The United States is not bound by the declarations of its agent
founded upon a mistake of fact unless it clearly appear that the
agent was acting within the scope of his authority and was
empowered in his capacity of agent to make such declaration.
This was an appeal from the decree of the Circuit Court for the
District of Columbia in a suit in chancery brought by Lee against
Thomas Munroe, Superintendent of the City of Washington, and
William Thornton, the survivor of the late board of commissioners
for that city. The object of the bill was to obtain a discount of
$3,000 upon a judgment which Munroe, as superintendent, had
obtained against Lee upon his bond. The ground upon which this
setoff was claimed was this. Morris & Nicholson were indebted
to Lee in that sum by promissory notes, and offered payment in
certain city lots, the title whereof was in the commissioners of
the city. Morris & Nicholson having paid money in advance to
the commissioners, were, as they supposed, entitled to demand from
them the conveyance of the lots in question under existing
contracts between the commissioners and themselves. Whereupon Lee
applied to the commissioners to know of them whether they would
convey the lots to him upon the order of Morris & Nicholson.
This they promised to do, and made an entry of it in their journal.
Lee then agreed with Morris & Nicholson to receive the lots in
payment, and upon receiving their order to the commissioners to
convey them to him, gave up to Morris & Nicholson their notes
for $3,000, which were the
Page 11 U. S. 367
evidence of the debt. On presenting this order to the
commissioners, they refused to convey the lots unless he would pay
them the purchase money due thereon to them from Morris &
Nicholson, alleging that the balance was against Morris &
Nicholson in its account with the commissioners. Morris &
Nicholson shortly afterwards became insolvent.
LIVINGSTON, J. delivered the opinion of the Court as
follows:
Page 11 U. S. 368
This is a bill seeking relief against public officers nominally,
but against the United States in fact, for a mistake of the former
in a representation made by them to the appellant by which it is
alleged that he has sustained a loss for the redress of which in
damages this suit is brought. It has been contended in this case
that the defendants having, in their public character as
Commissioners of the City of Washington, misinformed the plaintiff
as to the state of the accounts between them and Morris &
Nicholson, and thereby induced him to relinquish a demand which he
had against the latter, he is now entitled to have discounted from
a judgment which they have obtained against him for the use of the
United States, a sum equal to the principal and interest of the
debt which he lost by the confidence which he placed in them, and
this is supposed to be like the case of a party who, being about to
lend money on real estate, applies to one who holds a prior
mortgage to ascertain whether he has any encumbrance on it. There
is no doubt in such a case that if the person making the
application discloses that he is about lending money on the estate,
he will be preferred to the first mortgagee should the latter deny
his having a mortgage or assert that it is satisfied, and it seems
agreeable to the dictates of reason and good conscience that his
claim should be postponed to that of a person whose confidence was
inspired by the misrepresentation of one, who was acting for
himself and every way competent to inform him of the truth. But in
all the cases which have been decided on this principle, the fraud,
for such it is supposed to be, has been practiced by a party who
has himself an interest in the subject matter of inquiry, who
cannot well be mistaken, and whose conduct therefore ought to be
conclusive on him when the rights of third persons come in
question. It is, however, not known to the Court that the same rule
of decision has been extended so as to affect the interests of
principals, and particularly of the public, in consequence of
similar mistakes made by an agent, nor is it reasonable that such
extension should take place unless it most manifestly appear that
the agent was acting within the scope of his authority and was
empowered, in his capacity of agent, to make the declaration or
representation which is relied on as the ground of relief.
In the present case, the defendants were employed and authorized
by the public to
Page 11 U. S. 369
sell and make contracts for the sale of certain lands lying
within this district. In pursuance of these powers, they had made
contracts with Morris & Nicholson, which, having advanced a
considerable sum of money, was in the habit of directing the
defendants from time to time to convey certain of the lots which
they had contracted for to the persons named in such orders. The
commissioners supposing that Morris & Nicholson had not yet
received titles to land equal in value to the sum which it had
advanced, told the plaintiff that if he would obtain an order from
them for certain lots, they should be conveyed to him. But in a day
or two after, they discover that Morris & Nicholson had already
received deeds for lots to the whole amount of the sum which they
had advanced, and gave notice of this fact to the plaintiff,
offering however to convey to him the lots in question on his
paying for them at the rate expressed in their contract with Morris
& Nicholson.
The Court will not inquire whether the plaintiff really suffered
any injury from the confidence which he placed in the
commissioners, or whether he lost his remedy against Morris &
Nicholson (of which very serious doubts may well be entertained),
but a majority of the judges are of opinion that the communication
made by the commissioners to the plaintiff was altogether
gratuitous, and that not being within the sphere of their official
duties, the United States cannot be injured by it, and that the
defendants could not, without rendering themselves personally
liable to the public, have made a title to the plaintiff after a
discovery of the mistake which they had made, but on the terms
proposed by them; or in other words that the United States could
not, by any declaration of the commissioners proceeding from a
mistake, lose the lien which was secured to them by the contract
with Morris & Nicholson for the stipulated price of this
property. If the commissioners acted fraudulently, which is not
pretended, they may be personally liable in damages to the
plaintiff; but if it were a mistake, and such it is represented to
be, the Court has already said that the interests of the United
States cannot and ought not to be affected by it. Were it
otherwise, an officer entrusted with the sales of public lands or
empowered to make contracts for such sales might by inadvertence or
incautiously giving information to others destroy the lien of his
principals on very
Page 11 U. S. 370
valuable and large tracts of real estate, and even produce
alienations of them without any consideration whatever being
received. It is better that an individual should now and then
suffer by such mistakes than to introduce a rule against an abuse
of which, by improper collusions, it would be very difficult for
the public to protect itself. It is the opinion of this Court that
the decree of the circuit court be
Affirmed.
