This рroceeding originated in a claim for $3,113.87 filed by appellant, Foshay Trust & Savings Bank, hereinafter ealled “the bank,” against appellee Public Utilitiеs Consolidated Corporation, for convenience referred to as “PUCC,” in receivership proceedings then and now pending in the District Court оf the United States for the District of Minnesota. A third corporation, the W. B. Foshay Company of Delaware, hereinafter referred to as “the Foshаy Company,” owned a majority of the voting capital stock of PUCC.
January 30, 1929, the board of directors of PUCC, by proper resolution, established a fund, dеscribed as said appellee’s self-insurance reserve fund. The view was that the funds set apart by the corporation in this self-insurance reservе fund should in time “reach sufficient proportion that the corporation will thereby be enabled and justified in carrying its own insurance risks, whether they be life, firе, or any other insurable risks.” To this end the resolution enjoined upon the committee in charge of this fund the exercise of such discretion in deposits аnd investments as to secure the best returns, and yet have the funds available for immediate use; its discretional control and management being limited to suсh extent “as will carry out the intents and purposes of these resolutions.” This purpose was further safeguarded by the method prescribed for handling its bank аccount. A checking account was opened, with the bank, appellee herein, designated as “Public Utilities Consolidated Corporatiоn Self-Insurance Reserve Fund Account.” A certified copy of the resolution creating the fund was filed with the bank, together with a signature card, au-' thorizing the bank to honor cheeks only when signed by two members of the self-insurance reserve fund committee, consisting of Wilbur F. Foshay, president of the Foshay Comрany, R. J. Andrus, president of PUCC, and H. E. MeGinty, treasurer of PUCC.
It appears that these affiliated companies were very short of money in September, 1929. It was thе custom to transfer general funds from one to the other as occasion demanded. On September 23, 1929, there was on deposit in the bank, to the сredit of this special self-insurance reserve fund of PUCC, at least $5,-400. MeGinty signed a check for this amount payable to the Foshay Company. No othеr member of the committee signed this check, which was delivered to the Foshay Company, found its way into the appellant bank, and was there paid in violation of express instructions. The Foshay Company charged itself on its books as owing the PUCC self-insurance reserve fund this sum of $6,400. At the time this action was hеard by the special master that entry still remained uncanceled — the amount still unpaid. Subsequently the receiver of PUCC filed a claim for this amount agаinst the Foshay Company, itself in receivership, but apparently this claim has been abandoned, and appellee has relied upon its offset of $5',400, filed against the claim of appellant in the present proceeding. Upon hearing, the master sustained this offset and recommended thаt appellant’s claim be disallowed. Upon exceptions the District Court sustained the master and disallowed appellant’s claim. This appeal followed.
Three points are urged by counsel in their brief and in argument:
I. The payment of the disputed check, originally unauthorized, was ratified by filing a claim against the payee.
II. The claim against the payor bank is barred by the earlier election of the alternative inconsistent remеdy of a claim against the payee, Foshay Company.
III. PUCC ratified MeGinty’s act in drawing the disputed check without securing a second signature, by prejudiсial delay in repudiating the check.
We agree with the conclusion of the master that “to withdraw a fund established for a special purposе in order to make an unsecured loan to an affiliated and clearly insolvent company can be characterized only as an improper diversion of that fund.” It was improper under any circumstances to divert this fund from the carefully expressed purposes of its creation. It was in no sense subject to transfer for convenience between these affiliated companies, even if it be assumed that such transactions werе otherwise unobjectionable. The bank was charged with express written notice of the infirmity of the check, executed by but one of the authorizеd signers. Cashing that check under the cir-
It is only when “the second remedy sought to be invoked is based on a theory which is irreconcilable with that on which the first remedy was founded” that a party is barred by his election. He may pursue remedies, not thus inconsistent, within limitation periods, until actual satisfaction is obtained. The question is whether appellee elected to ratify the transaction after knowledge of the bank’s tort. Equitable Trust Co. v. Connecticut Brass & Mfg. Corp. (C. C. A. 2)
But, finally, neither the act of the receiver оf PUCO in filing a claim against the Foshay Company, nor the delay in repudiating the cheek, are defenses available to the bank.
“'The essence of laches is not merely lapse of time. It is essential that there he also acquiescence in the alleged wrong or lack of diligence in seeking a. remedy.” Southern Pacific Co. v. Bogert,250 U. S. 483 ,39 S. Ct. 533 , 536,63 L. Ed. 1099 .
The doctrine of equitable estopxml invoked by appellant involves the presumption that third parties would he injured by the dolav in sx>eaking or acting. Smith v. Fletcher,
Furthеrmore, the record fails to disclose circumstances from which ratification by competent authority could be inferred or presumed.
It follows that the decree below should be affirmed. It is so ordered.