Thе plaintiff, who had been a depositor in the defendant bank for many years, visited the bank in August, 1929, to make an inquiry as to whether she should hold or sell certain rights which had been issued to her as a stockholder in a public service corporation. She met the defendant’s president, one Fillebrown. He told her that the bank had a new manager, one Oburg, whose duty it was to deal with securities owned by the customers of the bank and to advise them about investments. This, he
The board of directors of the defendant in June, 1927, had appointed a committee to investigate the establishment of a bond department. The records of the board state that “it was the sense of the meeting that a securities department could well be established,” and the plan of the Old Colony Corporation seemed most feasible. It was then voted that the committee have definite papers drafted along the lines suggested by the committee for final consideration. The Brockton National Company, hereaftеr called the company, was organized. One half of the shares were held by the Old Colony Corporation and one half by trustees under a trust agreement whereby stockholders of the •
The рlaintiff saw Fillebrown in March, 1934. He told her that on account of a new securities law Oburg could no longer occupy space in the bank but that Oburg was working for the bank in so far as the bank’s customers were concerned, and that transactions must take place in Oburg’s new office. Fillebrown said that Oburg was honest and trustworthy, and that the bank “stood behind everything hе said or did.” He told her to go to Oburg’s office and exchange her bank receipts for receipts waich Oburg would give her in his name to comply with tlu change in the law; that as far as the bank was concerned she would be covered by the new receipts. He said he would keep
Fillebrown died on February 2, 1935. Oburg sold all the plaintiff’s stocks in March, 1935, and paid nothing to the plaintiff. She did not learn until after his bankruptcy in 1937 that he had dispоsed of her securities.
We have now recited many of the salient facts which the jury could find from the evidence. The jury returned a verdict for the plaintiff for $20,000, the ad damnum of the writ, on a count for deceit. The case is here on various exceptions taken by the defendant.
Our first inquiry is whether the defendant is to be held responsible for the statements of Fillebrown. The president of a bank merely by virtue of his office would have no authority to bind the bank by the representations that could have been found to have been made to the plaintiff. Slattery v. North End Savings Bank,
The defendant, however, was instrumental in the organization of the company, which had adopted a name some
The president of the defendant was in immediate charge of its business and of the activities conducted by the various departments of the bank. But to those of the public who were ignorant of the existence of the company and who reasonably thought that the business conducted in the company’s space was conducted by the bank, the president of the bank could have been found to have been clothed with apparent authority in reference to the business transacted in the bank by the company. Rintamaki v. Cunard Steamship Co. Ltd.
The defendant contends that even if it could be found that Fillebrown made the alleged representations to the plaintiff, it cannot be held liable in damages because it was beyond its corporate power to buy and sell seсurities for the plaintiff. It is true that by act of February 25, 1927, 44 U. S. Sts. at Large, 1226, and act of June 16, 1933, c. 89, § 16, 48 U. S. Sts. at Large, 184 — see also act of August 23, 1935, c. 614, § 308, 49 U. S. Sts. at Large, 709 — now U. S. C. (1940 ed.) Title 12, § 24, national banks were limited in dealing in investment securities “to purchasing and selling such securities . . . without recourse, solely upon the order, and for the account of, customers, and in no case for its own account.” The plaintiff’s action is in tort for deceit and not in contract for breach of an agreement with the bank as principal for the purchase or sale of securities. It has been held that the “without recourse” clause does not apply to actions to recover damages sustained by buyers of securities who were induced to purchase by the fraudulent misrepresentations of the president and vice-president of a national bank. Oppenheimer v. Harriman National Bank & Trust Co.
We need not analyze all the representations of Fillebrown. The gist of them was that Oburg was an employee of the bank who was the manager of its investment department. The statements of Fillebrown as to the honesty and integrity of Oburg added little, if anything, to the representations that would naturally arise as to the ability and trustworthiness of one whom the defendant had placed in charge of a department dealing in valuable securities. The plaintiff had the right to rely upon the presumptiоn not only that the defendant would not employ one who was not capable and competent to perform the duties entrusted to him by the defendant, but also that, if he turned out to be incompetent or dishonest, she had a responsible party to look to for reimbursement for her loss. McDonald v. Dr. McKnight, Inc.
The case is distinguishable from Browne v. Brockton National Bank,
The plaintiff could recover the amount of her loss that was caused by the fraud of the defendant. The misrepresentations of Fillebrown were first made in the summer of 1929, and were repeated in March, 1934. The plaintiff did not suffer any damage while her securities remained in the custody of the bаnk. Shé received whatever dividends were paid, and there was nothing to show that if she had presented the receipts issued to her by the bank and demanded her securities they would not have been delivered to her. Although she knew that their market value had diminished for reasons for which the bank was not responsible, she never objected to the bank’s holding thеm. Because of the stock market crash in October, 1929, she preferred to' let “things stay as they were” “because we all understand how things were at that time.” Her testimony in reference to her intention to let her securities remain as they were is binding upon her. Germaine v. Boston & Albany Railroad,
Moreover, there is nothing to show that if she had not been induced to turn over the custody of thе stock to the bank she would have disposed of it or would have managed it in such a way that she would have acquired more than what the stock was worth in March, 1935, when she took Oburg’s receipt for it and allowed him to take charge of the stock. In other words, she did not prove that in March, 1935, she was worse off than she would have been if Fillebrown had not made the representations to her in 1929. Bradley v. Fuller,
There was error in the denial of the defendant’s forty-third request, to the effect that damages could not be based upon the market value of the plaintiff’s securities in August, 1929, and in giving instructions that permitted the jury to assess damages computed as of that time. The purchase slip of the Kingman stock and the two written receipts for the Gay and Keith stocks by the bank, unaccom
The defendant’s exceptions must be sustained, but the new trial is to be had only on the question of damages, which are to be determined in accordance with this opinion.
So ordered.