Fenemore v. United States, 3 U.S. 357 (1797)

U.S. Supreme Court

Fenemore v. United States, 3 U.S. 3 Dall. 357 357 (1797) Fenemore v. United States

3 U.S. (3 Dall.) 357

ERROR TO THE CIRCUIT COURT FOR

THE DISTRICT OF NEW JERSEY

Syllabus

A certificate stating a debt to be due by the United States to one who had fraudulently claimed the same was issued to him by the commissioners for settling continental claims, and this certificate was afterwards funded by him, and interest on the same was paid to him.

The United States instituted a suit to recover the amount of the certificate and the interest paid by it. Held that it was entitled to recover the same in an action of assumpsit, it having by the suit affirmed the said certificate.

On the return of the record, it appeared that a declaration in case had been filed in this action containing three counts, the first and second of which were special counts for a fraud and deceit and the third was a general count for money had and received by the defendant to the use of the plaintiff. The first count charged the defendant with an express assumpsit that in consideration that the commissioner for settling continental accounts would issue a certificate for $4,273 and 49 ninetieths, he promised his account against the United States was just for that sum, and exhibited certain vouchers to support it, that the account ought to be allowed, and that the vouchers were true and lawful. It averred that confiding in the said promises, the United States, by its said commissioner, did issue the said certificate. And it assigned as a breach of the said promises that the defendant did not regard the same, but craftily deceived the United States in this, that the said certificate ought not to have been issued and delivered, that the account was not, nor was any part of it, for a just debt, but was deceitful, and that the account and vouchers were not true and lawful, whereby the United States had been greatly deceived.

The second count stated that whereas the United States had before that time issued and delivered to the defendant the said certificate and had accepted and received from him as lawful vouchers for the issuing and delivery thereof, the account aforesaid, together with certain paper writings in

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the declaration set forth, in consideration thereof he undertook and faithfully promised that the said account was a just and true account and that the sum mentioned in it was lawfully due from the United States and ought to be so certified, and that the said certain paper writings, then and there exhibited as further vouchers for issuing the said certificate, were regular and lawful vouchers. Nevertheless, the defendant did not regard his said last-mentioned promises, inasmuch as the said account was not true, nor was any part thereof due, nor were the said paper writings lawful vouchers, by means whereof the United States was by him deceived and greatly injured.

The third count having stated an assumpsit in the usual form, for $8,000 received to the plaintiff's use, concluded that the defendant not regarding his several promises, for making payment thereof, had not paid the said sum of money, but refused and still refuses to pay the same to the damage of the United States of $8,000. The defendant pleaded nonassumpsit, whereupon issue was joined, and on the trial of the cause, the jury found a special verdict of the following tenor:

"The jury finds that the commissioner named in the first and second counts was the lawful officer of the United States for transacting the business therein mentioned, and that certain regulations were made by Congress in relation thereto on 20 February, 1782, and 3 June, 1784, to which the jury refers. That the defendant, on 2 August, 1784, fraudulently exhibited an account, claiming a balance of �1,602 11s. 7 3/4p., equal to $4,273 49/90, as due from the United States to him, which account so fraudulently exhibited, and the vouchers therefor, the jury set forth at large. That then and there the defendant received, through fraud and imposition, from the United States the said balance, so as aforesaid falsely pretended to be due to him, in a certificate, which the jury set forth in its proper words and figures. That the defendant gave a receipt for the same, in the words and figures set forth by the jury. That according to law, the defendant, on 12 May, 1791, subscribed and funded the said certificate in the funds of the United States, and became a holder of the stock it produced, amounting with the interest, to $4,893 8/90, and that he gave to the United States a receipt for funded debt comprising the said certificate, which was thereupon delivered up and cancelled. But whether the said subscription, the subsequent funding of the said $4,273 49/90, with the interest of $619 59/90, and the stock acquired in virtue thereof as aforesaid ought to be allowed as payment of the amount of the said certificate by the said United States to the said defendant the said jurors know not, and thereupon they pray the advice of the court here in the premises.

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"

"And if it ought to be allowed, then it says he was paid the full amount, to-wit, $4,893 8/90. And the jurors further find that prior to the year 1791, the United States had paid part of the interest due on the said certificate, amounting to $1,025 58/90. That the defendant on 2 August, 1784, undertook and promised to the United States that the said account was just and true; that the sum of $4,273 49/90 was justly due to him from the United States, and ought to be so certified, and that the vouchers produced by him in support of the said account were regular and lawful vouchers for issuing and delivering the said certificate to him. That the said account was not just, nor was the sum specified to be due therein or any part thereof justly due, but the said account was fraudulent, and the vouchers produced by him in support thereof were not regular and lawful vouchers for issuing and delivering to him the said certificate. And whether, on the whole matter by the jurors so as aforesaid found, the plaintiff ought to recover against the defendant it is ignorant, and prays advice of the court."

"And if, upon the whole matter, etc., it shall appear to the court that the defendant did assume in manner and form as the United States complains, then it says he did assume upon himself, etc., and it assesses the damages by reason of the nonperformance of his promises and assumptions aforesaid $3,939 70/100, besides costs and charges, and for costs and charges 10 cents."

"But if it appear to the court that he did not assume, etc., then it says he did not assume, etc. And if upon the whole matter aforesaid by the jurors found in the manner aforesaid it shall appear to the court that the defendant did assume as to the sum of $1,025 58/90 so as aforesaid paid by the United States, in part of the interest so due on the said certificate, funded as aforesaid, etc., then it finds he did assume, etc. and assesses the damages of the United States by reason of the nonperformance of the promises within mentioned, besides costs and charges, at $1,023 64/100, and for costs and charges 10 cents. But if upon the whole matter, etc. it shall appear to the court that he did not assume, in construction of law, in manner and form as the United States complain, then they say he did not assume as to the said $1,025 58/90, etc."

Upon this verdict the circuit court rendered the following judgment on 2 April 1795:

"That the United States do recover against the said Thomas Fenemore its damages aforesaid, by the jurors aforesaid, in form aforesaid, assessed at $4,965 34/100, and also $169 43/100 for its costs and charges, by the court

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here to the United States, with their assent, of increase adjudged, which said damages in the whole amount to $5,134 77/100. And the said Thomas in mercy, etc. "

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On 7 August 1787, the judges delivered their opinions to the following effect:

CHASE, JUSTICE.

The judgment of the circuit court ought to be affirmed; here is the case of a plain fraud.

A man sets up a claim, exhibits colorable vouchers to support it, deceives the public officer, obtains a certificate that his claim is just, and finally converts that certificate into transferable stock. The transaction is rank from the beginning to the end, and the jury has properly found not only the fraud, but the value of the certificate obtained by it. The United States, by adopting the present mode of proceeding, has precluded itself from ever disputing hereafter the validity of the certificate, and it will never, perhaps, be able to indemnify itself against the subsequent payments of interest unless Fenemore remains solvent and accessible to legal process. But surely it ought never to have been a subject of argument in a court of justice whether, on stating a manifest fraud practiced upon the public credit and Treasury, the United States is entitled to recover an equivalent for the pecuniary injury from the avowed delinquent.

IREDELL, JUSTICE.

I am clearly of the same opinion. Upon strict technical rules, I had at first some doubts whether the inconsistency of the counts in the declaration would not be fatal, but on the appearance of the rule entered into by consent for the very purpose of obviating objections on that ground, my mind was perfectly satisfied. The only question, therefore, that remains to be decided turns upon the right of the

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United States to affirm the original transaction, and if it has that right it follows inevitably that it ought to recover from the defendant an equivalent for the value of the certificate which was surreptitiously obtained. I have no difficulty in saying that the right exists and that the public interest involved in the credit of a public paper medium required the exercise of the right in a case of this kind. The circulation of the certificate should be unimpaired, but the defendant ought at least to be made responsible in his purse for the fraud. The defense is indeed an extraordinary one; it is an attempt to make the very act of fraud an instrument or shield of protection. But I trust no man will ever be able to defend himself in an American court of justice upon the ground of his own turpitude. As, therefore, every exception to form has been obviated by consent, and as the special verdict finds every material fact to justify the judgment of the court below, I think that judgment ought to be affirmed.

CUSHING, JUSTICE.

The cause is susceptible of little doubt. The United States had a right to affirm the original transaction and to proceed, as it has done, for the recovery of the value of the certificate and the interest.

MR. CHIEF JUSTICE ELLSWORTH.

Giving a reasonable effect to the rule which the parties themselves have entered into, all objection as to the form and inconsistencies of the declaration is obviated. Then it is to be considered that the United States had an opinion either to affirm or disaffirm, the original contract, and by the present action it has chosen to affirm it. The special verdict fairly authorized the court below to give judgment for the value of the certificate on the first and second counts and for the amount of the money received as interest on the third count. With respect, however, to the right of disaffirmance, I wish to be understood as limiting it to the continuance of the certificate in the hands of the original party, for if the certificate had passed into the hands of a bona fide purchaser, even a court of equity would, I think, refuse to invalidate it, and I am sure public policy would forbid the attempt.

PATERSON, JUSTICE.

As I joined in giving the judgment of the circuit court, it gives me pleasure to be relieved from the necessity of delivering any opinion on the present occasion. But though I have no doubt on the case now to be decided, it appears to me to be another, and a great, question how far a bill in equity would reach all the points involved in the original transaction.

Judgment affirmed.