United States v. Kauhoe

GILBERT, Circuit Judge, after stating the case as above, delivered the opinion of the court. The question here presented is whether the complaint states a cause of action against the defendants in error.; They were sureties on a postmaster’s official bond. Their liability on the bond was limited to $1,000. The postmaster embezzled $1,891 and became liable to the United States in that amount. The post office inspector demanded of the sureties the payment of the full amount so embezzled. They asked for time in which to pay it. He consented to an extension of time for 90 days, and in consideration of such extension of time they executed their promissory note for the full amount so embezzled. Does it follow from these facts that the sureties are liable upon the note? There is nothing in the complaint to indicate that indulgence to the postmaster entered into the transaction or formed any part of the consideration for the note. There is nothing in the complaint to indicate that the sureties voluntarily assumed to pay the full amount of their principal’s liability over and above their own liability to the United States. The transaction as set forth in the complaint is purely one between the United States, represented by the inspector, and the sureties. The demand, and the only demand, made upon the latter was for the payment of $1,891, and it was based solely on their liability on the bond. Their liability was limited to $1,000, as the inspector must be presumed to have known. The contract of a surety is to be strictly construed and his responsibility is limited by the terms of his bond. National Surety Co. v. United States, 129 Fed. 70 , 63 C. C. A. 512 ; United States v. Boyd (C. C.) 118 Fed. 89 ; Miller v. Stewart, 9 Wheat. 680 , 6 L. Ed. 189 ; United States v. Singer, 82 U. S. 111 , 21 L. Ed. 49 . The plaintiff in error attempts to find a consideration for the assumption by the sureties of a liability vastly in excess. of that to which they could be lawfully held in the fact'that their time to pay was extended 90 days. But that contention is not sustained by the averments of the complaint. The original demand made upon the sureties was not for the payment of the $1,000 in accordance with their contract, but it was for the full amount of the postmaster’s indebtedness. According to the complaint it was for the payment of $1,891 that they obtained an extension of time. If the demand had been made for the $1,000, it is not improbable that they could have paid it then and there. But in any view of the transaction as alleged in the complaint it is clear that the post office inspector had no authority to alter the contract of the sureties with the United States. Their contract was to pay $1,000. That sum was due from them, if the averments of the complaint are true, on June 15, 1904. The post office inspector was clothed with no authority to extend the time of *187 pajmcnt or to bind the United States to refrain from immediately enforcing the liability of the sureties. In short, the note was obtained upon an unwarranted assumption of authority by the inspector and upon a wrongful demand. We find neither in the statutes, the regulations of the post office department, nor in the records in this case that authority is conferred upon a post office inspector to bind the government by an agreement to extend the time of payment such as is pleaded in the complaint herein. The government is not bound by the act or declaration of its agent unless it manifestly appears that he acted within the scope of his authority or is employed in his capacity as a public agent to do the act or make the declaration for it. No unauthorized act of his can estop the government from asserting its rights. Whiteside et al. v. United States, 93 U. S. 247 , 23 L. Ed. 882 ; United States v. Pine River Logging & Improvement Co., 89 Fed. 907 , 32 C. C. A. 406 -412; Lee v. Munroe, 7 Cranch, 366 , 3 L. Ed. 373 ; The Floyd Acceptances, 7 Wall. 666 -679, 19 L. Ed. 169 ; Pine River Logging Co. v. United States, 186 U. S. 279 -291, 22 Sup. Ct. 920, 46 L. Ed. 1164 . The execution of the note did not change the relation of the sureties to their obligation on the bond. They remained, as they were before, liable only on the bond and according to the letter of its provisions. The note was unauthorized, without consideration, and void. The judgment is affirmed.