36 N.W.2d 687 | Wis. | 1949
Motor Castings Company, operating a foundry in Milwaukee, during World War II had a pay-roll savings plan for war bonds. This plan was handled by one of its employees. He deducted a specified amount from the wages of each employee who subscribed to the plan. When enough had been accumulated a war bond was purchased in the employee's name. The bonds were purchased at the defendant bank. This arrangement developed because defendant's location was near the plaintiff's place of business. The regular account of plaintiff was with the First Wisconsin National Bank. The bonds were paid for by a check drawn by plaintiff on its account with the First Wisconsin National Bank and made payable to the defendant bank. These checks were voucher checks designated *495 for the purchase of war bonds and were signed by one of plaintiff's officers.
Early in 1943 Melvin Carlsen was assigned by the plaintiff to this war-bond duty. For approximately the first six months he submitted to the officer who signed the check a list showing the names of the employees and the amount of bonds to be purchased for them together with a check for the total amount of the bonds. According to the testimony of the plaintiff's officers this practice was used to be sure that Carlsen learned the procedure correctly and was discontinued in June, 1943.
Between May, 1944, and early 1946, Carlsen was able to acquire around $11,000 by making out these checks, which were subsequently signed by his employer, for more than that needed to purchase the employees' war bonds.
There is a conflict of testimony on what the procedure was at the bank. Carlsen said that he presented the checks with the voucher designating it for the purchase of war bonds attached and that when the check was for an amount larger than the cost of the bonds, the teller gave him the difference in cash. The testimony of the bank employees, which was that accepted by the trial court, was that the checks were presented without the vouchers; that the teller at the savings-bond window had no authority to cash checks; that whenever Carlsen's checks were for a larger amount than needed for the bonds, he was sent to another window to cash the check first,
In March, 1946, the discrepancies were discovered in Carlsen's accounts. An audit followed which disclosed the facts and the matter was referred to the district attorney. At his request one of the plaintiff's officers signed a complaint charging Carlsen with embezzlement of its funds. Carlsen pleaded guilty to this charge in the municipal court of Milwaukee county.
On May 24, 1946, plaintiff brought this action against the defendant bank to recover the difference between the checks and the amount of the bonds, claiming that the bank had diverted *496 this amount without authority from the plaintiff. The bank interpleaded Carlsen as defendant and filed a cross complaint against him claiming that if it were found liable it should have judgment against him for the full amount.
The trial court held that the evidence was insufficient to impose liability upon the defendant and on July 12, 1948, entered judgment dismissing the complaint. Plaintiff appeals. The trial court erroneously found that the evidence was insufficient to impose liability upon the respondent bank. The dealing between the appellant and respondent was only concerned with the furnishing of money by appellant to pay for war-savings bonds, which were issued in the name of the employee specified by the respondent.
This plan devised and adhered to by appellant was to send a check to cover exactly the cost of the bonds to be purchased at a given time. These checks were always made payable to the order of the bank and at no time was the bank authorized to deliver any cash to a messenger or agent. The respondent bank respected this arrangement in all transactions from its beginning and while the checks for bonds were presented by Mr. Knoll, who preceded the respondent Carlsen in that position, and thereafter until May 2, 1944. At that time instead of issuing savings bonds for a check of $37.50 respondent gave to Carlsen on his request that amount in cash. There was then a diversion of appellant's money to Carlsen. WisconsinGeneral F. Corp. v. Park Savings Bank,
While it may be said that less haste in dispatching the matter of signing checks presented by its employees might have served the best interests of all concerned, the fact remains that at all times the respondent ignored its legal duty to retain the over-plus of cash on checks payable to its order for the drawer of the check. The plan constantly followed of using the respondent as payee of the checks must be held to fix a definite duty on the bank to lodge the moneys in its custody and keep them under its control. Nothing further than this was inferable from the language of the check. The respondent bank could have refused to cash the check; but having accepted the check, it was its duty to hold appellant's money until it received direction to pay it out. Sims v. United States Trust Co.
In applying the rules of law to the facts of this case, we are impressed that the trial court did not give full weight to the fact that respondent failed to perform a duty required and imposed on it by a rule of commercial law. Wisconsin GeneralF. Corp. v. Park Savings Bank, supra. The failure of the respondent bank to hold the funds until advised by the owner is the source of the trouble and gave respondent Carlsen the opportunity to make away with the property the bank should have withheld for appellant. The worth of this rule is apparent even upon slight reflection. Had the rule been followed by respondent the wrong would have been prevented and the failure of the transgressor to accomplish his purpose might have overcome his temptation. *498
The bank had a positive duty to retain cash over and above the cost of the savings bonds. The language of the check even without the voucher slips was, together with the rule of law, such that respondent had no right to dispose of the money without instruction from the drawer of the check. The bank's act was a greater fault and was a greater departure from a plain duty than can be laid at the door of the drawer of the check whose fault, if any, was due either to reliance on the bank or its failure to note that some of the checks as drawn by the defaulting clerk were not divisible by $18.75.
The findings do not support the conclusions. Even if an officer of the appellant made written complaint to the district attorney charging respondent Carlsen with embezzlement of its funds, that procedure should not affect the result here. The criminal prosecution was not an action to try title. The money taken by Carlsen was identified erroneously in that case as belonging to appellant when received from respondent. The wrongful act of the respondent Carlsen was the important thing for consideration there. The title to the money was not in appellant and the fact that it was so considered by the prosecuting officer did no harm to respondent. The prosecution should have been under another section of the statutes instead of embezzlement. However, in that case the rights and duties were public for they governed the relation alone of the state with Carlsen, and related to his obtaining the money from the bank by false pretense or by privy and false token. The remedy was for the violation of a public rule of conduct. It was a criminal action and was between the state and Carlsen. Its purpose was not to protect a private right but was designed to effect or preserve the good order of the state and to enforce those duties of the individual toward the state.
As pointed out, it was the duty of the bank to recognize and preserve the right of appellant to the excess of cash. This was not done and because it was not the appellant is entitled to the equivalent of what the bank's breach of duty has taken from it. *499
It was also suggested by the trial court that Carlsen was acting within his apparent authority. Therefore his principal, appellant here, should be held for any loss. It is a well-established rule that when a principal puts an agent in a position that enables the agent, while apparently acting within his authority, to commit a fraud, the principal should stand the loss. This is true even when the agent is acting against his principal's interests. Restatement, 1 Agency, p. 582, sec. 261. However, Carlsen was not acting within his apparent authority. The only authority — apparent or actual — which he had was to receive bonds. Over a long period of time both Carlsen and his predecessors had come to the bank with a check for the exact amount of the bonds. When Carlsen presented to the teller at the savings-bond window a check larger than the amount necessary for the bonds and when she had to send him to another window to get it cashed, an unusual event occurred. Carlsen had never before dealt in cash for his employer. He was not an officer of the company, a fact which might have given him apparent authority to draw out funds. Nor were the checks drawn in such a way as to lead the bank to believe he had authority to draw out cash since they were made payable to the respondent bank itself. It is clear that Carlsen was not acting within his apparent authority.
Carlsen is indebted to respondent, and judgment for the proper amount should go in respondent's favor against him according to the demand of the cross complaint.
By the Court. — Judgment reversed and cause remanded with instructions to enter judgment in appellant's favor against respondent bank and for judgment against Carlsen in favor of the bank. *500
