Plaintiff appeals from a judgment entered in favor of defendant upon an agreed statement of facts.
Plaintiff operates certain airline transportation routes in the United States. In connection with its airlines, it maintains offices for general business traffic and ticket sales in a number of cities. Defendant is a national banking association with its principal office in the city of San Francisco. It maintains many other offices in California. Incidental to its general banking business, it issues and sells travelers cheques.
When the first shipment of travelers cheques was forwarded to plаintiff’s St. Louis office, one Ole May was stationed at plaintiff’s San Francisco office. For several days prior to November 11, 1938, May was a “District Traffic Agent” of the St. Louis office and as manager thereof had access to the travelers cheques received by that office. On November 11th May disappеared. Five days later plaintiff discovered that the shipment of cheques in the amount of $4000 was missing. Subsequent to the disappearance of May and prior to February 28, 1939, he sold the cheques which he took from the St. Louis office in the amount of $2810 for his personal use. The cheques so negotiated by May camе duly to the office of the bank and were honored on divers days from the 15th of November, 1938, until March 2, 1939. Thereafter, on the 27th day of May, 1939, May called at an office of the bank in the city of Los Angeles and delivered the balance of the unsold cheques in the sum of $1190 to an officer of defendant.
After demands by the bank fоr the payment of the cheques negotiated by May, defendant charged and deducted from the account of plaintiff the sum of $2810 without the consent of plaintiff. This action followed. This discussion disposes of all of appellant’s contentions.
All of the correspondence which constituted the contract between the parties was between plaintiff and defendant. Attached to the letter directed to plaintiff at its St. Louis office by defendant, under date of September 27, 1938, was a receipt which contained the same terms and conditions as set forth in identical receipts forwarded at the same time to all other offices of plaintiff. The language of that receipt is that the plaintiff “agrees to observe the same care and protection in the custody of the Travelers Cheques as would be given a
Plaintiff received the cheques at its St. Louis office October -3, 1938. That it undertook the sale thereof is emphasized by the language of plaintiff in a letter to the bank wherein it mentioned the “possibility of our handling your travelers cheeks . . . you notify this office of all shipments of travelers checks made to our various agents . . . confine sales to our city traffic offices where our personnel can devote the proper time to selling . . . will advise our personnel to accept your stock and begin sales ... a list of our traffic offices and the names of persons in charge is also attached . . . Bank of America travelers checks will be available for sale at all T. W. A. traffic offices.” This establishes a contract of agency between plaintiff and defendant. It betakеs of nothing of the nature of a joint adventure. Plaintiff, having promised to make the sales for a profit, directed its employees to sell and issue the cheques. The bank had nothing to do with the transfer of May to the St. Louis office and had had no contact with him prior to or during the time he was manager of that officе. At the time the cheques were forwarded that office was under the management of one Craden. May appeared immediately thereafter. He was there as an employee of plaintiff. As an instrumentality of plaintiff, he took possession of the cheques. Having received the cheques in ordеr to make sales of them, plaintiff thereby became defendant’s agent. (Carter v. Rowley,
In no sense was May an agent of the bank. The bank exercised no direction or control over the employees of plaintiff with respect to the handling of the cheques. Plaintiff’s agents in charge of its various offices negotiatеd the sales of the cheques solely because plaintiff had authorized defendant to forward them to the several managers of its far-flung offices. Moreover, while there was nothing in the correspondence requiring plaintiff to employ agents to sell the cheques, yet it
In making the sales plaintiff could act only through its own officers and employees. The acts of such parties in the performance of the business of the plaintiff were acts of the corporation itself. Having agreed to aсt as the agent of defendant for a consideration, plaintiff became liable for the fulfillment of the covenants undertaken. (American Soda Fountain Co. v. Stolzenbach, 75 N. J. L. 721 [
It is fundamental that if a duty of the master be violated by his employee the master is liable the same as though he personally were guilty of the breach. Such liability of the master is not obviаted by the fact that his servant aeted contrary to instructions and criminally. (Muehlebach v. Paso Robles Springs Hotel Co.,
We have observed the distinction of those cases involving the recovery of damages (1) where property is delivered to another and it is stolen by, or destroyed by reason of the negligence of an employee, from (2) those eases where prop
Plaintiff was liable for the safety of the cheques by the terms of the receipt which accompanied their shipment. While it was indeed never signed by plaintiff yet the facts that it accompanied the cheques and that its provisions were the substance of the prior correspondence made it binding uрon plaintiff. This receipt notified plaintiff that it was to “observe the same care and protection in the custody of these Travelers Cheques as would be given to a like amount of currency ... to hold said travelers cheques in trust for the bank”; to hold the cheques and proceeds of sale “separate and apart from T. W. A. assets ... to be fully responsible for their due issue and for prompt remittance (to bank) of the proceeds of sale thereof.” By the acceptance of the cheques accompanied by this declaration of plaintiff’s obligations, the latter undertook the responsibility of the due issuance of the cheques. All of the duties imposed by the terms of the receipt were breached by plaintiff.
Appellant contends that by paying all of the cheques negotiated by May at the time of their presentation, the bank’s voluntary acts defeat its right to charge the account of рlaintiff. This claim in effect is that the several bona fide holders
May had authority to sell the cheques and to cause the signature of the purchaser to be filled in at the prоper places. Under the Negotiable Instruments Law, where a cheek is in the hands of a holder in due course a valid delivery of the instrument is conclusively presumed to have been made by all parties prior to him. (Civil Code, sec. 3097.) Even though the check might have been stolen from its maker prior to its delivery, yet suсh theft is not a defense against a bona fide holder for value. (Northern Pacific R. R. Co. v. Spokane Talley Growers Union,
The ease of a stolen blank traveler’s cheque which had been later filled out is not parallel to the case' at bar. But to the extent that it may be likened to the act of May, it has been disposed of by the courts of this state. (People v. Cohen,
The law merchant, the history of the customs of bankers and tradesmen, the oft-enacted and revised statutes in occidental states guaranteeing the regularity and integrity of negotiable instruments regularly obtained in due course— the confluence of these and other economic forces has so fortified negotiable paper that in the absence of proof of notice of any covert vice in its issuance or endorsement, it is binding upon its maker. The fortunes and conveniences of commerce render it imperative that such paper should circulate with such character as to reassure all holders of its security. The cheques issued by May to himself were of that character. Consequently defendant became liablе to all holders thereof
Finally, the judgment must be affirmed upon another theory, to wit, the negligence of plaintiff. When promissory notes or cheques are endorsed in blank and they pass into the hands of innocent purchasers through the negligence of those who have their custody, the payors cannot escape Iheir obligation because the instruments were stolen. (Phelps v. American Mortgage Co., 40 Cal. App. (2d) 361 [
Judgment is affirmed.
Mr. Justice McComb, deeming himself disqualified, took no part in this decision.