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section 3926, Revised Statutes, and provides that the sender or owner of first-class registered matter shall be indemnified out of the postal revenues for loss in the mails. This provision was confined to first-class matter, and the indemnity was limited “in no case to exceed $10 for any one registered piece, or the actual value thereof when that is less than $10, and for which no other compensation or reimbursement to the loser has been made."
It is to be noted that both the original section and the amendment state the purpose of registration to be “for the greater security of valuable mail matter," and the indemnity covers losses in the mails without respect to the cause of the loss. The vigilance and care observed by the Gorernment in the postal service is the inducement upon which people employ the mails. The security, both when the Government was under no legal liability and now when it is under a limited legal liability, covers all known methods to prevent loss from negligence, accident, or dishonesty. The Government occupies the field of mail transportation to the exclusion of others, and invites the fullest possible use of its facilities, even in that portion of the field which other instrumentalities cover. The moral liability of the Government has always been an element in the situation, and has helped to strengthen the confidence with which people respond to the Government's invitation to use its facilities. Consequently, both when the Government was under no legal liability for loss, and now when its legal liability is restricted to $10 for each first-class piece, it has always investigated losses and sought to recover and restore to the owner the value lost, or as much thereof as possible. The Government limits its legal responsibility, but uses the utmost endeavor to find and restore a lost piece of mail, and if the loss is not caused by a casual disappearance or accident but is due to dishonesty and unfaithfulness, compels restitution from the culprit and from those responsible for his faithful service. I think there can be no doubt that this is and has been historically the Government's attitude, and that it is the necessary and right attitude.
But it must be conceded that the foregoing view of the responsibility of the United States, in good faith and good morals, does not control the legal liability of the surety company. That must be determined by a proper construction of the language of the contract, in the light of all the circumstances. And to bring the real question into view, we may put this query: Should the contract be construed irrespective on the one hand of the just cluty to the owner of the letter imposed on the Government by public policy and good faith, and irrespective on the other hand of the limited liability to the owner imposed by the Government in selfprotection? To rehut the implication thus suggested the argument advanced on behalf of the suretv company runs as follows: That the contract is one of indemnity or suretyship and not a covenant for liquidated damages; that the obligee under the bond has seen fit to limit its own liability in respect to the concrete thing involved, and hence can not call upon the obligor to respond in any greater sum; that. since the liability of the principal measures the liability of the surety, and in a civil action the Government could only recover from a dishonest clerk the amount for which it was liable to the sender of the letter, the liability of the surety rises no higher than this; and, finally, that the duty and obligation of the clerk being to deliver the letter to the addressee and not to pay the money to any official of the Government, the language of the bond "and shall faithfully account for and pay over to the proper official, etc.," does not properly cover such a case of theft. Authorities are cited to sustain these propositions on which, however, it is not necessary to dwell, because those branches of the
argument to which they are chiefly responsive may perhaps be granted, viz, that this is not a contract for liquidated damages, and that a contract for indemnity must be limited to the actual loss sustained by the obligee. It may be suggested that this argument directs attention too exclusively to elements of the case which are not vital, for the contract is not one of strict and narrow indemnity, and whether it is called one of suretyship or fidelity insurance, its meaning and purpose are clear, viz, to assure the faithful performance of all the employee's duties, and the result, to a plain understanding, is the assumption by the obligor of liability for the consequences of all failures of the principal to perform his obligations up to the amount of the principal sum named in the bond. It is undoubtedly settled law that a surety can not be held liable beyond the terms of his obligation, and that, in general, a guaranty is merely a contract to indemnify upon a contingency and is in the nature of a claim for unliquidated damages. But as I have endeavored to point out, this is not a mere contract to indemnify, as for instance, are those undertakings which agree to save harmless from all suits, actions, expenses, and liability; but without reference to the legal liability of the assured to other parties, and without language restricting the instrument to indemnity for that liability, the contract broadly covers all trusts and obligations imposed and must contemplate and include all consequences of a breach of the plainly expressed condition. I think it will be clear from present consideration of the language of the law and the bond, and in view of the well-known dealing and policy of the Government toward its dishonest employees and those who are losers by their dishonesty, that if the intention had been to limit the surety's liability to the amount of the Government's strict legal liability, the language of the instrument would have been different. For it seems to me that the language used fully supports the Government's contentions, and that there is nothing to prevent the Government from binding the surety to the full extent claimed, which the language used is apt and sufficient to do.
The statutes provide (section 3, act of June 13, 1898, 30 Stat., 14), that such bonds to be given, for the better protection of the interests of the Government, shall be conditioned for the faithful discharge of all duties and trusts imposed either by law or the rules and regulations of the Post-Office Department.
The language of the bond, as will be seen by the quotation, ante, substantially follows the statutory phrases, and without doubt the obligation assumed by the surety was the faithful discharge by the Government's employee of all the duties and trusts imposed upon him.
I cite some of the postal regulations which are appropriate. They are expressly given the force of law by the statute, and they are explicitly recognized by the instrument before me.
I do this in order to show more exactly wbat the law and practice are, what the knowledge of both parties embraced when the contract was made; and, as well, to meet a certain doubt suggested that the Government is without authority to act thus as a volunteer for the benefit of strangers to the contract and to pay out the funds which may be recovered.
Section 101 of the Regulations (Rev. Stat., sec. 4058), authorizes the delivery to the owner of stolen money or property recovered.
Section 231 et seq. gives a summary remedy by attachment against a defaulting or delinquent officer or employee of the postal service and their sureties.
Section 1031 (which is Rev. Stat., sec. 3926 in its original form) reminds us that the registry system was established for the greater security of valuable mail matter; and section 1051, carrying out the detailed scheme of protection (of which the taking of a bond is a later step) requires those handling registered matter to be duly sworn-that is, sworn to perform their duties with fidelity (section 35).
I remark here that the words in the act of 1898, supra, "for the better protection of the interests of the Government” are not to be construed narrowly and so as to restrain the protection of bonds to the Government's legal liability. Without attempting to define precisely the extent and contents of the word "interests," so used, it is broader in its scope than “liabilities.” Presumably Congress would have used the latter word if nothing more was intended, and it may safely be said that faithful service, as well as legal liability, was one of the Government's interests intended to be protected.
I may note further the purpose of inspection service, embracing mail depredations particularly. The injunction to make reports is tributary to this subject (Postal Regulations, sections 668 and 113+). The authority to make seizures, which broadly covers any illegal concealment, illustrates the extent of the Government's obligation, and the method adopted to discharge that obligation. Various orders and
regulations (Order, No. 763, December 5, 1899, sec. 1033 of Regulations) indicate the Government's encouragement of registration, and Order, No. 76 (p. 893, Postal Guide of January, 1900,) amending section 1111 of the Regulations, shows that extremely valuable registered mail, including letters and packages containing large sums of money, is an ordinary and fully authorized incident of the postal service.
It is now provided by section 11315 of the Regulations, that the statutory indemnity for a loss will not be paid until the inspectors report, after a proper investigation, that the registered piece or its value is irrecoverable.
I have dwelt at some length on these rules in order to show the well-established practice, running back, with minor differences, to the beginning of the postal service, by which the Government avails of all approved methods of guarding the mail, and recovering items lost or stolen. The argument that the Government has its remedy under the criminal law, and with the exercise of that and the collection of the amount of the statutory indemnity in each case, exhausts its power and its civil remedy, does not commend itself to me. However ingeniously in the abstract this logic may appear, in practice the culprit is properly made to respond and to restore to the fullest extent possible. I have no fear in venturing the assertion that the Government as intrusted with a commodatum, so to speak, by the sender of a letter, and as parens patria, is justly and legally entitled to pursue its remedies against the thief, not only under the criminal law and by the administrative method of search and seizure and recovery, but through the civil tribunals as well, if it shall elect so to do. Since there can be no question of the civil liability of the offender up to the amount of his stealings, and since upon a breach of the bond the surety stands in the culprit's shoes on the side of his civil liability up to the amount of the maximum sum named in the bond, I conceive that the surety is properly bound.
The thought that if this view is correct the offender is subject to two demands for the same cause of action, that of the Government and that of the owner of the letter, is another scrupulous and abstract doubt which may be ignored, because in theory and in practice the sender of the