634 F.2d 554 | Ct. Cl. | 1980
delivered the opinion of the court:
Century Bank of Gainesville, Florida, was part of the federal food stamp program. It collected from retail and wholesale food concerns (and from other authorized persons) used food stamp coupons with a face value of over $12,000. Plaintiff then gave credit to the collectors for this amount. The coupons were marked and endorsed by the submitting parties, and the bank cancelled the stamp coupons. On October 20, 1977, plaintiff properly prepared the cancelled stamps for mailing, as required, to the Federal Reserve Bank in Jacksonville. The stamps were
On these cross-motions for summary judgment, the Government’s defense rests primarily on a food stamp regulation which, defendant says, absolves it of liability for cancelled stamps which have not reached the mails or other carrier but are still in the custody of the accepting bank. Section 2013 of Title 7, U.S. Code [part of the Food Stamp Program] has given the Secretary of Agriculture authority to issue regulations consistent with the program which are necessary or appropriate for effective and efficient administration. Section 2019 (formerly section 2018) then declares that "Regulations issued pursuant to this chapter [Food Stamp Program] shall provide for the redemption of coupons accepted by retail stores through approved wholesale food concerns or through banks, with the cooperation of the Treasury Department * * Under this authority the Secretary promulgated a relevant regulation dealing with food stamp redemption. 7 C.F.R. 272.5 provides in pertinent part:
(c)(1) FNS [Food and Nutrition Service] shall be liable for losses of shipments of cancelled coupons while in transit to Federal Reserve or correspondent banks: Provided, That:
(i) Coupons shall not be deemed to be in transit while in the custody and care of either the transmitting bank, or*183 of the Federal Reserve, or of the correspondent bank, or of their employees.
The parties have exhibited fine embroidered filigree on whether or not there could be implied from this regulation a contract to pay the Century Bank for the stolen coupons. We think, however, that the whole case turns more directly on the meaning and validity of the regulation we have just set forth. Did it, and could it, free the United States from liability on used stamps lost or stolen from the receiving bank before the latter puts them into transit to the Federal Reserve Bank?
The regulation does not state explicitly that the Government is not liable for such losses, but we think that is its necessary content. The directive covers those instances in which the Federal Government
Aside from the claim that the regulation leaves open government liability for pre-transit losses by a transmitting bank from its own custody — a position we have just rejected — Century Bank proffers other unacceptable contentions as to the scope of the regulation. Invoking New Mexico Dept. of Health and Social Services v. Secretary of Agriculture, 376 F. Supp. 953 (D.N.M. 1973), the Bank would have us interpret the regulation, 7 C.F.R. § 272.5, as merely laying down standards of pre-transit due care for a bank to follow before it can hold the Government liable. In view of the express and limited liability provisions we have set forth and construed, we are unable to read the simple requirements as to endorsement, cancellation, and transmittal of coupons as extending the specific liability provisions to cover pre-transit losses where the bank has followed instructions.
Then, plaintiff says that we should interpret the regulation in the light of FNS(FS) Instruction 728-2 (''Procedures for Commercial Banks in Handling Food Coupons Under the Food Stamp Program”) which Century Bank saw (though it says it never saw the regulation). This instruction summarizes and is in much the same form as the regulation but while it speaks only of governmental liability for "in transit” losses it does not contain the regulation’s language excluding losses while in the bank’s custody and care. See supra. This omission has no significance. The instruction paraphrased but did not displace the regulation.
Lastly, plaintiff urges that the cancelled and used stamps were worthless, the bank had already paid on them, and there was no reason for the Government to refuse reimbursement. This plaint merges into the issue of validity, but insofar as it bears on the meaning of the regulation we deal with it here. The answer is that, though the stamps were used, it was important to the Government, in its administration of the Food Stamp Program, to have a full accounting of them and their disposition. The Federal Reserve Bank had an elaborate system for receiving, counting, and
For these reasons, the Secretary had the power to issue a regulation of this stripe. Congress had given him broad regulatory authority. See supra. The Government is not necessarily liable for coupons lost by the bank while in the bank’s own custody, and can therefore free itself of such liability unless that position must be characterized as unreasonable. It is not unreasonable, however, to have the Federal Government assume liability only for "in transit” losses, where the transmitting bank had no control and there was no non-federal entity which could be responsible.
Defendant’s motion for summary judgment is granted, plaintiffs motion for summary judgment is denied, and the petition is dismissed.
The Food and Nutrition Service is a constitutent part of the Department of Agriculture which is, of course, an integral part of the Federal Government.
The regulation’s simple instructions on how the bank is to treat the coupons are by no means all-inclusive. There are, for instance, no requirements on safe-keeping of the coupons or due diligence. The directions in the regulations all seem to go to the necessary steps for cancellation of the coupons and for preparation for redemption by the Federal Reserve Bank or correspondent bank.
The latter would follow from the fiduciary nature of the state agency’s relationship to the Federal Government with regard to the agency’s possession of the unused food stamps issued by the Federal Government. Id. at 954-55.
For instance the instruction states expressly that the Government is liable for in-transit losses only if the "transmitting bank used due diligence and care in making the shipment. * * *” FNS (FS) Instruction 728-2 § in C (1)(a). The regulation did not contain that explicit statement but may be assumed to embody it.
Even for “in transit” losses, the Government assumed liability only where the bank was unable to recover the loss from the carrier.