Ward v. United States , 20 L. Ed. 792 ( 1872 )

81 U.S. 28 (1871) 14 Wall. 28

WARD
v.
UNITED STATES.

Supreme Court of United States.

Messrs. C.J. Walker and G.F. Edmunds, for the plaintiff in error.

Mr. G.H. Williams, Attorney-General, and Mr. B.H. Bristow, Solicitor-General, contra.

Mr. Justice MILLER (having stated the case) delivered the opinion of the court.

The whole of the testimony is embraced in a bill of exceptions, not long, and the questions to be decided here arise out of the charge of the court to the jury and its refusal to give instructions asked by the defendant.

It is quite clear that the court charged the jury that there was evidence of a verbal contract differing from the one in writing; that they might infer that the verbal contract was such that defendant would be held in law to be a bailee for the United States as to the whole $80,000, and designedly left the impression that this was so clear that it was unnecessary for him to instruct them as to the legal effect of the written contract on the rights of the parties.

Now, as all the testimony is in the bill of exceptions, and as the plaintiffs read this written contract as part of their case, we should be able to discern some evidence on which the jury could find not only that there was a verbal contract but that it differed from the written one, and that it showed that the defendant received the entire $80,000 to the use of the United States; for if this was not so the verbal contract was insufficient to authorize the verdict. We have not been able to find in the bill of exceptions anything which justified this charge of the court.

It is clear from the paper given in evidence by the plaintiffs, and from the statement which it contains,^[*] — and which it stipulates are facts which may be admitted in evidence upon the trial of this cause on the part of plaintiffs, — that the plaintiffs themselves have shown by their own testimony that the proposition which the defendant asked the railroad company to make and which they did make verbally in April is the proposition and the same proposition which was reduced to writing by Trowbridge, the president, on the 14th May thereafter. The writing refers to the previous conversation, and there is no attempt to conceal the fact that the proposition was made at a previous time verbally.

Now the plaintiffs not only introduced the statement above alluded to, but they proved by Trowbridge, their own witness, as part of their case, that the verbal proposition of April was identical with the written proposition which they had introduced.

How can they be permitted to contradict their own witness and discredit their own written testimony, consistently with the rules of evidence?

But if they could, we have searched in vain for any evidence which varies in the slightest degree that which we have cited. It is in fact all that there is on that subject. It has been argued here, as it probably was before the jury, that the written proposition was gotten up after the fact to cover up a fraud; that in fact Ward was given the $80,000 for payment to the United States alone without reference to his own claim on the company, and having concealed this fact and made a better compromise than was expected, he had this paper made out to include his own claim to give color to a fraud. But of this there is noting but the merest suspicion of counsel. No witness has testified that the agreement of April was such as is here supposed, or that it differed from the writing of May 14th. The plaintiffs themselves have proved that they were identical. It would be a total disregard of all rules of evidence to allow them to go to the jury with an argument founded on mere suspicion, a suspicion contradicted by their own evidence, and then have the court charge that there was in the testimony a foundation for this suspicion, a foundation so strong as to render a construction of the only real proposition which was proved, useless and embarrassing to them.

And if it could for any reason be conjectured that the verbal proposal differed from the one made in writing, there is nothing to show what that difference was, and whether it might not have been even more favorable to the defendant than the one produced in writing. The jury were left by the court, and in fact told to disregard the facts which were proved, and indulge in the vagaries of their imagination, in this the turning-point of the case.

Now, it is undeniable that Ward made a very enormous profit in the transaction, and that he availed himself of a knowledge of facts unknown to the officers of the government, in a manner which was well calculated to prejudice the jury against his case, but this was no reason why the court should authorize them to indulge this prejudice by a disregard of the established principles of the law of evidence.

We are, therefore, of opinion that the Circuit Court erred in refusing to instruct the jury that there was no such evidence, and in charging them that there was.

There were several other prayers for instruction asked by the defendant's counsel and refused by the court, on which error is assigned and which we do not deem necessary to notice further than this: that some of the prayers seemed to require a construction of the written proposition found in the record.

Whether the specific prayers of the defendant's counsel were such as should have been given or refused, we are of opinion that it was the duty of the court to have given the jury a construction of that instrument, and as this duty will probably arise, and the interpretation of the writing become an important element of a new trial, we will consider it now.

The evidence makes it pretty clear that the original corporation, the principal in the warehouse bonds, was also indebted to the defendant in a considerable amount, which appears to have never been liquidated. The corporation whose directors made the proposition to Ward, while it denied a direct liability either to him or to the United States, found a lien on their property which made them desire the settlement of both these claims. These facts are undisputed, and in view of them, and of the other fact that Ward was probably liable to the government for the full amount unpaid or the bonds, we are to determine what those directors meant.

The first and important element of their proposal is that "we will pay $80,000 on account of these bonds if you can procure a settlement and cancelling of them for a sum not exceeding that amount." The second branch of it is that this sum must include "your services in making this settlement, and any claim you may have against the company on account of the bonds. When this arrangement is made the company is ready to pay half that sum, and the other half in thirty days thereafter."

Is this a proposition to pay Ward $80,000 if he procures a settlement of both demands, leaving him at liberty to keep as much or as little of it as he chose, provided he effected their purpose? Or is it a proposal to pay generally the $80,000 on the two demands, provided it be accepted in full satisfaction of both?

The language of the proposition is that they will pay that sum for a settlement of both claims. It does not say that they will pay it to Ward, but will pay that sum on account of these two demands. Ward had first called on them to do something in the matter. This was their response. Without entering into any further verbal criticism of the language of the instrument, but looking to the relations of Ward to the government, and to the railroad company which made the proposal, we think that its true construction is, that the $80,000 was to be paid in settlement of the claims of the government on the bonds, and of Ward's claim for becoming surety, and a fair compensation for his services in obtaining the compromise with the government.

With this construction of the instrument — the only evidence before the jury of the terms on which defendant received the money — it should have been left to them to ascertain how much was due the plaintiffs on account of the bonds when the proposition was made, how much was due the defendant for becoming surety for the railroad company, and what was a fair compensation for his services in effecting the compromise with the United States.

These facts being ascertained, they should have been directed to apportion the $80,000 between the plaintiffs and the defendant, according to the amounts thus ascertained as due to each, and make this the foundation of their verdict, deducting from the proportion of the $80,000 falling to the United States the $35,000 paid them by the defendant.

JUDGMENT REVERSED, AND A NEW TRIAL AWARDED.

Mr. Justice BRADLEY, with whom concurred Justices CLIFFORD and DAVIS, dissenting.

I dissent from the opinion of the court in this case. It seems to me that the charge of the judge to the jury was correct. The defendant was surety for the Detroit and Milwaukee Railroad Company on their rewarehousing bonds, given to secure duties on railroad iron, for an amount admitted to be $76,000, besides interest. The property of the company was sold under mortgages, and a new company was formed by the purchasers, who purchased under a stipulation to recognize and pay all sums due the Federal government for duties upon railroad iron which, it was admitted, then amounted to $94,000. The purchasers, after organization, gave a mortgage in November, 1860, to secure the payment, amongst other things, of the duties owing to the government of the United States, so that the new company assumed the payment of the duties in question. But their assumption was not communicated to the officers of the government, and was not known by them. In April, 1863, Ward, the plaintiff in error, urged upon the new company to settle this claim, and also a claim which he had, by way of compensation for becoming surety. The board of directors verbally made him a proposition afterwards put in writing, to the effect that if he could procure the settlement and cancellation of the bonds for a sum not exceeding eighty thousand dollars currency (that sum to include his services and any claim he had), they would pay that sum — one-half on his making the arrangement, the other half within thirty days. Thereupon Ward had an interview with the district attorney, and after dilating upon the difficulties which would be met with in collecting the money, the defences which the company had against the claim, &c., said that he had been urging the directors to do something in relation to the bonds; that he thought they were going to have some money that could be applied to this purpose, and that they would do something in relation thereto. He then offered $35,000 in full for the bonds, saying that whether the company did or did not furnish any money, as he expected they would, he would pay that sum out of his own funds, and that the company was apt to be behind when money was to be paid out. He never said one word about the offer of the company to pay the $80,000, and yet he was the surety, and was seeking to get up obligations that were his own as well as the company's. Under these representations and this suppression of the facts, the district attorney was induced to recommend the offer to the acceptance of the department, and on the 24th of July, 1863. Ward paid the $35,000, got possession of the bonds and the next day delivered them to the company and received from it the $80,000 which had been offered. Afterwards, in February, 1864, when the district attorney had discovered the deception, and demanded the balance of $45,000, Ward offered him a check for $22,000, on the plea that when the compromise was made he did not know that the company had provided for the government claim in their mortgage of November, 1860.

Upon this state of facts the government claimed that the whole $80,000 was received for their use.

A singular feature of the case is, that the offer of the company, made to Ward in April, was not put into writing until the 14th of May, 1863, and was then written out at the request of Ward, by Trowbridge, an officer of the railroad company, who was not present when the verbal proposition was made, but only heard of it from others. He wrote it out in a formal letter to Ward, dated May 14th, 1863, and this letter and the evidence of Trowbridge as to what he learned about it from others, is all the evidence we have of its precise terms.

The judge left it to the jury to say whether the letter contained the precise oral arrangement or not, with liberty to take into consideration all the facts and circumstances of the case. The plaintiff in error complains of this feature of the charge. He insists that there was no evidence that the oral agreement was anything different from what the letter stated it to be.

It seems to me that the judge went quite as far as he was bound to go in favor of the plaintiff in error. The great controlling facts of the case were that the company agreed to pay this $80,000 to get clear of the bonds, and of all claims in regard to them; that Ward never informed the government officials of this offer, but made representations which entirely ignored any such state of things — representations, to say the least, that were disingenuous, considering the relation in which he stood to the parties as surety on the bonds. Upon these representations he got a compromise, and afterwards had the offer of the railroad company put in writing in the shape in which it now stands in Trowbridge's letter. He finally received the money and pocketed it all, except $35,000, which he paid to the government.

His conduct was surely an estoppel against himself, so far as the government was concerned. He was under an obligation to disclose the offer which had been made to him. He admits he received the $80,000 on account of the bonds. He cannot be permitted to say that he received part of the money for himself. If that was the arrangement why did he not tell the district attorney so? As between him and the government, the latter had the prior right to be paid out of the fund. Ward was surety to the government for the payment of its whole claim. He must be deemed in law, under the circumstances, to have received the money for the use of the government. Hence the judge was right in declining to say what the true construction of Trowbridge's letter was.

I think the judgment should be affirmed.

NOTES

[*] Quoted supra, p. 30, in small type.