0-Lemore^ 4 How. 286; Perkins n. Fourniquet, 14 How. 328. But the introduction of the record of these proceedings as evidence did not prejudice the plaintiffs in error, for the other evidence in the cause, and which no doubt is the same on which the Circuit Court acted in that proceeding, shows an accord and satisfaction equivalent to a payment of the decree, and, in equity, to a satisfaction and discharge. It is so expressed in each of the papers executed at the time, which, although they are in one sense receipts acknowledging the payment of money, are also written evidence of an executed agreement by which the money was received in full payment and settlement of the decree and of the bond given for its payment now sued on. It is shown that the attorneys for the [p. 205] owners of the Richmond, who signed those receipts, were fully authorized to do so. The contract in each case is with the individual defendant for a satisfaction of the decree rendered against him severally. The payment and receipt of the money in pursuance of the agreement amounted to a release of errors, so that there was a valuable consideration to sustain the contract whereby a less sum than the amount due by the decree was received in full payment.

“The rules to set aside the arrest, provisional seizure and injunction came up, . . . when, after hearing the pleadings, evidence and arguments, it is ordered by the court that the writs of arrest and provisional seizure be set aside, but that the injunction be maintained on the complaining creditors giving bond and security to save the parties harmless from the effects of said injunction in such sum as will be fixed by the court upon ascertaining the value of the property, and to that [p. 208] end the parties shall take their evidence before Register Kellogg.”

This court, on writ of error brought, reversed the judgment, Chief Justice Taney delivering the opinion. The bond was regarded by this court as a departure from the order requiring it, and as being in effect equivalent to an injunction bond given to suspend seizure and sale under the Louisiana practice, which operates as a security for the debt, as well as the damages arising from the injunction, the same as a recognizance in error in the English practice. Such a bond requires a recovery against the parties before the condition is broken; that is, a judgment for the debt in suit. This the court considered as entirely different from the bond required by a court of equity as a condition of granting an injunction, and different from the bond required by the order of the court in that case. “In proceeding upon such a bond,” said the Chief Justice, “ the court would have no authority to apply to it the legislative provisions of the state. The obligors would be answerable for any damage or cost which the adverse party sustained by reason of the injunction, from the time it was issued until [p. 211] it was dissolved, but to nothing more. They would certainly not be liable for any aggravated interest on the debt, nor for the debt itself, unless it was lost by the delay, nor for the fees paid to the counsel for conducting the suit.” The Chief Justice also referred to the fact that no recovery had been had against the parties — nothing but a seizure and sale of the mortgaged premises — and a dissolution of the injunction; and, therefore, as the court construed the bond, the contingency on which the obligors agreed to pay had not happened, and the condition of the bond was not broken. Under the construction given to the bond in that case, the court could not well do otherwise than reverse the judgment of the Circuit Court.

But, according to our view, the bonds sued on in the cases before us do not demand any such construction. It is plain that they could not be intended as security for any debt or demand in litigation, but as security only for the damages that might be sustained by the issuing of the injunctions. The condition is to pay “ all such damages as he [Isaacs, in the one case, and Block, in the other] may recover against us in case it should be decided that the said writ of injunction was wrongfully issued.” Recover, how ? By the law of Louisiana damages may be recovered for suing out an injunction without just cause, independently of a bond. 3 La. 291. But this cannot be done in the United States courts. Without a bond no damages can be recovered at all. Without a bond for the payment of damages or other obligation of like effect, a party against whom an injunction wrongfully issues can recover nothing but costs, unless he can make out a case of malicious prosecution. It is only by reason of the bond, and upon the bond, that he can recover anything. When, therefore, the condition of the bond in these cases declares that the obligors will pay such damages as the obligee may recover against them, it must mean that they will pay such damages as he may recover by a suit on the bond itself. Otherwise it is senseless and vain. Construed in this way, it is in strict cononmty with the order which required it. It is in this way that the bonds in question were finally construed by the [p. 212] Supreme Court of Louisiana, and we think that its construction was right. In its opinion in the Block case the court says: “ Under our construction we find no difference in the obligation of parties ‘to save David Block harmless from the effects of an injunction issued against him,’ and the obligation contracted in this bond, ‘ to pay to David Block, the defendant in said injunction, all such damages as he may recover against the obligors in case it should be decided that the said writ of injunction was wrongfully issued.’ We, therefore, hold that the bond in this case did comply with the condition prescribed in the judge’s order, and that it was a valid bond.” The court not only construed the bonds in this way, but decided the cases upon this view as to their meaning and effect, awarding to the plaintiffs respectively only such damages as arose from the effects of the respective injunctions. The actions were brought to recover such damages. The petition in each case set forth the facts, showing the injuries which the plaintiff sustained as the immediate result of the injunction, and based his claim to a recovery entirely on the damages arising from such injuries. The evidence was directed to the establishment of these facts, and conformed to the allegations of the petition. The court, in its opinion in the case of David Block, after showing that the bond must be construed as intended to cover these damages, says : “ After a careful examination and consideration of the evidence in the record, we are satisfied that plaintiff suffered damages to the full extent of the amount allowed him by the lower court. The judgment appealed from is therefore affirmed.” In the case of Isaacs, the court at first reversed the judgment of the inferior tribunal, conceding that the order of the District Court required security for the entire damages, past as well as future, but considering the bond as not framed in conformity with it, and as not covering any damages but such as arose after it was given, as to which there was no distinct evidence. Supposing, however, that damages might be recovered against the plaintiffs in the injunction independently of the bond, the court reserved to Isaacs the right to bring a suit for that purpose. But on a rehearing of the case, and after the argument and [p. 213] decision in the Block case, the court came to a different conclusion, and held that the bond was in substantial conformity with the order, and was to be construed as intended to save the parties harmless from the effects of the injunction, adopting in all things the views expressed in the opinion in the Block case. It then adds: “ This leaves open for consideration the question of the quantum of damages allowed by the judgment appealed from. We have gone over the evidence on this point with care and deliberation, and reviewed all the authorities cited bearing on this point, the same in both cases, and are satisfied that the amount awarded by the judgment is fully justified and sustained by the proof and the law.” The court thereupon set aside its former judgment and affirmed that of the inferior court.