104 F. 214 | 2d Cir. | 1900
Gale, as receiver of the Elmira National Bank, which became insolvent in May, 1893, brought in the circuit court for the Southern district of New York an action at law against the Chase National Bank, a national hanking association established in the city of New York, upon the cause hereinafter stated, which action resulted in a verdict of the jury for the defendant. This writ of error was brought by the plaintiff below to review the judgment which was entered upon the verdict. The transaction between the Elmira Bank and the defendant was, as stated in the charge of the presiding judge, as follows:
“Mr. J. J. Bush was the cashier of the Elmira National Bank. He had borrowed money of the Chase National Bank, and given his note for $25,000, payable at the Chase National Bank, and secured by the stock of the Elmira National Bank. This note had been reduced by payments to $15,000. On the 4th day of May, 1893, the officers of the Chase National Bank telephoned to Bush that his collateral was unsatisfactory, and asked him to come down and settle the matter up. Mr. Bush came in response to this telephone message on the morning of May 5, 1893, bringing with him $8,000 in money and a draft of the Elmira Bank on the Quaker City Bank of Philadelphia for §7,000, which was originally made either to the order of Bush individually or*215 as cashier. ⅜ * ⅜ Bush said tliat with this money and draft he wished to take tip his Sil5.000 note. Mr. Porter, the vice president of the bank, objected to the $7,000 draft on Philadelphia, as there was some considerable delay with collections from Philadelphia, something of a panic in the money market, and some uncertainty about collections from Philadelphia banks. He said that, as they wanted to use funds, and Philadelphia funds were not. available to pay this loan, which was payable at the Chase National Bank, and therefore payable in New York funds, a different arrangement should be made. Hr. Porter asked Mr. Bush if he had a personal account with the Elmira National Bank, and he said he had. Porter then suggested to him that he (Bush) should put the money to the credit of the Mmira National Bank, and the $7,000 draft in its collection account, and make a personal draft for $15,012.50, the amount of the note and interest, on the Elmira Bank, payable at the Chase National Bank, so that it would be in New York funds. Mr. Yoorhees, one of the clerks in the Chase National Bank, then brought the form which Is ordinarily used in making such a draft; and Mr. Porter made it out, and Bush signed it individually as maker, and certified and accepted it as cashier, and left the $7,000 draft and the money.”
Whether the $7,000 draft was originally made to the order of Bush as cashier was a matter in dispute. Bush testified that it was so drawn. Porter testified that, when Bush indorsed the draft as cashier, he called Bush’s attention to the fact that it was made payable to him individually, whereupon he added "Cashier” to Ms name as payee. The plaintiff is of opinion that the question, whether or not actually decided by the jury, must be regarded as settled by the verdict in favor of the defendant’s version of the transaction. The check for $15,012.50 was immediately charged to the Elmira Bank, and the currency was credited to it. The $7,000 Quaker City draft was nominally taken for collection, and was collected and credited to the Elmira Bank on May 8th. The note and collateral were left with the defendant. ZSTo notice of the transaction was given by Porter to the Elmira Bank, but the charge of $15,012.50 appeared on the defendant’s account rendered June 6, 1893, to the receiver, who brought the suit to recover that amount. The $8,000 in currency were embezzled by Bush from the Elmira Bank, and the use of the $7,000 draft was also an embezzlement. His account with the bank on May 4th was overdrawn. If the transaction rested entirely upon the fact that Porter received this certified check for $15,012.50 in payment and discharge of Bush’s individual debt, there would be no doubt as to the illegal character of the transaction, and of its invalidity as against the Elmira Bank. Porter took in payment of Bush’s debt his individual check-upon the Elmira Bank, payable at the Chase Bank, which was certified by Busli as cashier; the certification being in violation of section 5208 of the Revised Statutes. The trial judge charged that títere was no evidence tending to show that Bush had any real or apparent authority for the certification, or to make the check payable at the office of the defendant. The certification was invalid because it was the certification of the cashier’s individual check, given and received for his individual benefit, with no authority either to certify it. or to malte it payable elsewhere than at the office of the Elmira Bank. The validity of the certification by the president or cashier of a bank of his individual check was examined by Chief Justice Selden in Claflin v. Bank, 25 N. Y. 293, — a well-known case, in which it was held that the acceptance or the certification of the president’s indi
The remaining question in the case was in regard to the authority of Bush to draw a cashier’s draft for $7,000 upon the Quaker City Bank to his own order in payment of his own individual debt, and thus embezzle the funds of the Elmira Bank. The question turned, not upon an express authority on the part of Bush, but upon an implied authority, which was to be inferred from the alleged acquiescence of the Elmira Bank in his prior assumption of authority. That, in the absence of any authority in a cashier to draw cashier’s drafts to his own order in payment of his individual debts, the person who receives such a draft in payment of the cashier’s individual debt takes the risk of being obliged to repay the draft to the bank, was not denied. Bank of New York Nat. Banking Ass’n v. American Dock & T. Co., 143 N. Y. 559, 38 N. E. 301; Hanover Hat. Bank v. Same, 148 N. Y. 612, 43 N. E. 72; Corn Exchange Bank v. Same, 149 N. Y. 174, 43 N. E. 915; Anderson v. Kissam (C. C.) 35 Fed. 699; Lamson v. Beard, 36 C. C. A. 56, 94 Fed. 30. The cases proceed upon the line of reasoning in the Claflin Case, supra, and, therefore, if a cashier has no authority to issue a cashier’s draft to his own order in payment of his own debt, the creditor who receives such a draft in payment “takes the risk” of the cashier’s lack of authority, although he may have had individual funds upon deposit. If the cashier had express authority to issue cashier’s drafts to his own order upon the same
“lint this general authority as such general agent of the bank to draw drafts or cheeks on the bank in the conduct of its business does not, by itself, permit him to draw such drafts or cheeks in payment of his personal debts, or to raise money for the transaction of his personal business. Where, therefore, as in this case, he draws a draft or cheek on the bank, payable to his own order, and for his individual debt, the party acting thereon takes the risk that the agent or the cashier may act without authority to do so. But if it appears that the agent had repeatedly done such acts-on previous occasions, and that such acts had been ratified, and not repudiated, by the officers of the corporation, ihon, providing such acts have been done for a period sufficiently long to establish a settled course of business, it may be inferred, from the general manner in which they have been done, that such acts were known, or ought to have been known, by the directors, and that the cashier had author-iiy to do such acts. If that be shown, the bank is liable. The authority to make such personal use of the funds of the bank may be shown, therefore, by the long-continued doing of such acts under such circumstances as warrant the inference that the acts were known and authorized by said bank; that is, the authority of the cashier may be inferred from the power he was accustomed to exercise without the dissent of the bank, and with its acquiescence.”
He further charged:
“If you find that Bush had no implied authority to use the funds of the bank in tbis way, then your verdict as to the $7,000 and interest should be for the plaintiff.”
The charge upon this point was in accordance with the views of the supreme court, as expressed in Martin v. Webb, 110 U. S. 7, 3 Sup. Ct. 428, 28 L. Ed. 49, in which it is said that the authority of a cashier “nmy he inferred from the general manner in which, for a period sufficiently long to establish a settled course of business, be has been allowed, without interference, to conduct the affairs of the bank. It may be implied from the conduct or acquiescence of the corporation, as represented by the board of directors. When, during a series of years, or in numerous business transactions, he has been permitted, without objection, and in his official capacity, to pursue a particular course of conduct, it may be presumed, as between the bank and those who in good faith deal with it upon the basis of bis authority to represent the corporation, that he has acted in conformity with instructions received from those who have the right to control its operations.” The authority is to be implied from the acquiescence of the directors in permitting the officer, during a series of years or in numerous business transaction#, to pursue a particular course of conduct; land their acquiescence is derived from their actual knowledge, or from what should have been their knowledge, of the conduct or course of business of the officer. In a case of this sort, in which a cashier’s use of the bank’s funds, and assumption of authority to use the bank’s Iname for bis individual benefit, was so much out of the line of the [ordinary conduct of a cashier that it would seem that its unusual [boldness would have prevented him from making the attempt, we are* >f opinion that clear proof should be required to satisfy a jury that
The plaintiff requested the court to direct the jury to find a verdict for the plaintiff in at least the sum of $7,000 and interest. The court refused to charge as requested, to which refusal the plaintiff excepted. Upon the evidence in the case, a verdict should have been directed in favor of the plaintiff to recover $7,000 and interest, in tin* event of a finding by the jury that he was not entitled to the entire sum in controversy. The judgment is reversed, with costs, and the case is remanded do the circuit court, with instructions to set aside the verdict and order a new trial.